MGMT 3613 Operations Management, Chapter 1 Notes

MGMT 3613 | Operations Management Chapter 1 Notes 1. Define Operations Management: The management of systems or processes that create goods and/or provide services. 2. The three major functional areas of organizations are: a. Finance: responsible for securing financial resources at favorable prices and allocating those resources throughout the organization, as well as budgeting, analyzing investment proposals, and providing funds for operations. b. Marketing: responsible for assessing consumer wants and needs, and selling and promoting the organizations goods and services. c. Operations: management of systems or processes that create goods and/or provide services. 3. Compare and Contrast service and manufacturing operations: Service: low percentage of goods, high percentage service, intangible output Manufacturing: high percentage of goods, low percentage service, tangible output Differences: Degree of customer Contact Uniformity of input Labor contents of job Uniformity of output Measurement of productivity Production and delivery Quality Assurance Amount of inventory 4. Describe the operations function: The operations function includes many interrelated activities, such as forecasting, capacity planning, scheduling, managing inventories, assuring quality, motivating employees, deciding where to locate facilities, and more. The operations function consists of all activities directly related to producing goods or services. What is the nature of the Operation Manager’s job?: The primary function of the operation manager is to guide the system by decision making. He/she is the key figure in the system: he or she has the ultimate responsibility for the creation of goods or provision of services. 5. Differentiate between design and operation of production systems: The design of a production system includes long-range capacity, process selection, layout, design of work systems, and location. The operations of a production system include quality control, aggregate planning, inventory management, materials requirement planning, scheduling, supply chain management, and project management. 6. Describe the key aspects of operations management decision making: Operations management make many key decisions that affect the entire organization, such as: What: What resources will be needed, and in what amounts? How will resources be allocated? When: When will each resource be needed? When should the work be scheduled? When should supplies be ordered? When is corrective action needed? Where: Where will the work be done? How: How will the product/service be designed? How will the work be done (organization, methods, equipment)? Who: Who will do the work? 7. Briefly describe the historical evolution of operations management: During the industrial revolution (1770s), goods were produced in small shops by craftsmen and their apprentices. In the 18th century a number of innovations substituted machine power for human power (steam engine). The development of the gauging system gave the industrial revolution a boost, reducing the need for custom made goods. The scientific management era brought Fredrick Taylor’s methods to light. He studied work methods of work to identify the best method for doing each job. His method’s emphasized maximizing output. In the early 10th century, mass production, interchangeable parts, and division of labor maximized output in the automobile industry as well as others. The human relations movement emphasized the importance of the human element in job design. Managers became aware of the idea that worker motivation is critical to improve productivity. 8. Identify current trends in business that impact operations management: Although different organizations have different priorities, and are affected differently by trends, major trends that impact operations management are: The internet, ecommerce, e-business Management of technology Globalization Management of supply chains Agility