Chapter 1INTRODUCTION TO OPERATIONS MANAGEMENT.ppt

S.Chopra/Coordination Chapter 1INTRODUCTION TO OPERATIONS MANAGEMENT Operations Management = OM Management of ANY activities/process that create goods and provide services Exemplary Activities: Forecasting, Scheduling, Quality management Why to study OM At a typical manufacturing company Operations example in Manufacturing: Food Processing Types of Operations Why OM? Core of all business organizations Many areas interrelated with OM activities Management of operations is critical to create and maintain competitive advantages Organization of Businesses Three basic functions Operations/Production Goods oriented (manufacturing and assembly) Service oriented (health care, transportation and retailing) Value-added (the essence of the operations functions) Finance-Accounting Budgets (plan financial requirements) Economic analysis of investment proposals Provision of funds (the necessary funding of the operations) Organization of Businesses (Cont.) Marketing Selling Promoting Assessing customer wants and needs Communicating those needs to operations The need for working closely Operations Interfaces Systems (Holistic) Approach Emphasizes 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, instruction for using new feature, the cost, training of workers, production schedule, quality standard, advertising must be informed about the new feature. Value Added Value added: The difference between cost of inputs and price (??) of outputs. Is this definition right? Should value added include profit? Value added: The difference between the cost of inputs and the (market or fair) value or price of outputs. Degree of Standardization ! Standardized output Take advantage of standardized methods, less