OM 1 *Operations Management and Decision-making

CHAPTER 1: INTRODUCTION TO OPERATIONS

General approaches to decision-making
MANAGEMENT
Models- An abstraction of reality, a simplified
Operations- Refer to the part of the organization that is
representation of something.
responsible for producing goods and /or services.
Quantitative approaches- often embody an attempt to
Operations management- Is the management of
obtain mathematically optimal solutions to managerial
systems or processes that create goods and/or provide
problems.
services.
Performance metrics- all managers use metrics to
*Production of goods versus Delivery of services
manage and control operations.
Production of goods results in a tangible output.
Analysis of trade-offs- operations personnel frequently
Delivery of service often implies an act.
encounter decisions that can be described as trade-off
Key differences between manufacturing and decision.
services Systems approach- emphasizes interrelationships
among subsystems, but its main theme is that the whole
1. Degree of customer contact
is greater than the sum of its individual parts.
2. Uniformity of input
Establishing priorities- certain factors are more
3. Labor content of jobs
4. Uniformity of output important than others. Recognizing this enables the
5. Measurement of productivity managers to direct their efforts to where they will do the
most good and to avoid wasting time and energy on
6. Production and delivery
7. Quality assurance insignificant factors.
Ethics- In making decisions, managers must consider
8. Amount of inventory
9. Evaluation of work how their decisions will affect shareholders,
10. Ability to patent design management, employees, customers, the community at
large, and the environment.
*The Scope of Operations Management Environmental concerns- with growing concern on
global environmental changes, stricter regulations
Interrelated activities of the operations function especially on developed nations are being imposed, thus
 Forecasting affecting the way businesses are operating.
 Capacity planning
 Scheduling *Trends in Business- business organizations must be
cognizant of current trends and take them into account
 Managing inventories
into their strategic planning.
 Assuring quality
Major trends
 Motivating and training employees
 The internet, e-commerce, and e-business.
 Locating facilities
 Management of technology
Operations function- consists of all activities directly  Globalization
related to providing goods and services.  Management of supply chains.
System design- involves decision that relate to system  Outsourcing
capacity, geographic location of facilities, arrangement of  Agility
departments and placement of equipments, product and  Ethical behavior
service planning and acquisition of equipment.
System operation- involves management of personnel, Supply Chain- A sequence of activities and
inventory planning and control, scheduling, project organizations involved in producing and delivering a
management, and quality assurance. good or service.
Other areas that are part of the operations function Outsourcing- Obtaining a product or service from
 Purchasing outside the organization.
 Industrial engineering
 Distribution
 Maintenance