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CRITICAL DECISIONS OF PRODUCTION OR OPERATIONAL MANAGER
- 1. Course Title: Production& Operations Management BBA 7th Semester Sessions Title: Introduction to Production & Operations Management Gul e Faris Zaman
- 2. Learning Objectives • Definitionof Production & Operations Management (POM) • Organizational Functions • Why Study POM? • Goods Versus Services • Career opportunities in Production/Operations Management
- 3. What Is Production& Operations Management? Production is the creation of goods and services Production & Operations management (POM) is the set of activities that create value in the form of goods and services by transforming inputs into outputs
- 4. Organizing to ProduceGoods and Services • Essential functions: 1. Marketing – generates demand 2. Production/operations – creates the product 3. Finance/accounting – tracks how well the organization is doing, pays bills, collects the money 4. Human Resources – provides labor, wage and salary administration and job evaluation
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- 7. Why Study POM? 1.POM is one of four major functions of any organization, we want to study how people organize themselves for productive enterprise. 2. We want (and need) to know how goods and services are produced 3. We want to understand what operations managers do
- 8. Options for Increasing Contribution Table1.1 Sales $100,000 $150,000 $100,000 $100,000 Cost of Goods – 80,000 – 120,000 – 80,000 – 64,000 Gross Margin 20,000 30,000 20,000 36,000 Finance Costs – 6,000 – 6,000 – 3,000 – 6,000 Subtotal 14,000 24,000 17,000 30,000 Taxes at 25% – 3,500 – 6,000 – 4,250 – 7,500 Contribution $ 10,500 $ 18,000 $ 12,750 $ 22,500 Finance/ Marketing Accounting OM Option Option Option Increase Reduce Reduce Sales Finance Production Current Revenue 50% Costs 50% Costs 20%
- 9. What Production &Operations Managers Do Planning Organizing Staffing Leading Controlling Basic Management Functions
- 10. Ten Critical Decisions TenDecision Areas 1. Design of goods and services 2. Managing quality 3. Process and capacity design 4. Location strategy 5. Layout strategy 6. Human resources and job design 7. Supply-chain management 8. Inventory, MRP, JIT 9. Scheduling 10. Maintenance
- 11. The Critical Decisions 1.Design of goods and services – What good or service should we offer? – How should we design these products and services? 2. Managing quality – How do we define quality? – Who is responsible for quality?
- 12. The Critical Decisions 3.Process and capacity design – What process and what capacity will these products require? – What equipment and technology is necessary for these processes? 4. Location strategy – Where should we put the facility? – On what criteria should we base the location decision?
- 13. The Critical Decisions 5.Layout strategy – How should we arrange the facility? – How large must the facility be to meet our plan? 6. Human resources and job design – How do we provide a reasonable work environment? – How much can we expect our employees to produce?
- 14. The Critical Decisions 7.Supply-chain management – Should we make or buy this component? – Who should be our suppliers and how can we integrate them into our strategy? 8. Inventory, material requirements planning, and JIT – How much inventory of each item should we have? – When do we re-order?
- 15. The Critical Decisions 9.Intermediate and short–term scheduling – Are we better off keeping people on the payroll during slowdowns? – Which jobs do we perform next? 10. Maintenance – How do we build reliability into our processes? – Who is responsible for maintenance?
- 16. Characteristics of Goods Tangible product Consistent product definition Production usually separate from consumption Can be inventoried Low customer interaction
- 17. Characteristics of Service Intangible product Produced and consumed at same time Often unique High customer interaction Inconsistent product definition Often knowledge-based Frequently dispersed
- 18. New Trends inOM • Global focus • Environmentally sensitive production • Rapid product development • Empowered employees • Supply-chain partnering • Just-in-time performance
- 19. Feedback loop Outputs Goods and services Transformation Economic systemtransforms inputs to outputs /CONVERSITION PROCESS The Economic System Inputs Labor, capital, management
- 20. Entry-Level Jobs inOM – Purchasing planner/buyer – Production (or operations) supervisor – Production (or operations) scheduler/controller – Production (or operations) analyst – Inventory analyst – Quality specialist – Others …
Editor's Notes
- #13 Using this and subsequent slides, you might go through in more detail the decisions of Operations Management. While greater detail is provided by these slides than the earlier one, you may still decide to have the students contribute examples from their own experience.