8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 1/35

Lecture 1Instructor Zia-ur-Rehman

Email ziaurrehman12@hotmail.com

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 2/35

Operations Management involves:` Product and Service design` Process selection` Selection and management of technology` Design of work systems` Location planning`

Facilities planning` Quality improvement of the organization¶s products

and services

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 3/35

Operations management can be defined as:` ³The management of systems or processes that create

goods and/or provide services´` ³The ongoing activities of designing, reviewing and

using the operating system, to achieve service outputsas determined by the organization for customers´.

Contd.

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 4/35

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 5/35

G oods & ServicesG oods & Services

` Services` Intangible product` Services cannot be

inventoried` High customer contact` Short response time

` Labor intensive

` M anufacturing` Tangible product` Product can be

inventoried` Low customer contact` Longer response time

` Capital intensive

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 6/35

P roduction of G oods vs Delivery of P roduction of G oods vs Delivery of ServicesServices

Production of goods results in a tangible output.

G overnment (federal, state, local).Wholesale/retail (clothing, food, appliances, stationery, toys, etc.).Financial services (banking, stock brokerages, insurance, etc.).Health care (doctors, dentists, hospitals, etc.).Personal services (laundry, dry cleaning, hair/beauty, gardening, etc.).Business services (data processing, e-business, delivery, employmentagencies, etc.).Education (schools, colleges, etc.)

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 7/35

O n the other hand«O n the other hand«

` Both use technology` Both have quality, productivity, & response

issues`

Both must forecast demand` Both will have capacity, layout, and location

issues` Both have customers, suppliers, scheduling

and staffing issues` M anufacturing often provides services` Services often provides tangible goods

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 8/35

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 9/35

DifferencesDifferences Between G oods andBetween G oods andServiceService

Degree of customer contact.Uniformity of input.Labor content of jobs.

Uniformity of output.Measurement of productivity.Production and delivery.Quality assurance.

Amount of inventory.Evaluation of work.

Ability to patent design.

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 10/35

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 11/35

O RGAN IZAT ION

Finance Operations Marketing

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 12/35

Typical O rganization ChartTypical O rganization Chart

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 13/35

` Finance: T his area is responsible for securingfinancial resources at favorable prices andallocating those resources throughout the

organization.` Marketing: T his area is responsible for assessing

consumer wants and needs, and selling andpromoting the organization¶s goods or services.

Contd.

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 14/35

` Operations: T his area is responsible for producingthe goods or providing the services offered by theorganization.

` In other words the role of operations managementis to transform a company¶s inputs into thefinished goods or services.

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 15/35

It involves:` Inputs: T hat is capital, labor, land and information` T ransformational Processes: T hat is storing,

transporting, cutting etc.` Outputs: T hat is goods and services.

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 16/35

I nputsI nputs OutputsOutputsConversionConversionSubsystemSubsystem

Production SystemProduction System

ControlControl

SubsystemSubsystem

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 17/35

OM¶ s T ransformation P rocessOM¶ s T ransformation P rocess

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 18/35

OM¶ s T ransformation P rocessOM¶ s T ransformation P rocess

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 19/35

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 20/35

` T he essence of the operations function is to addvalue during the transformation process.

` Value Added: It is the term used to describe the

difference between the cost of inputs and thevalue or price of outputs.or

` T he net increase created during the

transformation of inputs into final outputs.

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 21/35

Firms use the money generated by value-added for ` Research and development,` Investment in new facilities and equipment,` Worker salaries, and,` Profits.

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 22/35

Value-Added: T he difference between the cost of inputs and the value or price of outputs.

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 23/35

OM¶ s Transformation RoleOM¶ s Transformation Role

` To add value

Increase product value at each stage

Value added is the net increase between output product value

and input material value

` Provide an efficient transformation

Efficiency ± means performing activities well for least possible

cost

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 24/35

Introduction to operations M anagementIntroduction to operations M anagement

` Operations: All activities that involved in theConversion Process of Input to Output

(G oods/service)

` Management: T he Process of Planning, Organizingand Controlling in achieving the desired objectives.

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 25/35

Introduction to O perationsIntroduction to O perations M anagementM anagementUniversity as an Example:University as an Example:

Input Planning &controlling

SupportiveSubsystems

Output

Students

Professor

Buildings

Class T imes

CourseDevelopment

SchoolRegulations

Book store

Library

Computer Lab

Educated

Students

ResearchOutcomes

Service toPublic

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 26/35

Scheduling / Capacity Planning / Purchasing / QualityControl / Facility Location & Layout / Production andProcess Design / Job Design / Maintenance / Project

Management / ««

Functions of Operations Management

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 27/35

Operations Management as

a Function

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 28/35

` Degree of customer involvement, and` Degree to which technology is used to produce

and/or deliver a product or service.

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 29/35

14 -

29

Intangibility

Perishability

Heterogeneity

Inseparability

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 30/35

14 -

30

Simple Flowchart for Delivery of

People-Processing Service

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 31/35

14 -

31

P ossession- P rocessing Service

Simple Flowchart for Delivery

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 32/35

14 -

32

Simple Flowchart for Delivery of

Mental St imulus Processing Service

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 33/35

14 -

33

Simple Flowchart for Delivery of I nforma t ion-Processing

Service

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 34/35

T he Scope of O perationsT he Scope of O perationsM anagementM anagement

8/6/2019 OM Lecture 1

http://slidepdf.com/reader/full/om-lecture-1 35/35