This document provides an overview of operations management. It discusses key topics such as (1) the meaning and functions of operations management, (2) differentiating features of production systems like degree of standardization and type of operation, and (3) the scope of operations management including forecasting, quality control, and more. It also examines the roles and decision-making processes of operations managers as well as historical evolutions and recent trends in the field.

1. Introduction to Operations Management
i. Meaning
ii. Functions of business organization
iii. Differentiating features of production system
iv. Scope of Operation Management
v. Operation manager and mgt. process
vi. Operation manager and decision making,
vii. Historical evolution
viii.Recent trends in operation mgt

2. Meaning
• OM involves the planning, coordinating, and
executing all activities that create goods and
services.
• Operation management: The management of
systems or processes that creates goods
and/or provides service

3. Operations Management
• Create operational systems.
• Manage (plan, organize, staff, direct and
control) the activities relating to the
production of goods and/or services with
maximum efficiency (at the lowest cost)
and effectiveness (in the eyes of the
customer).
• Improve those processes continuously to
create competitive advantage.

4. Manage the
Process
Inputs Outputs
> > > >
>
Conversion
Improve the
Process
Operations Management
Create the
Process
New Product Development
Innovation
Quality Management
Planning & Control
Infrastructural
Elements
Workforce
Organization
Technology
Vertical Integration
Structural
Elements
Capacity
Facilities
Cost
Quality
Time Flexibility
Service
Evaluate
On

5. The Operations System
The operations system transforms inputs into
desired goods and services.
OUTPUTS
INPUTS PROCESS
EXTERNAL
FACTORS
FEEDBACK
Material flow
Information Flow

6. Operations
Management
~
The Context
Business Unit Strategy
Marketing
Strategy
4 Ps
Place
Product
Price
Promotion
Competitive Priorities & Positioning
Cost, Quality, Time, Flexibility, Service
Customer Satisfaction (Internal & External)
Market Share
Quality Measures
Cost Measures
Performance
Measures
Execution Processes
Operations Strategy
Structural
Facility Location
Capacity
Vertical Integration
Process Technology
Infrastructural
Workforce
Quality
Policies/Procedures
Organizational Structure
Corporate Strategy

7. Types of Conversions
• Physical
• Chemical
• Locational
• Educational
• Entertained

8. The Organization
Organization
Finance Operations Marketing

9. Operation
• Consists of all activities directly related to
producing goods or providing services.
• The production function exists both in
manufacturing and service,
• Inputs are used to obtain finished goods or
services using one or more transformation
process (storing, transporting, cutting).

10. Food Processor
Inputs Processing Outputs
Raw Vegetables Cleaning Canned
vegetables
Metal Sheets Making cans
Water Cutting
Energy Cooking
Labor Packing
Building Labeling
Equipment
Table 1.2

11. Hospital Process
Inputs Processing Outputs
Doctors, nurses Examination Healthy
patients
Hospital Surgery
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy
Table 1.2

12. Finance
• The finance function comprises activities
related to securing resources at favorable
prices and
• Allocating those resources throughout the
organization.

13. Marketing
• Marketing consists of selling and/ or
promoting the goods or services of an
organization.
• makes advertising and pricing decisions.
• is also responsible for assessing customer
wants and needs, and for communicating
those to operation and design people.

14. Differentiating features of production system
 We can differentiate production system by
three ways. They are
i. Degree of standardization
ii. Type of operation
iii. Mfg. operation versus service operations

15. Degree of standardization
• Production system produces output that
ranges from highly standardized to highly
customize.
• Standardized output means that there is a
high degree of uniformity in goods or services.
Such as
– radio, television, computer and newspapers.
• Customized out put means that the product is
designed for a specific case or individual. Such

16. Types of operation
1. Project: a set of activities directed towards a
unique goal, usually large scale, with a
limited time frame.
2. Job shop: An organization that renders unit
or lot production or service with varying
specifications, according to customer needs.
3. Batch processing: A system used to produce
moderate volumes of similar items.
4. Continuous processing: A system that
produces highly uniform products or
continuous services, often performed by

17. Process-Product Matrix
Project
Job Shop
Batch
Line Flow
• Continuous
• Discrete
Flow
Patterns
Jumbled
Consistent
Product
Each Unique –
Wide Variety
Commodity–
Little Variety
????
Opportunities
for real
advantage

18. Mfg operation versus service operations
Characteristic Goods Service
Customer contact Low High
Uniformity of input High Low
Labor content Low High
Uniformity of output High Low
Output Tangible Intangible
Measurement of productivity Easy Difficult
Opportunity to correct problems High Low
Inventory Much Little
Evaluation Easier Difficult
Patentable Usually Not usual

19. 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 . . .

20. Operation manager and decision-making
• There are some approaches of decision-
making. Manager needs to follow the
approach to take decision.
i. Uses Model
ii. Quantitative approach
iii. Analysis of Trade off
iv. System approach
v. Establishing priorities
vi. Ethics

21. Models
A model is an abstraction of reality.
– Physical
– Schematic
– Mathematical
What are the pros and cons of models?
Tradeoffs

22. Models Are Beneficial
 Easy to use, less expensive
 Require users to organize
 Increase understanding of the problem
 Enable “what if” questions
 Consistent tool for evaluation and standardized format
 Power of mathematics

23. Limitations of Models
 Quantitative information may be emphasized over
qualitative
 Models may be incorrectly applied and results
misinterpreted
 Nonqualified users may not comprehend the rules on
how to use the model
 Use of models does not guarantee good decisions

24. It is an attempt to obtain mathematically optimum solution
of a managerial problem.
Quantitative Approaches
• Linear programming
• Queuing Techniques
• Inventory models
• Project models
• Statistical models

25. Analysis of Trade-Offs
 Operation manager has to take trade off decisions.
 Such as selecting a piece of equipment, a manager must evaluate the merits of
extra features relative to the cost of those features.
 Decision on the amount of inventory to stock
– Increased cost of holding inventory
Vs.
– Level of customer service

26. Systems Approach
“The whole is greater than
the sum of the parts.”
Suboptimization
System is a set of interrelated parts that must work together.

27. Pareto Phenomenon
• A few factors account for a high percentage of the occurrence of some
event(s).
• 80/20 Rule - 80% of problems are caused by 20% of the activities.
How do we identify the vital few?

28. Ethical Issues
 Financial statements
 Worker safety
 Product safety
 Quality
 Environment
 Community
 Hiring/firing workers
 Closing facilities
 Worker’s rights

29. Historical Evolution of Operations Management
 Industrial revolution (1770’s)
 Scientific management (1911)
– Mass production
– Interchangeable parts
– Division of labor
 Human relations movement (1920-60)
 Influence of Japanese manufacturers
Table 1.7

30. Trends in Business
 Major trends
– The Internet, e-commerce, e-business
– Management technology
– Globalization
– Management of supply chains
– Outsourcing
– Agility
– Ethical behavior
– Lean Production

31. Significant Developments
• Division of Labor
• Standardized Parts
• Scientific Management
– Time and Motion Study
– Efficiency Improvement
– Wage Incentives
• Assembly Lines
• Motivation and Behavioral Issues

32. Significant Developments
• Operations Research
• Computers and Information Technology
- Computer Aided Design (CAD)
- Computer Aided Manufacture (CAM)
- Computer Integrated Manufacture (CIM)
• Flexible Manufacturing Systems (FMS)
• Cellular Manufacturing
• JIT, Lean Manufacturing
• Total Quality Management, Six Sigma
• Mass Customization