Operations Management a What is operations? © The part of a business organization that is responsible for producing goods or services What is operations management? ° The management of systems or processes that create goods and/or provide services Operations management affects: ° Companies’ ability to compete PeOperations Management... © Refers to the management of the production system that transforms inputs into finished goods and services. Production system: the way a firm acquires inputs then converts and disposes outputs. Operations managers: responsible for the transformation process from inputs to outputs. ° Operations management seeks to increase the quality, efficiency, and responsiveness of the firm. Seeks to provide a competitive advantage.Operations Management Concepts ° Quality: goods and services that are reliable and perform correctly. Quality allows customers to receive the performance that they expect. Efficiency: the amount of input to produce a given output. Less input required lowers cost and waste. Responsiveness to customers: actions taken to respond to customer needs. Firm can react quickly and correctly to customer needs as they arise.The Basics Of Operations Management a Operations Management ° The process of managing the resources that are needed to produce an organization’s goods and services. ° Operations managers focus on managing the “five Ps” of the firm’s operations: @ People, plants, parts, processes, and planning and control systems. PeModels a Types of Models: © Physical Models @ Look like their real-life counterparts ° Schematic Models @ Look less like their real-life counterparts than physical models ° Mathematical Models @ Do not look at all like their real-life counterpartsDifferences Between Services and Goods a Information Asymmetry Intangible Inventory Customer Contact a Response Time a Labor Intensity PeBasic Functions of the Business OrganizationBusiness Functions are InterconnectedHistorical Evolution of OM Industrial Revolution Scientific Management Human Relations Movement Decision Models and Management Science Influence of Japanese ManufacturersIndustrial Revolution » Pre-Industrial Revolution Craft production - System in which highly skilled workers use simple, flexible tools to produce small quantities of customized goods » Some key elements of the industrial revolution Began in England in the 1770s Division of labor - Adam Smith, 1776 Application of the “rotative” steam engine, 1780s Cotton Gin and Interchangeable parts - Eli Whitney, 1792 » Management theory and practice did not advance appreciably during this periodScientific Management » Movement was led by efficiency engineer, Frederick Winslow Taylor © Believed in a “science of management” based on observation, measurement, analysis and improvement of work methods, and economic incentives Management is responsible for planning, carefully selecting and training workers, finding the best way to perform each job, achieving cooperate between management and workers, and separating management activities from work activities » Emphasis was on maximizing outputScientific Management - contributors » Frank Gilbreth - father of motion studies » Henry Gantt - developed the Gantt chart scheduling system and recognized the value of non-monetary rewards for motivating employees » Harrington Emerson - applied Taylor’s ideas to organization structure Henry Ford - employed scientific management techniques to his factories Moving assembly line Mass productionHuman Relations Movement » The human relations movement emphasized the importance of the human element in job design ° Lillian Gilbreth » Elton Mayo - Hawthorne studies on worker motivation, 1930 ° Abraham Maslow - motivation theory, 1940s; hierarchy of needs, 1954 ° Frederick Hertzberg - Two Factor Theory, 1959 ° Douglas McGregor - Theory X and Theory Y, 1960s © William Ouchi - Theory Z, 1981Decision Models & Management Science » F.W. Harris - mathematical model for inventory management, 1915 » Dodge, Romig, and Shewart - statistical procedures for sampling and quality control, 1930s » Tippett - statistical sampling theory, 1935 » Operations Research (OR) Groups - OR applications in warfare » George Dantzig - linear programming, 1947 1-16Influence of Japanese Manufacturers » Refined and developed management practices that increased productivity ° Credited with fueling the “quality revolution ° Just-in-Time production