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Trade Strategy

The document outlines the key concepts of Operations Management (OM) as presented in Chapter 1 of the Heizer/Render Principles of Operations Management textbook. It covers the definition of OM, the roles of operations managers, the importance of productivity, and the historical development of OM practices. Additionally, it highlights the critical decisions involved in operations management and provides a case study on Hard Rock Cafe to illustrate these concepts.

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3 views

Trade Strategy

The document outlines the key concepts of Operations Management (OM) as presented in Chapter 1 of the Heizer/Render Principles of Operations Management textbook. It covers the definition of OM, the roles of operations managers, the importance of productivity, and the historical development of OM practices. Additionally, it highlights the critical decisions involved in operations management and provides a case study on Hard Rock Cafe to illustrate these concepts.

Uploaded by

msadgar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as TXT, PDF, TXT or read online on Scribd
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Presentation Transcript

Operations Management Chapter 1 – Operations and Productivity PowerPoint


presentation to accompany Heizer/Render Principles of Operations Management, 6e
Operations Management, 8e © 2006 Prentice Hall, Inc.

Outline • Global Company Profile: Hard Rock Cafe • What Is Operations Management? •
Organizing To Produce Goods And Services • Why Study OM? • What Operations Managers
Do • How This Book Is Organized

Outline - Continued • The Heritage Of Operations Management • Operations In The


Service Sector • Differences Between Goods And Services • Growth Of Services •
Service Pay • Exciting New Trends In Operations Management

Outline - Continued • The Productivity Challenge • Productivity Measurement •


Productivity Variables • Productivity And The Service Sector • Ethics And Social
Responsibility

Learning Objectives When you complete this chapter, you should be able to: Identify
or Define: • Production and productivity • Operations management (OM) • What
operations managers do • Services

Learning Objectives When you complete this chapter, you should be able to: Describe
or Explain: • A brief history of operations management • Career opportunities in
operations management • The future of the discipline • Measuring productivity

The Hard Rock Cafe • First opened in 1971 • Now – 110 restaurants in over 40
countries • Rock music memorabilia • Creates value in the form of good food and
entertainment • 3,500+ custom meals per day in Orlando • How does an item get on
the menu? • Role of the Operations Manager

What Is Operations Management? Operations management (OM) is the set of activities


that creates value in the form of goods and services by transforming inputs into
outputs Production is the creation of goods and services

Organizing to Produce Goods and Services • Essential functions: • Marketing –


generates demand • Production/operations – creates the product • Finance/accounting
– tracks how well the organization is doing, pays bills, collects the money

Operations Teller Scheduling Check Clearing Collection Transaction processing


Facilities design/layout Vault operations Maintenance Security Finance Investments
Security Real estate Marketing Loans Commercial Industrial Financial Personal
Mortgage Accounting Auditing Trust Department Organizational Charts Commercial Bank
Figure 1.1(A)

Operations Ground support equipment Maintenance Ground Operations Facility


maintenance Catering Flight Operations Crew scheduling Flying Communications
Dispatching Management science Finance/ accounting Accounting Payables Receivables
General Ledger Finance Cash control International exchange Marketing Traffic
administration Reservations Schedules Tariffs (pricing) Sales Advertising
Organizational Charts Airline Figure 1.1(B)

Operations FacilitiesConstruction; maintenance Production and inventory


controlScheduling; materials control Quality assurance and control Supply-chain
management ManufacturingTooling; fabrication; assembly Design Product development
and design Detailed product specifications Industrial engineering Efficient use of
machines, space, and personnel Process analysis Development and installation of
production tools and equipment Finance/ accounting Disbursements/ credits
Receivables Payables General ledger Funds Management Money market International
exchange Capital requirements Stock issue Bond issue and recall Marketing Sales
promotion Advertising Sales Market research Organizational Charts Manufacturing
Figure 1.1(C)

Why Study OM? • OM is one of three major functions (marketing, finance, and
operations) of any organization • We want (and need) to know how goods and services
are produced • We want to understand what operations managers do • OM is such a
costly part of an organization

