Operation Management: Chapter 1

Output/(Labor+Material+Overhead)

Multifactor Productivity

# of units X $ of units

Output

# of hours X wage per hour

Labor

((Current Productivity-Previous Productivity)/Previous Productivity) X 100%

Productivity Growth

What is Operations?

The part of a business organization that is responsible for producing goods or services

How can we define operations management?

The management of systems or processes that create goods and/or provide services

Goods

Physical items that include raw materials, parts, subassemblies and final products such as automobiles, computers, ovens, etc.

Services

activities that provide some combination of time, location, form or psychological value such as air travel, education, haircuts, legal counsel, etc.

Supply Chain

A sequence of activities and organizations involved in producing and delivering a good or service

The Transformation Process

(Inputs>Transformation/Conversion Process>Outputs) ><Control

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

Functions that overlap

Marketing, Finance and Operations

Functions in Operations Management

Forecasting
Capacity Planning
Facilities and Layout
Scheduling
Managing Inventories
Assuring Quality
Motivating Employees
Deciding Where to Locate Facilities

Role of the Operations Manager

All activities directly related to producing goods or providing services - guide the system by decision making (System design decisions and system operations decisions)

System Operation

Generally tactical and operational decisions (Management of personnel, inventory management and control, scheduling, project management, quality assurance)

Six Sigma (Process Variation)

Developed by Motorola; seeks to improve the process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes

4 Sources of Process Variation

1. Variety of goods or services being offered
2. Structural variation in demand
3. Random Variation
4. Assignable Variation

Variety of goods or services being offered

The greater the variety of goods and services offered, the greater the variation in production or service requirements

Structural variation in demand

These are specifically predictable. They are important for capacity planning

Random variation

Natural variation that is present in all processes. Generally it cannot be influenced by managers.

Assignable variation

Variation that has identifiable sources. This type of variation can be reduced or eliminated by analysis of the current section.

Modeling

An abstraction of reality; a simplification of something
Common features:
-simplifications of real-life phenomena
-they omit unimportant details of the real-life systems they mimic so that attention can be focused on the most important aspects of the real

Benefits of Models

-Generally easier to use and less expensive than the real system
-Require users to organize and sometimes quantify information
-Increase understanding of the problem
-Enable managers to analyze "What If" questions
-Serve as a consistent tool for evaluatio

Quantitative Approaches

A decision making approach that frequently seeks to obtain a mathematically optimal solution

Examples of Quantitative Approaches

-Linear Programming
-Queuing Techniques
-Inventory Models
-Project Models
-Forecasting Techniques
-Statistical Models

When did the Industrial Revolution begin?

England in the 1770s

Famous Inventions from the Industrial Revolution

-Steam Engine
-Cotton Gin

Craft Production

-Pre-Industrial Revolution
-A system in which highly skilled workers use simple, flexible tools to produce small quantities of customized goods

4 Principles of Frederick Taylor's Scientific Management

1. Replace rule-of-thumb work methods with methods based on a scientific study of the tasks.
2. Scientifically select, train, and envelop each employee rather than passively leaving them to train themselves.
3. Provide detailed instruction and supervision