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Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin

Operations ManagementContemporary Concepts and Cases 5/e

Chapter OneThe Operations Function 

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Chapter One Outline

Why Study Operations Management?

Definition of Operations Management

Decisions at Pizza U.S.A.Operations Decisions - A Framework 

Cross-Functional Decision Making

Operations as a ProcessContemporary Operations Themes

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Why Study Operations Management?

Every decision is cross-functional in nature.

Operations is a major function in everyorganization.

The principles of process thinking can beapplied across the business.

Operations Decisions - A Framework 

Operations Management is an interesting andchallenging field of study.

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Definition ofOperations Management

The operations function of an

 organization is responsible for producing

 and delivering goods or services of value to customers of the organization.

Operations managers make decisions to

 manage the transformation process that converts inputs into desired finished goods

 or services 

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Key Points in OM Definition

1. Decisions the operations manager must make:

• Process, quality, capacity, inventory

2. Functions in the organization.• Operations, marketing, finance

3. Process: planning and controlling the

transformation process and its interfaces

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Major Decisions at Pizza USAA Framework for OM

Process

 –  How to produce & deliver

Quality

 –  Criteria, measurement & process for achieving

Capacity

 –  Physical facilities & labor

Inventory –  What, when & how much?

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Cross-FunctionalDecision Making

Operations as the primary function. 

Other primary functions:

 – 

Marketing –  Finance

Supporting functions: all others

Major cross-functional decision makingrelationships (See Table 1.2)

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Operations as a Process 

Transformation(Conversion)

Process

Input Output

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Operations as a Process 

TransformationFabrication

Input OutputTransformationAssembly

Fabrication: making the parts

Assembly: putting the parts together

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Operations as a Process 

(Figure 1.1)

Transformation(Conversion)

Process

Energy

Materials

LaborCapital

Information

Goods orServices

Feedback information for 

control of process inputs 

and process technology 

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Relation of Operations to itsEnvironment

(Figure 1.2)

Operations transformation systemSuppliers

Human

ResourcesMarketing

Accounting Finance MIS

Engineering

SOCIETY

GOVERNMENT

ExternalEnvironment

CUSTOMERS

COMPETITORS

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Contemporary Operations Themes

Service and Manufacturing (differences and

implications)

Customer-Directed Operations

Lean Operations

Integration of Operations and Other Functions

Environmental Concerns and sustainability

Supply Chain Management

Globalization of Operations

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Summary

Why Study Operations Management?

Definition of Operations Management

Decisions at Pizza U.S.A.Operations Decisions - A Framework 

Cross-Functional Decision Making

Operations as a SystemContemporary Operations Themes

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End of Chapter One