Finance/ Marketing Accounting OM Option Option Option Increase Reduce Reduce Sales
Finance Production Current Revenue 50% Costs 50% Costs 20% Sales $100,000 $150,000
$100,000 $100,000 Cost of Goods – 80,000 – 120,000 – 80,000 – 64,000 Gross Margin
20,000 30,000 20,000 36,000 Finance Costs – 6,000 – 6,000 – 3,000 – 6,000 Subtotal
14,000 24,000 17,000 30,000 Taxes at 25% – 3,500 – 6,000 – 4,250 – 7,500
Contribution $ 10,500 $ 18,000 $ 12,750 $ 22,500 Options for Increasing
Contribution

What Operations Managers Do Basic Management Functions Planning Organizing Staffing


Leading Controlling

Ten Decision Areas Chapter(s) • Service and product design 5 • Quality management 6
6 Supplement • Process and capacity 7 design 7 Supplement • Location 8 • Layout
design 9 • Human resources, 10 job design 10 Supplement • Supply-chain 11
management 11 Supplement • Inventory management 12, 14, 16 • Scheduling 13, 15 •
Maintenance 17 Ten Critical Decisions Table 1.2

The Critical Decisions • Service and product design • What good or service should
we offer? • How should we design these products and services? • Quality management
• How do we define quality? • Who is responsible for quality? Table 1.2 (cont.)

The Critical Decisions • Process and capacity design • What process and what
capacity will these products require? • What equipment and technology is necessary
for these processes? • Location • Where should we put the facility? • On what
criteria should we base the location decision? Table 1.2 (cont.)

The Critical Decisions • Layout design • How should we arrange the facility and
material flow? • How large must the facility be to meet our plan? • Human resources
and job design • How do we provide a reasonable work environment? • How much can we
expect our employees to produce? Table 1.2 (cont.)

The Critical Decisions • Supply-chain management • Should we make or buy this


component? • Who are our suppliers and who can integrate into our e-commerce
program? • Inventory, material requirements planning, and JIT • How much inventory
of each item should we have? • When do we re-order? Table 1.2 (cont.)

The Critical Decisions • Intermediate and short–term scheduling • Are we better off
keeping people on the payroll during slowdowns? • Which jobs do we perform next? •
Maintenance • Who is responsible for maintenance? • When do we do maintenance?
Table 1.2 (cont.)

Where are the OM Jobs? Figure 1.2

Where are the OM Jobs? • Technology/methods • Facilities/space utilization •


Strategic issues • Response time • People/team development • Customer service •
Quality • Cost reduction • Inventory reduction • Productivity improvement

Significant Events in OM Figure 1.3

The Heritage of OM • Division of labor (Adam Smith 1776; Charles Babbage 1852) •
Standardized parts (Whitney 1800) • Scientific Management (Taylor 1881) •
Coordinated assembly line (Ford/ Sorenson/Avery 1913) • Gantt charts (Gantt 1916) •
Motion study (Frank and Lillian Gilbreth 1922) • Quality control (Shewhart 1924;
Deming 1950)

The Heritage of OM • Computer (Atanasoff 1938) • CPM/PERT (DuPont 1957) • Material


requirements planning (Orlicky 1960) • Computer aided design (CAD 1970) • Flexible
manufacturing system (FMS 1975) • Baldrige Quality Awards (1980) • Computer
integrated manufacturing (1990) • Globalization (1992) • Internet (1995)

Eli Whitney • Born 1765; died 1825 • In 1798, received government contract to make
10,000 muskets • Showed that machine tools could make standardized parts to exact
specifications • Musket parts could be used in any musket

Frederick W. Taylor • Born 1856; died 1915 • Known as ‘father of scientific


management’ • In 1881, as chief engineer for Midvale Steel, studied how tasks were
done • Began first motion and time studies • Created efficiency principles

Taylor’s Principles Management Should Take More Responsibility for: • Matching


employees to right job • Providing the proper training • Providing proper work
methods and tools • Establishing legitimate incentives for work to be accomplished

Frank & Lillian Gilbreth • Frank (1868-1924); Lillian (1878-1972) • Husband-and-


wife engineering team • Further developed work measurement methods • Applied
efficiency methods to their home and 12 children! • Book & Movie: “Cheaper by the
Dozen,” book: “Bells on Their Toes”

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