1. Operations Management COB 300C Dr. Michael Busing 08-28-02

2. Some Definitions of Operations Management Management of productive resources Design and control of systems responsible for productive use of: –raw materials (or supplies for service operations) –people (direct and indirect workforce) –equipment/facilities (factories or service branches) –information (planning and control systems)

3. Operations Management (COB 300 C)versus Management Science (COB 291) OM is a field of management Management Science is the application of quantitative methods to decision making in all fields OM decisions are made in the context of the firm as a whole -- starting with customers (i.e., the marketplace) and explicitly considering a firm’s corporate strategy.

4. The Production System The production system is the heart of OM. –Uses resources to transform inputs into some desired output.

6. Inputs RMH - patients BW3 - hungry/thirsty customers General Motors - sheet steel, engine parts JMU - high school students Pier One - shoppers Target Distribution Center - stockkeeping units (SKU’s)

7. Transformations RMH - health care procedures BW3 - preparation/service of food/drink General Motors - fabrication and assembly of cars JMU - imparting of knowledge and skills Pier One - filling of orders Target Distribution Center - storage and redistribution

8. Desired Outputs RMH - healthy individuals BW3 - satisfied customers General Motors - high quality cars JMU - educated and employable individuals Pier One - sales to satisfied customers Target Distribution Center - right item at right place at right time.

9. Why Study Operations Management? OM activities are at the core of all business organizations regardless of what business they are in At least 35% of all jobs are in OM related areas –customer service, quality assurance, production planning and control, scheduling, job design, inventory management Other functional areas such as information systems, finance, accounting, human resources, logistics, marketing, purchasing, etc. are all interrelated with OM activities.

10. Operations Management Professional Societies American Production and Inventory Control Society (APICS)American Production and Inventory Control Society (APICS) American Society for Quality (ASQ) National Association of Purchasing Management (NAPM)National Association of Purchasing Management (NAPM)

11. Functions Within Business Organizations Organizations are formed to pursue goals that are achieved more efficiently by the concerted efforts of a group of people than by individuals working alone. Organizations are either profit or nonprofit.

12. Functions Within Business Organizations Three Basic Functions –finance –marketing –production/operations Functions must interact to achieve the goals and objectives of the organization. Success depends not only on the individual functional area, but on the interface.

13. Operations as it Relates to Other Disciplines

14. Functions Within Business Organizations Personnel /Human Resource s

15. OM/Finance Interrelationship Budgeting: Operating performance - standard costs versus actual costs Economic Analysis: Evaluation of various plant/equipment alternatives Funding/Provision of funds: Cash Flow issues - how much/when

16. OM/Marketing Interrelationship Advertising/pricing decisions are made by marketing people. Marketing is closest to customer wants/needs and can communicate these to operations (short and long term requirements). Marketing is in tune with competition.

17. OM/HR Relationship Aggregate Planning –Hiring/Firing Decisions –Undertime/Overtime Issues Workplace Safety Issues Quality/Training Programs Productivity/Motivation Issues

18. Current Event

19. Operations System design versus operation System Design Decisions: involves decisions that relate to system capacity, geographic location of facilities, arrangement of departments and placement of equipment, product and service planning, and acquisition of equipment.

20. Operations System design versus operation System Operation Decisions: management of personnel, inventory planning and control, scheduling, project management, and quality assurance

21. Operations System design versus operation System design essentially determines many of the parameters of system operation. –e.g., cost, space capacities, and quality

22. Differentiation Features of Operations Systems Degree of Standardization (standardized versus customized) - volume versus cost Type of operation (job shop versus assembly line versus flow) Goods versus Services –customer contact, uniformity of input, labor content, uniformity of output, measurement of productivity, quality assurance.