PRODUCTIONS/OPERATIONS MANAGEMENT

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PART ONE
INTRODUCTION

• Chapter One
• Introduction to Operations Management
• Chapter Two
• Competitiveness, Strategy, and Productivity

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Chapter One

• Introduction to Operations Management

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Operations Management
Introduction to Operations Management
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Introduction to Operations Management

• Operations Management includes
• Forecasting
• Capacity planning
• Scheduling
• Managing inventories
• Assuring quality
• Motivating employees
• And more . . .

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Introduction to Operations Management
Business Operations Overlap
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Introduction to Operations Management
Goods-service continuum
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Introduction to Operations Management
Stage of Production Value Added Value of Product
Farmer produces and harvests wheat 0.15 0.15
Wheat transported to mill 0.08 0.23
Mill produces flour 0.15 0.38
Flour transported to baker 0.08 0.46
Baker produces bread 0.54 1.00
Bread transported to grocery store 0.08 1.08
Grocery store displays and sells bread 0.21 1.29
Total Value-Added 1.29
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Introduction to Operations Management
Types of Operations
Operations
Examples
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Introduction to Operations Management
Value-Added
The difference between the cost of inputs and
the value or price of outputs.
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Introduction to Operations Management
Food Processor
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Introduction to Operations Management
Hospital Process
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Introduction to Operations Management
Operations Interfaces
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Introduction to Operations Management
Decision Making
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Introduction to Operations Management
Decision Making
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Introduction to Operations Management
Major Characteristics of Production Systems
Degree of standardization
Type of operation

project

job shop

repetitive production

continuous processing
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Introduction to Operations Management
Manufacturing or Service?
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Introduction to Operations Management
Key Differences
These differences are beginning to fade
in many cases
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Introduction to Operations Management
Manufacturing vs Service
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Introduction to Operations Management
Responsibilities of Operations Management
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Introduction to Operations Management
Models
A model is an abstraction of reality.
Tradeoffs
What are the pros and cons of models?
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Introduction to Operations Management
Systems Approach
The whole is greater than the sum of the parts.
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Introduction to Operations Management
Quantitative Approaches
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Introduction to Operations Management
Pareto Phenomenon

A vital few things are important for reaching
an objective or solving a problem.

80/20 Rule - 80 of problems are caused by
20 of the activities.
How do we identify the vital few?
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Introduction to Operations Management
Recent Trends

• The Internet
• E-Business
• Supply Chain Management

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Introduction to Operations Management
Simple Product Supply Chain
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Introduction to Operations Management
Continuing Trends
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Chapter 2

• Competitiveness, Strategy, and
• Productivity

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Competitiveness How effectively an organization
meets the needs of customers relative to others
that offer similar goods or services
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Competitiveness
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Mission/Strategy/Tactics
How does mission, strategies and tactics relate
to decision making and distinctive competencies?
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Strategy

• Mission
• The reason for existence for an organization
• Mission Statement
• A clear statement of purpose
• Strategy
• A plan for achieving organizational goals
• Tactics
• The actions taken to accomplish strategies

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Strategy Example
Example 1

• Rita is a high school student. She would like to
  have a career in business, have a good job, and
  earn enough income to live comfortably
• Mission Live a good life
• Goal Successful career, good income
• Strategy Obtain a college education
• Tactics Select a college and a major
• Operations Register, buy books, take
  courses, study,
  graduate, get job

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Planning and Decision Making
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Strategy Formulation

• Distinctive Competencies
• The special attributes or abilities that give an
  organization a competitive edge.
• Environmental Scanning
• The considering of events and trends that present
  threats or opportunities for a company.

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Examples of Distinctive Competencies
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Key External Factors

• Economic conditions
• Political conditions
• Legal environment
• Technology
• Competition
• Markets

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Key Internal Factors

• Human Resources
• Facilities and equipment
• Financial resources
• Customers
• Products and services
• Technology
• Suppliers

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New Strategies

• Quality-based strategies
• Focuses on maintaining or improving the quality
  of an organizations products or services
• Quality at the source
• Time-based strategies
• Focuses on reduction of time needed to accomplish
  tasks

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Time-based Strategies
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Production

• Craft Production - Highly skilled workers use
  simple flexible tools to produce small quantities
  of customized goods.
• Mass Production - Lower-skilled workers use
  specialized machinery high volumes of
  standardized goods.
• Lean Production - Uses minimal amounts of
  resources high volume of high-quality goods.

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Productivity

• Partial measures
• output/(single input)
• Multi-factor measures
• output/(multiple inputs)
• Total measure
• output/(total inputs)

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Productivity Growth
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Measures of Productivity
Table 2-4
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Examples of Partial Productivity Measures
Table 2-5
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Example
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Example--Labor Productivity

• 10,000 units/500hrs 20 units/hour or we can
  arrive at a unitless figure
• (10,000 unit 10/unit)/(500hrs 9/hr)
  22.22
• Can you think of any advantages or disadvantages
  of each approach?

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Example--Multifactor Productivity
MFP Output Labor Materials
MFP (10,000 units)(10) (500)(9)
(5000) (25000)
MFP 2.90
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Figure 2-2
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Factors Affecting Productivity
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Factors Affecting Productivity

• Standardization
• Use of Internet
• Computer viruses
• Searching for lost or misplaced items
• Scrap rates
• New workers
• Cuts in health benefits

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Factors Affecting Productivity

• Safety
• Shortage of IT workers
• Layoffs
• Labor turnover
• Design of the workspace
• Incentive plans that reward productivity

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Improving Productivity

• Develop productivity measures
• Determine critical (bottleneck) operations
• Develop methods for productivity improvements
• Establish reasonable goals
• Get management support
• Measure and publicize improvements
• Dont confuse productivity with efficiency

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Bottleneck Operation
Figure 2-3