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Operations ManagementCOB 300C
Dr. Michael Busing
08-28-02
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Some Definitions of Operations
Management
Management of productive resources
Design and control of systems responsiblefor productive use of:
raw materials (or supplies for service
operations)
people (direct and indirect workforce)
equipment/facilities (factories or service
branches)
information (planning and control systems)
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Operations Management (COB 300 C)versus
ManagementScience (COB 291)
OM is a field of management
Management Science is the application ofquantitative methods to decision making in
all fields
OM decisions are made in the context of the
firm as a whole -- starting with customers
(i.e., the marketplace) and explicitly
considering a firms corporate strategy.
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The Production System
The production system is the heartofOM.
Uses resources to transform inputs into somedesired output.
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Inputs
RMH - patients
BW3 - hungry/thirsty customers
General Motors - sheet steel, engine parts
JMU - high school students
Pier One - shoppers Target Distribution Center - stockkeeping
units (SKUs)
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Transformations
RMH - health care procedures
BW3 - preparation/service of food/drink
General Motors - fabrication and assemblyof cars
JMU - imparting of knowledge and skills
PierOne - filling of orders
Target Distribution Center - storage andredistribution
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Desired Outputs
RMH - healthy individuals
BW3 - satisfied customers
General Motors - high quality cars
JMU - educated and employable individuals
PierOne - sales to satisfied customers Target Distribution Center - right item at
right place at right time.
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WhyStudy Operations Management?
OM activities are at the core ofallbusiness organizations
regardless of what business they are in
At least 35% of all jobs are in OM related areas
customer service, quality assurance, production
planning and control, scheduling, job design, inventory
management
Other functional areas such as information systems,
finance, accounting, human resources, logistics, marketing,
purchasing, etc. are all interrelated withO
M activities.
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Operations Management
ProfessionalSocieties
American Production and Inventory Control
Society (APICS)
American Society for Quality (ASQ)
National Association ofPurchasing
Management (NAPM)
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Functions Within Business
Organizations
Organizations are formed to pursue goals
that are achieved more efficiently by the
concerted efforts of a group of people than
by individuals working alone.
Organizations are either profit or nonprofit.
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Functions Within Business
Organizations
Three Basic Functions
finance
marketing
production/operations
Functions must interact to achieve the goals
and objectives of the organization.
Success depends not only on the individual
functional area, but on the interface.
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Operations as it Relates to OtherDisciplines
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OM/F
inanceI
nterrelationship
Budgeting: Operating performance -
standard costs versus actual costs
Economic Analysis: Evaluation of various
plant/equipment alternatives
Funding/Provision of funds: Cash Flow
issues - how much/when
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OM/MarketingI
nterrelationship
Advertising/pricing decisions are made by
marketing people.
Marketing is closest to customer
wants/needs and can communicate these to
operations (short and long term
requirements).
Marketing is in tune with competition.
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OM/HR Relationship
Aggregate Planning
Hiring/Firing Decisions
Undertime/Overtime Issues
Workplace Safety Issues
Quality/Training Programs
Productivity/Motivation Issues
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Current Event
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Operations System design versus
operation
System Design Decisions: involves
decisions that relate to system capacity,
geographic location of facilities,
arrangement of departments and placement
of equipment, product and service planning,
and acquisition of equipment.
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Operations System design versus
operation
System Operation Decisions: management
of personnel, inventory planning and
control, scheduling, project management,
and quality assurance
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Operations System design versus
operation
System design essentially determines many
of the parameters of system operation.
e.g., cost, space capacities, and quality
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Differentiation Features of
Operations Systems
Degree of Standardization (standardized
versus customized) - volume versus cost
Type of operation (job shop versus
assembly line versus flow)
Goods versus Services
customer contact, uniformity of input, labor
content, uniformity of output, measurement of
productivity, quality assurance.