1. Operations Management BA-339 R. M
Operations Management BA-339 R.M.Zahrowski Operations and Productivity Chapter 1
Bob Introduce yourself - qualifications and interests - overall, where you are coming from.
2. Have students introduce themselves. each other.
3. Discuss both choice of textbook and development of syllabus.
4. Teams or no teams?

2. What Is Operations Management?
Production is the creation of goods and services
Operations management is the set of activities that creates value in the form of goods and services by transforming inputs into outputs
Two additional points:
1. Any activity is an “operation”
2. No company produces only “goods” - service is a greater or lesser part of any product. (Discuss this in more detail later)

3. Organizational Functions
Marketing
Gets customers
Operations
creates product or service
© 1995 Corel Corp.
Here is the point at which you can add to your discussion of the three business functions. In an effort to encourage student participation, you might allow students to lead the discussion as to the nature of each function, while you lead the discussion as to the relationship of the individual functions to the larger business.
Initiate a class discussion about how these functions expand as the firm grows and how new activities have become important (i.e., MIS and Human Resources)
Finance/Accounting
Obtains funds
Tracks money

4. Organizational Charts
Commercial Bank
Operations
Teller Scheduling
Check Clearing
Transactions processing
Facilities design/layout
Vault operations
Maintenance
Security
Finance
Investments
Real Estate
Accounting
Auditing
Marketing
Loans
Commercial
Industrial
Financial
Personal
Mortgage
Trust Department
Marketing vs. Sales Clarify!

5. What Operations Managers Do
Plan - Organize - Staff - Lead - Control
This is the typical breakdown one finds in many business courses. It may be helpful to the students if you discuss each of these elements in relationship to something you or they have done. Work on a group project, for example, can provide a useful vehicle for the discussion.

6. Ten Critical Decisions
Service, product design……………..
Quality management…………………
Process, capacity design…………..
Location …………….…………………
Layout design ………………………..
Human resources, job design……..
Supply-chain management…………
Inventory management …………….
Scheduling ……………………………
Maintenance ………………………….
Ch. 5
Ch. 6, 6S
Ch. 7, 7S
Ch. 8
Ch. 9
Ch. 10, 10S
Ch. 11,11s
Ch. 12, 14, 16
Ch. 3, 13, 15
Ch. 17
This slide introduces the 10 decision areas of Operations Management. These decision areas form the structure of the text.
You may either go through this list quickly, and hold an enriched discussion using some of the slides that follow; or ask the students to give you examples of specific decisions from each area.
As mentioned before - you may forego looking for precise answers at this point - and simply try to get them thinking and involved.

7. Why Study OM?
OM is one of three major functions (marketing, finance, and operations) of any organization.
We want (and need) to know how goods and services are produced.
We want to understand what operations managers do.
OM is such a costly part of an organization.
One might ask students to consider:
- marketing => deciding what is needed
- finance => securing resources
- operations => doing it!
What are the limitations of this perspective?

8. Why Study OM?
OM is one of three major functions (marketing, finance, and operations) of any organization.
We want (and need) to know how goods and services are produced.
We want to understand what operations managers do.
OM is such a costly part of an organization.
One might ask students to consider:
- marketing => deciding what is needed
- finance => securing resources
- operations => doing it!
What are the limitations of this perspective?

9. Operations Management R. M
Operations Management R.M.Zahrowski Operations Strategy in a Global Environment Chapter 2

10. The Role of Maquiladoras World Trade Organization (WTC)
North American Free Trade Agreement (NAFTA)
European Union (EU)

11. Supply-Chain Management
Sourcing
Vertical integration
Make-or-buy decisions
Partnering

12. Location Decisions Country-related issues Product-related issues
Government policy/political risk
Organizational issues

13. Materials Management Flow of materials
Transportation options and speed
Inventory levels
Packaging
Storage

14. Mission Mission - where are you going?
Organization’s purpose for being
Provides boundaries & focus
Answers ‘What do we provide society?’
© 1995 Corel Corp.
You might ask students to prepare for class by visiting several company web sites, and, for each company: locating the company mission, and printing a copy of the mission to bring to class. The students should also be asked to, if possible, determine the strategy used by the company to achieve its avowed mission. You might even ask that a student finding a mission statement that they believe of special interest, bring a copy of the statement on a transparency.
You might begin the class by asking students why a company’s mission is so important. Does it really convey important information, or is it, as some cynics might claim, simply an expression of wishful thinking?
Among other benefits, the mission provides an “umbrella” under which decisions should be made. This may be especially useful for a global enterprise.
If the students have obtained the mission statements of companies with which they are familiar, you might ask if their perception of the company suggests that it is fulfilling it published mission. If the answer is “No,” ask what suggests otherwise.

