1. INTRODUCTION
to
Operation Management
Chapter 1
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2. Chapter Outline
Definition of Operations Management
Decisions at Pizza U.S.A.
Operations Decisions - A Framework
Cross-Functional Decision Making
Operations as a System
Contemporary Operations Themes
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3. Definition of
Operations Management
er at i ons i s r es pons i bl e f or s uppl yi ng t he pr oduc t
r v i c e of t he or gani z at i on. Oper at i ons m
anager s m
ec i s i ons r egar di ng t he oper at i ons f unc t i on and i
ec t i on wi t h ot her f unc t i ons . The oper at i ons m
ana
and c ont r ol t he pr oduc t i on s ys t em and i t s i nt er f
n t he or gani z at i on and wi t h t he ext er nal env i r on
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4. The Operations Definition
Operations as a basic function
Operations as a transformation process
Operations as the technical core
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5. The Operation As A Basic
Function
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6. Basic Function
The best way to start understanding the nature
of P/OM is to look around you.
Everything you can see around you (except the
flesh and the blood) has been done by P/OM.
Every service you consumed today (radio
station, bus service, lecture, etc.) has also been
basically P/OM.
P/O managers create everything you buy, sit on,
wear, eat, throw at people and throw away.
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7. Operations As A Transformation
Process
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8. Operations as a System
(Figure 1.1)
Ener gy
Mat er ials
Labor
Capit al
I nf or mat ion
Tr ansf or mat ion
(Conver sion)
Pr ocess
Goods or
Ser vices
Feedb infor
ack mationfor
contr ofpr inpu
ol ocess ts
andpr tech ogy
ocess nol
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9. INPUT
OUTPUT
Material
Goods
Machines TRANSFORMATION Services
Manpower
PROCESS
Methods &
Management
Money
FEEDBACK
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10. THE 5 Ps or THE 5 Ms POM
5Ps
People
Plants
Parts
Processes
Planning and
Control
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5Ms
Manpower
Machines
Money
Materials
Methods
and
Management
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11. Transformation Processes
Physical
Manufacturing
Location
Transportation
Warehouse
Retail
Health care
Entertainment
Communications
Exchange
Physiological
Psychological
Informational
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12. Characteristics of Goods
Tangible product
Consistent product definition
Production usually separate from
consumption
Can be inventoried
Low customer interaction
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13. Characteristics of Services
Intangible product
Inconsistent product definition
Produced and consumed at same time
Cannot be inventoried
High customer interaction.
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14. Operations as the Technical Core
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15. Finance and Accounting
Production and inventory data
Capital budgeting and investments
Marketing
Product/service availability
Lead time estimates
Delivery schedules
Sales forecasts
Human Resources
Personnel needs
Hiring/firing/training
Suppliers
Orders for materials
Production/delivery
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Technology plans
Costs analysis
Status of orders
Promotions
Customer feedbacks
Skill sets
Job design/work measurement
Quality data
Performance specs
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16. Relation of Operations to its
Environment
Figure 1.2
SOCI ET
Y
Ext er nal
Envir onment
Human
Engineer ing Mar ket ing
Resour ces
Supplier s
Account ing Finance
MI S
GOVERNMENT
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CUSTOMERS
Oper at ions t r ansf or mat ion syst em
COMPETI TORS
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17. Key Points in OM Definition
Decisions
 Functions
System
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18. Cross-Functional
Decision Making
Operations as the primary function
Other primary functions:
– Marketing
– Finance
Supporting functions
Major cross-functional decisions
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19. Definition of
Operations Management
The design, operation, and improvement of
production systems that create the firm’s primary
products or services.
The design and control of the systems responsible
for the productive use of raw materials, human
resources, equipment, and facilities in the
development of a product or services.
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20. Operations Management
Planning
Organizing
Staffing
Directing and
Controlling
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21. Desirable Features
of the Process
Low Cost
High Quality
Flexibility
Speed of Delivery
Innovation
Environmentally Acceptable
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22. Major Decisions at Pizza USA
A Framework for OM
Process
Quality
Capacity
Inventory
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23. Contemporary Operations Themes
Service and Manufacturing (differences and
implications)
Customer-Directed Operations
Time Reduction (Lean Operations)
Integration of Operations and Other Functions
Environmental Concerns
Globalization of Operations
Supply Chain Management
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