Operations Management Chapter 1

Introduction to Operations Management

• Operations Management (OM) is concerned with the acquisition of raw materials, conversion into finished products, and supply of those products to customers.
• OM is a functional field of business with clear lines of management responsibility.

Organizational Functions

• All organizations perform at least three basic functions: Production/Operations, Marketing, and Finance.
• These functions must interact to achieve organizational goals.

OM Systems

• Production Systems: create tangible products (e.g., refrigerators, bread).
• Operations Systems: produce services (e.g., insurance, healthcare).
• Basic components of OM systems:
  • Inputs
  • Transformation/Conversion subsystem
  • Output
  • Control subsystem

Transformation/Conversion Subsystem

• Converts inputs into goods or services.
• Components: Concepts, Procedures, Non-equipment technologies, Rules, Guidelines, Steps, etc.
• Examples: Cutting, drilling, transporting, teaching, packing, mixing, consulting, copying, faxing.

Control Subsystem

• Ensures desired outputs are obtained by measuring and comparing to established standards.

Career Opportunities in OM

• Operations manager
• Production analyst
• Production manager
• Industrial engineer
• Time study analyst
• Inventory manager
• Quality analyst
• Quality manager

Characteristics of Service and Goods

• Service:
  • Intangible product
  • Produced and consumed at the same time
  • Difficulty in measuring output
  • High customer interaction
  • Inconsistent product definition
  • Often knowledge-based
  • Shorter response time
  • Time-perishable capacity
  • Labor intensive
• Goods:
  • Tangible product
  • Consistent product definition
  • Production usually separate from consumption
  • Can be inventoried
  • Low customer interaction
  • Longer response time
  • Capital intensive

Manufacturing versus Service Systems

• Similarities:
  • Both use technology
  • Both have quality, productivity, and response issues
  • Both must forecast demand
  • Both have capacity, layout, and location issues
• Differences:
  • Output: tangible or intangible
  • Customer contact: extensive or little
  • Lead time: short or long
  • Intensity: labor or capital

Major Issues in OM

• Design:
  • Product and service design
  • Process and capacity design
  • Facility location and layout
• Planning/Scheduling:
  • Forecasting
  • Planning
  • Scheduling
• Materials management:
  • Inventory control and management
  • Supply chain management
• Quality:
  • Quality assurance - Standards & Awards
  • Statistical Quality Control
  • Total Quality Management (TQM)

OM in Practice

• OM has the most diverse organizational function
• Manages the transformation process
• OM has many faces and names (e.g., V.P. operations, Director of supply chains, Manufacturing manager, Plant manager, Quality specialists)

New Challenges in OM

• From local or national focus to global focus
• From batch shipments to just-in-time
• From low bid purchasing to supply chain partnering
• From lengthy product development to rapid product development and alliances
• From standard products to mass customization
• From job specialization to empowered employees and teams### Facility Planning
• Facility planning involves the design, layout, and accommodation of people, machines, and activities within a physical spatial environment.
• It is concerned with the determination of how the facility's tangible fixed assets best support achieving the activity's objectives.

Importance of Facility Planning

• Facility planning determines how an activity's tangible fixed assets best support achieving the activity's objectives.
• It involves the determination of how the location of a facility supports meeting the facility's objectives.
• It affects the management of a facility's capability to adapt to change and satisfy future requirements.

Disciplines Involved in Facility Planning

• Civil Engineers
• Electrical Engineers
• Mechanical Engineers
• Industrial Engineers
• Architects
• Consultants
• General contractors
• Managers
• Real estate brokers
• Urban planners

Applications of Facility Planning

• Planning of a new hospital
• An assembly department
• An existing warehouse
• The baggage department in an airport
• Department building of IE in EMU
• A production plant
• A retail store
• A dormitory
• A bank
• An office
• A cinema
• A parking lot

Facility Planning Process

• Define the problem
• Analyze the problem
• Determine the space requirements for all activities
• Evaluate the alternatives
• Select the preferred design
• Implement the design
• Maintain and adapt the plan

Role of Industrial Engineers in Facility Planning

• Industrial engineers bring value to the overall design by assisting in operations planning, concept design, and layout evaluation.
• They use their skills and analytical tools to determine site selection, space requirements, flow/activity analysis, and space/function relationship programming.

Employee Services - Space Requirements

• Employee services include parking lots, cafeterias, locker rooms, restrooms, and recreational facilities.
• The size of these facilities is determined by the number of employees and other factors.

Parking Lots

• The goal is to provide adequate space with a convenient location.
• Three parking lots may be needed: manufacturing employee parking, office employee parking, and visitor parking.
• The facilities planner must incorporate the requirements of the ADA (American with Disabilities Act) of 1989.

Locker Rooms

• Locker rooms give employees space to change from their street clothes to their work clothes and a place to keep their personal effects while working.
• Showers, toilets, washbasins, lockers, and benches are all part of a well-equipped locker room.
• The size of the locker room can be initially sized by multiplying the number of employees by 4 square feet per employee.

Toilets and Restrooms

• As a rule of thumb, one toilet is required for every 20 employees, and restrooms should be no farther than 200 feet away from the employee.
• Special accommodations and provisions must be made for people with disabilities as required by ADA.

Cafeterias or Lunchrooms

• A cafeteria feeds a lot of people in a short time.
• Vending machines can serve very complete meals.
• Mobile vendors may be used for small plants.

Recreational Facilities

• Health-conscious employees are better employees.
• The plant layout designer must talk with management to understand what facilities need to be included.

Aisles

• Aisles are for movement of people, equipment, and material and must be sized for that use.
• Aisles should be long and straight.

Medical Facilities

• Medical facilities vary from 6 x 6 foot first aid rooms to full-fledged hospitals.
• In smaller plants, first aid is handled by trained employees at the plant.
• When a plant approaches 500 people, a registered nurse is usually justified.

Break Areas and Lounges

• If the lunchroom is too far away from groups of employees, a break area should be provided.
• Lounges are usually found in shipping and receiving areas for visiting truck drivers to wait for their loads.