Operations Management and Production

Operations Management

• Operations management is the management of processes or systems that create goods and/or provide services.
• It encompasses forecasting, capacity planning, scheduling, and managing inventories, assuring quality, motivating employees, and deciding where to locate facilities.

Production and Operations

• Production is the creation of goods and services.
• Operations management is required for the efficient production of goods and services.
• It involves the application of concepts, tools, and techniques of operations management.

Operations in Different Industries

• Commercial bank operations involve teller scheduling, check clearing, collection, transaction processing, facilities design/layout, vault operations, maintenance, and security.
• Airline operations involve ground support equipment, maintenance, ground operations, facility maintenance, catering, flight operations, crew scheduling, flying, communications, and dispatching.
• Manufacturing operations involve facilities, production and inventory control, quality assurance and control, supply chain management, manufacturing, tooling, fabrications, assembly, design, and industrial engineering.

Business Organization

• Organizations are formed to pursue goals that are achieved more effectively by the concerted efforts of a group of people than by individuals working alone.
• Functions of business organization include production, finance, marketing, and other functions.

Functions of Business Organization

• Production/operations involve production and operation systems, inputs, and transformation processes.
• Finance involves securing resources at favorable prices and allocating those resources throughout the organization.
• Marketing involves selling and/or promoting the goods and services of an organization.

Other Functions

• Purchasing involves procurement of materials, supplies, and equipment.
• Management information system (MIS) involves providing management with the information it needs to effectively manage.
• Distribution involves shipping of goods to warehouses, retail outlets, or final consumers.
• Maintenance involves general upkeep and repair of equipment, buildings, and grounds.
• Supply chain involves a global network of organizations and activities that supply a firm with goods and services.

Features of Operations System

• Degree of standardization: standardized output means high uniformity in goods or services, while customized output means product or service is designed for specific cases or individuals.
• Types of operation: production of goods and service operation, degree of standardized products and volume of output influence the way firms organize production.

Production of Goods versus Service Operation

• Production of goods results in a tangible product, while service operation implies an act.
• Differences between goods and services include customer contact, uniformity of input, labor content of job, uniformity of output, measurement of productivity, and simultaneous production/consumption and delivery.

Approaches to Decision Making

• Model: an abstraction of reality, a simplified version of something, which can be mathematical, physical, or schematic.
• Quantitative approaches: involve obtaining mathematically optimum solutions to managerial problems using techniques like linear programming, queuing techniques, inventory models, PERT, and CPM.
• Analysis of trade-offs: involves listing the advantages and disadvantages of a course of action to better understand the decision.
• Systems approach: emphasizes interrelationships among subsystems, and the whole is greater than the sum of its individual parts.

Operations Management Decisions

• Operations managers perform the basic functions of the management process, which includes planning, organizing, staffing, leading, and controlling.
• 10 strategic operations management decisions include design of goods and services, managing quality, process and capacity strategy, location strategy, layout strategy, human resources and job design, supply chain management, inventory management, scheduling, and maintenance and reliability.

10 Strategic Operations Management Decisions

• Design of goods and services defines much of what is required of operations in each of the other OM decisions.
• Managing quality determines the customer's quality expectations and establishes policies and procedures to achieve that quality.
• Process and capacity strategy determines how a good or service is produced and commits management to specific technology, quality, human resources, and capital investments.
• Location strategy requires judgments regarding nearness to customers, suppliers, and talent, while considering costs, infrastructure, logistics, and government.
• Layout strategy requires integrating capacity needs, personnel levels, technology, and inventory requirements to determine the efficient flow of materials, people, and information.