CHAPTER 1

1. CHAPTER 1 Introduction to Operations Management

2. What is Operations Management?

3. 3 Basic Functions of Business Organizations Produce goods or services Ensure and allocating financial resources Assess consumer needs, and sell / promote goods or services

4. Outputs Inputs Operations: A Transformation Process Feedback • Workers • Managers • Equipment • Facility • Materials • Land • Energy • Information Performance • Goods • Services Operations and processes Lead timeThe time between ordering a good or service and receiving it.

5. Operations Management The management of systems or processes that create goods and/or provide services. • Planning • Coordinating • Executing

6. Operations = Transformation Process • Inputs • 5 Ms Management, Methods, Material, Machines, Maintenance • Also: Personnel , information & energy • Transformation/conversion process Cutting, machining, storing, transporting, investing, analyzing • Output Goods/services Value-addedThe difference between the cost of inputs and the value or price of outputs.

7. Example: Food Processor Table 1.2 Outputs Inputs Processing Raw Vegetables Metal Sheets Water Energy Labor Building Equipment Cleaning Making cans Cutting Cooking Packing Labeling Canned vegetables Consumer Feedback

8. Example: Hospital Table 1.2 Outputs Inputs Processing Doctors, nurses Hospital Medical Supplies Equipment Laboratories Examination Surgery Monitoring Medication Therapy Healthy patients Improvement of patients health condition

9. Example: BA 3352 Table 1.2 Outputs Inputs Processing • Knowledge • Text Book • Lecture Notes • Handouts • Course CD • …… Lecturing Tutoring Assignment Exam Future operations managers Teaching Evaluation

10. Manufacture or Service Operations?

11. Tangible Act Manufacturing or Service? Production of goods Delivery of services

12. Goods-Service Continuum Figure 1.3 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

13. Manufacturing vs. Service Table 1.3 Characteristic Manufacturing Service Output Uniformity of output Uniformity (seragam) of input Labor content Measurement of productivity Customer contact Opportunity to correct quality problems before delivery Evaluation Patentable Tangible High High Low Easy Low High Easy Usually Intangible Low Low High Difficult High Low Difficult Not Usually

14. Manufacturing vs. Service Employment Service Manufacturing

15. What does Operations Manager Do?

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

17. Example: Airline Company • Forecasting: Weather, landing conditions, seat demands for flights. • Capacity Planning: How many number of planes in each route? • Scheduling: Scheduling of planes for flights and for routine maintenance, scheduling of pilots and flights attendants. • Quality: Quality of the services, Safety.

18. Example: Automobile Factory • Forecasting: Demands for cars. • Capacity Planning : Number of shifts, level of workforce. • Inventory: Various component, parts. • Scheduling: Scheduling of various types of cars, Scheduling of workforce. • Quality: Quality of products, services.

19. Operations Examples Goods Producing Farming, construction, manufacturing, power generation Storage/Transportation Warehousing, trucking, mail service, moving, taxis, buses, hotels, airlines Exchange Retailing, wholesaling, banking, renting, leasing, library, loans Entertainment Films, radio and television, concerts, recording Communication Newspapers, radio and television newscasts, telephone, satellites Types of Operations Table 1.4

20. Costs Productivity Quality – – – Responsibilities of Operations Manager Table 1.6 Planning Organizing Capacity – Degree of centralization – Location – Process selection – Products & services – Staffing Make or buy – Hiring/laying off – Layout – Use of Overtime – Projects – Directing Scheduling – Incentive plans – Controlling/Improving Issuance of work orders – Inventory – Job assignments –

21. Why is Operations Management Important?

22. Reasons to Study Operations Management • Operations Management activities are at the core of all business organizations. • 50% or more of the jobs in industry are operations management-related: • Customer Service • Quality Assurance • Production Planning • Scheduling • Inventory Management • Logistics • All Other Functional Areas are interrelated with Operations Management

23. Capital Markets, Stockholders Finance Suppliers Operations Purchasing Personnel Workers Marketing Customers Operations as Technical Core

24. Operations Marketing Finance The Overlapping of Three Major Functions Figure 1.5 • Competitor • Customer preference • Trend of technology • …… • Judgment of manufacturability • Fulfillment lead time • Budgeting • Economic analysis of investment proposals • Provision of funds • …… • Financial indicators

25. Industrial Engineering Maintenance Distribution Purchasing Public Relations Operations Legal Personnel MIS Accounting Interfaces with Other Supporting Functions • Purchasing • Accounting • Personnel/Human resources • Public relations • Maintenance • Industrial engineering • Distribution

26. What are the Operational Decisions?

27. 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

28. System Design • System capacity • Location of facilities • Arrangement of departments • Product and services planning • Acquisition and placement of equipment

29. System Operations involved.. • Management of personnel • Inventory planning and control • Scheduling • Project management • Quality assurance