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10/31/2018
Introduction
to
Operation Management
1Prof. (Dr.) Anil Mishra
Components for Evaluation Marks
 Quiz Test (surprise quiz tests TWO) - 10
 Written Submission (Assignment TWO) - 20
 Class Participation - 10
 Mid Term Examination - 20
 End Term Examination - 40
TOTAL - 100
10/31/2018 2Prof. (Dr.) Anil Mishra
RECOMMENDED BOOKS
 Operations Management by Chase, Jacobs & Ravi
Shankar (TMH)
 Production & Operation Management by K Aswathappa &
Bhat.(HPH)
 Operations Management by Mahadevan (Pearson)
 Operations Management - R. S. Russell & B. W. Taylor
(Pearson)
10/31/2018 3Prof. (Dr.) Anil Mishra
Meaning of OM
 Operations management (OM) is the science and art of
ensuring that goods and services are created and delivered
successfully to customers.
 The principles of OM help one to view a business
enterprise as a total system, in which all activities are
coordinated not only vertically throughout the organization,
but also horizontally across multiple functions.
 OM is the process of planning and regulating the
operations of that part of an enterprise which is
responsible for actual transformation of materials into
finished products.
10/31/2018 4Prof. (Dr.) Anil Mishra
 Operations management is the management of an
organization’s production system.
 A production system takes inputs and converts them into
outputs.
 The conversion process is the predominant activity of a
production system.
 So the primary concern of an operations manager is the
activities of the conversion process.
10/31/2018 5Prof. (Dr.) Anil Mishra
Operations as the Technical Core
10/31/2018 6
Operations
Finance/Accounting
Human Resources
Marketing
Suppliers
Production and
Inventory data
Capital budgeting requests
Capacity expansion and
Technology plans
Budgets
Cost analysis
Capital investments
Stockholder
requirementsOrders for materials
Production and delivery
Schedules Quality
Requirements Design/
Performance specs
Material availability
Quality data
Delivery schedules
Designs
Product/Service
Availability
Lead-time estimates
Status of order
Delivery schedules
Sales forecasts
Customer orders
Customer feedback
Promotions
Personnel needs
Skill sets
Performance evaluations
Job design/work
measurement
Hiring/firing
Training
Legal requirements
Union contract negotiations
Prof. (Dr.) Anil Mishra
Learning Objectives
 To understand the nature of typical OM activities in business, what
operations managers do, and how everyone uses OM principles in their
work, no matter what their functional job is.
 To understand the nature of goods and services, their similarities and
differences, the concept of a customer benefit package, and why they
are important for managing operations.
 To understand the Decision Making in OM
 To know the Historical Events in OM
10/31/2018 7Prof. (Dr.) Anil Mishra
Example of “What Operations Managers
Do?”
 Planning and budgeting –
Evaluation of new product planning and development, developing
annual budgets and staffing plans, and watching technology that
might affect the production.
 Inventory management –
Control the management of inventory for items, and disclosure.
 Scheduling and capacity –
 Quality –
10/31/2018 8Prof. (Dr.) Anil Mishra
Understanding Goods and Services
 A good is a physical product that you can see, touch, or maybe
consume. Examples : oranges, flowers, televisions, soap,
airplanes, fish, furniture, coal, personal computers, paper, etc.
 A durable good is a product that typically lasts at least
three years. Vehicles, dishwashers, furniture etc. are some
examples of durable goods.
 A non-durable good is perishable and generally lasts for
less than one years. Examples are toothpaste, software,
shoes, fruit etc.
10/31/2018 9Prof. (Dr.) Anil Mishra
 A service is any primary or complementary activity that does
not directly produce a physical product.
 Service management integrates marketing, human
resource, and operations functions to plan, create, and
deliver goods and services, and their associated service
encounters.
 A service encounter is an interaction between the
customer and the service provider.
10/31/2018 10Prof. (Dr.) Anil Mishra
Similarities Between Goods and Services
 Goods and services provide value and satisfaction to customers
who purchase and use them.
 They both can be standardized or customized to individual wants
and needs.
10/31/2018 11Prof. (Dr.) Anil Mishra
Differences Between Goods and Services
 Goods are tangible while services are intangible.
