The document discusses operations management. It describes the operations function as including all activities related to producing goods or providing services. This includes development, production, and distribution. It notes operations exist in both manufacturing and service industries and involve scheduling, employee management, inventory control, quality assurance, and customer satisfaction. Key decisions for operations include capacity planning, process selection, location selection, and quality control.

1. Lecture 2

2. Type of Operations
 Goods Producing
 Storage/
Transportation
 Exchange
 Entertainment
 Communication
Examples
 Farming, mining, construction,
manufacturing, power generating.
 Warehousing, Trucking, mail
service, moving, taxis, buses,
hotels, airlines
 Retailing, Wholesaling, financial
advising, renting, leasing, library
loans, stock exchanges.
 Films, radios, television plays,
concerts
 Newspapers, TV newscasts
telephone, satellites, the internet

3.  The operations function include all the activities
directly related to producing goods or providing
services
 Goods-Oriented: It exists both in manufacturing
and assembly operations.
 Service-Oriented: Include areas such as health
care, transportation, food handling, and retailing

4.  Tactical/Operational Decisions: Such decisions
are specific and short-term in nature and are
bound by strategic decisions.
 Such decisions typically pertain to the system
operation.

5. System operations involve decisions that relate to:
 Management of personnel
 Inventory planning and control
 Scheduling
 Project management
 Quality assurance

6. Strategic Decisions
•Broad in scope
•Long-term in nature
•All-encompassing
e.g., What are the unique features
of our product that make us
competitive?
Tactical/Operational Decisions
•Narrow in scope
•Short-term in nature
•Concerning a small group of issues
e.g., Who will work the 2nd
Shift
tomorrow?

7. The operations manager is more involved in day-to-day
operating decisions than with decisions relating to system
design.
However, the operations manager has a vital stake in
system design because system design essentially
determines many of the parameters of system operation.

8. 1. Purchasing: It has the responsibility for procurement of
materials, supplies, and equipment. Close contact with
operations is necessary to ensure correct quantities and
timing of purchases. The purchasing department is often
called on to evaluate vendors for quality, reliability,
service, price, and ability to adjust to changing demand.
Purchasing is also involved in receiving and inspecting
the purchased goods.
Contd.

9. 2. Industrial Engineering: It is often concerned with
scheduling, performance standards, work methods, quality
control, and material handling.
3. Distribution: It involves the shipping of goods to
warehouses, retail outlets, or final customers.
4. Maintenance: It is responsible for general upkeep and
repair of equipment, buildings and grounds, heating and
air-conditioning, removing toxic wastes, parking and
perhaps security.

10. System design involves decisions that relate to:
 System capacity,
 The geographic location of facilities,
 Arrangement of departments,
 Placement of equipment within physical structure
 Product and service planning,
 Acquisition of equipment.

11. Decision Area
 Product and service design
 Capacity
 Process Selection
 Process Layout
Basic Issues
 Customer demands,
improvement of products
 Capacity needed and how the
organization best meet
capacity requirements.
 What process should the
organization use?
 What is the best arrangement
for departments, equipment?

12. Decision Area
 Design of work systems
 Location
Basic Issues
 What is the best way to
motivate employees? How can
productivity be improved?
 What is the satisfactory
location of the facility/store,
etc.?

13. Decision Area
 Quality
 Quality Control
 Supply Chain Management
 Inventory Management
 Aggregate Planning
Basic Issues
 How is quality defined? How are
quality goods achieved and
improved?
 Are processes performing
adequately? What standards should
be used?
 How to achieve effective flows of
information and goods throughout
the chain?
 How much to order? When to reorder?
Which items should get the most
attention?
 How much capacity will be needed
over the intermediate range?

14. The importance of Operations Management is fairly
obvious for both the:
 Organization: Operations is the core function of an
organization. As organizations exist primarily to provide
services or create goods. So operations is responsible for
creating those goods or providing services.
Moreover, operations is responsible for a major portion of
the assets in most business organizations.

15.  Society: More than half of all employed people in most
countries have jobs in operations.
Moreover, operations is responsible for creating goods
or providing services and, the consumption of these
goods and services is an integral part of our society.

16. The Interrelated Activities:
o Forecasting
o Capacity planning
o Scheduling
o Managing inventories
o Assuring quality
o Motivating and training employees

17. Forecasting
 Weather and landing conditions
 Seat demand for flights
 Growth in air travel

18. Capacity Planning
 Ensuring the maintenance of cash flow and
generating reasonable profit.
 The adjustment of flight timings and destinations
that could maximize profits.

19. Scheduling
 Maintenance of flight schedule
 Schedules of on duty pilots and flight attendants
 Scheduling of ground crews, counter staff, and
baggage handlers.

20. Managing Inventories
 Managing inventories such as:
Foods and beverages
First-aid equipment
In-flight magazines
Pillows and blankets
Life preservers

21. Assuring Quality
 Quality Assurance: It is essential in flying and
maintenance operations.
 Emphasis on safety and important in dealing with
customers at ticket counters, check-in, telephone,
electronic reservations and curb service where the
emphasis is on efficiency and courtesy.

22. Motivating and Training Employees
 Employee motivation and training in all phases of
operations.

23. Locating Facilities
Locating facilities according to manager’s
decisions on which cities to provide service for,
where to locate major and minor hubs.

24. • The operations function consists of all activities
directly related to producing goods or providing
services. Such activities include:
1. Development of idea for a product or service
2. Product verification and funding
3. Product Development
4. Product Production
5. Product Distribution
Contd.

25.  Fabrication of work: The factory might do some of
the fabrication work itself, forming frames, making
gears and chains and buying mainly raw
materials, spare parts and other materials such
as, paints, nuts, bolts and tires.

26.  It exists both in manufacturing and assembly
operations.
 Assembly Operations: Buying components such as,
frames, tires, wheels, gears and other items for
suppliers and then assembling a bicycle.
 Both service and production industry involves
scheduling activities, motivating employees, ordering
and managing supplies, selecting maintaining
equipment, satisfying quality standards and above
all satisfying customers.