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Operations Management

BU 385

Teresa Marcon

LH 2048
ext. 4158
tmarcon@wlu.ca
Office hours

Monday 2 3 PM
Thursday 1 2 PM
Or by appointment

Today

Course Overview
Chapter 1 Introduction to Operations
Management

What is this course about?

This course examines the role of the


operations function in the organization
by exploring planning and strategic
issues in managing manufacturing and
service operational systems

In April, Bombardier said it would be unable to meet its


deadline due to a disconnect between the company's
manufacturing plant in Mexico and its assembly plant
in Thunder Bay.

That disconnect included misaligned bolt holes, which


were discovered when the assembly crews in Thunder
Bay started to put together test vehicles.

http://www.cbc.ca/news/canada/kitchener-waterloo/lrt-delayed-until-early-2018-

http://www.forbes.com/sites/grantmartin/2015/08/31/united-airlines-turning-the-

OM in the News

corner-with-friendlier-skies-and-better-flight-management/

From the operational standpoint, the second area on which United is focusing is in the manner in
which it schedules and services its flights. Part of Uniteds operational woes this summer had to
do tight scheduling around airport gates and long turnover times between flights. The result was
aircraft that took off late, missed takeoff and landing slots and arrived at airports where gates
were already allocated. To stem that problem the airline plans to reconfigure its schedule in a way

OM in the News
Shipping volumes were down 4 percent for the year
to date compared to the same period in 2015, with
declines in the chemical, agricultural goods and
industrial goods segments, Union Pacific said.

Coal, meanwhile, fell due to mild weather and high


utility inventories.

Vehicles and related parts was the lone segment to


see an increase compared to 2014 levels, the WorldHeraldreported.
The numbers also hit Union Pacific's financial
results. The second
quarter saw a 7 percent profit
http://www.manufacturing.net/news/2015/09/union
-pacific-workers-furloughed-amid-sluggish-raildecline and Knight
said that the company likely

Why is OM important to you?

OM is one of the major functions of


the organization. It interacts with all
other major functions

We need to understand how goods


and services are provided

A large percentage of a companys


expenses occur in OM area
(improvements = more profits)

A large number of all jobs are in OM


area (purchasing, quality, planning,
scheduling, inventory, etc)

OM Job Titles some examples

Business Process Analyst


Inventory Analyst
Project Coordinator
Unit Supervisor
Supply Chain Analyst
Material Manager
Quality Assurance Specialist
Production Scheduler
Logistics Planner

Course Aims
To understand
the strategic role of operations in the
firm
how the operations function interacts
with other business functions, and
core concepts and decision making tools
used by operations managers

Course Materials

Operations Management 5th


Edited by W. J. Stevenson, Mehran Hojati,
and James Cao (McGraw-Hill) 2015

Onlineaccessprovides

ChapterSupplements
ConnectTMresources

More details on this will be provided next class


Access to Connect document is posted on MLS

Quick overview of BU385

Introduction to Operations Management


(Chapter 1)
Operations Strategy and Competitiveness
(Chapter 2)
Demand Forecasting (Chapter 3)
Product Design (Chapter 4)
Reliability (Chapter 4 Supplement)
Capacity Planning (Chapter 5)
Quality Management (Chapters 9 and 10)
Acceptance Sampling (Chapter 10
Supplement)
Process Design and Facility Layout (Chapter
6)

Evaluation Option 1
Components

Tasks / Deliverables

Weight

Examination
2-sided crib sheet allowed
October 16, 1-3 PM

25%

Examination non-cumulative
2-sided crib sheet allowed
November 12, 3:30-5:30 PM

25%

Homework

McGraw-Hill Connect Assignments

15%

Participation

In Class Activities/Quizzes

5%

Final

Examination non-cumulative
2-sided crib sheet allowed

30%

Mid terms

Evaluation Option 2
Components

Tasks / Deliverables

Weight

Examination
2-sided crib sheet allowed
October 16, 1-3 PM

30%

Examination non-cumulative
2-sided crib sheet allowed
November 12, 3:30-5:30 PM

30%

Participation

In Class Activities/Quizzes

5%

Final

Examination non-cumulative
2-sided crib sheet allowed

35%

Mid terms

Midterm exams

Two non-cumulative exams


Two-sided 8-inch by 11-inch information
sheet allowed - no restriction on its
contents
Calculator, capable of arithmetic,
exponentiation, and root calculations
required
The midterm and final exams will include
questions that require calculations and
questions that are conceptual/qualitative in
nature
An exam statement will be posted to the
BU385 web site prior to each examination,
explaining in more details what is covered

NO Deferred Midterms Permitted

Students unable to write the midterms


must provide the instructor with
documented evidence of illness, family
emergency or other sufficient reason
If such evidence is provided, the weight
of the missed exam(s) will be added to
that of the final exam
If no such evidence is provided, a grade
of zero will be given for the midterm
Refer to the course outline for more
details

Final exam

The final exam is non-cumulative; however,


the exam will test on some of the materials
from midterm exams
Closed book
You are allowed to bring one double-sided 8inch by 11-inch information sheet with no
restriction on its contents
Bring your own calculators, capable of
arithmetic, exponentiation, and root
calculations
Midterm 2

Final

Midterm 1

Degree of difficulty

Chapter 1 - Introduction

19

What is operations management (OM)?