 Customers participate in many service processes, activities, and
transactions.
 The demand for services is more difficult to predict than the demand for
goods.
 Services cannot be stored as physical inventory.
 Service management skills are dominant to a successful service
encounter.
 Service facilities typically need to be in close proximity to the customer.
10/31/2018 12Prof. (Dr.) Anil Mishra
How Goods and Services Affect
Operations Management Activities
10/31/2018 13Prof. (Dr.) Anil Mishra
Operations as a System
Inputs Outputs
Conversion
Subsystem
Production System
Control
Subsystem
10/31/2018 14Prof. (Dr.) Anil Mishra
Inputs of an Operations System
 External
 Legal, Economic, Social, Technological
 Market
 Competition, Customer Desires, Product Info.
 Primary Resources
 Materials, Personnel, Capital, Utilities
10/31/2018 15Prof. (Dr.) Anil Mishra
Conversion Subsystem
 Physical (Manufacturing)
 Locational Services (Transportation)
 Exchange Services (Retailing)
 Storage Services (Warehousing)
 Other Private Services (Insurance)
 Government Services (Federal)
 Physiological (health care)
 Psychological (entertainment)
 Informational (communications)
10/31/2018 16Prof. (Dr.) Anil Mishra
Outputs of an Operations System
 Direct
 Products
 Services
 Indirect
 Waste
 Pollution
 Technological Advances
10/31/2018 17Prof. (Dr.) Anil Mishra
Decision Making in OM
 Strategic Decisions
 Operating Decisions
 Control Decisions
10/31/2018 18Prof. (Dr.) Anil Mishra
Strategic Decisions
 These decisions are of strategic importance
and have long-term significance for the
organization.
 Examples include deciding:
 the design for a new product’s production process
 where to locate a new factory
 whether to launch a new-product development plan
10/31/2018 19Prof. (Dr.) Anil Mishra
Operating Decisions
 These decisions are necessary if the ongoing
production of goods and services is to satisfy
market demands and provide profits.
 Examples include deciding:
 how much finished-goods inventory to carry
 the amount of overtime to use next week
 the details for purchasing raw material next month
10/31/2018 20Prof. (Dr.) Anil Mishra
Control Decisions
 These decisions concern the day-to-day
activities of workers, quality of products and
services, production and overhead costs, and
machine maintenance.
 Examples include deciding:
 labour cost standards for a new product
 frequency of preventive maintenance
 new quality control acceptance criteria
10/31/2018 21Prof. (Dr.) Anil Mishra
What Controls the Operations System?
 Information about the outputs, the conversions, and the
inputs is fed back to management.
 This information is matched with management’s
expectations
 When there is a difference, management must take
corrective action to maintain control of the system
10/31/2018 22Prof. (Dr.) Anil Mishra
Five Eras of Operations
Management
10/31/2018 23Prof. (Dr.) Anil Mishra
Historical Events in OM
Industrial Revolution
Steam engine 1769 James Watt
Division of labor 1776 Adam Smith
Scientific Management
Time and motion studies 1911 Frank & Lillian Gilbreth
Activity scheduling chart 1912 Henry Gant
Moving assembly line 1913 Henry Ford
Human Relations
Motivation theories 1940s Abraham Maslow
1950s Frederick Hertzberg
Globalization
European Union and 1970s IBM and others
other trade agreements
10/31/2018 24Prof. (Dr.) Anil Mishra
Historical Events in OM
Management Science
Linear programming 1947 George Dantzig
Digital computer 1951 Remington Rand
Simulation, PERT/CPM, 1950s Operations research
Waiting line theory groups
MRP 1960s Joseph Orlicky, IBM
Quality Revolution
JIT 1970s Taiichi Ohno, Toyota
TQM 1980s W. Edwards Deming,
Joseph Juran, et. al.
