Post on 01-Nov-2014
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© Dr. Mehdi Kaighobadi, FAU
INTRODUCTION TO OM
Chapter 1
© Dr. Mehdi Kaighobadi, FAU
Basic Concepts
Product Operating Systems Operations Management
© Dr. Mehdi Kaighobadi, FAU
Product
Core Peripheral Services “Facilitating Goods”
© Dr. Mehdi Kaighobadi, FAU
Product Definition
Total package of values delivered to customers
© Dr. Mehdi Kaighobadi, FAU
Operations Management(System’s View)
Management of Decisions and Activities Needed to Effectively and Efficiently Transform the Inputs of an Operating System to Throughput of the System
Food for thought: What is the difference between “output” and “throughput?
© Dr. Mehdi Kaighobadi, FAU
Operations and Supply ManagementA Different View
Management of Decisions and Activities Needed to Effectively and Efficiently Transform the Inputs of an Operating System to Outputs of the System and Deliver them to the Right Customers, at the Right Time and Place, and with the Right Quality/Quantity.
© Dr. Mehdi Kaighobadi, FAU
Operations and Supply Management
Key words/concepts in the definition: Right Product Customer (Consumers?) – What’s the difference?
Delivery (speed vs. consistency) Quality Quantity Efficiency Effectiveness Value
Integrated view
© Dr. Mehdi Kaighobadi, FAU
Types of Transformations (NOT mutually exclusive)
Physical (Manufacturing). Transform “A” into “B”
Location (Transportation) Move “A” from location X to location Z
Exchange (Retailing) – Be a middleman
Storage (Warehousing) – Store for future use
Physiological (Healthcare) – Change a patient physically
and/or mentally. Informational (Telecommunication) – Facilitate
exchange of data and info.
© Dr. Mehdi Kaighobadi, FAU
A Typical Supply NetworkNotice that the word “chain” was not used; “network” was used)
© Dr. Mehdi Kaighobadi, FAU
“Goods” versus “Services”
Manufacturing Processes Tangible output
Low consumer contact
Homogenous output
Output can be inventoried
Long lead time
Capital and labor intensive
Quality/Productivity is less difficulty to define and thus measure
Product and Process are distinguished from each other.
Services ProcessesIntangible output
High consumer contact
Heterogeneous output
Output cannot be inventoried
Shorter lead time
Labor and information intensive
Quality/Productivity is harder to define and thus measure
Services are offered in “Service Package” form
“Product” and “process” are often the same.
© Dr. Mehdi Kaighobadi, FAU
“Goods” and “Services”Not a B&W Classification!
100% 75% 50% 25% 0% 100%75%50%25%
Self-service groceries
Automobile
Installed carpeting
Fast-food restaurant
Gourmet restaurant
Auto maintenance
Haircut
Consulting services
Goods Services
Classifying a firm as “goods producing” or “service” operation is not a B&W case; it is a matter of degrees.
© Dr. Mehdi Kaighobadi, FAU
Why is “Operations” Important?
It’s like asking why is having a “heart” important in your health!
Operation is the heart of any organization. (Note that it is “organization”, not just “business”)
Without operations, other functions have no place in organization.
Studying operations makes it possible to realize how a firm integrates its functions around one major goal.
Any organization has two fundamental functions (pared down to the minimum); they are a) making and b) delivering. Operations is 100% responsible for the first and at least 50% for the second.