cht 1 introductions

8/19/2019 Cht 1 Introductions

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Chapter 1

Introduction to

OperationsManagement


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Three Functions in aBusiness

• Marketing – to “sell” products

• Operations – to “make” products

• Finance and Accounting

– to use money efectivelyand keep track businessactivities in terms o dollar


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Role of “Operation”

• !ole o operation in abusiness is to transorm a

company"s input into the#nished goods or services

•$alue o the product is addedin the process o operation


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Business Operation as aValue Added Process

Inputs in $$Transformation

ProcessOutputs in $$$

Value Added by Process


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Operations Management

• %he business unctionresponsible or planning&

coordinating& and controllingthe process and resourcesneeded to produce acompany"s products andservices


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Essential Pursuit of OM

• %he essential pursuit ooperations management is

'FF(C(')C* +or productivity&or efectiveness,


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Manufacturing s!"erice

Manuacturing-

• %angible product

• .roduct can be

inventoried

• /o0 customercontact

• Capital intensive• /ong response time

ervices-

• (ntangible product

• .roduct cannot be

inventoried

• 2igh customercontact

• /abor intensive• hort response

time


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OM #ecisions

• trategic decisions- – 3ecisions that set the direction or the

entire company

– 4road in scope 5 long6term in nature

• %actical decisions- –

hort6term 5 speci#c in nature – 4ound by the strategic decisions


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"pectrum of OM#ecisions


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Milestones of OM#eelopment

(ndustrial !evolution /ate 1788scienti#c Management 'arly 1988s

2uman !elations Movement 19:8s to 19;8s

Management cience Mid61988s

Computer Age 1978s

uality Management +%>M, 19=8s

!eengineering 19=8s

Fle?ibility 1998s

%ime6based Competition 1998s

upply Chain Management 1998s@lobal Competition 1998s

'nvironmental (ssues1998s

'lectronic Commerce/ate 1998s 'arly B1st Century


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Industrial Reolution$late %&''s(

• !eplaced traditional crat methods

• ubstituted machine po0er or

labor +


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,uman RelationsMoement $%+-'s.%+/'s(

• !ecognition that actors other thanmoney contribute to 0orkerproductivity

• MaEor contributions- – Gnderstanding o the Hawthorn efect -

tudy o estern 'lectric plant in 2a0thorn& (llinois intendedto study impact o environmental actors +light 5 heat, on

productivity& but ound 0orkers responded to management"sattention regardless o environmental changes

–


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Management "cience$mid.%+''s(

• 3eveloped ne0 HuantitativetechniHues or common OM problems-

– MaEor contributions include- inventory

modeling& linear programming& proEectmanagement& orecasting& statisticalsampling& 5 Huality control techniHues

– .layed a large role in supportingAmerican military operations duringorld ar ((


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0omputer Age $%+&'s(

• Computer provided the tool necessary tosupport the 0idespread use oManagement cience"s Huantitative

techniHues the ability to process hugeamounts o data Huickly 5 relativelycheaply

• MaEor contributions include thedevelopment o Material !eHuirements.lanning +M!., systems or productioncontrol


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#eelopment in %+1's

• M,-

– %echniHues designed to achieve high levels oproduct Huality through shared responsibility 5 byeliminating the root causes o product deects

• 4usiness .rocess !eengineering- – Clean sheet" redesign o 0ork processes to increase

eJciency& improve Huality 5 reduce costs


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#eelopment since%++'s $%(

• Fle?ibility- – Ofer a greater variety o product choices on a

mass scale +mass customiKation,

• %ime6based competition- – 3eveloping ne0 product designs 5 delivering

customer orders more Huickly than competitors

• upply Chain Management- – Cooperating 0ith suppliers 5 customers to

reduce overall costs o the supply chain 5increase responsiveness to customers


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#eelopment since%++'s $2(

• @lobal competition- – (nternational trade agreements open ne0

markets or e?pansion 5 lo0er barriers to theentry o oreign competitors +eg- )AF%A 5 @A%%,

– Creates the need or decision6making tools oracility location& compliance 0ith localregulations& tailoring product oferings to localtastes& managing distribution net0orks& D

• 'nvironmental issues- – .ressure rom consumers 5 regulators to reduce&

reuse 5 recycle solid 0astes 5 discharges to air5 0ater


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Electronic 0ommerce$since late %++'3s(

• (nternet 5 related technologiesenable ne0 methods o businesstransactions- – '6retailing creates a ne0 outlet or selling goods 5

services 0ith global access and BL67 availability4BC

– (nternet provides a cheap net0ork or coordinating

supply chain management inormation 4B4

• 3eveloping inIuence o broadband5 0ireless

cht 1 introductions

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