Strategy and operations Skinner, Hayes
Reengineering 1990s Hammer, Champy
Information Age/Internet Revolution
Internet, ERP 1990s ARPANET, Tim
Supply chain Berners-Lee, SAP, i2
management, Technologies, ORACLE,
E-commerce Amazon,Yahoo, eBay,
and others
10/31/2018 25Prof. (Dr.) Anil Mishra
Thank you
10/31/2018 26Prof. (Dr.) Anil Mishra

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Introduction to om 1st

  • 2. Components for Evaluation Marks  Quiz Test (surprise quiz tests TWO) - 10  Written Submission (Assignment TWO) - 20  Class Participation - 10  Mid Term Examination - 20  End Term Examination - 40 TOTAL - 100 10/31/2018 2Prof. (Dr.) Anil Mishra
  • 3. RECOMMENDED BOOKS  Operations Management by Chase, Jacobs & Ravi Shankar (TMH)  Production & Operation Management by K Aswathappa & Bhat.(HPH)  Operations Management by Mahadevan (Pearson)  Operations Management - R. S. Russell & B. W. Taylor (Pearson) 10/31/2018 3Prof. (Dr.) Anil Mishra
  • 4. Meaning of OM  Operations management (OM) is the science and art of ensuring that goods and services are created and delivered successfully to customers.  The principles of OM help one to view a business enterprise as a total system, in which all activities are coordinated not only vertically throughout the organization, but also horizontally across multiple functions.  OM is the process of planning and regulating the operations of that part of an enterprise which is responsible for actual transformation of materials into finished products. 10/31/2018 4Prof. (Dr.) Anil Mishra
  • 5.  Operations management is the management of an organization’s production system.  A production system takes inputs and converts them into outputs.  The conversion process is the predominant activity of a production system.  So the primary concern of an operations manager is the activities of the conversion process. 10/31/2018 5Prof. (Dr.) Anil Mishra
  • 6. Operations as the Technical Core 10/31/2018 6 Operations Finance/Accounting Human Resources Marketing Suppliers Production and Inventory data Capital budgeting requests Capacity expansion and Technology plans Budgets Cost analysis Capital investments Stockholder requirementsOrders for materials Production and delivery Schedules Quality Requirements Design/ Performance specs Material availability Quality data Delivery schedules Designs Product/Service Availability Lead-time estimates Status of order Delivery schedules Sales forecasts Customer orders Customer feedback Promotions Personnel needs Skill sets Performance evaluations Job design/work measurement Hiring/firing Training Legal requirements Union contract negotiations Prof. (Dr.) Anil Mishra
  • 7. Learning Objectives  To understand the nature of typical OM activities in business, what operations managers do, and how everyone uses OM principles in their work, no matter what their functional job is.  To understand the nature of goods and services, their similarities and differences, the concept of a customer benefit package, and why they are important for managing operations.  To understand the Decision Making in OM  To know the Historical Events in OM 10/31/2018 7Prof. (Dr.) Anil Mishra
  • 8. Example of “What Operations Managers Do?”  Planning and budgeting – Evaluation of new product planning and development, developing annual budgets and staffing plans, and watching technology that might affect the production.  Inventory management – Control the management of inventory for items, and disclosure.  Scheduling and capacity –  Quality – 10/31/2018 8Prof. (Dr.) Anil Mishra
  • 9. Understanding Goods and Services  A good is a physical product that you can see, touch, or maybe consume. Examples : oranges, flowers, televisions, soap, airplanes, fish, furniture, coal, personal computers, paper, etc.  A durable good is a product that typically lasts at least three years. Vehicles, dishwashers, furniture etc. are some examples of durable goods.  A non-durable good is perishable and generally lasts for less than one years. Examples are toothpaste, software, shoes, fruit etc. 10/31/2018 9Prof. (Dr.) Anil Mishra
  • 10.  A service is any primary or complementary activity that does not directly produce a physical product.  Service management integrates marketing, human resource, and operations functions to plan, create, and deliver goods and services, and their associated service encounters.  A service encounter is an interaction between the customer and the service provider. 10/31/2018 10Prof. (Dr.) Anil Mishra
