Operations Management 1new 2003[1] (1)

8/2/2019 Operations Management 1new 2003[1] (1)

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Lecture 1Instructor Zia-ur-Rehman

Email [email protected]


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Operations Management involves: Product and Service design Process selection

Selection and management of technology Design of work systems Location planning

Facilities planning Quality improvement of the organizations

products and services


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It is the business function that plans,organizes, co-ordinates, and controls theresources needed to produce a companysgoods and services.


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Goods & ServicesGoods & Services

Services Intangible product Services cannot be

inventoried High customer contact Short response time

Labor intensive

ManufacturingTangible product Product can be

inventoried Low customer contact Longer response time

Capital intensive


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Production of Goods vsProduction of Goods vs

Delivery of ServicesDelivery of Services

Production of goods results in a tangible output.

Government (federal, state, local). Wholesale/retail (clothing, food, appliances, stationery, toys,

etc.). Financial services (banking, stock brokerages, insurance, etc.). Health care (doctors, dentists, hospitals, etc.). Personal services (laundry, dry cleaning, hair/beauty, gardening,

etc.).

Business services (data processing, e-business, delivery,employment agencies, etc.).

Education (schools, colleges, etc.)


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On the other handOn the other hand

Both use technology Both have quality, productivity, &

response issues Both must forecast demand Both will have capacity, layout, and

location issues Both have customers, suppliers,

scheduling and staffing issues Manufacturing often provides

services Services often provides tangible

goods


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DifferencesDifferences Between Goods andBetween Goods and

ServiceService

Degree of customer contact. Uniformity of input. Labor content of jobs. Uniformity of output. Measurement of productivity. Production and delivery. Quality assurance.

Amount of inventory. Evaluation of work. Ability to patent design.


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ORGANIZATION

Finance OperationsMarketin

g


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Typical OrganizationTypical Organization

ChartChart


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Finance: This area is responsible for securingfinancial resources at favorable prices andallocating those resources throughout theorganization.

Marketing: This area is responsible forassessing consumer wants and needs, andselling and promoting the organizations

goods or services. Contd.


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Operations: This area is responsible forproducing the goods or providing theservices offered by the organization.

In other words the role of operationsmanagement is to transform a companysinputs into the finished goods or services.


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It involves: Inputs: That is capital, labor, land and

information

Transformational Processes: That is storing,transporting, cutting etc. Outputs: That is goods and services.


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InputsInputsInputsInputs OutputsOutputsOutputsOutputs

ConversionConversion

SubsystemSubsystem

ConversionConversion

SubsystemSubsystem

Production SystemProduction System

ControlControl

SubsystemSubsystem

ControlControl

SubsystemSubsystem


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OMs TransformationOMs Transformation

ProcessProcess


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OMs Transformation ProcessOMs Transformation Process


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The essence of the operations function is toadd value during the transformation process.

Value Added: It is the term used to describethe difference between the cost of inputsand the value or price of outputs.

orThe net increase created during the

transformation of inputs into final outputs.


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Firms use the money generated by value-addedfor

Research and development,

Investment in new facilities and equipment, Worker salaries, and, Profits.


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Value-Added: The difference between the cost of inputs and the value or

price of outputs.


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OMs Transformation RoleOMs Transformation Role

To add value

Increase product value at each stage

Value added is the net increase between output

product value and input material value

Provide an efficient transformation

Efficiency means performing activities well for least

possible cost


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Introduction to operationsIntroduction to operations

ManagementManagement

Operations: All activities that involved in theConversion Process of Input to Output

(Goods/service)

Management: The Process of Planning,Organizing and Controlling in achieving the

desired objectives.


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Introduction to OperationsIntroduction to OperationsManagement University as an Example:Management University as an Example:

Input Planning &controlling

SupportiveSubsystems

Output

Students

Professor

Buildings

Class Times

Course

Development

School

Regulations

Book store

Library

ComputerLab

Educated

Students

ResearchOutcomes

Service toPublic


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Scheduling / Capacity Planning / Purchasing /Quality Control / Facility Location & Layout /Production and Process Design / Job Design /Maintenance / Project Management /

Functions of OperationsManagement


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Operations Management

as a Function


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Degree of customer involvement, and

Degree to which technology is used toproduce and/or deliver a product or service.


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Intangibility

Perishability

Heterogeneity

Inseparability


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Simple Flowchart for

Delivery ofPeople-Processing Service


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Possession-ProcessingService Simple Flowchart for

Delivery


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Delivery of MentalStimulus Processing

Service


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Delivery of Information-Processing Service

Th S f O tiTh S f O ti


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The Scope of OperationsThe Scope of Operations

ManagementManagement


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Documents

Operations Management 1new 2003[1] (1)