Chapter 1 Flashcards
Operations management
deals with the processes that
transform organizational inputs into goods or services.
“OM is the management of processes that create goods and/or provide services.”
Operations (definition)
The activities directly related to producing a good or a service
What do companies use operations management for??
Efficiency (cost and time)
Effectiveness (quality and timeliness)
Operations management - WHY?
• A large percentage of company’s expense occurs in OM area
• A large number of all jobs are in OM area (purchasing, quality, planning, scheduling, inventory, … analysts/data scientists)
• Activities in all other functional areas are interrelated with OM activities
• Operations innovation lead to marketplace and strategic benefits (Toyota, Apple)
Three basic functions within organizations
- finance
- operations (manufacturing/service)
- marketing
Reverse way
- demands
- funding needs
Transformation
Inputs and out puts (in class exercise)
Types of Organizations
Goods Farming Mining
Construction Manufacturing
Services
Healthcare Transportation Food Retailing Banking Broadcasting
Transformation - Vlaue addition
The essence of the operations function is to add value during the transformation process:
– Value added is the term used to describe the difference between the cost of inputs and the value or price of outputs
– The value of outputs is measured by the prices that customers are willing to pay for those goods or services
The scope of operations management - designing decisions and planning/ controlling decisions
Designing Decisions
– Capacity
– Location
– Equipment
Planning/Control Decisions
– Quality
– Inventory
– Scheduling
– Project Management
Do some organizations just have goods or just have services??
NO, most systems are a blend of both goods and services
Differences between Goods AND Services
Differences
OUTPUT:
Goods -> tangible
Services -> intangible
Uniformity of output
Goods -> high
Services -> low
Why is it important to know the percentage total labour force by industry?
- make your plans based not hat so you can win the market and increase tour market share.
- when you have majority of the market people will pay anything for your product
Approaches to decision making - MODELS
- abratction of reality: simplified
Types - Physical Model:
– Mathematical Model: – Schematic Model:
– Statistical Models:
Key to use model
– Purpose, how it is used to generate results, how these results are interpreted and used, assumptions and limitation
Benefits to models
• easier to use and less expensive than dealing with the real system
• Require users to organize and sometimes quantify information
• Provide a systematic approach to problem solving
• Increase understanding of the problem
• Enable managers to analyze “What if?” questions
• Enable managers to specify objectives
Approaches to Decisions making - quantitative techniques
• Focus on objective measurements and analysis of numbers in order to draw conclusions
– Optimization
– Queuing Techniques
– Inventory techniques
– Project scheduling technique – Forecasting Technique
– Statistical Techniques
• Time Consuming and requires computers • heuristics
Approaches to decision making - analysis of tradeoffs
• Performance Metrics
All managers use metrics to • Trade off: a compromise
manage and control operations • Amt of inventory in stock: trade
– Profits
– Costs
– Productivity
– Forecast accuracy
Analysis of trade offs
- amt of inventory in stock: trade
off between customer satisfaction and cost of additional inventory
• Selecting a feature in car: trade off between merits of feature and price
Approaches to decision making
• System - a set of interrelated parts that must work together
• The business organization is a system composed of subsystems
– marketing subsystem
– operations subsystem
– finance subsystem
• The systems approach
– Emphasizes interrelationships among subsystems
– Main theme is that the whole is greater than the sum of its parts
– The output and objectives of the organization take precedence over those of any one subsystem
Approaches to decision making - establishing priorities
• In nearly all cases, certain issues or items are more important than others
• Recognizing this allows managers to focus their attention to those efforts that will do the most good
• Pareto Phenomenon: 80% of results achieved will come from ~ 20% of factors.
• Manager should only deal with important problems and for selected problem, search for one or two factors that will have greatest impact.
Approaches to decision making - moral principals
• financial statements
• Worker safety
• Product safety
• QuALITY
• Environment
• Community
• Hireing/firing workers
Major trends
• The internet and e-commerce
• Management technology
• Globalization
• Management of Supply Chains
• Sustainability
• Industry 4.0/Internet of things
Supplies management
• The internet and e-commerce
• Management technology
• Globalization
• Management of Supply Chains
• Sustainability
• Industry 4.0/Internet of things
