Operations Management is:

The management of systems or

processes that create goods and/or
provide services
Operations Management affects:
Companies’ ability to compete
Nation’s ability to compete
internationally
Productivity - Increasing productivity
The Three Basic Functions allows companies to maintain or
1. Finance increase their output using fewer
2. Operations workers
3. Marketing
Outsourcing - Some manufacturing work
has been outsourced to more productive
companies

Operations Management Decision

Challenges of Managing Services
 Service jobs are often less
structured than manufacturing jobs
 Customer contact is higher
 Worker skill levels are lower
 Services hire many low-skill, entry-
level workers
 Employee turnover is higher
 Input variability is higher
 Service performance can be
affected by worker’s personal
factors
Operations Management is
management of systems or processes
that create goods and/or provide
services
Operations Management affects:
Companies’ ability to compete
Nation’s ability to compete internationall
Value-added is the difference between
the cost of inputs and the value or price
of outputs.
Product packages are a combination of
The
goods and services and can make a
company more competitive.
Making
 Models
 Quantitative approaches
 Analysis of trade-offs
 Systems approach
 Establishing priorities
 Ethics
Models Are Beneficial
 Easy to use, less expensive
 Require users to organize
 Increase understanding of the
problem
 Enable “what if” questions
 Consistent tool for evaluation and
standardized format
 Power of mathematic
Limitations of Models
 Quantitative information may be
emphasized over qualitative
 Models may be incorrectly applied Historical Evolution of Operations
and results misinterpreted Management
 Non-qualified users may not
 Industrial revolution (1770’s)
comprehend the rules on how to
use the model  Scientific management (1911)
 Use of models does not guarantee Mass production
good decisions Interchangeable parts
Division of labor
Quantitative Approaches
 Linear programming  Human relations movement (1920-
 Queuing Techniques 60)
 Inventory models  Decision models (1915, 1960-70’s)
 Project models
 Influence of Japanese
 Statistical models
manufacturers
Systems Approach - “The whole is
greater than the sum of the parts.” Trends in Business
(Suboptimization)
Major trends
Pareto Phenomenon - A few factors  The Internet, e-commerce, e-
account for a high percentage of the business
occurrence of some event(s).  Management technology
80/20 Rule - 80% of problems are caused
 Globalization
by 20% of the activities.
 Management of supply chains
 Outsourcing
 Agility
 Ethical behavior