PRODUCTION and OPERATIONS SYSTEMS Management 362 MTSU Management 362

INTRODUCTION PART ONE Chapter One Production and Operations Management Chapter Two Productivity, Competitiveness, and Strategy MTSU Management 362

What does the operations function do? The operations function is responsible for the the creation of goods and services Alternatively, the operations function transforms a set of inputs into a set of outputs The operations function exists in some form in all firms MTSU Management 362

Overlap of Basic Functional areas Marketing Production/ Operations Finance MTSU Management 362

Types of Operations Operations Examples Goods Producing Farming, mining, 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 MTSU Management 362

A Value-Added Model Value added • The difference between the cost of inputs and the value or price of outputs. Value added Inputs Outputs Transformation/ Land Goods Conversion Labor Services process Capital Feedback Control Feedback Feedback MTSU Management 362

The Model Applied to a Food Processor Transformation/Processing Inputs Outputs Raw Vegetables Cleaning Canned vegetables Metal Sheets Making cans Water Cutting Energy Cooking Labor Packing Building Labeling Equipment MTSU Management 362

The Model Applied to a Hospital Transformation/Processing Inputs Outputs Doctors Nurses Staff Building Medical Supplies Equipment Laboratories Examination Healthy patients Surgery Monitoring Medication Therapy MTSU Management 362

Operations Interfaces Within the Organization MTSU Management 362

Operations System Design Decisions conerning capacity location arrangement of work areas product and service planning acquisition and placement of processes MTSU Management 362

Operations System Operation Decisions concerning personnel inventory scheduling project management quality assurance MTSU Management 362

Differentiating Features of Operations/Production Systems Degree of standardization/customization Volume MTSU Management 362

Manufacturing or Service? Goods- Oriented Act- MTSU Management 362

Key Differences Between Service and Manufacturing Operations Characteristic Manufacturing Service Output Tangible Intangible Customer contact Low High Uniformity of input High Low Labor content Low High Uniformity of output High Low Measurement of productivity Easy Difficult Opportunity to correct High Low quality problems High MTSU Management 362

What Does the Manager of the Operations Function Do? Makes and implements decisions regarding the design, operation and control of the operations system Applies analyses and tools to enhance the performance measures for the operations system MTSU Management 362

Operations Management Responsibilities of Operations Management • Planning – Capacity Location Make or buy Layout Projects Scheduling Controlling Inventory Quality • Organizing – Degree of centralization – Subcontracting Products and services • Staffing – Hiring/laying off – Use of Overtime • Directing – Incentive plans – Issuance of work orders – Job assignments MTSU Management 362

Quantitative Approaches to Decision Making Linear programming Queuing techniques Inventory models Project models Statistical models MTSU Management 362

A Systems Approach to Decision Making A system is a set of interrelated parts that must work together The whole is greater than the sum of the parts Suboptimization MTSU Management 362

Establishing Priorities Determining what is critical Pareto phenomenon a vital few things are important in reaching a goal or solving a problem 80/20 rule - 80% of the problems are caused by 20% of the activities How do we identify the vital few? MTSU Management 362

Hiring and firing workers Closing facilities Workers’ rights Ethics Worker safety Product safety Quality The environment The community Hiring and firing workers Closing facilities Workers’ rights MTSU Management 362

Some Significant Events in Operations Management Division of labor Standardized parts Scientific management Motion study Gantt charts Coordinated assembly line Statistical quality control Human relations movement Management science Computer/Information systems MRP CAD/CAM Flexible Manufacturing Systems (FMS) Computer Integrated Manufacturing (CIM) MTSU Management 362

Recent Trends in Operations (1 of 2) Global marketplace Operations strategy Total quality management Flexibility Time reduction Technology Worker involvement MTSU Management 362

Recent Trends in Operations (2 of 2) Reengineering Environmental issues Corporate downsizing Supply-chain management Lean production a system that uses minimal amounts of resources to produce a high volume of high-quality goods with some variety MTSU Management 362

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