OUTLINE

Concept of operations Why study operations management Operations decision making Manufacturing vs Service operations Product and service development Types of manufacturing Assembly line Operations strategy MRPI and MRPII Problems Operation tools

Concept of Operations
o The best way to start understanding the nature of operations is to look around you. o Everything you can see around has been processed by an operation. o Every service you consumed today (radio station, bus service, lecture, etc.) has also been produced by an operation. o Operations Managers create everything you buy, sit on, wear, eat, and throw away.

WHAT IS OPERATIONS MANAGEMENT

The

management of systems or processes that create goods and/or provide services The field of management that specializes in the physical production of goods or services and uses quantitative techniques for solving manufacturing problems

OPERATIONS AT THE CORE OF BUSINESSES

Organization

Finance

Operations

Marketing

Three basic functions Operations/Production Goods oriented (manufacturing and assembly) Service oriented (health care, transportation and retailing) Value-added (the essence of the operations functions) Finance-Accounting Budgets (plan financial requirements) Provision of funds (the necessary funding of the operations) Marketing Selling, Promoting Assessing customer wants and needs

MARKETING-OPERATIONS-FINANCE SHOULD
WORK TOGETHER

Operations
Industrial Engineering Maintenance Marketing Finance Distribution

Operations

Public Relations

Purchasing Personnel Accounting

THE ORGANIZATION AS AN OPERATIONS MANAGEMENT SYSTEM

Feedback Operations Strategy Operations Management
Outputs Products Services Products & Facilities Product design Facilities layout Capacity planning Facilities location Control Processes Structure Reporting relationships Inventory management Productivity Teams Quality

Inputs Raw materials Human resources Land, buildings Information Technology

The Technical Core

WHY STUDY OPERATIONS MANAGEMENT?

Systematic Approach to Org. Processes

Business Education/ Career Opportunities

Operations Management

Increase Competitive Advantage/Survival

Cross-Functional Applications

OPERATIONS DECISION MAKING

Marketplace

Corporate Strategy

Finance Strategy

Operations Strategy

Marketing Strategy

Operations Management

People Materials & Customers

Plants

Parts

Processes Products & Services

Planning and Control

Input

Output

EXAMPLE OF HOW OM WORKS

OPERATIONS DECISIONS
Following

decisions focus on specifics Tactical decision Tactical decisions: focus on specific dayto-day issues like resource needs, schedules, & quantities to produce. These are frequent Strategic decisions less frequent Tactical and Strategic decisions must align

OMS TRANSFORMATION ROLE

To add value

Increase product value at each stage Value added is the net increase between output

product value and input material value

Provide an efficient transformation

Efficiency means performing activities well for least possible cost

MANUFACTURING VS. SERVICE OPERATIONS

Production of goods Tangible products Automobiles, Refrigerators, Aircrafts, Coats, Books, Sodas Services Repairs, Improvements, Transportation, Regulation Regulatory bodies: Government, Judicial system, FAA, FDA Entertainment services: Theaters, Sport activities Exchange services: Wholesale/retail Appraisal services: Valuation, House appraisal Security services: Police force, Army Financial services: Banks Education: Universities, K-12 schools

MANUFACTURING VS. SERVICE OPERATIONS

Differences with respect to 1. Customer contact 2. Uniformity of input 3. Labor content of jobs 4. Uniformity of output 5. Measurement of productivity 6. Production and delivery 7. Quality assurance 8. Amount of inventory

MANUFACTURING VS. SERVICES

Characteristic
Output

Manufacturing
Tangible

Service
Intangible

Customer contact
Uniformity of output Labor content Uniformity of input

Low
High Low High

High
Low High Low

Measurement of productivity
Opportunity to correct quality problems

Easy
Easy

Difficult
Difficult

Steel production Home remodeling Automobile fabrication Retail sales

Auto Repair Appliance repair

Maid Service Manual car wash

High percentage goods

Low percentage goods

NEW PRODUCT AND SERVICE DEVELOPMENT, AND PROCESS SELECTION

Categories of new products: 1. Incremental or Derivative Products: products with least amount of innovation. These products are often cost-reduced versions of existing products or with some added minor features, e.g. waterproof Walkman CD player.

2. Next Generation or Platform Products: these products provide a broad base for a product family that can be leveraged over several years requiring more resource than incremental products, e.g. major model changeovers in the auto industry. 3. Breakthrough or Radical Products: these products require substantial product design and process change, e.g. first TV, cellular phone, etc.

TYPES OF PROCESSES IN MANUFACTURING

1. Project: process that focuses on making one-of-a-kind products, e.g. producing a movie 2. Intermittent: process that produces products in small lot sizes: a) Job Shop process where a specific quantity, generally small, of a product is produced only once, e.g. printing programs for a concert, b) Batch a process that produces the same item again and again, usually in specified lot sizes, e.g. McDonalds making burgers. 3. Line - Flow: continuous process that produces high volume, highly standardized products: a) Assembly Line: manufacture individual discrete products such as cars, b) Continuous: operates 24 hours/day, e.g. refining sugar or oil.

TYPES OF MANUFACTURING LAYOUTS

Layout Type
Process Similar operations are performed in a common or functional area, regardless of the product in which the parts are used. Equipment/operations are located according to the progressive steps required to make the product. Groups of dissimilar machines are brought together in a work cell to perform tasks on a family of products that share common interests. The product, because of its size and/or weight, remains in one location and processes are brought to it.
The McGraw-Hill Companies, Inc., 2003 817

Product (Flow-shop layout) Group Technology (GT) or Cellular

Fixed-Position

PRODUCT LAYOUT: KEY TERMS

Product Interval Time The time between products being completed (processed through) at a single station (process step). Also cycle time or takt time. Product Duration (Throughput) Time. The overall time required to entirely complete an individual product. Assembly Line Balancing Assignment of tasks to workstations within a given cycle time and with minimum idle worker time.

The McGraw-Hill Companies, Inc., 2003 818

ASSEMBLY LINE BALANCING STEPS

Specify the sequential relationships among tasks. Determine the required takt (T) time. Determine the theoretical minimum number of workstations (Nt) required to satisfy the takt time constraint. Select a primary rule by which tasks are to be assigned to workstations.

1.

2. 3.

4.

The McGraw-Hill Companies, Inc., 2003 819

ASSEMBLY LINE BALANCING STEPS (CONTD)

5.

Assign tasks, one at a time, to the first workstation until the sum of the task times is equal to the takt time. Continue assigning tasks to other workstations until all tasks are assigned. Evaluate the efficiency of the resulting assembly line. If efficiency is unsatisfactory, rebalance the line using a different decision rule in step 4.
The McGraw-Hill Companies, Inc., 2003 820

6.

7.