introduction to production & operations management unit 1
- 1. 1-1 Introduction to Operations Management CHAPTER 1 Introduction to Operations Management By IRFAN ISHAQ IRFAN ISHAQ M.SC( M.SC(MATH MATH) ) M.SC( M.SC(INFORMATION &OPERATIONS MANAGEMENT INFORMATION &OPERATIONS MANAGEMENT) ) M.PHIL( M.PHIL(BUSINESS MANAGEMENT BUSINESS MANAGEMENT) )
- 2. 1-2 Introduction to Operations Management TEXT BOOKS TEXT BOOKS Operations Management by William J.Stevenson. Operations Management for Competitive Advantage by Chase-Jacobs- Aquilano. Foundation of Operation Management by Larry P. Ritzman and Lee J. Krajewski 2
- 3. 1-3 Introduction to Operations Management Lecture 1 Lecture 1 Definition of POM. Nature and Scope of Operations Management. Concept of Production. Production process of goods and services. Input output transformation. OM Decisions. POM in practice. POM across organizations. Historical evolution of POM.
- 4. 1-4 Introduction to Operations Management 4 Learning Objectives Learning Objectives Define and explain OM Explain the role of OM in business Describe the decisions that operations managers make Describe the differences between service and manufacturing operations Identify major historical developments in OM
- 5. 1-5 Introduction to Operations Management Functional Departments of an Organization Functional Departments of an Organization The management of systems or processes that create goods and/or provide services Figure 1.1
- 6. 1-6 Introduction to Operations Management Production v/s Manufacturing Manufacturing: is the process of value addition to the raw material by transforming it into something else. For example Transforming wooden blocks into furniture. Transforming flour into bread. Manufacture pen, Laptop, Batteries, Electronics equipment. Production: is the creation of goods and services. It is different from manufacturing in the sense that here creation take place instead of transformation. For example Veterinary and agricultural production. Production of movies. Services.
- 7. 1-7 Introduction to Operations Management INTRODUCTION INTRODUCTION Operations: Is that part of a business that is responsible of producing goods or services. Goods: Physical items produced by business organizations. Services: Activities that provide some combination of time, location and psychological value.
- 8. 1-8 Introduction to Operations Management Allocation GDP by sector Allocation GDP by sector Developed Developing Underdeveloped Agriculture 1-5 10-30 20-30 Industry 20-30 20-30 30-40 Services 70-80 50-60 40-45 Examples US, GERMANY Italy, Canada, France Pakistan, India, Indonesia, Ethiopia Nigeria, Sudan Combodia, Bhutan,
- 9. 1-9 Introduction to Operations Management
- 10. 1-10 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
- 11. 1-11 Introduction to Operations Management Manufacturing Vs Services Manufacturing Vs Services Characteristic Manufacturing Service Output Customer contact Uniformity of input Labor content Uniformity of output Measurement of productivity Opportunity to correct Tangible Low High Low High Easy High High Intangible High Low High Low Difficult Low Low quality problems Inventory High
- 12. 1-12 Introduction to Operations Management Production and operations management Production and operations management POM is the management of systems or processes that generate or create goods or provide services. Operations Management affects: Companies ability to compete Nations ability to compete internationally
- 13. 1-13 Introduction to Operations Management Operations Management Operations Management The difference between the cost of inputs and the value or price of outputs. Figure 1.2
- 14. 1-14 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
- 15. 1-15 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
- 16. 1-16 Introduction to Operations Management Input/output transformation Input/output transformation SYSTEM INPUTS RESOURCES TRANSFORM ATION FUNCTION DESIRED OUTPUT Airline Travelers Airplanes, crews, ticketing system Move to destination On time, safe delivery to destination Hospital Restaurant Department store Automobile factory 16
- 17. 1-17 Introduction to Operations Management Input/output transformation Input/output transformation SYSTEM INPUTS RESOURCES TRANSFORM ATION FUNCTION DESIRED OUTPUT Hospital Patients Doctors, equipments, medicines Health care Healthy individuals Restaurant Hungry customers Food, environment, taste, quality Well prepared, well served food Satisfied customers Department store Shoppers Displays, stock of goods Attract shoppers, promote products Sales to satisfied customers Automobile factory Sheet steels, engine parts Tools, equipments, workers Assembly of cars High quality cars. 17
- 18. 1-18 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
- 19. 1-19 Introduction to Operations Management Why organization need Operations Manager Why organization need Operations Manager An operation manager controls the processes by which value is added from conversion of inputs to outputs. A primary function of operations manager is to guide the system by decision making. What are organizations An organization is an business entity that can work for profit or non profit purposes to generate a value added product or services for its customers. 19
- 20. 1-20 Introduction to Operations Management Operations manager is more involve in operation design decisions than any other decision area. They still have a vital stake in system design. OM Decisions OM Decisions
- 21. 1-21 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 Product or service be designed Who To do the work
- 22. 1-22 Introduction to Operations Management Decision Making Decision Making Models Quantitative approaches Analysis of trade-offs Systems approach Establishing priorities Ethics
- 23. 1-23 Introduction to Operations Management Models Models A model is an abstraction of reality. – Physical – Schematic – Mathematical What are the pros and cons of models? Tradeoffs
- 24. 1-24 Introduction to Operations Management Models Are Beneficial Models Are Beneficial Easy to use, less expensive Identify areas where improvements required Increase understanding of the problem Enable to analyze“what if” questions
- 25. 1-25 Introduction to Operations Management Quantitative Approaches Quantitative Approaches • Linear programming • Queuing Techniques • Inventory models • Project models (Project evaluation & review technique, CPM) • Statistical models
- 26. 1-26 Introduction to Operations Management Systems Approach Systems Approach “The whole is greater than the sum of the parts.” Suboptimization Suboptimization
- 27. 1-27 Introduction to Operations Management Pareto Phenomenon Pareto Phenomenon • A few factors account for a high percentage of the occurrence of some event(s). • 80/20 Rule - 80% of problems are caused by 20% of the activities. How do we identify the vital few?
- 28. 1-28 Introduction to Operations Management Historical Evolution of Operations Historical Evolution of Operations Management Management Industrial revolution (1770’s) Craft production Steam engine (18th century) Scientific management (1911) F.W. Taylor (studied work methods) Mass production Interchangeable parts Division of labor
- 29. 1-29 Introduction to Operations Management Human relations movement (1920-60) Emphasize human element in job design. Elton introduce the employee motivation concept Douglas McGregor gives theory X & Y Decision models (1915, 1960-70’s) For inventory and quality control Influence of Japanese manufacturers
- 30. 1-30 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 (How fast you respond to the market needs)
- 31. 1-31 Introduction to Operations Management Simple Simple Product Supply Chain Product Supply Chain Figure 1.7 Supply Chain: A sequence of activities And organizations involved in producing And delivering a good or service
- 32. 1-32 Introduction to Operations Management Figure 1-8 Figure 1-8
- 33. 1-33 Introduction to Operations Management Stage of Production Value Added Value of Product Farmer produces and harvests wheat $0.15 $0.15 Wheat transported to mill $0.08 $0.23 Mill produces flour $0.15 $0.38 Flour transported to baker $0.08 $0.46 Baker produces bread $0.54 $1.00 Bread transported to grocery store $0.08 $1.08 Grocery store displays and sells bread $0.21 $1.29 Total Value-Added $1.29 A Supply Chain for Bread A Supply Chain for Bread
- 34. 1-34 Introduction to Operations Management
- 35. 1-35 Introduction to Operations Management