Lecture 1 Instructor Zia-ur-Rehman Email ziaurrehman12@hotmail.

com

Operations Management involves: ` Product and Service design ` Process selection ` Selection and management of technology ` Design of work systems ` Location planning ` Facilities planning ` Quality improvement of the organizations products and services

Operations management can be defined as: ` The management of systems or processes that create goods and/or provide services ` The ongoing activities of designing, reviewing and using the operating system, to achieve service outputs as determined by the organization for customers.
Contd.

It is the business function that plans, organizes, co-ordinates, and controls the resources needed to produce a companys goods and services.

Goods & Services

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Manufacturing
Tangible product Product can be inventoried Low customer contact Longer response time Capital intensive

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Services
Intangible product Services cannot be inventoried High customer contact Short response time Labor intensive

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Production of Goods vs Delivery of Services

Production of goods results in a tangible output.
     

Government (federal, state, local). Wholesale/retail (clothing, food, appliances, stationery, toys, etc.). Financial services (banking, stock brokerages, insurance, etc.). Health care (doctors, dentists, hospitals, etc.). Personal services (laundry, dry cleaning, hair/beauty, gardening, etc.). Business services (data processing, e-business, delivery, employment agencies, etc.). Education (schools, colleges, etc.)

On the other hand

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Both use technology Both have quality, productivity, & response issues Both must forecast demand Both will have capacity, layout, and location issues Both have customers, suppliers, scheduling and staffing issues Manufacturing often provides services Services often provides tangible goods

Differences Between Goods and

Service
         

Degree of customer contact. Uniformity of input. Labor content of jobs. Uniformity of output. Measurement of productivity. Production and delivery. Quality assurance. Amount of inventory. Evaluation of work. Ability to patent design.

ORGANIZATION

Finance

Operations

Marketing

Typical Organization Chart

Finance: This area is responsible for securing financial resources at favorable prices and allocating those resources throughout the organization. Marketing: This area is responsible for assessing consumer wants and needs, and selling and promoting the organizations goods or services. Contd.

Operations: This area is responsible for producing the goods or providing the services offered by the organization. In other words the role of operations management is to transform a companys inputs into the finished goods or services.

It involves: ` Inputs: That is capital, labor, land and information ` Transformational Processes: That is storing, transporting, cutting etc. ` Outputs: That is goods and services.

Production System Conversion Subsystem

Control Subsystem

Inputs

Outputs

OMs Transformation Process

OMs Transformation Process

The essence of the operations function is to add value during the transformation process. Value Added: It is the term used to describe the difference between the cost of inputs and the value or price of outputs. or The net increase created during the transformation of inputs into final outputs.

Firms use the money generated by value-added for ` Research and development, ` Investment in new facilities and equipment, ` Worker salaries, and, ` Profits.

Value-Added: The difference between the cost of inputs and the value or price of outputs.

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

Introduction to operations Management

Operations: All activities that involved in the Conversion Process of Input to Output (Goods/service) Management: The Process of Planning, Organizing and Controlling in achieving the desired objectives.

Introduction to Operations Management

University as an Example: Input Students Planning & controlling Class Times Supportive Output Subsystems Book store Educated Students Research Outcomes Service to Public

Professor Course Development Library Buildings School Regulations Computer Lab

Functions of Operations Management

Scheduling / Capacity Planning / Purchasing / Quality Control / Facility Location & Layout / Production and Process Design / Job Design / Maintenance / Project Management /

Operations Management as a Function

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Degree of customer involvement, and Degree to which technology is used to produce and/or deliver a product or service.

Intangibility Perishability Heterogeneity Inseparability

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Simple Flowchart for Delivery of

People-Processing Service

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Possession-Processing Service
Simple Flowchart for Delivery

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Simple Flowchart for Delivery of

Mental Stimulus Processing Service

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Simple Flowchart for Delivery of

Information-Processing Service

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The Scope of Operations Management