Operations Management Quiz

Operations Management: A Brief History and Overview

• Operations management is concerned with designing and controlling the process of production and redesigning business operations in the production of goods or services.

• It involves ensuring that business operations are efficient in terms of using as few resources as needed and effective in meeting customer requirements.

• Operations management manages an entire production or service system that converts inputs (raw materials, labor, consumers, and energy) into outputs (goods and/or services for consumers).

• The operations function requires management of both the strategic and day-to-day production of goods and services.

• In managing manufacturing or service operations, several types of decisions are made, including operations strategy, product design, process design, quality management, capacity, facilities planning, production planning, and inventory control.

• The history of production and operation systems begins around 5000 B.C. when Sumerian priests developed the ancient system of recording inventories, loans, taxes, and business transactions.

• The industrial revolution facilitated by interchangeability of parts and division of labor led to mass production and was a main element of the Second Industrial Revolution, along with the emergence of the electrical industry and petroleum industry.

• In the post-industrial society, the future economy would provide more GDP and employment from services than from manufacturing, agriculture, and mining.

• Frederick Taylor is credited for developing the stopwatch time study, the differential piece-rate system, and scientific management (also known as Taylorism).

• Walter Shewhart introduced the control chart and defined control, and H.B. Maynard, J.L. Schwab, and G.J. Stegemerten developed methods-time measurement (MTM).

• In Japan, Taiichi Ohno arrived at Toyota Motor company and developed the Toyota Production System (TPS) and Lean Manufacturing, centered on just in time (produce only what is needed) and autonomation (automation with a human touch).

• Total Quality Management (TQM) is a strategy for implementing and managing quality improvement on an organizational basis that includes participation, work culture, customer focus, supplier quality improvement, and integration of the quality system with business goals.Operations Management and Its Evolution

• Operations management involves the management of resources and processes to produce goods and services efficiently and effectively.

• The evolution of operations management started in the early 1900s with the scientific management approach pioneered by Frederick Winslow Taylor.

• In the 1950s, the focus shifted to quality control, with the introduction of statistical process control and quality assurance.

• In the 1960s, the focus shifted to production planning and inventory management, with the introduction of material requirements planning (MRP).

• The service industry saw innovations in service operations in the 1950s, with McDonald's production-line approach to service and franchising.

• FedEx introduced overnight delivery of packages in 1971, which created a whole new industry and allowed fast delivery of online orders.

• Walmart provided the first example of low-cost retailing through efficient management of the entire supply chain.

• The International Organization for Standardization (ISO) issued ISO 9000 in 1987, a family of standards related to quality management systems.

• Amazon revolutionized the retail industry with its online retailing and distribution system in 1994, which included dispersed warehouses and an efficient transportation system.

• The production system comprises both technological elements and organizational behavior.

• Metrics in operations management can be broadly classified into efficiency metrics and effectiveness metrics.

• Designing the configuration of production systems involves both technological and organizational variables.

• Service industries comprise 80% of employment and GDP in the U.S. and require unique practices and academic research for effective operations management.Operations Management: Differences and Similarities between Manufacturing and Services

• Professional services firms are not included in the operations management section.

• Four comparisons between manufactured goods and services show how service operations management is different from manufacturing regarding capacity requirements, quality assurance, location of facilities, and interaction with the customer.

• Quality management approaches used in manufacturing such as the Baldrige Award and Six Sigma have been widely applied to services, and lean service principles and practices have also been applied in service operations.

• Service recovery is an important difference in service operations as errors in service delivery must be recovered on the spot by the service provider.

• Planning capacity requires more flexibility than manufacturing since services cannot be stored and the service facility must be managed to peak demand.

• Location of facilities must be near customers and scale economics can be lacking, and scheduling must consider customers waiting in line.

• Queue theory has been devised to assist in the design of service facilities waiting lines and revenue management is important for service operations.

• Operations management also involves mathematical theory such as operations research, which is used in modeling queue and processing times in production systems.

• The Seven Basic Tools of Quality designation provides a summary of commonly used tools in approaches like total quality management and Six Sigma.

• Demand forecasting is a critical part of push systems since order releases have to be planned ahead of actual clients’ orders.

• Other important management problems involve maintenance policies, safety management systems, facility management, and supply chain integration.

• Organizations such as APICS and INFORMS support and promote operations management, while academic journals like Journal of Operations Management and Production and Operations Management are concerned with operations management issues.