1. Basic Concepts of Operations Management

2. Meanings of Operations Management Narrow meaning ： OM can be viewed as how to plan and control production tasks. Broad meaning ： OM is to closely and collaboratively integrate all business functions in a firm. The purpose is to effectively utilize capital, workforce, equipment, raw materials, energy, information, and so on in an economical way so that the firm can provide customers with satisfactory goods and services.

3. The Contents of Narrow Meaning of OM Rough-Cut Capacity Estimation Production Performance Evaluation Adjustment or Modification Infeasible Buy Order Processing Production Coordination Loading Analysis Prepare Master Production Schedule (MPS) Prepare Outsourcing Schedule Calculate Materials Demand Production Scheduling Capacity Requirement Planning Production Document Preparation Routing Prepare Procurement Schedule Dispatching Follow-up Forecasting Make

4. Main Tasks of OM Order Processing Production & Sale Coordination Prepare Master Production Schedule Prepare Outsourcing Schedule Calculate Materials Demand Routing Production Scheduling Dispatching Production Progress Control and Follow-up Production Performance Evaluation

5. A Framework of Broad Meaning of OM Broad Meaning of OM Production & Operations Management Productivity Competitive Advantage Comparison between Manufacturing and Service Industries Operations Strategy & Competitiveness Total Quality Management Theory Comparison, Planning, Controlling, and Improvement Forecasting Capacity Planning Process Design Work Design and Measurement & Learning Curve Production Planning Location Selection Material Requirements Planning (MRP) Qualitative & Quantitative Approaches Strategic Capacity Planning Factors and measurement Methods Definition & Classification Activities, Strategy & Process, And Master Production Schedule MRP Lot Sizing

6. Broad Meaning of OM Inventory System Dependent Demand Inventory System Independent Demand Inventory System Just-in-Time System Apply JIT to Manufacturing Processes Scheduling Scheduling Based on the Best Appropriate Solution Project Management Organization Structure Matrix Organization Functional Organization Pure-type Organization Planning and Control Business Process Reengineering and World Class Manufacturing Product Design and Process Selection Materials Management and Inventory System Inventory Control and Economic Order Quantity Purchase and Vendor Management Materials Management Aggregate Planning Aggregate production Plan Hierarchical Production Plan Synchronous Manufacturing System Performance Measurements

7. Main Process of OM Forecasting DesignRouting SchedulingDispatchingFollow-up

8. Value-Added Process The operations function involves the conversion of inputs into outputs Inputs Land Labor Capital Transformation/ Conversion process Outputs Goods Services Control Feedback Value added

9. Innovations in Operations Management and from Bayraktar et al. (2007)

10. A General Computerized OM System Order and Customer Management Subsystem Quotation Subsystem Production Scheduling Subsystem Shop Floor Management Subsystem Outsourcing Subsystem Consignment & Authorized Selling Subsystem Selling Subsystem Materials Demand Management Subsystem Procurement Subsystem Warehousing Subsystem

11. A General Computerized OM System (continued) Product Structure Management Subsystem Cost Analysis & Management Subsystem Personnel & Salary Management Subsystem Financial & Accounting Management Subsystem Assets Management Subsystem Work-in-Process Management Subsystem Finished Goods Management Subsystem Shipping and Account Receivable Subsystem Account Payable and Vendor Management Subsystem Physical Count Subsystem

12. ERP: Cross-Functional Integration through Data Sharing Human Resources  Human-Resources accounting  Payroll  Personnel planning  Travel expenses Sales and Marketing  Order management  Pricing  Sales management  Sales planning An ERP system integrates data across functions in the firm. This list shows some of the many functions supported by SAP’s R/3 package.

13. ERP: Cross-Functional Integration through Data Sharing (conti.)  Accounts receivable and playable  Asset accounting  Cash management and forecasting  Cost-element and cost- centered accounting  Executive information system  Financial consolidation  General ledger  Product-cost accounting  Profitability analysis  Profit-center accounting  Standard and period- related costing Financial System

14. ERP: Cross-Functional Integration through Data Sharing (conti.)  Inventory management  Material requirements planning  Materials management  Plant management  Production planning  Project management  Purchasing  Quality management  Routing management  Shipping  Vendor evaluation Operations and Logistics

15. Efficiency V.S. Effectiveness Efficiency: getting the most output from the least amount of inputs. It is referred to as “doing things right!” Effectiveness: “doing the right things ！ ” —that is, those work activities will help the organization reach its goals. Work Smarter, Not Only Harder. Differentiation: “doing the different things ！ ”

16. Goods-service Continuum Automobile assembly, steel making Home remodeling, retail sales Automobile Repair, fast food Computer repair, restaurant meal Song writing, software development GoodsService Surgery, teaching

17. Key Differences 1. Customer contact 2. Uniformity of input 3. Labor content of jobs 4. Uniformity of output 5. Measurement of productivity 6. Production and delivery 7. Quality assurance 8. Amount of inventory 9. Evaluation of work 10. Ability to patent design

18. Goods vs. Service CharacteristicGoodsService Customer contactLowHigh Uniformity of inputHighLow Labor contentLowHigh Uniformity of outputHighLow OutputTangibleIntangible Measurement of productivityEasyDifficult Opportunity to correct problemsHighLow InventoryMuchLittle EvaluationEasierDifficult PatentableUsuallyNot usual

19. Characteristics of Service Industry Service Industry emphasizes intangible services physical productsintangible services service package

