Introduction to Operation Management

Operations Management

• Operations Management is the set of activities that creates value in the form of goods and services by transforming inputs into outputs.

Transformation Process

• The transformation process can be physical, locational, exchange, physiological, or psychological.

Primary Functions of an Organization

• Marketing generates demand and takes orders for products or services.
• Production/Operations creates, produces, and delivers products.
• Finance/Accounting tracks performance, pays bills, and collects money.

Supply Chain

• A supply chain is a global network of organizations and activities that supply a firm with goods and services.
• It encompasses everything from the delivery of source materials to the manufacturer to the end user.

Why Study Operations Management?

• To understand how people organize themselves for productive enterprise.
• To know how goods and services are produced.
• To understand what operations managers do.
• Because operations management is a costly part of an organization.

Operations Management Functions

• Planning: establishes a course of action and guides future decision-making.
• Organizing: establishes a structure of tasks and authority.
• Controlling: assures actual performance in accordance with planned performance.

Operations Management Activities

• Forecasting: predicts future outcomes.
• Product and Process Choices: selects products and processes.
• Operations Capacity: determines production capacity.
• Facility Location Planning: chooses facility locations.
• Layout Planning: designs facility layouts.
• Scheduling: schedules production and activities.
• Inventory Control: manages inventory levels.
• Material Requirement Planning: plans material requirements.
• Managing for Quality: ensures product quality.

Operations Managers and Human Behavior

• Operations managers are concerned with how their efforts affect human behavior.
• They also want to know how the behavior of subordinates affects management's planning, organizing, and controlling actions.

Models and Decision Making

• Aggregate Planning models simplify operations managers' difficulties in decision making.
• Break-even analysis calculates the point at which revenue equals costs.
• Linear programming and computer simulation are used to analyze and solve problems.

Objectives of Operations Management

• To ensure the transformation process is performed efficiently.
• To ensure the output is of greater value than the sum of the inputs.
• To create value.