15. Mission/Strategy Mission - where you are going
Strategy - how you are going to get there; an action plan
The distinction between mission and strategy probably requires some discussion. The best approach might be to ask students, who have obtained the mission statements of companies with which they are familiar, to discuss their perception of the company strategy. There may also be companies which publish a statement of strategy as well their mission on their web site.

16. Strategy Action plan to achieve mission
Shows how mission will be achieved
Company has a business strategy
Functional areas have strategies
© 1995 Corel Corp.
Here, you might introduce the hierarchical nature of strategies, and, as prelude to subsequent slides, ask students whether they believe it is better to plan from the top down, or bottom up.

17. Process Design Job Shops Mass Customization Assembly line Continuous
Process-focused
Job Shops
(Print shop, emergency
room , machine shop,
fine dining
Repetitive (modular)
focus
Assembly line
(Cars, appliances, TVs,
fast-food restaurants)
Product-focused
Continuous
(steel, beer, paper, bread, institutional kitchen)
Mass Customization
Customization at high Volume
(Dell Computer’s PC)
Low Moderate High
Volume
High
Moderate
Low
Variety of Products
This slide can be used to introduce the process design options, and help students begin to understand the conditions of volume and variety under which they are most useful.
Student should be asked to provide and discuss examples.

18. SWOT Analysis Process Environmental Analysis
Determine Corporate Mission
This slide can be used to frame a discussion of SWOT analysis. Students should be asked what types of questions might be appropriate at each stage.
Form a Strategy

19. Operations Management Supply-Chain Management Chapter 11

20. Supply-Chain Management
Planning, organizing, directing, & controlling flows of materials
Begins with raw materials
Continues through internal operations
Ends with distribution of finished goods
Involves everyone in supply-chain
Example: Your supplier’s supplier
Objective: Maximize value & lower waste
Probably the most important point to be made here is the encompassing nature of supply-chain management - from suppliers’ suppliers through internal production through distribution to the customer.

21. Make/Buy Considerations
Reasons for Making Reasons for Buying
Maintain core competencies and protect personnel from layoff
Lower production cost
Unsuitable suppliers
Assure adequate supply
Utilize surplus labor and make a marginal contribution
Frees management to deal with its primary business
Lower acquisition cost
Preserve supplier commitment
Obtain technical or management ability
Inadequate capacity
Ask students to consider the product characteristics which might cause a company to choose one or the other of the make/buy options.

22. Supply-Chain Strategies
Plans to help achieve company mission
Affect long-term competitive position
Strategic options
Many suppliers
Few suppliers
Keiretsu network
Vertical integration
Virtual company
The strategic options listed are expanded upon in later slides.
Plan

23. Supply-Chain Strategies
Negotiate with many suppliers; play one supplier against another
Develop long-term “partnering” arrangements with a few suppliers who will work with you to satisfy the end customer
Vertically integrate; buy the actual supplier
Keiretsu - have your suppliers become part of a company coalition
Create a virtual company that uses suppliers on an as-needed basis.
Subsequent slides expand upon these strategies.

24. Operations Management Inventory Management Chapter 12
Use Dells Case study at the end of the chapter

25. What is Inventory? Stock of materials Stored capacity Examples
While most students recognize inventory as a “stock of material,” the notion of inventory as a “stored capacity” probably merits explicit discussion. Stored Capacity - Think of like fuel!

26. The Material Flow Cycle
Wait
Time
Move
Time
Queue
Time
Setup
Time
Run
Time
Other
Input
Output
Cycle Time
Run time: Job is at machine and being worked on
Setup time: Job is at the work station, and the work station is being "setup."
Queue time: Job is where it should be, but is not being processed because other work precedes it.
Move time: The time a job spends in transit
Wait time: When one process is finished, but the job is waiting to be moved to the next work area.
Other: "Just-in-case" inventory.
This slide provides a more detailed view of the material flow cycle. Students might be asked to comment on the impact of each element on the overall time. Questions such as:
- why do we need these times? How do they relate to you companies?
- how can they be reduced?
- would we wish to eliminate these elements entirely?
might be helpful.

