The document is from a textbook chapter on production and operations management. It introduces key concepts in operations including: the operations function and how it overlaps with other business functions; examples of different types of operations like goods production, storage, and services; and responsibilities of operations management like planning, controlling, organizing, staffing, and directing activities. It also discusses models, quantitative approaches, trends in operations management, and differences between manufacturing and services.

1. Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1999
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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
PRODUCTION/OPERATIONS
MANAGEMENT
SIXTH EDITION
WILLIAM J. STEVENSON
Rochester Institute of Technology
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1999

2. Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1999
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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
INTRODUCTION
PART ONE
•Chapter One
•Production and Operations Management
•Chapter Two
•Productivity, Competitiveness, and Strategy
Irwin/McGraw-Hill ©The McGraw-Hill Companies, Inc., 1999

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Operations Management
 Operations function consists of all activities directly
related to producing goods or providing services.
Organization
Finance Production/
Operations
Marketing

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Business Operations Overlap
Marketing
Production/
Operations
Finance

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
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

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Value-Added
• The difference between the cost of inputs
and the value or price of outputs.
Inputs
Land
Labor
Capital
Transformation/
Conversion
process
Outputs
Goods
Services
Control
Feedback
Feedback
Feedback
Value added

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Food Processor
Inputs Processing Outputs
Raw Vegetables Cleaning Canned vegetables
Metal Sheets Making cans
Water Cutting
Energy Cooking
Labor Packing
Building Labeling
Equipment

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Hospital Process
Inputs Processing Outputs
Doctors, nurses Examination Healthy patients
Hospital Surgery
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Operations Interfaces

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Decision Making
• System Design
– capacity
– location
– arrangement of departments
– product and service planning
– acquisition and placement of
equipment

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Decision Making
• System operation
– personnel
– inventory
– scheduling
– project
management
– quality assurance

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Major Characteristics of
Production Systems
• Degree of standardization
• Type of operation
– project
– job shop
– repetitive production
– continuous processing

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Manufacturing or Service?
Tangible Act

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Key Differences
• Customer contact
• Uniformity of input
• Labor content
• Uniformity of output
• Measurement of productivity
• Quality assurance
These differences are beginning to fade
in many cases

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Manufacturing vs Service
Characteristic
Output
Customer contact
Uniformity of input
Labor content
Uniformity of output
Measurement of productivity
Opportunity to correct
Manufacturing
Tangible
Low
High
Low
High
Easy
High
Service
Intangible
High
Low
High
Low
Difficult
Low
quality problems
High

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

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Models
• A model is an abstraction of reality.
– Physical
– Schematic
– Mathematical
What are the pros and cons of models?
Tradeoffs

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Systems Approach
“The whole is greater than the sum of the parts.”
Suboptimization

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Quantitative Approaches
• Linear programming
• Queuing Techniques
• Inventory models
• Project models
• Statistical models

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Pareto Phenomenon
• A vital few things are important for reaching
an objective or solving a problem.
• 80/20 Rule - 80% of problems are caused by
20% of the activities.
How do we identify the vital few?

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Recent Trends
• Global competition
• Operations strategy
• Total quality management (TQM)
• Flexibility
• Time reduction Technology

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CHAPTER ONE
PRODUCTION AND OPERATIONS MANAGEMENT
Recent Trends (Continued)
• Worker involvement
• Reengineering
• Environmental issues
• Service