Operations Management

Operations refers to the way that members

of an organization transforms inputs
labour, money, supplies, equipment and so
on into outputs goods, or services.

Physical transformations
Locational transformations
Exchange transformations
Information transformations

Product organizations:
Organization that produces tangible goods that can be
mass-produced and stored for later consumption
Service organization:
Organization that produces intangible goods that require
consumer participation and cannot be stored

The Importance of Operations

Management
Operations management refers to the complex set of
management activities involved in planning, organization,
leading, and controlling and organizations operations.
Types of productivity rations:
Total productivity: Relates to the value of all out put to the
value of all input, using the ratio total output/total input
Partial productivity: Relates the value of all output to the
value of major categories or inputs, using the ratio total
output/partial input.
Eg: Legal clinic output per work-hour ratio
Eg: no of units to bw reworked, amount of scrap, length of
time of operation etc.

Major competitive priorities for

operations management
Price: Keep costs low so that the organization can offer
good prices and still make a profit
Quality level: High performance design and fast delivery
time
High performance design superior features, close
tolerances, and greater durability of the product or service
Eg: Pizza Hut
Quality reliability: Means consistent quality and on-time
delivery
It measures the frequency with which the design
specifications are met
Eg: McDonald uniform design specifications

Major competitive priorities for

operations management
Flexibility: Refers to both product and volume flexibility
Product flexibility means that the product designs can be
changed quickly and that managers emphasize making
such changes to please customers they customize products
to individual preference
In this case the level of output for an individual products is
necessarily low because the firm competes primarily on its
ability to produce difficult, one-of-a kind products
Volume flexibility: is the ability to make quick changes in
the rate of production as the demand for a firms product
changes
Eg: McDonald

Designing Operations Systems

What to Produce?
Design for Manufacture
CAD Design and drafting performed
interactively on a computer
Bill of materials: Listing of the type and number
of parts needed to produce a given product.
How many to produce?
Also called capacity planning: A process of
forecasting demand and then deciding what
resources will be needed to meet that demand

The complex process of capacity planning

Forecast future demand, including insofar as
possible, the likely impact of technology,
competition, and other events
Translate these forecasts into actual physical
capacity requirements
Generate alternative capacity plans to meet the
requirements.
Analyze and compare the economic effects of the
alternative plans
Identify and compare the risks and strategic effects
of the alternative plans.

How to produce?
Major technological choice:
Does technology exist to produce the product?
Should innovations be licensed from elsewhere,
such as foreign countries, or should an internal
efforts be made to develop the needed technology
Minor technological choice:
Evaluating alternative transformation processes
for costs and for consistency with the desired
product and capacity plans.
Should the process be continuous?
Specific component choice:

How to produce?
What type of equipment should be used?
Should the equipment be dedicated (tied to a specific
purpose) or general purpose (leaving open the possibility
of using it to make other products)?
To what degree should machines replace people in
performing anc controlling the work?
Process flow choice:
How should the product or service flow through the
operations system
This final process selection stop determines how materials
and products will move through the system
Tools Assembly drawings, assembly charts, rout sheets
and process flow charts
Analysis leads to resequencing, combining or eliminating
operations

Facility Location planning

Factors to be considered: Fixed capital costs for construction,
land, and equipment
Variable costs wages, taxes, energy and materials acquisitions,
and distribution
Layout planning: How to arrange space in the physical facilities
Space must be provided for
Productive facilities such as work stations and materials
handling equipment
Nonproductive facilities such as storage areas and
maintenance facilities
Support facilities such as offices, restrooms, waiting rooms,
cafeterias and parking lots.
A good layout minimizes materials handling, maximizes
workers and equipment efficiency, and satisfies a host of other
factors, such as minimizing worker exposure to hazardous
fumes

Who will do the work

Issues to be considered for job design:

1) The level of skills employees bring to the
workplace
2) Workplace safety
3) Workplace cooperation
Worker skills
Worker safety
Workplace collaboration

Inventory management
Inventory: Is the supply of raw materials, partially finished
goods called work in progress and finished goods an
organization maintains to meet its operational needs.
Materials requirement planning: Operational planning
system in which end products are analyzed to determine
the materials needed to produce them
Materials resource planning (MRPII) Operational
planning system that extends MRP by comparing needs to
known resources and calculates unit costs; can also be used
with other computer programs to handle order entry,
invoicing, and other operations task
Just-in-time inventory systems