Introduction to Operations Management

1. Introduction to Operations Management MBA 570Summer 2011

2. Business Environment

3. Accounting Bookkeeping Pensions Audits Tax Business Environment

4. Business Environment

5. Business Environment Finance Investments Capital Stock Market

6. Business Environment

7. Business Environment Economics Nceufhkurreffg (the study of how the forces of supply and demand allocate scarce resources*)

8. Business Environment

9. Business Environment Management Organization Behavior Policy Strategy

10. Business Environment

11. Business Environment Marketing Sales, Promotion Market Research Consumer Behavior

12. Business Environment

13. Business Environment Information Systems The application of people, technologies, and procedures to solve business problems**

14. Business Environment

15. Business Environment Operations The efficient and effective , Design, control, Maintenance, and improvement of processes to produce and distribute products and services***

16. Operations Management Designing Products and Services

17. Operations Management Designing Products and Services

18. Operations Management Designing Products and Services

19. Operations Management • Facility Location and Layout

20. Operations Management Scheduling Operations

21. Operations Management Scheduling Operations

22. Operations Management Inventory Control

23. Operations Management Quality Management

24. What Is Operations Management? Production is the creation of goods and services Operations managementis the set of activities that creates value in the form of goods and services by transforming inputs into outputs Operations management affects: • - Companies’ ability to compete • - Nation’s ability to compete internationally

25. The Operations function • Consists of all activities directly related to producing goods or providing services

26. Value-Added Value added Inputs Outputs Transformation/ Land Goods Conversion Labor Services process Capital Feedback Control Feedback Feedback The difference between the cost of inputs and the value or price of outputs.

27. Types of Transformations • Physical Manufacturing • Locational Transportation • Exchange Retailing • Storage Warehousing • Physiological Health Care • Informational Telecommunications

28. Raw Vegetables Cleaning Canned vegetables Metal Sheets Making cans Water Cutting Energy Cooking Labor Packing Building Labeling Equipment Food Processor Outputs Inputs Processing

29. Doctors, nurses Examination Healthy patients Hospital Surgery Medical Supplies Monitoring Equipment Medication Laboratories Therapy Hospital Process Inputs Processing Outputs

30. OM Decisions Where to locate your business?

31. OM Decisions What type of process to use?

32. OM Decisions Number of workers to employ? Number of workers scheduled at each station?

33. More than just McDonalds… Forecasting park demands Reducing wait times Managing projects

34. Operations is AboutMaking Business Run Better • More Efficiently • More Abundantly • With Higher Customer Satisfaction

35. The Goal of Operationsand business! Loyalty Loyalty Customer Satisfaction Quality

36. The Goal of Operations and business apostle zone of affection 100% 80% zone of indifference 60% Loyalty (Retention) 40% zone of defection 20% terrorist 1 2 3 4 5 Dissatisfied Satisfied Very satisfied Neutral Very dissatisfied Satisfaction

37. Unitsproduced Productivity = Input used Productivity • Measure of process improvement • Represents output relative to input • Only through productivity increases can our standard of living improve

38. Multi-Product Productivity Productivity = Output Labor + material + energy + capital + miscellaneous

39. Options for Increasing Contribution

40. Measurement Problems • Quality may change while the quantity of inputs and outputs remains constant • External elements may cause an increase or decrease in productivity • Precise units of measure may be lacking

41. Goods-service Continuum Steel productionAutomobile fabrication Home remodelingRetail sales Auto Repair Appliance repair Maid Service Manual car wash Teaching Lawn mowing High percentage goods Low percentage service Low percentage goods High percentage service

42. Goods Contain Services / Services Contain Goods 75 25 50 100 75 0 100 50 25 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

43. Tangible Act Manufacturing or Service?

44. What Makes Services Unique • Inseparability • Intangibility • Perishability • Heterogeneity • Site Location • Labor Intensity • Difficulty In Measuring Quality of Output

45. Output Intangible Tangible Customer contact High Low Uniformity of input Low High Labor content High Low Uniformity of output Low High Measurement of productivity Difficult Easy Opportunity to correct Low High quality problems High Manufacturing vs Service Characteristic Manufacturing Service

46. Scope of Operations Management • Operations Management includes: • Forecasting • Capacity planning • Scheduling • Managing inventories • Assuring quality • Motivating employees • Deciding where to locate facilities • And more . . .

47. Key Decisions of Operations Managers • What What resources/what amounts • When Needed/scheduled/ordered • Where Work to be done • How Designed • Who To do the work

48. System Design – capacity – location – arrangement of departments – product and service planning – acquisition and placement of equipment Decision Making

49. System operation – personnel – inventory – scheduling – project management – quality assurance Decision Making

50. Trends in Operations Management • Ethical behavior • Operations strategy • Working with fewer resources • Cost control and productivity • Quality and process improvement • Increased regulation and product liability • Lean production