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Operations
Operations Management
Management
Instructor:
Instructor: Dr.
Dr. Rizwan
Rizwan Ahmed
Ahmed
Lecture outline
What is Operations Management
Operations in Organization
Manufacturing and Service
Operations
Operations and Productivity
Conclusion
Wiley 2010
Wiley 2010
OMs Transformation
Process
a series of activities along a value chain extending from supplier to
customer
activities that do not add value are superfluous and should be eliminated
TRANSFORMATION
PROCESS: SANDWICH
MAKING
TRANSFORMATION
PROCESS: BUS SERVICE
Some Types of
Transformation Process
Inputs to Operations
Inputs: All physical and nonphysical
resources coming into the system
Primary Resources
Market
PEST
Goods
Services
Indirect/Secondary
Waste
Pollution
Technological Advances
Classroom activity
Time to consider an example.
Operations in organization
Organization
Production/
operations
Marketing
Finance
Production/
operations
Marketing
Figure
Finance
Organizational Charts
Commercial Bank
Operations
Finance
Marketing
Teller
Scheduling
Check Clearing
Collection
Transaction
processing
Facilities
design/layout
Vault operations
Maintenance
Security
Investments
Security
Real estate
Loans
Commercial
Industrial
Financial
Personal
Mortgage
Accounting
Auditing
Trust Department
Figure 1.1(A)
1 16
Organizational Charts
Manufacturing
Operations
Facilities
Construction; maintenance
Design
Industrial engineering
Process analysis
Finance/
accounting
Disbursements/
credits
Receivables
Payables
General ledger
Funds Management
Money market
International
exchange
Capital requirements
Stock issue
Bond issue
and recall
Marketing
Sales
promotion
Advertising
Sales
Market
research
Figure 1.1(C)
1 17
OM in Practice
OM has the most diverse organizational
function
Manages the transformation process
All business functions need information from
OM in order to perform their tasks
The major functional areas must interact to
achieve the organization goals
Wiley 2010
18
Operations
Function
Operations
function interacts
with
Role of Operations
Manager
The job of an operations manager?
Quality
Services
Intangible
Immediate
No
Extensive
High
Subjective
Difficult
Goods
Tangible
Long term
Yes
Little
Low
Objective
Easy
Wiley 2010
22
75
|
50
|
25
|
0
|
25
|
50
|
75
|
100%
|
1 23
What is Productivity?
Defined
Productivity is a common measure on
how well resources are being used. In
the broadest sense, it can be defined
as the following ratio:
Outputs
Inputs
One of the main objectives of operations
management is to improve productivity!
Improving Productivity at
Starbucks
A team of 10 analysts
continually look for ways to
shave time. Some
improvements:
Saved 12 seconds
per shot
Capital
Materials
Energy
Productivity Calculations
Labor Productivity
Productivity =
Units produced
Labor-hours used
1,000
=
250
= 4 units/labor-hour
Multi-Factor Productivity
Productivity =
Output
Labor + Material + Energy +
Capital + Miscellaneous
Example of Productivity
Measurement
Example of Productivity
Measurement
120boxes
1.1 (a)
=3.0boxes/hour
40hours
percentagechange=
0.125boxes
= 4.166%
3.0
Example of Productivity
Measurement
Kleen
Carpets cleaned 65 rugs in October consuming
following resources
Labor
Solvent
Machine rental
65
65
=
(52013)
$6,760
=.0096rugsperlabor$
(a)Laborproductivity=
Multifactor
65
(b)
65
=
= .00787rugsper$
productivity(520 $13) + (100 $5) + (20 $50)
$8,260
Assignment
Search a case study on productivity in any sector e.g.
retail, banking, manufacturing, mining, education etc.
Describe the measures/metrics of productivity used
and how productivity was increased.