1. Operations management involves organizing processes to efficiently produce goods and services. It aims to maximize efficiency and profitability.
2. The scope of operations management includes forecasting demand, capacity planning, facilities layout, scheduling, inventory management, quality assurance, employee motivation and training, and location of facilities.
3. An operations manager's key responsibilities are decision making, influencing the organization's goal achievement, and making choices regarding resources, scheduling, ordering, work processes, product/service design, and employee roles. Models are used as tools to simplify complex phenomena and enable analysis of different scenarios.
1. Operations management involves organizing processes to efficiently produce goods and services. It aims to maximize efficiency and profitability.
2. The scope of operations management includes forecasting demand, capacity planning, facilities layout, scheduling, inventory management, quality assurance, employee motivation and training, and location of facilities.
3. An operations manager's key responsibilities are decision making, influencing the organization's goal achievement, and making choices regarding resources, scheduling, ordering, work processes, product/service design, and employee roles. Models are used as tools to simplify complex phenomena and enable analysis of different scenarios.
1. Operations management involves organizing processes to efficiently produce goods and services. It aims to maximize efficiency and profitability.
2. The scope of operations management includes forecasting demand, capacity planning, facilities layout, scheduling, inventory management, quality assurance, employee motivation and training, and location of facilities.
3. An operations manager's key responsibilities are decision making, influencing the organization's goal achievement, and making choices regarding resources, scheduling, ordering, work processes, product/service design, and employee roles. Models are used as tools to simplify complex phenomena and enable analysis of different scenarios.
Operation management is I the business limelight
Management – Application of the because it is the function through which companies management functions can achieve this type of competitiveness. to achieve goals Learn how people organize themselves to be efficiently and productive and profitable at their chosen enterprise effectively Learn how goods and services are produced. To learn what Operation Managers do to use in Finance (Laurence Graham) - Art numerous opportunities. and science of managing To learn what makes it such a costly part of an org. money ad how to manage those costs through informed decisions. Marketing How companies sell (Philip Cutler), meeting SCOPE OF OPERATIONS MANAGEMENT the needs and wants of customers profitably. 1. Forecasting- external factors that may Accounting System meant for affect operations. To have correct measuring business forecast, use historical data. activity, processing 2. Capacity Planning – Reduce opportunity information into report cost. Compute possible capacity point and making the finding and break even point. available to decision- 3. Facilities and Layout – important in makers Production/ Operations – A function of system achieving effective use of workers and that transforms input equipment. into outputs at a greater 4. Scheduling value. 5. Managing Inventories -How to materialize a 6. Assuring Quality concept from 7. Motivation and Training employees marketing/ providing 8. Location Facilities products. Goods Tangible, the Outputs Operations Products Intangible, the Outputs - What do you do? - Part of business responsible for producing OPERATIONS MANAGEMENT (3 Functions: goods and services Operations, Finance, and Marketing) Operations Management Service jobs closely related to operations: - Administration of business practices Finance Services : Stock Market Analyst, *opportunities to make the highest level of Broker, Investment banker, Loan Officer efficiency (minimize waste). Marketing services: Market analyst, Market - Maximum level of efficiency is necessary to Researcher, advertising manager, product achieve profitability manager Goods Services Accounting services: Corporate accountant, Tangible Intangible TYPES OF SERVICES public accountant, budget analyst 1. Professional services Information Services: Corporate 2. Mass services ( e.g. Media, Utilities, intelligence, library services, management internet) information systems, design systems 3. Service Shops ( Tailoring, Repair) 4. Personal care (Barbershops, spas CBME 1 Midterms 5. Government ( Police protection, Fire Ability to protection, sss, Philhealth) Patent 6. Education 7. Food/Catering Role of an Operation Manager 8. Service within Orgs (Payroll, Human Decision Making Resources, Janitorial, Maintenance. Exerts considerable influence over the 9. Delivery and Shipping degree to which the organizations goals are 10. Residential Services realized. 11. Travel and Hospitality Key Decision Making of an OP Manager 12. Transportation - What resources are needed and in what 13. Miscellaneous Services amount - When would each resources be needed TRANSFORMATION PROCESS - When would it be scheduled - Convert/ Transform inputs into outputs - When would materials and supplies be - Adds Value to products. ordered - Where would the work begin ILLUSTRATION - How will the products and services be designed - Who will do the work MODEL - It is known as an abstraction of reality or a simple representation of something. Classifications: 1. Physical- Looks like real life representation 2. Schematic- as a more abstract as its physical counterpart. 3. Mathematical – Most Abstract - does not look at all as to ots physical counterparts. - would be used a s decision making aids and VALUE ADDED simplification of more complex phenomenon. *can also be information given to you Each model has the following: *adding value to a product more aligned with 1. Purpose goods. 