This is a PP presentation on Chapter 1 - Introduction to OM

1. Chapter 1
© Dr. Mehdi Kaighobadi, FAU

2. Basic Concepts
 Product
 Operating Systems
 Operations Management
© Dr. Mehdi Kaighobadi, FAU

3. Product
 Core
 Peripheral
 Services
 “Facilitating Goods”
© Dr. Mehdi Kaighobadi, FAU

4. Product Definition
Total package of values delivered to
customers
© Dr. Mehdi Kaighobadi, FAU

5. Operations Management
(System’s View)
Management of Decisions and Activities Needed
to Effectively and Efficiently Transform the Inputs
of an Operating System to Throughput of the
System
© Dr. Mehdi Kaighobadi, FAU
Food for thought: What is the difference between “output” and “throughput?

6. Operations and Supply
Management
A Different View
Management of Decisions and Activities Needed to Effectively
and Efficiently Transform the Inputs of an Operating System to
Outputs of the System and Deliver them to the Right
Customers, at the Right Time and Place, and with the Right
Quality/Quantity.
© Dr. Mehdi Kaighobadi, FAU

7. Operations and Supply
Management
 Key words/concepts in the definition:
 Right Product
 Customer (Consumers?) – What’s the difference?
 Delivery (speed vs. consistency)
 Quality
 Quantity
 Efficiency
 Effectiveness
 Value
 Integrated view
© Dr. Mehdi Kaighobadi, FAU

8. Types of Transformations
(NOT mutually exclusive)
 Physical (Manufacturing). Transform “A” into “B”
 Location (Transportation) Move “A” from location X to
location Z
 Exchange (Retailing) – Be a middleman
 Storage (Warehousing) – Store for future use
 Physiological (Healthcare) – Change a patient physically
and/or mentally.
 Informational (Telecommunication) – Facilitate
exchange of data and info.
© Dr. Mehdi Kaighobadi, FAU

9. A Typical Supply Network
Notice that the word “chain” was not used; “network” was used)
© Dr. Mehdi Kaighobadi, FAU

10. “Goods” versus “Services”
Manufacturing Processes
 Tangible output
 Low consumer contact
 Homogenous output
 Output can be inventoried
 Long lead time
 Capital and labor intensive
 Quality/Productivity is less
difficulty to define and thus
measure
 Product and Process are
distinguished from each other.
Services Processes
Intangible output
High consumer contact
Heterogeneous output
Output cannot be inventoried
Shorter lead time
Labor and information intensive
Quality/Productivity is harder to
define and thus measure
Services are offered in “Service
Package” form
“Product” and “process” are
often the same.
© Dr. Mehdi Kaighobadi, FAU

11. “Goods” and “Services”
Not a B&W Classification!
100% 75% 50% 25% 0% 100%75%50%25%
Self-service groceries
Automobile
Installed carpeting
Fast-food restaurant
Gourmet restaurant
Auto maintenance
Haircut
Consulting services
Goods Services
© Dr. Mehdi Kaighobadi, FAU
Classifying a firm as “goods producing” or “service” operation is not a B&W case; it is a
matter of degrees.

12. Why is “Operations” Important?
 It’s like asking why is having a “heart” important in your
health!
 Operation is the heart of any organization. (Note that it is
“organization”, not just “business”)
 Without operations, other functions have no place in
organization.
 Studying operations makes it possible to realize how a
firm integrates its functions around one major goal.
 Any organization has two fundamental functions (pared
down to the minimum); they are a) making and b)
delivering. Operations is 100% responsible for the first
and at least 50% for the second.
© Dr. Mehdi Kaighobadi, FAU