  • 11. Similarities Between Goods and Services  Goods and services provide value and satisfaction to customers who purchase and use them.  They both can be standardized or customized to individual wants and needs. 10/31/2018 11Prof. (Dr.) Anil Mishra
  • 12. Differences Between Goods and Services  Goods are tangible while services are intangible.  Customers participate in many service processes, activities, and transactions.  The demand for services is more difficult to predict than the demand for goods.  Services cannot be stored as physical inventory.  Service management skills are dominant to a successful service encounter.  Service facilities typically need to be in close proximity to the customer. 10/31/2018 12Prof. (Dr.) Anil Mishra
  • 13. How Goods and Services Affect Operations Management Activities 10/31/2018 13Prof. (Dr.) Anil Mishra
  • 14. Operations as a System Inputs Outputs Conversion Subsystem Production System Control Subsystem 10/31/2018 14Prof. (Dr.) Anil Mishra
  • 15. Inputs of an Operations System  External  Legal, Economic, Social, Technological  Market  Competition, Customer Desires, Product Info.  Primary Resources  Materials, Personnel, Capital, Utilities 10/31/2018 15Prof. (Dr.) Anil Mishra
  • 16. Conversion Subsystem  Physical (Manufacturing)  Locational Services (Transportation)  Exchange Services (Retailing)  Storage Services (Warehousing)  Other Private Services (Insurance)  Government Services (Federal)  Physiological (health care)  Psychological (entertainment)  Informational (communications) 10/31/2018 16Prof. (Dr.) Anil Mishra
  • 17. Outputs of an Operations System  Direct  Products  Services  Indirect  Waste  Pollution  Technological Advances 10/31/2018 17Prof. (Dr.) Anil Mishra
  • 18. Decision Making in OM  Strategic Decisions  Operating Decisions  Control Decisions 10/31/2018 18Prof. (Dr.) Anil Mishra
  • 19. Strategic Decisions  These decisions are of strategic importance and have long-term significance for the organization.  Examples include deciding:  the design for a new product’s production process  where to locate a new factory  whether to launch a new-product development plan 10/31/2018 19Prof. (Dr.) Anil Mishra
  • 20. Operating Decisions  These decisions are necessary if the ongoing production of goods and services is to satisfy market demands and provide profits.  Examples include deciding:  how much finished-goods inventory to carry  the amount of overtime to use next week  the details for purchasing raw material next month 10/31/2018 20Prof. (Dr.) Anil Mishra
  • 21. Control Decisions  These decisions concern the day-to-day activities of workers, quality of products and services, production and overhead costs, and machine maintenance.  Examples include deciding:  labour cost standards for a new product  frequency of preventive maintenance  new quality control acceptance criteria 10/31/2018 21Prof. (Dr.) Anil Mishra
  • 22. What Controls the Operations System?  Information about the outputs, the conversions, and the inputs is fed back to management.  This information is matched with management’s expectations  When there is a difference, management must take corrective action to maintain control of the system 10/31/2018 22Prof. (Dr.) Anil Mishra
  • 23. Five Eras of Operations Management 10/31/2018 23Prof. (Dr.) Anil Mishra
  • 24. Historical Events in OM Industrial Revolution Steam engine 1769 James Watt Division of labor 1776 Adam Smith Scientific Management Time and motion studies 1911 Frank & Lillian Gilbreth Activity scheduling chart 1912 Henry Gant Moving assembly line 1913 Henry Ford Human Relations Motivation theories 1940s Abraham Maslow 1950s Frederick Hertzberg Globalization European Union and 1970s IBM and others other trade agreements 10/31/2018 24Prof. (Dr.) Anil Mishra
  • 25. Historical Events in OM Management Science Linear programming 1947 George Dantzig Digital computer 1951 Remington Rand Simulation, PERT/CPM, 1950s Operations research Waiting line theory groups MRP 1960s Joseph Orlicky, IBM Quality Revolution JIT 1970s Taiichi Ohno, Toyota TQM 1980s W. Edwards Deming, Joseph Juran, et. al. Strategy and operations Skinner, Hayes Reengineering 1990s Hammer, Champy Information Age/Internet Revolution Internet, ERP 1990s ARPANET, Tim Supply chain Berners-Lee, SAP, i2 management, Technologies, ORACLE, E-commerce Amazon,Yahoo, eBay, and others 10/31/2018 25Prof. (Dr.) Anil Mishra
  • 26. Thank you 10/31/2018 26Prof. (Dr.) Anil Mishra