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OPERATION/PRODUCTION The processes and methods used to transform tangible inputs (raw materials, semi-finished goods, subassemblies) and intangible inputs (ideas, information, knowledge) into goods or services. Resources are used in this process to create an output that is suitable for use or has exchange value. methodstangibleraw materialssemi-finished goods subassembliesintangibleideasinformationknowledge goodsservicesResourcesprocesscreateoutputexchange valuemethodstangibleraw materialssemi-finished goods subassembliesintangibleideasinformationknowledge goodsservicesResourcesprocesscreateoutputexchange value
OPERATIONS MANAGEMENT DEFINED Operations management is defined as the process of designing, operating, and controlling a productive system capable of transforming physical resources and human talent into needed goods and services.
THE PRODUCTION SYSTEM AND ITS ENVIRONMENT
innovation The process of translating an idea or invention into a good or service that creates value or for which customers will pay. To be called an innovation, an idea must be replicable at an economical cost and must satisfy a specific need. Innovation involves deliberate application of information, imagination and initiative in deriving greater or different values from resources, and includes all processes by which new ideas are generated and converted into useful products. In business, innovation often results when ideas are applied by the company in order to further satisfy the needs and expectations of the customers. In a social context, innovation helps create new methods for alliance creation, joint venturing, flexible work hours, and creation... processideainventionservicecreatesvaluecustomerspay economicalcostneedinformationinitiativevalues resourcesideasproducts businessresultscompanyorderneeds expectationscontextcreatemethodsallianceflexible workprocessideainventionservicecreatesvaluecustomerspay economicalcostneedinformationinitiativevalues resourcesideasproducts businessresultscompanyorderneeds expectationscontextcreatemethodsallianceflexible work
Examples of Conversion Process Input-Output in a Dental Clinic Input-Output in a fast-food Shop Input: Patient Through put in Conversion process: Patient Output: Patient receiving Medical service Input: Bread, meat, mayonnaise Through put in Conversion process: Items being cooked Output: Burgers
Operations Systems Operations systems for a Department store Random fluctuations: Late deliveries, Recessions, labor turnover Conversion process Feedback: inventory levels, labor efficiency, sales volume Outputs: Serviced customer with desired merchandise Inputs: Land, Labor, building, equipment, merchandise, store managers
Operations Systems Operations systems for a farm Feedback: observation of soil and crop conditions, prices received Inputs: Land, farmer labor, building, equipment, tractors, plows, etc. Outputs: Grain, beef, milk, etc. Random fluctuations: Weather, inflation, govt. controls, equipment breakdown Conversion process
PRODUCT Products or things are outputs converted from inputs that satisfy consumer needs & offers benefits to customers in forms of financial, medical, legal, educational, etc.Products or things are outputs converted from inputs that satisfy consumer needs & offers benefits to customers in forms of financial, medical, legal, educational, etc. A product can be either a good (i.e., a physical object) or it may be a service (i.e., an intangible product).A product can be either a good (i.e., a physical object) or it may be a service (i.e., an intangible product). In operational terms, goods are produced/ manufactured and services are generated.In operational terms, goods are produced/ manufactured and services are generated.
Characteristic Differences between Goods & Services CharacteristicsGoodsServices 1.Output TangibleIntangible 2.Customer contact LowHigh 3.Uniformity of input HighLow 4.Labor content LowHigh 5.Measurement of productivity EasyDifficult 6.to correct quality problems HighLow 7.Input variability LowerGreater 8.Perishable Character LessMore
Periodic Selecting Involves the selection of products, processes, equipment, work force Designing Involves the design of products, processes, equipment, jobs, methods & wage payment, operating & control system Updating Involves the revision of the productive system in light of new products and process, technological breakthroughs, shifts in demand, new managerial techniques, research findings, failures in the existing products, processes or operating and control systems OPERATIONS MANAGEMENT ACTIVITIES Continual Operating– Controlling Is concerned with setting production levels, scheduling production and work force, inventory management and quality assurance
Process Technology 1.Job shop technology is a process technology suitable for a variety of custom-designed products in small volume, e.g., Consulting firms. 2.Batch technology is a process technology suitable for a variety of products in varying volumes, e.g., Bakery. 3.Assembly line is a process technology suitable for a narrow range of standardized products in high volumes, e.g., Ready made garments manufacturing. 4.Continuous flow technology is a process technology suitable for producing a continuous flow of products, e.g., Beverage. 5.Project technology is a unique & not repetitious activity with a well defined objective that cuts across many organizational and functional lines involving cost & time, e.g., Jamuna Bridge project.
