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1 Introduction To OM
1 Introduction To OM
Chapter 1
Introduction to Operations Management
Organization of Businesses
Three
Operations/Production
basic functions
Finance-Accounting
Organization of Businesses
(Cont.)
Marketing
Selling
Promoting
Assessing customer wants and needs
Communicating those needs to operations
The
Operations
Marketing
6
Finance
Value-Added
The difference between the cost of inputs
and the value or price of outputs.
Value added
Inputs
Land
Labor
Transformation/
Outputs
Conversion
Goods
Services
process
Capital
Feedback
Control
Feedback
Feedback
PROCESS
OUTPUTS
Raw vegetables
Cleaning
Metal sheets
Cutting/Rolling/Welding Cans
Energy, Vegetables
Cutting
Cut vegetables
Energy, Water,
Vegetables
Cooking
Boiled
vegetables
Clean vegetables
Can food
Processing
Outputs
Examination
Surgery
Monitoring
Medication
Therapy
Healthy
patients
Types of Operations
Operation
Examples
Goods producing
Storage/transportation
Exchange
Entertainment
Communication
10
Service Organizations
and
manufacturing Organization
Organizational Charts
Commercial Bank
Operations
Finance
Marketing
Teller
Scheduling
Check Clearing
Collection
Transaction
processing
Facilities
design/layout
Vault operations
Maintenance
Security
Investments
Security
Real estate
Loans
Commercial
Industrial
Personal
Mortgage
Accounting
Auditing
Trust Department
Organizational Charts
Airline
Operations
Ground support
equipment
Maintenance
Ground Operations
Facility
maintenance
Catering
Flight Operations
Crew scheduling
Flying
Communications
Dispatching
Management science
Finance/
accounting
Accounting
Payables
Receivables
General Ledger
Finance
Cash control
International
exchange
Marketing
Traffic
administration
Reservations
Schedules
Tariffs (pricing)
Sales
Advertising
Organizational
Charts
Manufacturing
Operations
Facilities
Construction; maintenance
Design
Industrial engineering
Process analysis
Finance/
accounting
Disbursements/
credits
Receivables
Payables
General ledger
Funds Management
Money market
International
exchange
Capital requirements
Stock issue
Bond issue
and recall
Marketing
Sales
promotion
Advertising
Sales
Market
research
2.
3.
4.
8.
9.
10.
1.
2.
3.
4.
5.
6.
7.
Responsibilities of Operations
Management
Planning
Capacity, utilization
Location
Choosing products or services
Make or buy
Layout
Projects
Scheduling
Market share
Plan for risk reduction, plan B?
Forecasting
17
Operations Managers
Controlling
Organization
Inventory
Quality
Costs
Degree of standardization
Subcontracting
Process selection
Staffing
Hiring/lay off
Use of overtime
Incentive plans
Job assignments
18
Example
If units produced = 1000 and labor-hours used is 250
then:
3.
4.
5.
Improving Productivity at
Starbucks
A team of 10 analysts
continually look for ways to
save time. Some
improvements:
Stop requiring signatures
on credit card purchases
under $25
Saved 8 seconds
per transaction
Saved 14 seconds
per drink
Saved 12 seconds
per shot
Improving Productivity at
Starbucks
A team of 10 analysts
continually look for ways to
shave time. Some
improvements:
Operations improvements have helped Starbucks
Saved 14 seconds
per drink
Saved 12 seconds
per shot
Productivity
Productivity =
Units produced
Input used
Productivity Calculations
Labor Productivity
Productivity =
Units produced
Labor-hours used
1,000
=
= 4 units/labor-hour
250
Multi-Factor Productivity
Productivity =
Output
Labor + Material + Energy +
Capital + Miscellaneous