Goods
physical items that include raw materials, parts, subassemblies, and final products produced by business organizations (examples are automobiles, computers, ovens, and shampoo)
Services
activities that provide some combination of time, location, form or psychological value (examples are air travel, education, haircut, and legal counsel)
Operations Management
The management of systems or processes that create goods and/or provide services
Operations
The part of a business organization that is responsible for producing goods or services
Why Study Operations Management?
Every aspect of business revolves around operations.
Many service jobs are closely related to operations:
-Financial services
-Marketing services
-Accounting services
-Information services
There is a significant amount of interaction and collaboration amo
Basic Functions of the Business Organization
Marketing, Operations, and Finance
Supply Chain
A sequence of activities and organizations involved in producing and delivering a good or service
value-added
the difference between the cost of inputs and the value or price of outputs
How do manufacturing and service organizations differ?
manufacturing is goods-oriented and service is act-oriented -Jobs in services are often less structured than in manufacturing
-Customer contact is generally much higher in services compared to manufacturing
-In many services, worker skill levels are low c
process
one or more actions that transform inputs into outputs
feedback
measurements taken at various points in the transformation process
control
The comparison of feedback against previously established standards to determine if corrective action is needed
The operations function
includes many interrelated activities such as: forecasting, capacity planning, scheduling, managing inventories, assuring quality, motivating employees, deciding where to locate facilities, and more . . .
consists of all activities directly related to pro
What is the primary function of the operations manager?
A primary function is to guide the system by decision making.
System Design Decisions
Decisions that define the parameters under which the system operates:
Capacity
Facility location
Facility layout
Product and service planning
Acquisition and placement of equipment
These are typically strategic decisions that require long-term commitment
System Operation Decisions
Decisions you make day to day on a regular basis:
Management of personnel
Inventory management and control
Scheduling
Project management
Quality assurance
Operations managers spend more time on these decisions than any other decision area because they mak
Why the decline in manufacturing employment?
Increasing productivity allows companies to maintain or increase their output using fewer workers, Some manufacturing work has been outsourced to more productive companies, and Manufacturers are increasingly using contract and temporary labor which no lon
Model
an abstraction of reality; a simplified representation of something
Lead time
the time between ordering a good or service and receiving it.
System
a set of interrelated parts that must work together
Pareto phenomenon
a few factors account for a high percentage of the occurrence of some event(s)
Ethical issues in operations management
Financial statements
Worker safety
Product safety
Quality
The environment
The community
Hiring and firing workers
Closing facilities
Workers rights
Craft Production
System in which highly skilled workers use simple, flexible tools to produce small quantities of customized goods. this is how goods were produced in the earliest days of manufacturing
The Industrial Revolution
Pre-________ Revolution
Craft production was slow and costly
Some key elements:
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
M
Scientific Management
-Movement was led by efficiency engineer, Frederick Winslow Taylor. often called the father of this.
-Believed in a "science of management" based on observation, measurement, analysis and improvement of work methods, and economic incentives
-Management is
Frank Gilbreth
was an industrial engineer who is often referred to as the father of motion study. He developed principles of motion economy that could be applied to incredible small portions of a task. contributed heavily to the scientific management movement
Henry Gantt
recognized the value of non-monetary rewards to motivate workers, and developed a widely used system of scheduling, called Gantt charts. contributed heavily to the scientific management movement
Harrington Emerson
applied Taylor's ideas to organization structure and encouraged the use of experts to improve organizational efficiency. He tested in a congressional hearing that railroads could save a million dollars a day by applying principles of scientific management
Henry Ford
A great industrialist, employed scientific management techniques in his factories. He adopted the scientific management principles espoused by Fredrick Winslow Taylor. He introduced the assembly line and mass production. Also used division of labor. contr
Mass Production
System in which low-skilled workers use specialized machinery to produce high volumes of standardized goods. Introduced by Henry Ford
Interchangeable Parts
Parts of a product made to such precision that they do not have to be custom fitted, attributed to Eli Whitney
Division of Labor
A concept used by Ford that Adam Smith wrote about in the Wealth of Nations. The breaking up of a production process into small tasks, so that each worker performs a small portion of the overall job
Human Relations Movement
The human relations movement emphasized the importance of the human element in job design
Lillian Gilbreth - worked with her husband, focusing on the human factor of work
Elton Mayo - Hawthorne studies on worker motivation, 1930
Abraham Maslow - motivatio
F.W. Harris
developed one of the first models in 1915 which was a mathematical model for inventory management
Dodge, Romig, and Shewart
3 coworkers at Bell Telephone Labs, developed statistical procedures for sampling and quality control in the 1930s.
L.H.C. Tippett
conducted studies that provided the groundwork for statistical sampling theory in 1935
Operations Research groups
Operations research applications in warfare in 1940
George Dantzig
linear programming, 1947
Influence of Japanese Manufacturers
Refined and developed management practices that increased productivity
Credited with fueling the "quality revolution"
Just-in-Time production
E-Business
Use of the internet to transact business
E-Commerce
Consumer-to-business transactions
technology
the application of scientific discoveries to the development and improvement of goods and services
product and service technology
the discovery and development of new products and services
process technology
refers to methods, procedures, and equipment used to produce goods and services
information technology (IT)
refers to the science and use of other computers and other electronic equipment to store, process, and send information
sustainability
using resources in ways that do not harm ecological systems that support human existence
agility
the ability of an organization to respond quickly to demands or opportunities
Six Sigma
A process for reducing costs, improving quality, and increasing customer satisfaction
Lean system
system that uses minimal amounts of resources to produce a high volume of high-quality goods with some variety
Outsourcing
Buying goods or services instead of producing them in-house