Product Life Cycle
Manufacturing Cost/ unit Job Shop Batch Technology Continuous flow Assembly Line Start up Rapid Maturation Commodity G rowth Time → Figure: Process Costing
IMPORTANT FEATURES OF DIFFERENT STAGES IN THE PRODUCT LIFE CYCLE StagesR&DIntroductionGrowthMaturityDecline Basic StrategiesInnovateInfiltrateAdvanceDefendWithdraw Product VarietyGreat Variety Increasing standardization Emergence of a ‘dominant design’ High standardization, ‘commodity characteristics’ Product Volume-Low VolumeIncreasing VolumeHigh Volume Form of Competition -Product Characteristics Product Quality & Availability Price & DependabilityPrice Strategic Concerns 1. R&D for new products & services 2. Forecast sales & key trends 1. Plan financing for negative cash flow period 2. Scale up production & marketing operations 1. R&D competitive innovations for present products 2. Seek economies of scale in production 1. Cut costs in production & marketing to fight declining profit 2. Consider extending product life cycle via reintroduction or product update 1. Scale down production & marketing 2. Trim inventories
Product Design & Development Sequence Key Activities StepsKey Outputs Search for consumer needs Screening of alternatives Idea generation Selection & ranking of best ideas Market analysis Economic analysis General feasibility Product selection Choice of specific product features Preliminary design Evaluation of alternative designs with regard to reliability, maintainability, & service life Selection of best design Development & testing of process compatibility& simulation studies Final design Final specifications in the form of assembly drawings, processing formulas, procedure statements, etc. Facilities existNew facilities required Process selection Downstream production decisions i/c: Capacity planning Production planning Scheduling Evaluation of alternative technologies & methods Major & minor technological choice Choice of specific equipment & process flow
PRODUCT SCREENING TECHNIQUES PerformanceFeaturesRelativeWeightRatingFactorScore VeryGood(40)Good(30)Fair(20)Poor(10)VeryPoor(0) Sales0.20x8 Competition0.10x4 Patent protection 0.10x1 Technical opportunity 0.15x4.5 Materials availability 0.15x6 Effect on present product 0.10x3 Labor availability 0.15x4.5 Value added 0.05x2 Total1.0033 A. PRODUCT EVALUATION SHEET
PRODUCT SCREENING TECHNIQUES (Cont.) B. PROJECT VALUE INDEX (PVI) Where PVI: Project Value Index CTS: Chances for technical success on an arbitrary rating scale, say 0 to 10 CCS: Chances for commercial success on an arbitrary rating scale, say 0 to 10 AV: Annual volume (total sales of product in units) P: Profit in dollars per unit (i.e., price minus cost) L: Life of products (in years) TPC: Total Project Cost
HISTORICAL DEVELOPMENT OF OPERATIONS MANAGEMENT DateContributionContributor1776 Specialization of labor in manufacturing Adam Smith 1799 Interchangeable parts, cost accounting Eli Whitney & others 1832 Division of labor by skill; assignment of jobs by skill; basics of time study Charles Babbage 1900 Scientific management; time study and work study developed; dividing, planning and doing of work Frederick W. Taylor 1900 Motion study of jobs Frank B. Gilbreth 1901 Scheduling techniques for employees, machines, jobs in manufacturing Henry L. Gantt 1915 Economic lot sizes for inventory control F. W. Harris 1927 Human relations; the Hawthorne studies Elton Mayo 1931 Statistical inference applied to product quality; quality control charts Walter A. Shewart 1935 Statistical sampling applied to quality control; inspection sampling plans H.F. Dodge & H.G. Romig 1940 Operations research applications in World War II P.M.S. Blacket & others 1946 Digital computer John Mauchly & J.P. Eckert 1947 Linear programming George B. Dantzig, William Orchard- Hays, & others 1950 Mathematical programming, nonlinear and stochastic processes A. Charnes, W.W. Cooper, H. Raiffa & others 1951 Commercial digital computer; large-scale computations available Sperry Univac 1960 Organizational behavior; continued study of people at work L. Cummings, L. Porter & others 1970 Integrating operations into overall strategy and policy W. Skinner 1970 Computer applications to manufacturing, scheduling, and control, material requirements planning (MRP) J. Orlicky & O. Wright 1980 Quality and productivity applications from Japan; robotics, computer-aided design and manufacturing (CAD/CAM) W.E. Deming & J. Juran 1990 Time based competition and information highway Numerous
ETHICS ETHICS The basic concepts and fundamental principles of decent human conduct. It includes study of universal values such as the essential equality of all men and women, human or natural rights, obedience to the law of land, concern for health and safety and, increasingly, also for the natural environment.The basic concepts and fundamental principles of decent human conduct. It includes study of universal values such as the essential equality of all men and women, human or natural rights, obedience to the law of land, concern for health and safety and, increasingly, also for the natural environment.
MORALITY Conformance to a recognized code, doctrine, or system of rules of what is right or wrong and to behave accordingly. No system of morality is accepted as universal, and the answers to the question "What is morality?" differ sharply from place to place, group to group, and time to time. For some it means conscious and deliberate effort in guiding one's conduct by reason based on fairness and religious beliefs. For others it is, in the words of the UK mathematician and philosopher Alfred North Whitehead (1861-1947), "... what the majority then and there happen to like, and immorality is what they dislike.Conformance to a recognized code, doctrine, or system of rules of what is right or wrong and to behave accordingly. No system of morality is accepted as universal, and the answers to the question "What is morality?" differ sharply from place to place, group to group, and time to time. For some it means conscious and deliberate effort in guiding one's conduct by reason based on fairness and religious beliefs. For others it is, in the words of the UK mathematician and philosopher Alfred North Whitehead (1861-1947), "... what the majority then and there happen to like, and immorality is what they dislike.Conformancecodedoctrine systemrulesrightanswersgroupmeansconductbeliefswordsNorthmajorityConformancecodedoctrine systemrulesrightanswersgroupmeansconductbeliefswordsNorthmajority
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