operations
part of a business organization that is responsible for producing goods and/or services
goods
physical items that include raw materials, parts, subassemblies such as motherboards that go into computers, and final products such as cell phones and automobiles.
services
activities that provide some combination of time, location, form or psychological value
what is the ideal situation for a business organization?
to match supply and demand
operations management
the management of systems or processes that create goods and/or provide services
supply chain
the sequence of organizations - their facilities, functions and activities that are involved in producing and delivering a product or service. - value of product increases as it moves through supply chain
*sequence begins with basic suppliers or raw mater
what is an example of a simple product supply chain?
suppliers' suppliers, direct suppliers, producer, distributor, final customers
what is the conversion process of inputs into outputs?
transforming/converting inputs into outputs - inputs are used to create goods or services using one or more of the transformation processes (storing, transporting, repairing) to ensure that desired outputs are obtained
* at the transformation process - an
what is the purpose of the transformation process?
to add value
what does the term value-added mean?
the difference between the cost of inputs and the value or price of outputs.
ex. how much someone would pay for a car, vs the cost of all the parts
how are service and manufacturing jobs different in the degree of customer contact
many services (not all) involve a higher degree of customer contact
how are service and manufacturing jobs different in the labor content of jobs?
services often have a higher degree of labor content than manufacturing
how are service and manufacturing jobs different in the uniformity of inputs?
service operations are often subject to a higher degree of variability of inputs - each client, patient, etc. presents somewhat of a unique situation - manufacturing operations often have a greater ability to control the variability of inputs and have mor
how are service and manufacturing jobs different in measurement of productivity?
measurement of productivity can be more difficult for service jobs due to the high variation of inputs
ex. it may seem as though the doctor with more difficult cases would be less productive than one with more routine cases
how are service and manufacturing jobs different in quality assurance?
quality assurance is usually more challenging for services due to the higher variation in input and because delivery and consumption occur at the same time.
manufacturing occurs away from the customer and allows mistakes that are identified to be correcte
how are service and manufacturing jobs different in inventory?
services tent o involve less use of inventory than manufacturing operations - costs of having inventory on hand are lower than they are for manufacturing
how are service and manufacturing jobs different inwages?
manufacturing jobs are often well paid, and have less wage variation than service jobs which range from minimum wage to highly paid professional services
how are service and manufacturing jobs different in ability to patent?
product designs are often easier to patent than service designs
what are some of the primary factors for both?
1. forecasting and capacity planning to match supply and demand
2. process management
3. managing variations
4. monitoring and controlling costs and productivity
5. supply chain management
6. location planning, inventory management, quality control and sc
process
consists of one or more actions that transforms inputs into outputs
*central role of management is process management
business process
suppliers - a business organization, department, or an operation - customer
what are the three categories of business processes?
1. upper-management processes - govern the operation of the entire organization (organizational governance, organizational strategy)
2. operational processes - core processes that make up the value stream (purchasing, production, marketing, sales)
3. supp
what are business process management activities?
process design, process execution and process monitoring
what are the four basic sources of variation and where do they occur?
variation occurs in almost all business processes
1. the variety of goods or services being offered
2. structural variation in demand (trends and seasonal variation)
3. random variation (natural variability)
4. assignable variation (defective inputs, inco
what is a primary function of an operations manager?
guide the system by decision making. certain decisions affect the design of the system while others affect the operation of the system
what is system design?
involves decisions that relate to system capacity, the geographic location of facilities, arrangement of departments and placement of equipment within physical structures, product and service planing and acquisition of equipment.
*often strategic long-ter
what is system operation?
involves management of personnel, inventory planning and control, scheduling, project management and quality control
*tactical and operational decisions and feedback for measurement and control
how is purchasing a part of the operations function?
responsibility for procurement of materials, supplies and equipment. close contact with operations is necessary to ensure correct quantities and timing of purchases.
how is industrial engineering part of the operations function?
is often concerned with scheduling, performance standards, work methods, quality control and material handling.
how is distribution involved in the operations function?
involves the shipping of goods to warehouses, retail outlets or final customers
how is maintenance involved in the operations function?
responsible for general upkeep and repair of equipment, building and grounds, heating and air conditioning; removing toxic wastes; parking and even security.
what is the current trend for manufacturing and service sector?
service >70% of US jobs
number of people working in service is increasing while manufacturing is not.
this is because...
operations function in manufacturing is finding more productive ways to produce goods and the companies can use less workers. also, ma
What are some of the activities that finance and operations management personnel exchange information and expertise in?
1. budgeting - should be periodically prepared and sometimes need to be adjusted
2. economic analysis of investment proposals - evaluation of alternative investments in equipment and plant
3. provision of funds - funding of operations (the amount and timi
lead time
the time between ordering a good or service and receiving it - to give customers realistic estimates of how long it will take to fill their orders
models
*key tool used by decision makers
an abstraction of reality, a simplified representation of something
ex. automobile test tracks, child's toy car, income statements, financial ratios
What are the three classifications of models?
