Operations management
Operations management
Operation Management
An over view
Gross Look!!!
INTRODUCTION TO
OPERATIONS MANAGEMENT
Previously called Production Management
Then Production and Operations Management
Often called Operations Management
Should not be confused with Operations Research
which are the domain of Mechanical and Industrial
Engineering.
Distinctions between OR & OM
OR relies on mathematical modeling and OM relies
on practical scenarios/industrial cases.
OR is a domain and tool of Engineers while OM is
considered to be one of the critical tools of
Managers.
OR considered more powerful to improve the whole
system where as OM can be applied to a part of
the system.
OM Concepts & Definitions
Operation is where the organizations goods &
services produced.
Operation is common to all organization-be it
small or large, private or government, local or
international, manufacturing or service giving.
OM Definitions
Operations management can be defined as:
The administration of process that transforms
inputs of labor, capital and materials in to
output bundles of products and services that
are valued by customers.
Operation is among the major
business functions!!!
System concepts in OM.
A system is defined as “a purpose full
collection of people, objects and procedures for
operating within an environment”.
Thus every organization can be represented
as a system consisting of interacting sub
systems.
System concepts in OM...
The basic process of the system converts
(transforms) the resource inputs (such as people,
plant, part processes, planning and controlling
systems) in to some useful form of outputs.
Of course, depending up on the efficiency of the
conversion process we may have undesirable outputs
too-such as pollution, scrap/wastage rejections,
losses of human life(in a hospital) etc.
System concepts in OM...
Using the generalized concepts of operations management we
can call such system as operations system and the operation
management has the prime responsibility for transforming
input in to output.
Inputs transformation process output
Note: in operations management, the objective
of combining resources under control
conditions/conversions is to transform them in
to goods and services having higher value
than the original inputs.
Thus transformation involves value adding
activities.
Input –transformation-output
relationships for typical system
System Inputs Components Transformations Output
Hospital Patients Doctors ,Nurses, Physiologica Cured person
Staff, Equipment, l
Facility, Energy,
etc
Bank Clients Teller, Staff, Exchange Loan/deposit etc.
Facility etc
College High school Teacher, Class imparting Educated person
graduate room, Books etc knowledge
Automobile Steel, Sheet, Tools, Physical Automobile
factory Engine Equipment’s,
Power etc
Restaurant Hungry Waiter, Physical Satisfied
Customer Environment, customers
Energy etc
Manufacturing operation Vs Service
operation
Similarities between manufacturing and services
Every organization whether manufacturing or service
giving, has processes (transform input in to output)
that must be designed and managed effectively.
Some type of technology be it manual or
computerized must be used in each process.
Every organization is concerned about
quality, productivity, and the timely
response to customers.
Manufacturing operation Vs Service
operation ...
Similarities between manufacturing and services
A service provider, like a manufacturer, must make
choices about the capacity, location, and lay out of
its facility.
Every organization deals with suppliers of outside
services and materials, as well as scheduling
problems.
Finally, matching staffing levels and capacities with
forecasted demand is universal problems.
Differences between manufacturing and services
More like a manufacturing organization More like a service organization
Tangible, durable product intangible product
Output that can be inventoried output that can’t be inventoried
Low customer contact high customer contact
Long response time short response time
Regional, national or international local market
market small facilities
Large facilities labor intensive
Capital intensive quality and productivity is difficult to
Quality and productivity easy to measure
measure high degree of variety of input and
High degree of uniformity of difficult to automate etc.
input& output
Ease to automate etc.
Operations management decision
making areas
Strategic Decision Operational/Tactical
Broad in scope
difficult to undo Narrow in scope
once implemented short term planning
Long term in and control problems.
nature Short term in nature
All encompassing Concerning a small
Eg. What are the group of issues
unique features of our Eg. Who will work the
product that make us second shift tomorrow?
competitive?
Operations management
decision making areas
Strategic decisions: Operational/Tactical
Production planning,
Product selection scheduling and control
and design: Inventory planning and
Process selection and control
planning Quality assurance
Facilities location Work and job design
Facilities layout and Maintenance and
Capacity planning replacement
Cost reduction and control
Why we study operations
management?
Operations management (OM) is one of the
three major functions of any organizations, and
it is integrally related to all the other business
functions.
We study operations management because we
want to know how goods and services are
produced.
We study OM to understand what operations
managers do.
Process in Operation
Env.t of OM
Internal
External Env.t
Internal -Mkting
-Finance
-Accting
-Engineering
-Personnel and labor relation
-R& D
-Purchasing and traffic
Env.t of OM...
External Env.t
Economic factors
Government regulation
Competition
Technological forces
Current trends influencing the field
of OM
Growth and dominance of services
Internationalization
Environmental quality
CHAPTER TWO
= 5 insurance polices/hours
Total or multifactor productivity measures are
generally preferable than partial productivity.
The reason for this is that focusing on
productivity improvement in a narrow
portion of an organization may actually
decrease total productivity.
Example: ABC Furniture Company produced 10,000
chairs, with annual labor and equipment cost of
$50,000 and $25000 respectively. Total productivity
can be calculated as:
Productivity: chairs/dollar input = 10000 chairs
$50000 + $ 25000
=0.133chairs/dollar input
Labor productivity, however, is measured for this
example as:
.
Suppose that a $10,000 reduction in labor can be
achieved by investing in a more advanced machine.
Labor productivity will increase to: 5 chairs/labor-
dollar.
Thus, from a productivity perspective, it would
appear that this investment is attractive.
If, however, that annual cost with the new equipment
increases to $40,000 then, total productivity will be:
And hence overall productivity would
decrease.
It is necessary, therefore to examine the
simultaneous effects of all changes on
productivity.
Improving productivity