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1-1 Introduction to Operations Management
William J. Stevenson
Operations Management
8th edition
1-2 Introduction to Operations Management
CHAPTER
1
Introduction to
Operations Management
McGraw-Hill/Irwin
Operations Management, Eighth Edition, by William J. Stevenson
Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
1-3 Introduction to Operations Management
Operations Management
Operations Management
The management of systems or processes
that create goods and/or provide services
Organization
Finance Operations Marketing
Figure 1.1
1-4 Introduction to Operations Management
Value-Added
Value-Added
The difference between the cost of inputs
and the value or price of outputs.
Inputs
Land
Labor
Capital
Transformation/
Conversion
process
Outputs
Goods
Services
Control
Feedback
Feedback
Feedback
Value added
Figure 1.2
1-5 Introduction to Operations Management
Steel production
Automobile fabrication
Home remodeling
Retail sales
Auto Repair
Appliance repair
Maid Service
Manual car wash
Teaching
Lawn mowing
High percentage goods
Low percentage service
Goods-service Continuum
Goods-service Continuum
Low percentage goods
High percentage service
Figure 1.3
1-6 Introduction to Operations Management
Food Processor
Food Processor
Inputs Processing Outputs
Raw Vegetables Cleaning Canned
vegetables
Metal Sheets Making cans
Water Cutting
Energy Cooking
Labor Packing
Building Labeling
Equipment
Table 1.2
1-7 Introduction to Operations Management
Hospital Process
Hospital Process
Inputs Processing Outputs
Doctors, nurses Examination Healthy
patients
Hospital Surgery
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy
Table 1.2
1-8 Introduction to Operations Management
Production of Goods vs. Delivery of Services
Production of Goods vs. Delivery of Services
 Production of goods – tangible output
 Delivery of services – an act
 Service job categories
 Government
 Wholesale/retail
 Financial services
 Healthcare
 Personal services
 Business services
 Education
1-9 Introduction to Operations Management
Key Differences
Key Differences
1. Customer contact
2. Uniformity of input
3. Labor content of jobs
4. Uniformity of output
5. Measurement of productivity
6. Production and delivery
7. Quality assurance
8. Amount of inventory
1-10 Introduction to Operations Management
 Operations Management includes:
 Forecasting
 Capacity planning
 Scheduling
 Managing inventories
 Assuring quality
 Motivating employees
 Deciding where to locate facilities
 And more . . .
Scope of Operations Management
Scope of Operations Management
1-11 Introduction to Operations Management
 The operations function
 Consists of all activities directly related to
producing goods or providing services
1-12 Introduction to Operations Management
U.S. Manufacturing vs. Service Employment
0
20
40
60
80
100
45 50 55 60 65 70 75 80 85 90 95 00
Year
P
e
r
c
e
n
t
Year Mfg. Service
45 79 21
50 72 28
55 72 28
60 68 32
65 64 36
70 64 36
75 58 42
80 44 46
85 43 57
90 35 65
95 32 68
00 30 70
Figure 1.4
1-13 Introduction to Operations Management
Responsibilities of Operations Management
Responsibilities of Operations Management
Products & services
Planning
– Capacity
– Location
–
– Make or buy
– Layout
– Projects
– Scheduling
Controlling/Improving
– Inventory
– Quality
Organizing
– Degree of centralization
– Process selection
Staffing
– Hiring/laying off
– Use of Overtime
Directing
– Incentive plans
– Issuance of work orders
– Job assignments
– Costs
– Productivity
Table 1.6
1-14 Introduction to Operations Management
Key Decisions of Operations Managers
Key Decisions of Operations Managers
 What
What resources/what amounts
 When
Needed/scheduled/ordered
 Where
Work to be done
 How
Designed
 Who
To do the work
1-15 Introduction to Operations Management
Business Operations Overlap
Business Operations Overlap
Operations
Finance
Figure 1.5
Marketing
1-16 Introduction to Operations Management
Operations Interfaces
Operations Interfaces
Public
Relations
Accounting
Industrial
Engineering
Operations
Maintenance
Personnel
Purchasing
Distribution
MIS
Legal
1-17 Introduction to Operations Management
Trends in Business
Trends in Business
 Major trends
 The Internet, e-commerce, e-business
 Management technology
 Globalization
 Management of supply chains
 Agility

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chapter 1 stevenson book.ppt slides of 1st

  • 1. 1-1 Introduction to Operations Management William J. Stevenson Operations Management 8th edition
  • 2. 1-2 Introduction to Operations Management CHAPTER 1 Introduction to Operations Management McGraw-Hill/Irwin Operations Management, Eighth Edition, by William J. Stevenson Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.