27. ABC Analysis Divides on-hand inventory into 3 classes
A class, B class, C class
Basis is usually annual $ volume
$ volume = Annual demand x Unit cost
Policies based on ABC analysis
Develop class A suppliers more
Give tighter physical control of A items
Forecast A items more carefully
It might be helpful here to discuss some of the differences in the ways we would manage items in the three different levels. What actions would we actually take in managing A versus in managing C?

28. Advantages of Cycle Counting
Eliminates shutdown and interruption of production necessary for annual physical inventories
Eliminates annual inventory adjustments
Provides trained personnel to audit the accuracy of inventory
Allows the cause of errors to be identified and remedial action to be taken
Maintains accurate inventory records
An element to stress about cycle counting is that it usually identifies problems and enables action to be taken in a reasonable amount of time.

29. Operations Management Aggregate Planning = Aggregate Scheduling Chapter 13

30. Aggregate Planning Requires
Logical overall unit for measuring sales and outputs
Forecast of demand for intermediate planning period in these aggregate units
Method for determining costs
Model that combines forecasts and costs so that planning decisions can be made
It may be helpful to begin this chapter with a discussion of the various planning needs of an organization - from strategic planning down to day-to-day/hour-to-hour scheduling and dispatching. Identify the level of decision making (strategic, tactical, operational), and provide examples of the time periods and level of detail required - i.e., step through the various levels of disaggregation.
When you get to this slide, you may want to spend a little extra time discussing how one develops a logical overall unit for measuring sales and output. Is the unit of dollars always the best? Could required units of capacity or something similar be used?

31. Planning Setting goals & objectives Determining steps to achieve goals
Example: Meet demand within the limits of available resources at the least cost
Determining steps to achieve goals
Example: Hire more workers
Setting start & completion dates
Example: Begin hiring in Jan.; finish, Mar.
Assigning responsibility
Of these steps, the most difficult to implement seems to be the goal setting. Discussion of setting goals and objectives in a practical case would probably be helpful to students.

32. Planning Tasks and Responsibilities

33. Operations Management Material Requirements Planning (MRP) & ERP Chapter 14

34. Inputs to the Production Plan
Aggregate Production Plan
Marketing
Customer
Demand
Engineering
Design
Completion
Management
Return on
Investment
Capital
Human
Resources
Manpower
Planning
Procurement
Supplier
Performance
Finance
Cash Flow
Production
Capacity
Inventory
Inputs

35. Material Requirements Planning (MRP)
Manufacturing computer information system
Determines quantity & timing of dependent demand items
A point to stress here is that while MRP is heavily computer-based, it is more than simply a computer program. Involves inouts form all areas… Suppliers, material coding, etc..
© 1995 Corel Corp.

36. MRP Requirements Computer system Mainly discrete products
Accurate bill-of-material
Accurate inventory status
99% inventory accuracy
Stable lead times (calculated)
It is important to emphasize the need for accurate records - both bill-of-material and inventory. And stability is not flat, but has to be forecasted accurately, ie: KNOWN lead times.
© T/Maker Co.

37. Structure of the MRP System
Master Production
Schedule
BOM
Lead Times
(Item Master File)
Inventory Data
Purchasing data
MRP planning programs (computer and software)
MRP by Period Report
MRP by date report
Planned order report
Purchase advice
Exception report
Emphasize that this slide illustrates the overall technological structure of MRP - people and process are also extremely important in its actual success. Bills of Material=how material is grouped (Parent - Child relationships)

38. MRP in Services
Can be used when demand for service or service items is directly related to or derived from demand for other services
restaurant - rolls required for each meal
hospitals - implements for surgery
etc.
Have the students consider what modifications may be necessary for MRP to be valuable in services.

39. Operations Management Short-Term Scheduling Chapter 15

40. Forward and Backward Scheduling
Forward scheduling: begins the schedule as soon as the requirements are known
jobs performed to customer order
schedule can be accomplished even if due date is missed
often causes buildup of WIP
Backward scheduling: begins with the due date of the final operation; schedules jobs in reverse order
used in many manufacturing environments, catering, scheduling surgery
Students should be asked to consider how, using either process, they would modify the schedule when (a) an order is cancelled, (b) a priority, rush order is accepted, or (c) a delay is encountered.

