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• Operations Management


  The management of systems or processes that create goods and/or provide services
• Operations Management


  • It is one of the functions of management
  • Without operations, there are no goods and services to offer
  • Its role is to transform a company's inputs into finished goods or services
• Goods


  Physical items produced by business organizations, made of raw materials
• Services


  Activities that provide some combination of time, location, form, or psychological value
• Scope of Operations Management

  • Inputs are the company inputs, while the Outputs are goods and services
  • The collective success or failure of a company's operations function has an impact on the ability of a nation to compete with other nations and on the nation's economy
• Finance


  The function responsible for budgeting, and managing cash flow, current assets, and capital investments
• Operations


  The business function that plans, organizes, coordinates, and controls the resources needed to produce a company's goods and services
• Marketing


  The function responsible for sales, generating customer demand, understanding customer wants and needs, and providing insights into what competitors are doing
• What Operations Management includes

  • Designing the product
  • Deciding what resources are needed
  • Arranging schedules, equipment, and facilities
  • Managing inventory
  • Controlling quality
  • Designing the jobs to make the product
  • Designing work methods
• Supply Chain


  A sequence of organizations - their facilities, functions, and activities that are involved in producing and delivering a product or service
• Value-added


  The difference between the cost and inputs and the value or price of outputs
• Efficiency


  Performing activities well and at the lowest possible cost
• Manufacturing Organizations


  • Primarily produces a tangible product (goods) and typically has low customer contact
  • The production of goods that results in a tangible output
• Service Organizations


  • Primarily produced intangible products, such as ideas, assistance, or information, and typically have high customer contact
  • The delivery of service that generally implies an act
• Strategic Decisions


  Decisions that set the direction for the entire company; they are broad in scope and long-term in nature
• Tactical Decisions


  Decisions that are specific and short-term in nature and are bound by strategic decisions
• What Operations Management Decisions Focus On

  • What resources will be needed, and in what amounts
  • When will each resource be needed? When should the work be scheduled? When should materials and other supplies be ordered? When is corrective action needed?
  • Where will the work be done?
  • How will the product or service be designed? How will the work be done (organization, methods, and equipment)? How will resources be allocated?
  • Who will do the work?
• Models


  An abstraction of reality, a simplified representation of something
• Types of Models


  • Physical models: real-life counterparts
  • Schematic models: they have less resemblance to physical reality
  • Mathematical models: the most abstract
• System


  A set of interrelated parts that must work together
• Pareto Phenomenon


  A few factors account for a high percentage of the occurrence of some event(s)
• Industrial Revolution


  • An industry movement that changes production by substituting machine power for labor power
  • Craft production: a system in which highly skilled workers use simple, flexible tools to produce small quantities of customized goods
  • Mass production: a system in which low-skilled workers use specialized machinery to produce high volumes of standardized goods
• Scientific Management


  • An approach to management that focuses on improving output by redesigning jobs and determining acceptable levels of worker output
  • It assumes that workers are motivated only by money and are limited only by their physical ability
  • It is the separation of management and labor
• Human Relations Movement


  • A philosophy based on the recognition that factors other than money can contribute to worker productivity
  • Hawthorne studies: the studies responsible for creating the human relations movement, which focused on giving more consideration to worker's needs
  • Job enlargement: an approach in which workers are given a larger portion of the total task to do
  • Job enrichment: workers are given a greater role in planning
• Management Science


  • A field of study that focuses on the development of quantitative techniques to solve operations problems
• Influence of Japanese Manufacturers

  • Customers Demand Better Quality, Greater Speed, and Lower costs
  • Lean systems: a concept that takes a total system approach to creating efficient operations
  • Just-in-time (JIT): a philosophy designed to achieve high-volume production through elimination of waste and continuous improvement
  • Total Quality Management (TQM): a philosophy that seeks to improve quality by eliminating causes of product defects and by making quality the responsibility of everyone in the organization
  • Reengineering: redesigning a company's processes to increase efficiency, improve quality, and reduce costs
• 1. Business


  The use of electronic technology to facilitate business transactions
• Electronic Commerce (E-Commerce)


  The use of the Internet for conducting business activities, such as communication, business transactions, and data transfer
• Data Analytics


  Applying mathematics and statistics to large volumes of structured and unstructured data to gain unprecedented business insights
• Sustainability


  Using resources in ways that do not harm ecological systems that support human existence
• Ethics


  A standard of behavior that guides how one should act in various situations
• Business Ethics


  Principles of conduct within organizations that guide decision-making and behavior
• Total Quality Management (TQM)


  A philosophy that involves everyone in an organization in a continual effort to improve quality & achieve customer satisfaction
• Quality


  The degree to which the performance of a product or service meets or exceeds customer expectations
• Determinants of Quality


  • Quality of design
  • Quality of conformance
  • Ease of use
  • Service after delivery
• Benefits of Good Quality

  • An enhanced reputation for quality, the ability to command premium prices, an increased market share, greater customer loyalty, lower liability costs, and fewer production or service problems - which yields higher productivity, fewer complaints from customers, lower production costs, and higher profits
• Consequences of Poor Quality

  • Loss of business
  • Liability
  • Productivity
  • Costs
• Usability


  A key concept that describes how easily users can use a product
• Service after delivery - aftersales


  • An enhanced reputation for quality
  • The ability to command premium prices
  • An increased market share
  • Greater customer loyalty
  • Lower liability costs
  • Fewer production or service problems
  • Higher productivity
  • Fewer complaints from customers
  • Lower production costs
  • Higher profits
• Craft production


  Highly skilled workers use simple, flexible tools to produce small quantities of customized goods