1. physical models - look like their real-life counterparts
ex. miniature cars, airplanes, toy animals, trains
2. schematic models - more abstract than their physical counterparts - they have less resemblance to physical reality
ex. graphs and charts, blu
what should we know about every model?
1. its purpose
2. how its used to generate results
3. how these results are interpreted and used
4. what assumptions and limitations apply
why are models beneficial?
easy to use, less expensive, indicate areas where additional information is needed, increase understanding of a problem, enable managers to analyze what-if questions, serve as a tool for evaluation, using mathematics to bear on a problem
what are the three limitations of models?
1. quantitative information is emphasized at the expensive of qualitative
2. models may be incorrectly applied and results misinterpreted
3. use of models does not guarantee good decisions
quantitative approaches
been accepted because of calculators and computers capable of handling the required calculations
ex. linear programming, queuing techniques, inventory models, project models, forecasting, statistical models, etc.
*most important decisions are based on qua
trade-off decisions
operations frequently come across these
ex. deciding how much inventory to stock - decision maker must take into account the trade-off between the increased level of customer service that the additional inventory would yield and the increased costs to sto
system
almost always beneficial in decision making
*set of interrelated parts that must work together
ex. business organization - its arts can be thought of as a system composed of subsystems
**the whole is greater than the sum of its individual parts
what is the Pareto phenomenon?
a few factors account for a high percentage of the occurrance of some events - will have greatest impact and should have highest priority
In the early days of manufacturing, what is craft production?
highly skilled workers using simple, flexible tools produced goods according to customer specifications
*slow and costly
Explain Taylor's beliefs on scientific management
science of management" based on observation, measurement, analysis and improvement of work methods and economic incentives
- believed management should be responsible for planning, carefully selecting and training workers, finding the best way to perform
Who else was part of Taylor's movement?
Frank Gilbreth (industrial engineer - motion economy)
Henry Gantt (nonmonetary rewards to motivate workers - GANTT charts for scheduling)
Harrington Emerson (using Taylor's movement to help organizational efficiency)
Henry Ford (used scientific management
Explain Ford's contribution of mass production to the automotive industry
low-skilled workers use specialized machinery to produce high volumes of standardized goods
what are interchangeable parts?
parts of a product made to such precision that they did not have to be custom fitted - parts could be used for replacement parts
decrease in assembly time and cost
what was the division of labor that Ford also used?
breaking up of a production process into small tasks, so that each worker performs a small portion of the overall job
e-business
electronic business, use of internet to transact business, changing way organizations interact with their customers and suppliers
e-commerce
consumer to business transactions such as buying online or requesting information
technology
application of scientific discoveries to the development and improvement of goods and services
knowledge, materials, methods and equipment
What are the three kinds of technology that operations management is primarily concerned with?
1. product and service technology - discovery and development of new products and services
2. process technology - methods, procedures, and equipment used to produce goods and provide services
3. information technology - science and use of computers and o
six sigma process
or process analysis and improvement - process for reducing costs, improving quality and increasing customer satisfaction
agility
ability of an organization to respond quickly to demands or opportunities in volume of demand or changes in product/service offerings
lean systems
system that uses minimal amounts of resources to produce a high volume of high-quality goods with some variety - qualities from both mass production and craft production
*more involved in maintaining and improving system than their mass production counter
what are some of the key issues for today's business operations?
1. economic conditions - lingering recession and slow recovery
2. innovating - finding new or improved products or services, technology, processes, etc.
3. quality problems - need to improve how operations are managed
4. risk management - managing risk -
sustainability
service and production processes that use resources in ways that do not harm ecological systems that support both current and future human existence
ethics
a standard of behavior that guides how one should act in various situations
ethical framework
sequence of steps to guide thinking and subsequent decisions or actions
what are the five principles for thinking ethically?
1. utilitarian principle - good done by an action should outweigh any harm it causes or may cause (don't let a person who has been drinking, drive)
2. rights principle - respect and and protect moral rights of others
3. fairness principle - equals should
cycle time
time from when you start until when it is delivered
explain the need to improve operations in the management of supply chains
Organizations have adopted practices such as lean operation and total quality management - these were able to achieve improved quality while wringing out much of the excess costs out
explain the need to increase levels of outsourcing in the management of supply chains
organizations are increasing their levels of outsourcing - buying goods or services instead of producing or providing hem themselves. Organizations can then spend increasing amounts on supply-related activities
explain increasing transportation costs and competitive pressures in management of supply chains
- transportation costs are increasing and should be carefully managed
- competitive pressures have let to an increasing number of new products, shorter product development cycles and increased demand for customization
explain increasing globalization in management of supply chains
this has expanded the physical length of supply chains - a global supply chain increases the challenges of managing a supply chain - having far away customers means longer lead times and greater opportunities for disruption of deliveries, also the cultura
explain the complexity of supply chains and the need to manage inventories in management of supply chains
- supply chains are complex they have many inherent uncertainties that ca affect them such as inaccurate forecasting
- most coordinate levels of inventory through a supply chain shortages and excess inventories can both be troublesome
what are the two types of decisions related to supply chain management?
1. strategic - design and policy decisions
2. operational - relate to day-to-day activities