1-1 Introduction to Operations Management
Operations Management
William J. Stevenson
8th edition
1-2 Introduction to Operations Management
CHAPTER
1
Introduction to
Operations Management
Operations Management, Eighth Edition, by William J. Stevenson
McGraw-Hill/Irwin Copyright 2005 by The McGraw-Hill Companies, Inc. All rights
1-3 Introduction to Operations Management
Operations Management
Figure 1.1
The management of systems or processes
that create goods and/or provide services
Organization
Finance Operations Marketing
1-4 Introduction to Operations Management
Value-Added
Figure 1.2
The difference between the cost of inputs
and the value or price of outputs.
Value added
Inputs
Transformation/ Outputs
Land
Conversion Goods
Labor
process Services
Capital
Feedback
Control
Feedback Feedback
1-5 Introduction to Operations Management
Goods-service Continuum
Figure 1.3
Steel production Home remodeling Auto Repair Maid Service Teaching
Automobile fabrication Retail sales Appliance repair Manual car wash Lawn mowing
High percentage goods Low percentage goods
Low percentage service High percentage service
1-6 Introduction to Operations Management
Food Processor
Table 1.2
Inputs Processing Outputs
Raw Vegetables Cleaning Canned
Metal Sheets Making cans vegetables
Water Cutting
Energy Cooking
Labor Packing
Building Labeling
Equipment
1-7 Introduction to Operations Management
Hospital Process
Table 1.2
Inputs Processing Outputs
Doctors, nurses Examination Healthy
Hospital Surgery patients
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy
1-8 Introduction to Operations Management
Production of Goods vs. Delivery of Services
Production of goods tangible output
Delivery of services an act
Service job categories
Government
Wholesale/retail
Financial services
Healthcare
Personal services
Business services
Education
1-9 Introduction to Operations Management
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
1-10 Introduction to Operations Management
Scope of Operations Management
Operations Management includes:
Forecasting
Capacity planning
Scheduling
Managing inventories
Assuring quality
Motivating employees
Deciding where to locate facilities
And more . . .
1-11 Introduction to Operations Management
The operations function
Consists of all activities directly related to
producing goods or providing services
1-12 Introduction to Operations Management
Figure 1.4
U.S. Manufacturing vs. Service Employment
Year Mfg. Service
45 79 21
100
50 72 28
55 72 28 80
60 68 32
65 64 36
Percent 60
70 64 36 40
75 58 42
80 44 46 20
85 43 57
0
90 35 65
95 32 68 45 50 55 60 65 70 75 80 85 90 95 00
00 30 70 Year
1-13 Introduction to Operations Management
Responsibilities of Operations Management
Table 1.6
Planning Organizing
Capacity Degree of centralization
Location Process selection
Products & services Staffing
Make or buy Hiring/laying off
Layout Use of Overtime
Projects Directing
Scheduling Incentive plans
Controlling/Improving Issuance of work orders
Inventory Job assignments
Quality
Costs
Productivity
1-14 Introduction to Operations Management
Key Decisions of Operations Managers
What
What resources/what amounts
When
Needed/scheduled/ordered
Where
Work to be done
How
Designed
Who
To do the work
1-15 Introduction to Operations Management
Business Operations Overlap
Figure 1.5
Operations
Marketing Finance
1-16 Introduction to Operations Management
Operations Interfaces
Industrial
Engineering
Maintenance
Distribution
Purchasing Public
Operations Relations
Legal
Personnel
Accounting MIS
1-17 Introduction to Operations Management
Trends in Business
Major trends
The Internet, e-commerce, e-business
Management technology
Globalization
Management of supply chains
Agility