20. Characteristics of Service Industry （ continued ） Intangible Perishable (i.e., cannot be stored) Heterogeneity Service provided and consumption occur concurrently Labor intensive, but automation can be used (e.g., an ATM of a bank and slot machines of a seller) The layout of an outlet includes the front display room and the back logistics space Use multi-site operations or multiple points of sales to reach economies of scale

21. Food Processor InputsProcessing Outputs Raw VegetablesCleaning Canned vegetables Metal SheetsMaking cans WaterCutting EnergyCooking LaborPacking BuildingLabeling Equipment

22. Hospital Process InputsProcessingOutputs Doctors, nursesExaminationHealthy patients HospitalSurgery Medical SuppliesMonitoring EquipmentMedication LaboratoriesTherapy

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

24. Types of Operations OperationsExamples Goods ProducingFarming, mining, construction, manufacturing, power generation Storage/TransportationWarehousing, trucking, mail service, moving, taxis, buses, hotels, airlines ExchangeRetailing, wholesaling, banking, renting, leasing, library, loans EntertainmentFilms, radio and television, concerts, recording CommunicationNewspapers, radio and television newscasts, telephone, satellites

25. Operations Management Decision Making Models Quantitative approaches (e.g., inventory models, project models, and statistical models) Analysis of trade-offs Systems approach Establishing priorities Ethics

26. Operations Interfaces Public Relations Accounting Industrial Engineering Operations Maintenance Personnel Purchasing Distribution MIS Legal

27. Evolution of Management Theories YearType of theory FocusFields or representatives Before 1910 Traditional theory God1.Rome Catholicism 2.Sun Zu’s War Law 3.Venetian Military Factory Industrial Revolution Classical theory Thing 1.Taylor － Scientific Management 2.Fayol － Administrative Management 3.Gilbreth － Time ＆ Motion Study 4.Weber － Bureaucracy

28. Evolution of Management Theories （ continued ） YearTheoryFocusFields or representatives 1930 ~ 1950 Behavioral theory Peopl e 1.Munsterberg － Industrial Psychology 2.Mayo － Hawthorn Experiments 3.McGregor － X ＆ Y theories 4.Herzberg － Two factors 5.Maslow － Hierarchy theory of motivation 1950 ~ System theory Syste m 1.Operations Research （ OR ） 2.Management Science （ MS ）

29. Evolution of Management Theories （ continued ） YearTheoryFocusFields or representatives 1970~Contingency theory Situation 1.Burns ＆ Stalker 2.Lawrence ＆ Lorsch 3.Wood-Ward 1980~ Ouchi ’s Z theory Integration ＆ incorporation 1980~Japanese Managemen t Practices Team work spirit 1.JIT 2.Suggestion system 3.QCC

30. Characteristics of Japanese Production Management Team work Thorough training and indoctrination for all employees Lifetime employment Consensus decision making Open communication  Management by wandering around: a technique by which managers discuss problems and solve them with subordinates while visiting subordinates in their work area.

31. Characteristics of Japanese Production Management (continued) Concern for cleanliness(5S) Employee involvement (participation) Waste abhorrence Close relationships with government Associated firms within a community of interests (i.e., a collective security system) through quasi-integration.

32. Evolution of Production Craft Production Mass Production Custom-made Production Lean Production Agile Manufacturing

33. What is Lean Production? Lean is about doing more with less: less time, inventory, space, labor, and money. Lean manufacturing (also known as the Toyota Production System )is, in its most basic form, the systematic elimination of waste – overproduction, waiting, transportation, inventory, motion, over- processing, defective units – and the implementation of the concepts of continuous flow and customer pull.

34. What is Lean Production? (conti.) Five areas drive lean manufacturing /production: Cost Quality Delivery Safety, and Morale. Just as mass production is recognized as the production system of the 20th century, lean production is viewed as the production system of the 21st century.

35. Lean Production Basically, Lean Production can be divided into four categories and ten topics ： Add Nothing But Value 1.Eliminate Waste 2.Minimize Paperwork 3.Focus Testing Center On Those Who Add Value 4.Empower Those Who Add Value 5.Create a Learning Environment

36. Lean Production （ continued ） Pull Value From Customers 6. Pull Value From Customers 7.Decide As Late As Possible 8.Implement In Small Increments Optimize The Value Stream 9.Maximize Business Value 10.Optimize Across Organizations The benefits of introducing Lean Production are the saving of space, elimination of transshipping warehouses, reduction of stock, shortening of delivery times, and so on.

37. Types of Production Make to Stock (MTS ）  Production management procedure is ： Design→Scheduling→Producing→Warehousing→Order taking→Delivery  MTS is suitable to mass production Make to Order (MTO ）  Production management procedure is ： Order taking→Design→Scheduling→Producing→Delivery  MTO is suitable to producing diversified, small quantity, and less standardized goods Assemble to Order (ATO ） Use postponement or delayed differentiation to do the final assembly job when a firm receives customer orders or customers confirm the specifications ，

38. The Make-to-Stock System Sales Forecasts Inventory Control Department Is Production Needed? Finished Goods Warehouse Ship Orders to Customer NO Inventory Records YES Create Production Order #5555 Schedule Order #5555 for Production Customer Orders Produce Order #5555 Order Materials from Suppliers Receive Materials from Suppliers

39. The Make-to-Order System (See Gaither 1996 pp.133-134) Production Planning and Control Department Customer Orders Create Customer Order #9999 Do Product Designs Exist? Do Processing Plans Exist? Schedule Order #9999 for Production Design Product Develop Processing Plan and Routing Notify Customer Of Promised Delivery Date Order Materials from Suppliers Receive Materials from Suppliers Produced Order #9999 For Production Ship Order #9999 to Customer Yes No Yes