The document provides an overview of operations management concepts including: definitions of operations management and supply chains; key decisions made by operations managers regarding process, quality, capacity and inventory; and contemporary operations themes such as service/manufacturing differences, lean operations, integration with other functions, environmental concerns, and globalization. Operations management involves cross-functional decision making and transforming inputs into outputs through business processes.

1. Chapter One The Operations Function Copyright © 2011 by The McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin Operations Management Contemporary Concepts and Cases 5/e

4. Definition of Operations Management The operations function of an organization is responsible for producing and delivering goods or services of value to customers of the organization. Operations managers make decisions to manage the transformation process that converts inputs into desired finished goods or services.

9. Simple Product Supply Chain Figure 1.7 Supply Chain : A sequence of activities And organizations involved in producing And delivering a good or service Suppliers’ Suppliers Direct Suppliers Producer Distributor Final Consumer

10. A Supply Chain for Bread Stage of Production Value Added Value of Product Farmer produces and harvests wheat $0.15 $0.15 Wheat transported to mill $0.08 $0.23 Mill produces flour $0.15 $0.38 Flour transported to baker $0.08 $0.46 Baker produces bread $0.54 $1.00 Bread transported to grocery store $0.08 $1.08 Grocery store displays and sells bread $0.21 $1.29 Total Value-Added $1.29

13. Operations as a Process Transformation (Conversion) Process Input Output

14. Operations as a Process Transformation Fabrication Transformation Assembly Fabrication: making the parts Assembly: putting the parts together Input Output

15. Operations as a Process (Figure 1.1) Transformation (Conversion) Process Energy Materials Labor Capital Information Goods or Services Feedback information for control of process inputs and process technology

16. Relation of Operations to its Environment (Figure 1.2) Operations transformation system Suppliers Human Resources Marketing Accounting Finance MIS Engineering SOCIETY GOVERNMENT External Environment CUSTOMERS COMPETITORS

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

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

20. Figure 1.4

23. Mikl ós Németh WHO!? 1-

24. U.S. production of aluminum dropped dramatically in the early 1990s because the Russians dumped aluminum on the world market. Why? The opening of the Hungarian border, 2 May 1989, led to the fall of the Berlin Wall in November, 1989, which led to the breakup of the Soviet Union in 1991, which caused them to downsize their military, which gave them overcapacity in aluminum production, which caused them to dump in the world markets, which led to the closing of U.S. smelters such as the one near Charlotte, NC. 1-

25. Mikl ós Németh Was the Hungarian Prime Minister who opened the border on 2 May 1989. 1-

26. Moral of the Story In an age of globalization, you never know who will be the competition or who is doing something that will affect your job or your life. The aluminum workers in NC had never heard of Mikl ós Németh, but he ultimately cost them their jobs. 1-