Operations management involves planning and controlling the processes that transform inputs into outputs. Key aspects of operations management include operations strategy, facilities layout and location, capacity planning, production planning and control, and quality management. The overall goal is to efficiently manage resources, processes, and outputs.

1. Operations Management
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2. Operations Strategy
 Part of a strategic plan that defines:
– The role
– Capabilities
– Expectations of operations
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3. Operational Problems for Producers of
Goods and Services
 Each is concerned with converting resources into
something saleable.
 Each must acquire materials or supplies to
achieve that conversion.
 Each must schedule the process of conversion.
 Each must control processes and ensure quality.
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4. Flow of Operations
Inputs Outputs
•Raw Materials
•Human Resources Transformation •Products
•Land, Buildings Processes •Services
•Information
•Technology
Feedback to Provide Control
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5. Role of Operations
Operations
Strategy and Strategy
Operations
Operations
Management Management
Products, Facilities, Implementation Control
and Processes Structures Processes
Product or Service
Design Scheduling Design Control
Facilities Layout Relationships Purchasing Control
Decentralization Inventory Control
Inputs Production Processes Outputs
and Technology Teams Scheduling Control
Facilities Location Productivity Product Control
Capacity Planning Quality Productivity
Productivity Quality
Quality
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6. Operations Management
Embraces
Facilities Process design
Product
Implementation
structure Control
processes
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7. The Planning Stage of an
Organization’s Operations
 Involves decisions about:
 Involves decisions about:
–– Product or service design
Product or service design
–– Facilities layout
Facilities layout
–– Production processes and
Production processes and
technology
technology
–– Facilities location
Facilities location
–– Capacity planning
Capacity planning
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8. Two Design Concepts
1. Design for manufacturability and assembly (DFM/A)
• Calls for design teams consisting of designers, manufacturers,
and assemblers.
• all have a say in product design and actual production of the
product.
• DFM/A product design involves four criteria:
 Producibility
 Cost
 Quality
 Reliability
2. Design for disassembly (DFD)
• The goal is to conceive, develop, and build a product with a
long-term view of how its components can be refurbished and
reused–or disposed of safely.
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9. Major Benefits of the DFMA Approach, Against Which
GM Evaluates New Designs
Quality Excellence of the car, including serviceability.
Reliability The degree to which the car fulfills its intended purpose.
Durability The degree to which the car withstands performance demands.
Mass The total weight of the car.
Safety The degree to which the car increases the protection of occupants.
Manufacturability The degree to which the car can be manufactured and assembled
within existing operational capacity.
Time to market The time from product design until the car is ready for sale to the
consumer.
Total cost The total amount of materials, labor, transportation, design, and
overhaul expenses associated with the design.
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10. Process Layout
Equipment or machines that perform a similar task or function are
located together.
A product is moved from process to process as needed.
Major advantage is potential for reducing costs.
Requires fewer people and pieces of equipment.
Limits the need to move the product through several different
processes.
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11. Four Options of Facilities Layout
(a) Process Layout
Receiving Dept. Molding Welding Assembly
Storage
Wiring Insulation Painting Testing
Product A Product B Product C
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12. Product Layout
Machines and tasks are arranged according to the
Machines and tasks are arranged according to the
progressive steps by which the product is made.
progressive steps by which the product is made.
Efficient when the business produces large
Efficient when the business produces large
volumes of identical products.
volumes of identical products.
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13. Four Options of Facilities Layout
(b) Product Layout
Molding Welding Testing
Receiving Receiving
Dept. Molding Wiring Painting Assembly Dept.
Molding Insulating Painting Assembly
Product A Product B Product C
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14. Cellular Layout
Combines some of the characteristics of process and product
layouts.
All the equipment required for a sequence of operations on the
same product is placed together.
Allows efficient handling of materials and inventory.
Workers are physically close enough to work together to solve
problems.
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15. Four Options of Facilities Layout
(c) Cellular Layout
Welding
Painting Wiring
Testing
Assembly
Molding
Product A Product B Product C
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16. Fixed-Position Layout
Used because The product
of size or remains in
bulk. one location.
Tools, equipment,
and human skill
are brought to the
product.
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17. Four Options of Facilities Layout
(d) Fixed-Position Layout
Labor
Machines Supplies
Equipment Product Materials
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18. Technologies Responsible for
Revolutionizing Manufacturing Processes
Computer- Flexible
integrated manufacturing
manufacturing systems
CAD/CA
Robotics
M
Agile Soft
manufacturin manufacturin
g g systems
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19. Placement of Facilities
Two Questions
 Should the firm  Where should the
have one or two facilities be
large plants, or located?
several smaller
ones?
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20. Facility Location Depends on
Proximity to
Labor costs Tax rates
suppliers
Availability Quality of
of labor The location life for
skills of the market employees
where the
Construction product will
be sold Utility rates
expenses
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21. To Increase Capacity
Create additional
Build new facilities
shifts and hire new staff
Pay present staff overtime
Subcontract work to outside
Refit existing plants
firms
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22. Specific Plans for the Overall
Production Activities Involve
Aggregate Master
planning scheduling
Structuring for
operations
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23. Development of a Master Schedule from an
Aggregate Plan
Aggregate Plan (Units per Month)
January February March April May
Electric Ranges 1,000 1,250 1,200 1,300 1,200
Gas Ranges 750 800 700 1,000 1,000
Total 1,750 2,050 1,900 2,300 2,200
Master Schedule for Electric Ranges (Units per Week)
January February
1 2 3 4 5 6 7 8
3,600 100 100 50 50 100 100 50 100
3,665 100 100 50 100 100 50 100 100
3,670 100 50 100 100 150 150 150 150
January Total 1,000 February Total 1,300
Note: Another master schedule will be developed for the gas ranges.
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24. Operational Controls
Materials
Materials Inventory
Inventory
Control
of
design
Scheduling
Scheduling Products
Products
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25. Design Control
Focuses on creating new products
engineered for reliability.
Functionality Serviceability
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26. Purchasing is Critical for the
Following Reasons
 If the materials are not on hand, nothing can be
produced.
 If the right quantity of materials is not available,
the organization cannot meet demand.
 If the materials are of inferior quality, producing
quality products is difficult or costly.
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27. Goals of Purchasing Control
Ensure availability of
material
Balance costs
Ensure acceptable
quality of material
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28. Three Types of Inventory
Transformation
Inputs Outputs
Processes
Raw Work-in- Finished
Materials Process Goods
Inventory Inventory Inventory
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29. Four Specific Techniques for
Inventory Management
Economic order quantity Manufacturing resource planning
Just-in-time inventory
Materials requirement planning
systems
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