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Chapter 1

Chapter 1. Introduction to Operations Management. Overview. Introduction Historical Milestones in OM Factors Affecting OM Today Different Ways of Studying OM Wrap-Up: What World-Class Producers Do. Introduction.

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Chapter 1

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  1. Chapter 1 Introduction to Operations Management

  2. Overview • Introduction • Historical Milestones in OM • Factors Affecting OM Today • Different Ways of Studying OM • Wrap-Up: What World-Class Producers Do

  3. Introduction • Operations management is the management of an organization’s productive resources or its production system. • A production system takes inputs and converts them into outputs. • The conversion process is the predominant activity of a production system. • The primary concern of an operations manager is the activities of the conversion process.

  4. Organizational Model Finance HRM Sales OM QA Marketing MIS Accounting Engineering

  5. Entry-Level Jobs in OM • Purchasing planner/buyer • Production (or operations) supervisor • Production (or operations) scheduler/controller • Production (or operations) analyst • Inventory analyst • Quality specialist

  6. Studying Operations Management • Operations as a System • Decision Making in OM

  7. Operations as a System Production System Conversion Subsystem Inputs Outputs Control Subsystem

  8. Inputs of an Operations System • External • Legal, Economic, Social, Technological • Market • Competition, Customer Desires, Product Info. • Primary Resources • Materials, Personnel, Capital, Utilities

  9. Conversion Subsystem • Physical (Manufacturing) • Locational Services (Transportation) • Exchange Services (Retailing) • Storage Services (Warehousing) • Other Private Services (Insurance) • Government Services (Federal)

  10. Outputs of an Operations System • Direct • Products • Services • Indirect • Waste • Pollution • Technological Advances

  11. Decision Making in OM • Strategic Decisions • Operating Decisions • Control Decisions

  12. Strategic Decisions • These decisions are of strategic importance and have long-term significance for the organization. • Examples include deciding: • the design for a new product’s production process • where to locate a new factory • whether to launch a new-product development plan

  13. Operating Decisions • These decisions are necessary if the ongoing production of goods and services is to satisfy market demands and provide profits. • Examples include deciding: • how much finished-goods inventory to carry • the amount of overtime to use next week • the details for purchasing raw material next month

  14. Control Decisions • These decisions concern the day-to-day activities of workers, quality of products and services, production and overhead costs, and machine maintenance. • Examples include deciding: • labor cost standards for a new product • frequency of preventive maintenance • new quality control acceptance criteria

  15. What Controls the Operations System? • Information about the outputs, the conversions, and the inputs is fed back to management. • This information is matched with management’s expectations • When there is a difference, management must take corrective action to maintain control of the system

  16. Wrap-Up: World Class Practice • OM important in any organization • Global competition forces rapid evolution of OM • Decision based framework focus of course • Strategic, Operating, and Control

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