2. How it would be used to generate reports GOODS SERVICES 3. How the results are interpreted and used Degree of 4. What assumptions and limitations would Customer Contact apply Labor Content Benefits in using models? Uniformity of 1. Easy to use and less expensive Input 2. Requires users to organize and at times Measurement quantify data/ info of Productivity 3. Increases understanding of the problem Quality 4. Enables managers to analyze “What-if” Assurance situations Inventory 5. Serves as a tool for evaluation and provides Wage a standard format for analyzing a problem CBME 1 Midterms 6. Enables users to use mathematics to - Businesses make plans for future operation problems based on anticipated future demandderived Limitations of models from 1. Actual customer order and 1. Quantitative information may be Forecasts. emphasized at the expense of quantitative 2 Aspects information Expected level of demand 2. Models may be incorrectly applied as a o Can be a function of some result of misinterpretations structural variation such as a trend 3. Models does not guarantee a good decision or seasonal variation Degree of accuracy that can be assigned to Features*** a forecast 1. Quantitative approaches o A function of the ability of 2. Performance Metrics forecasters to correctly model 3. Analysis of trade off demand, random variation and 4. Degree of customization sometimes unforeseen events. 5. Systems approach Made with reference of a specific time horizon. 6. Establishing Priorities 1. Short term forecast – pertain to ongoing operations. HISTORICAL EVOLUTION OF OPERATIONS 2. Long term – Pertain to new products or MANAGEMENT services, new equipment, facilities or I. Industrial Revolution things that require lead time to 1770: England – 19th Century: USA and develop, construct or implement. England USES 18th Century – Steam Engine 1. Help managers plan a system – generally II. Scientific Management involves long range plans Fredrick Winslow Taylor- Father of Scientific 2. Help managers plan the use of the system. Management. Maximum output: Can – refers to short range plans. destroy quality of the service/ good. There FEATURES is no checking) a. Generally assumes that the same Frank Gilbreth – Father of Motion study underlying casual system existing in the Henry Gantt – Founder of the Gantt chart, past will continue to exist in the future. illustrates a project’s schedule. b. Are not perfect – they are assumptions III. Human Relation Movement c. Forecasting for groups of items tend to be a. Work Privilege more accurate than individual items. b. Worker motivation is critical in (groups-raw materials) improving productivity. d. Forecasting accuracy decreases as the time c. Motivational Theories period covered by the Forecast (time d. Theory X & Y horizon) increases. e. Theory Z ELEMENTS FORECASTING 1. Timely - For there to be enough inventory to sell 2. Accurate 3. Reliable - Basic inputs in the decision process of 4. Meaningful Units operations management because they 5. In writing provide information on future demand. 6. Simple to understand and use 7. Cost effective CBME 1 Midterms STEPS FORECASTS BASED ON TIME-SERIES DATA 1. Determine the purpose of the forecast - A time-series is a time ordered sequence of 2. Establish a time horizon observations taken at regular intervals. (e.g. 3. Obtain clean and analyze appropriate data hourly, daily, weekly, monthly etc.) 4. Select a forecast technique - Forecasting techniques based on time- 5. Make the forecast series data are made on the assumption 6. Monitor the forecast events that future values of the series can be ACCURACY estimated from past values. Et=At-Ft - Analysis of time series data requires the Where: analyst to identify the underlying behavior E= Error of the series. This can often be A= Actual accomplished by merely plotting the data F= Forecast and visually examining the plot TREND refers to a log term upward or Forecast error is the difference between the value downward movement in the data that occurs and the value that was predicted for a IRREGULAR VARIATION is caused by unusual given period of time. circumstances not reflective of typical Accuracy and control is vital, so minimize errors. behavior. RANDOM VARIATIONS are residual 2 General Approaches variations that remain after all other 1. Qualitative behaviors have been accounted for - Qualitative techniques permit inclusion of SEASONALITY refers to short term regular soft information in the forecasting process variations related to the calendar or time of a. Executive opinion day. b. Sales force Opinion CYCLES are wavelike variations of more c. Consumer Surveys than one year’s duration. d. Delfi Method NAÏVE METHOD e. Other approaches - Uses a single precious value of a time series 2. Quantitative as the basis of forecast - Consists mainly of subjective inputs witch - Can be used with a stable series with often defy numerical description seasonal variations or with a trend. Techniques 1. Judgmental Forecast - Relies on analysis of subjective inputs such as opinions from customer surveys, sales staff etc. 2. Time-Series Forecast AVERAGING - Projects patterns identified in recent time - Smooths fluctuations in a time series series observations. because the individual highs and lows in - Based on past events. data are offset. 3. Associative model SIMPLE MOVING AVERAGE - Use explanatory variables to predict future ∑𝑛𝑖=1 𝐴𝑡−𝑖 𝐴𝑡𝑛 + ⋯ + 𝐴𝑡−2 + 𝐴𝑡−1 𝐹𝑡 = 𝑀𝐴𝑡 = = demand 𝑛 𝑛 F= Forecast for time period MA= Period Moving Average At-i= Actual value in period t-i CBME 1 Midterms N= Number of periods (data points) in moving average
CAPACITY PLANNING - Upper limit on load (may be no. of units produced or no. of services rendered) an operating unit (may be a plant,
department, machine, store or worker) can handle
- Goal of strategic capacity planning is to
achieve a match between long term supply capabilities and predict level of long term demand. CAPACITY DECISIONS are STRATEGIC - Have a real impact on the activity of the organization to meet future demands for products and services. - Affect cost - Capacity is usually a major determinant of initial cost. - Often involve long-term commitment of resources. - Can affect competitiveness - Capacity affects the ease of management - Globalization has increased the importance and the complexity of capacity decisions. - Because CD often involve substantial financial and other resources, it is necessary to plan for them far in advance DEFINING and MEASURING CAPACITY 1. Design capacity – Max output an operation, process, or facility is designed for. 2. Effective capacity – Design Cap minus allowances. The different measures of capacity are useful in defining two measures of system effectiveness: Utilization % of design capacity achieved 𝐴𝑐𝑡𝑢𝑎𝑙 𝑂𝑢𝑡𝑝𝑢𝑡 𝐷𝑒𝑠𝑖𝑔𝑛 𝐶𝑎𝑝𝑎𝑐𝑖𝑡𝑦 𝑥 100% Efficiency % of effective capacity achieved 𝐴𝑐𝑡𝑢𝑎𝑙 𝑜𝑢𝑡𝑝𝑢𝑡 𝐸𝑓𝑓𝑒𝑐𝑡𝑖𝑣𝑒 𝑐𝑎𝑝𝑎𝑐𝑖𝑡𝑦 𝑥 100%