41. The Goals of Short-Term Scheduling
Minimize completion time
Maximize utilization (make effective use of personnel and equipment)
Minimize WIP inventory (keep inventory levels low)
Minimize customer wait time
While we would like to minimize customer wait time, an alternate goal might be to make customer wait time consistent - we could always ask them to come later.

42. Priority Rules for Dispatching Jobs
First come, first served
The first job to arrive at a work center is processed first
Earliest due date
The job with the earliest due date is processed first
Shortest processing time
The job with the shortest processing time is processed first
Longest processing time
The job with the longest processing time is processed first
Critical ratio
The ratio of time remaining to required work time remaining is calculated, and jobs are scheduled in order of increasing ratio.
FCFS
EDD
SPT
LPT CR
Key TERMS!

43. Theory of Constraints A Five Step Process
Identify the constraints
Develop a plan for overcoming the identified constraints
Focus resources on accomplishing the constraints identified in step 2
Reduce the effects of the constraints by off-loading work or by expanding capability
Once one set of constraints is overcome, return to the first step and identify new constraints

44. Bottleneck Work Centers
Bottleneck work centers have less capacity than prior or following work centers
They limit production output
© 1995 Corel Corp.

45. Techniques for Dealing With Bottlenecks
Increase the capacity of the constraint
Ensure well-trained and cross-trained employees are available to operate and maintain the work center causing the constraint
Develop alternate routings, processing procedures, or subcontractors
Move inspections and tests to a position just before the constraint
Schedule throughput to match the capacity of the bottleneck

46. Operations Management Just-in-Time and Lean Production Systems Chapter 16

47. What is Just-in-Time?
Management philosophy of continuous and forced problem solving
Supplies and components are ‘pulled’ through system to arrive where they are needed when they are needed.
It is good at this point to emphasize the notion that JIT is a philosophy not simply delivery of small lots at specific times. It is also helpful to emphasize that JIT requires an ongoing effort.

48. Lean Production
Lean Production supplies customers with exactly what the customer wants, when the customer wants, without waste, through continuous improvement.

49. Types of Waste Overproduction Waiting Transportation
Inefficient processing
Inventory
Unnecessary motion
Product defects
You should ask students to consider why such waste occurs.

50. Just-in-Time Success Factors
Suppliers
Preventive Maintenance
Layout
Inventory
Scheduling
Quality
Employee Empowerment
JIT
This side outlines the essential features, more detail is provided in subsequent slides.

51. Employee Empowerment
Get employees involved in product & process improvements
Employees know job best!
JIT requires
Empowerment
Cross-training
Training support
Few job classifications
© 1995 Corel Corp.
It is important to point out to students that Employee Empowerment is one of the Critical Success Factors of JIT - perhaps the most important one.

52. Operations Management Maintenance and Reliability Chapter 17

53. Maintenance Management
All activities involved in keeping a system’s equipment working
Objective: Maintain system capability & minimize total costs
A major point to be emphasized here is the maintenance should attempt to minimize total cost - not just maintenance cost.
A second point is that total cost should be what some call “whole body cost,” and include:
- unit purchase cost
- cost of training personnel to use the unit
- cost of buying a replacement at the end of this unit’s lifetime
- cost of disposing of the old unit
- cost of maintaining the unit during its useful lifetime
- cost of upgrading the unit during its lifetime
- etc.
© 1995 Corel Corp.

54. Maintenance Benefits Lower operating costs Continuous improvement
Faster, more dependable throughput
Higher productivity
Improved quality
Improved capacity
Reduced inventory
Maintenance
Examples demonstrating how each of the benefits is incurred would be worthwhile.

55. Types of Maintenance Preventive Breakdown
Routine inspection & servicing
Prevents failures
Bases for doing
Time: Every day
Usage: Every 300 pieces
Inspection: Control chart deviations
Non-routine inspection & servicing
Remedial
Basis for doing
Equipment failure
Choose several items or processes, and ask students to decide upon what basis they should be maintained. Ask them also to identify some of the costs of an inappropriate maintenance schedule.

56. A Computerized Maintenance System

57. A Key To Success
High utilization of facilities, tight scheduling, low inventory and consistent quality demand reliability - total preventive maintenance is the key to reliability.

58. Best wishes on your final
Best wishes on your final! More than that – I wish you success in your careers!
Chapters
1&2
11-17
Be sure to bring!
Blue Book
Scan-tron
Short form