Busm 361

1
Busm 361

• OM defined

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What Is Operations Management?

• Production is the creation of goods and services
• Operations management is the set of activities
  that creates goods and services through the
  transformation of inputs into outputs

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Critical Functions

• Managing quality
• Design of goods and services
• Location strategies
• Layout strategies
• Human resources
• Supply-chain management
• Inventory management
• Scheduling
• Maintenance

Ch . 4 Ch. 6 Ch. 8 Ch. 9 Ch. 10, S10 Ch. 11 Ch.
12, S12 Ch. 13, 14, 15 Ch. 17
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Organizational Functions

• Marketing
• Gets customers

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Functions - Airline
6
Functions - Bank
7
Functions - Manufacturer
8
Whirlpool video
9
Whirlpool
Productivity improved Costs were pared
Wages increased
Parts per man hour
Average worker's annual cash compensation
Cost per unit of a spin pinion
2.25
115
110
27000
2.00
105
26000
1.75
25000
100
95
24000
1.50
1989
1990
1991
1989
1990
1991
1989
1990
1991
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Development of the Service Economy
U.S. Employment, Share
Services as a Percent of GDP
U.S. Exports of Services
80 70 60 50 40 30 20 10 0
United States Canada France Italy Britain Japan W
Germany
In Billions of Dollars
250 200 150 100 50 0
Services
Industry
Farming
1970 1991
1850 75 1900 25 50 75 2000
40 50 60 70
1970 75 80 85 90 95 2000
Percent
Year 2000 data is estimated
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Goods Versus Services
Good
Service

• Reselling unusual
• Difficult to inventory
• Quality difficult to measure
• Selling is part of service

• Can be resold
• Can be inventoried
• Some aspects of quality measurable
• Selling is distinct from production

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Goods Versus Services -
Good
Service

• Provider, not product is transportable
• Site of facility important for customer contact
• Often difficult to automate
• Revenue generated primarily from intangible
  service.

• Product is transportable
• Site of facility important for cost
• Often easy to automate
• Revenue generated primarily from tangible product

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Goods Contain Services Services Contain Goods
Automobile
Computer
Installed Carpeting
Fast-food Meal
Restaurant Meal
Auto Repair
Hospital Care
Advertising Agency
Investment Management
Consulting Service
Counseling
Percent of Product that is a Good
Percent of Product that is a Service
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Options for Increasing Contribution
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Where Are the OM Jobs?

• Technology/methods
• Facilities/space utilization
• Strategic issues
• Response time
• People/team development
• Customer service
• Quality
• Cost reduction
• Inventory reduction
• Productivity improvement