Three (or more) basic functions within
organizations
The scope of operations management
Differentiating goods and services
Operations managers job
Operations managers and decision
making
The historical evolution of operations
management
Major trends

What is Operations Management?


OM is the management of
activities and resources
that create goods and/or provide services

Companies use OM to improve:

efficiency (minimize cost and time) and


effectiveness (achieving intended goals: quality &
timeliness)

Organizing to Produce Goods and


Services

Essential functions:
1. Marketing generates demand
2. Operations creates the product
3. Finance/accounting tracks how
well the organization is doing,
pays bills, collects the money
+ Human Resources provides
labor, wage and salary
administration and job evaluation
+

Operations Interfaces
Maintenance
Product Design

MIS

Manufacturing

Logistics

Operations

Engineering

Purchasing

Personnel
Accounting

Adding Value

Is operations adding value during the


transformations process?

Operations function
Value Added

Inputs:
Buildings

Outputs:

Transformation/

Labour

Goods

conversion

Machines

Services

Process

Materials
Information

Feedback

Control
Feedback

Feedback

Transformation: Food Processor


Inputs
Raw
Vegetables
Metal
Sheets
Water
Energy
Labour
Building
Equipment

Process
Cleaning
Making
cans
Cutting
Cooking
Packing
Labelling

Output
Canned
vegetables

Transformation: Hospital
Inputs

Process

Output

Doctors
Nurses
Building
Medical
supplies
Equipment
Labs

Examinatio
n
Surgery
Monitoring
Medication
Therapy

Healthy
patients

Goods vs. Services


Differences

Goods
(Produce a car)

Services
(Teach a class)

Output

Tangible

Intangible

Customer contact

Low

High

Uniformity of input High

Low

Labour content

Low

High

Uniformity of
output

High

Low

Measurement of
productivity

Easy

Difficult

Quality assurance

Easy

Difficult

Most systems are a blend of both good & service.


Service sector accounts for > 78% of jobs in Canada

The Scope of Operations


Management

The Scope of OM
Decision area

Basic question

Chapter

Forecasting

What will the demand be?

Product/ service design

What customers want? How to improve products/services?

Capacity

How much capacity will be needed?

Process

What processes should be used?

Layout

What is the best arrangement for the departments?

Design of Work Systems

How to improve work methods?

Quality

How to define quality? How to improve it?

Supply Chain Management

Which supplier to choose?

11

Inventory

How much to order?

12

Aggregate planning

How much capacity will be needed over the medium term?

13

JIT systems

How to coordinate production and purchasing?

15

Scheduling

How to schedule jobs, staff?

16

Which decision is design type and which is planning/control type?

The Operations Managers Job


Managemen
t Process

Field of responsibility

Planning

Capacity, Location, Mix of products and


Services, Make or buy, Projects

Organizing

Degree of Centralization, Specialization,


Subcontracting, Staffing, Suppliers

Controlling

Inventory, Quality, Motivation, Cost,


Productivity

Directing

Scheduling, Incentive Plans, Work


Orders, Job Assignments

Operations Managers and Decision


Making

Models
A model is an abstraction of reality

Quantitative Approaches
Linear

programming (BU275)
Queuing techniques (BU275)
Inventory techniques (BU395)
Project techniques (BU385)
Statistical techniques (BU255)

Analysis of Trade-Offs

Decision on amount of inventory to stock

Increased cost of holding inventory

vs.

Level of customer service

Systems (or Holistic) Approach


The output and the objective of the organization
as a whole takes precedence over those of any
one subsystem
Emphasize interrelations among subsystems
A systems approach is essential whenever something
is being designed, redesigned, implemented, or
improved. It is important to take into account the
impact on all parts of the system
Example: A new feature is added to a product.

Designer must take into account how customers will view the
change, instructions for using new feature, the cost, training of
workers, production schedule, quality standard, advertising
must be informed about the new feature

The whole is greater than the sum of the parts

Establishing Priorities
Pareto Phenomenon

A few factors account for a high percentage of the


occurrence of some event(s)

80/20 Rule - 80% of problems are caused by 20% of the


activities
How do we identify the vital few?

Ethical Issues

http://www.cbc.ca/news/business/general-mills-aims-to-cut-greenhouse-gas-emissions-28-in-10-years-1.3209868

The Historical Evolution of OM

Trends in Business

What did we learn?

Defining OM
Interaction with other functions of the
organization
Two kinds of activities: design decisions and
planning/control decisions
Differences between products and services
What do OM managers do? Plan, organize,
control, and direct
They use models, trade-off analysis, systems
approach, priorities, and ethics in decision
making
Historical evolution of OM
Major trends currently are e-commerce,
technology, globalization, supply chains, and
sustainability

Next Class

Competitiveness, Strategic Planning, and


Productivity

Read Chapter 2