Introduction to Operations Management

Study Notes

Operations management ensures efficient and effective production by designing, overseeing, and controlling the production process.
It involves a key distinction between tangible products (goods) and intangible services.
Productivity is a measure of efficiency, calculated by output divided by input.
Operations managers ensure efficient processes, manage resources, and balance costs with customer satisfaction.

Operations strategy involves aligning operations with the broader business strategy to gain a competitive advantage.
Globalization requires adapting operations strategies to a global market, considering cultural differences, global supply chain complexity, and regulations and compliance.
Competitive priorities include cost leadership, quality, flexibility, delivery speed, and sustainability.
Sustainability focuses on eco-friendly and socially responsible operations, including waste reduction and ethical labor practices.

Process strategies involve deciding how to organize the production process.
Job Shop processes are customized, low-volume production processes.
Batch processes are more standardized and produce goods in batches, suited for moderate-volume production.
Repetitive or assembly line processes are highly standardized for high-volume production.
Continuous processes are used for high-volume, continuous production of products like chemicals or gas.
Capacity refers to the maximum output a system can produce.
Capacity planning is the process of balancing capacity with demand to avoid under-utilization or overburdening.
Capacity utilization rate is calculated by dividing actual output by design capacity and multiplying by 100.

Location decisions are important, impacting costs, delivery time, labor availability, and customer satisfaction.
Location decisions are influenced by proximity to markets, labor availability, infrastructure, government regulations, and cost of living.
Location strategies use techniques like the factor-rating method, which assigns weights to different factors affecting the location, or the center-of-gravity method to minimize transportation costs.

Demand forecasting predicts future customer demand to plan for production, inventory, and staffing.
Qualitative forecasting methods include expert opinion, the Delphi method, and market research.
Quantitative forecasting methods include time series analysis, such as the moving average and exponential smoothing, and regression analysis.
Forecast accuracy is measured using metrics like the mean absolute deviation (MAD) and the mean squared error (MSE).

Operations management ensures efficient processes, improves productivity, and reduces costs.
Operations strategies must align with global competition and sustainability.
Efficient processes and capacity strategies are crucial for balancing demand with production.
Choosing the right location affects operational efficiency.
Accurate demand forecasting enables better decision-making for inventory, capacity, and staffing.