  • 3. 1-3 Introduction to Operations Management Operations Management Operations Management The management of systems or processes that create goods and/or provide services Organization Finance Operations Marketing Figure 1.1
  • 4. 1-4 Introduction to Operations Management Value-Added Value-Added The difference between the cost of inputs and the value or price of outputs. Inputs Land Labor Capital Transformation/ Conversion process Outputs Goods Services Control Feedback Feedback Feedback Value added Figure 1.2
  • 5. 1-5 Introduction to Operations Management Steel production Automobile fabrication Home remodeling Retail sales Auto Repair Appliance repair Maid Service Manual car wash Teaching Lawn mowing High percentage goods Low percentage service Goods-service Continuum Goods-service Continuum Low percentage goods High percentage service Figure 1.3
  • 6. 1-6 Introduction to Operations Management Food Processor Food Processor Inputs Processing Outputs Raw Vegetables Cleaning Canned vegetables Metal Sheets Making cans Water Cutting Energy Cooking Labor Packing Building Labeling Equipment Table 1.2
  • 7. 1-7 Introduction to Operations Management Hospital Process Hospital Process Inputs Processing Outputs Doctors, nurses Examination Healthy patients Hospital Surgery Medical Supplies Monitoring Equipment Medication Laboratories Therapy Table 1.2
  • 8. 1-8 Introduction to Operations Management Production of Goods vs. Delivery of Services Production of Goods vs. Delivery of Services  Production of goods – tangible output  Delivery of services – an act  Service job categories  Government  Wholesale/retail  Financial services  Healthcare  Personal services  Business services  Education
  • 9. 1-9 Introduction to Operations Management Key Differences Key Differences 1. Customer contact 2. Uniformity of input 3. Labor content of jobs 4. Uniformity of output 5. Measurement of productivity 6. Production and delivery 7. Quality assurance 8. Amount of inventory
  • 10. 1-10 Introduction to Operations Management  Operations Management includes:  Forecasting  Capacity planning  Scheduling  Managing inventories  Assuring quality  Motivating employees  Deciding where to locate facilities  And more . . . Scope of Operations Management Scope of Operations Management
  • 11. 1-11 Introduction to Operations Management  The operations function  Consists of all activities directly related to producing goods or providing services
  • 12. 1-12 Introduction to Operations Management U.S. Manufacturing vs. Service Employment 0 20 40 60 80 100 45 50 55 60 65 70 75 80 85 90 95 00 Year P e r c e n t Year Mfg. Service 45 79 21 50 72 28 55 72 28 60 68 32 65 64 36 70 64 36 75 58 42 80 44 46 85 43 57 90 35 65 95 32 68 00 30 70 Figure 1.4
  • 13. 1-13 Introduction to Operations Management Responsibilities of Operations Management Responsibilities of Operations Management Products & services Planning – Capacity – Location – – Make or buy – Layout – Projects – Scheduling Controlling/Improving – Inventory – Quality Organizing – Degree of centralization – Process selection Staffing – Hiring/laying off – Use of Overtime Directing – Incentive plans – Issuance of work orders – Job assignments – Costs – Productivity Table 1.6
  • 14. 1-14 Introduction to Operations Management Key Decisions of Operations Managers Key Decisions of Operations Managers  What What resources/what amounts  When Needed/scheduled/ordered  Where Work to be done  How Designed  Who To do the work
  • 15. 1-15 Introduction to Operations Management Business Operations Overlap Business Operations Overlap Operations Finance Figure 1.5 Marketing
  • 16. 1-16 Introduction to Operations Management Operations Interfaces Operations Interfaces Public Relations Accounting Industrial Engineering Operations Maintenance Personnel Purchasing Distribution MIS Legal
  • 17. 1-17 Introduction to Operations Management Trends in Business Trends in Business  Major trends  The Internet, e-commerce, e-business  Management technology  Globalization  Management of supply chains  Agility