More Related Content Similar to Buspro infosheet1 (20) 2. Learning Objectives
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Definition of Operations Management (OM)
Organizational Functions
Why Study OM?
A brief history of operations management
The future of the discipline
Goods Versus Services
Measuring productivity
Career opportunities in operations management
© 2011 Pearson Education, Inc.
publishing as Prentice Hall
3. What Is Operations
Management?
Production is the creation of goods
and services
Operations management (OM) is the
set of activities that create value in
the form of goods and services by
transforming inputs into outputs
© 2011 Pearson Education, Inc.
publishing as Prentice Hall
4. Organizing to Produce Goods and
Services
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Essential functions:
1. Marketing – generates demand
2. Production/operations – creates the
product
3. Finance/accounting – tracks how well
the organization is doing, pays
bills, collects the money
4. Human Resources – provides labor, wage
and salary administration and job
evaluation
© 2011 Pearson Education, Inc.
publishing as Prentice Hall
5. Organizational Charts
Commercial Bank
Operations
Teller Scheduling
Check Clearing
Collection
Transaction processing
Facilities design/layout
Vault operations
Maintenance
Security
© 2011 Pearson Education, Inc.
publishing as Prentice Hall
Marketing
Finance
Loans
Human Resources
Commercial
Recruitment
Industrial
Job evaluation
Financial
Performance evaluation
Personal
Wage and Salary Adm.
Mortgage
Personnel records
Investments
Security
Real estate
Accounting
Auditing
Trust Department
6. Organizational Charts
Manufacturing
Operations
Facilities
Construction; maintenance
Production and inventory control
Scheduling; materials control
Quality assurance and control
Supply-chain management
Manufacturing
Tooling; fabrication; assembly
Design
Product development and design
Detailed product specifications
Industrial engineering
Efficient use of machines, space,
and personnel
Process analysis
Development and installation of
production tools and equipment
© 2011 Pearson Education, Inc.
publishing as Prentice Hall
Finance/ accounting
Disbursements/
credits
Receivables
Payables
General ledger
Funds Management
Money market
International
exchange
Capital requirements
Stock issue
Bond issue
and recall
Human Resources
Recruitment
Marketing
Sales
promotion
Advertising
Sales
Market research
Job evaluation
Performance evaluation
Wage and Salary Adm.
Personnel records
7. Why Study OM?
1. OM is one of four major functions of any
organization, we want to study how people
organize themselves for productive
enterprise
2. We want (and need) to know how goods
and services are produced
3. We want to understand what operations
managers do
4. OM is such a costly part of an organization
© 2011 Pearson Education, Inc.
publishing as Prentice Hall
8. Options for Increasing
Contribution
Marketing
Option
OM
Option
Current
Sales
Cost of Goods
Gross Margin
Finance Costs
Subtotal
Taxes at 25%
Contribution
Finance/
Accounting
Option
Increase
Sales
Revenue 50%
Reduce
Finance
Costs 50%
Reduce
Production
Costs 20%
$100,000
– 80,000
20,000
– 6,000
14,000
– 3,500
$ 10,500
$150,000
– 120,000
30,000
– 6,000
24,000
– 6,000
$ 18,000
$100,000
– 80,000
20,000
– 3,000
17,000
– 4,250
$ 12,750
$100,000
– 64,000
36,000
– 6,000
30,000
– 7,500
$ 22,500
© 2011 Pearson Education, Inc. publishing
as Prentice Hall
Table 1.1
9. What Operations
Managers Do
Basic Management Functions
Planning
Organizing
Staffing
Leading
Controlling
© 2011 Pearson Education, Inc.
publishing as Prentice Hall
10. The Critical Decisions
1. Design of goods and services
– What good or service should we offer?
– How should we design these products and
services?
2. Managing quality
– How do we define quality?
– Who is responsible for quality?
© 2011 Pearson Education, Inc.
publishing as Prentice Hall
Table 1.2 (cont.)
11. The Critical Decisions
3. Process and capacity design
– What process and what capacity will these
products require?
– What equipment and technology is
necessary for these processes?
4. Location strategy
– Where should we put the facility?
– On what criteria should we base the
location decision?
© 2011 Pearson Education, Inc.
publishing as Prentice Hall
Table 1.2 (cont.)
12. The Critical Decisions
5. Layout strategy
– How should we arrange the facility?
– How large must the facility be to meet our
plan?
6. Human resources and job design
– How do we provide a reasonable work
environment?
– How much can we expect our employees to
produce?
© 2011 Pearson Education, Inc.
publishing as Prentice Hall
Table 1.2 (cont.)
13. The Critical Decisions
7. Supply-chain management
– Should we make or buy this component?
– Who should be our suppliers and how can we
integrate them into our strategy?
8. Inventory, material requirements
planning, and JIT
– How much inventory of each item should we
have?
– When do we re-order?
© 2011 Pearson Education, Inc.
publishing as Prentice Hall
Table 1.2 (cont.)
14. The Critical Decisions
9. Intermediate and short–term scheduling
– Are we better off keeping people on the
payroll during slowdowns?
– Which jobs do we perform next?
10. Maintenance
– How do we build reliability into our
processes?
– Who is responsible for maintenance?
© 2011 Pearson Education, Inc.
publishing as Prentice Hall
Table 1.2 (cont.)
17. Self-Check
• What are the 4 essential function of
organizing products and services?
• What basic functions do managers do?
• What 10 critical decisions do managers make?
18. Answer Key
1. Marketing, Production/operations, Finance/accou
nting, Human Resources
2. Planning, Organizing, Staffing, Leading, Controlling
3. 10 critical decisions
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Design of goods and services
Managing quality
Process and capacity design
Location strategy
Layout strategy
Human resources and job design
Supply-chain management
Inventory, material requirements planning, and JIT
Intermediate and short–term scheduling
Maintenance
19. Fast Food Feast Case
• Visit at least two different fast-food restaurants that make
hamburgers. For example, McDonald's, Jollibee, Whoopee are good
choices. Observe the basic operational differences between these
stores. Note the differences in the following processes:
• QUESTIONS
• How are in-store orders taken?
• Are the hamburgers prepared to order, or are they prepared ahead
of time and delivered from a storage bin?
• How are special orders handled?
• How are the hamburgers cooked?
• How are the hamburgers assembled?
• Is a microwave oven used in the process?
• How are other common items, such as french fries and
drinks, handled?
