Operations Management and Decision-Making Models

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MBA503 –

Operations

Management and

Decision-Making Models Lesson - Week 1

The nature of operations management – operations as a competitive weapon

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What does he mean?

In the end, all business

operations can be

reduced to three words:

• People

• Product

• Profit

Lee Iacocca

Lesson Learning Outcomes

1 Answer the question - Why should masters

students should study operations

management?

2 Understand the key differences between

manufacturing and service industries

3 Appreciate the connection between decision

making and effective operations management

4 Define the key operational management terms

and concepts

What we cover in this subject - Part 1

What we cover in this subject - Part 2

LEARNING OUTCOME 1

Answer the question -

Why master's students should

study operations management?

Student Activity

Watch the following

video and answer the

question – Why

should masters

students study

operations

management?

https://www.youtube.c

om/watch?v=nKK6vdz

mnjE

https://www.youtube.com/watch?v=nKK6vdzmnjE

Why Study Operations Management?

• Firstly, it explains how the operations function must deliver top quality products and services efficiently and effectively to meet the needs of clients and customers.

• Secondly, it will empower you to solve complex business problems related to the journey of products and services from the manufacturer or service provider to the end customer.

What students will understand from

studying this subject

• Must deliver top quality products and services, both efficiently and effectively to meet the needs of the customer

The Operations Function

• Studying this subject will help students solve complex business problems related to the journey of products and services from the manufacturer or service provider to the end customer.

Complex Business problems

Student Activity

Key Operations Management concepts

Key Operations Management

Concepts

Efficiency vs Effectiveness

Supply and demand

Competitive Advantage

Supply, Value and Demand

Chain

Business Processes

Adding Value

LEARNING OUTCOME 2

Understand the key differences

between

manufacturing

and

service industries

Student Activity

• In groups of four (4) discuss the backgrounds

and work experience of each student.

• Is (or was) there a manufacturing or service

focus?

• Who were the customers and end customers

of the product or service?

• After 10 minutes conduct a class discussion

on the variety of operational backgrounds.

STUDENT ACTIVITY

Manufacturing

• Car manufacturing

•

Services

• Hairdressing

•

In pairs add another four examples of manufacturing industries under the

example of manufacturing and services – car manufacturing and

hairdressing are examples.

Try and think of examples that are a bit different from the ones listed. This

activity should take 5 minutes. We will then discuss as a class

The two pillars of operations

management

Manufacturing Services

In the same groups as previously, list a minimum of four key differences there are between

manufacturing versus service industries. As a class we will share each group’s answers

As the trimester progresses your understanding of manufacturing, versus services industries will grow

Two Pillars of Operation

Management

Some operations management roles fall

under the category of production. The

planning and using of resources to ensure

products are designed, created and

dispatched to ensure that they are available

to customers

More tangible products

Less customer contact

Products Services

Other operations managers

focus on the delivery of

services.

More intangible products

More customer contact

LEARNING OUTCOME 3

Appreciate the connection between

decision making

and

effective operations management

Operations Management as a

set of decisions Capabilities

Processes

Value chains

Tactical decisions

KPIs

Development of new capabilities and the

maintenance of existing capabilities

Designing new processes.

Development and organisation of value chains linking

external suppliers and external customers to the firm’s

internal processes.

Developing and monitoring key performance

measures such as cost and quality.

Tactical decisions relating to production and

staffing plans, inventory management and project

management.

Student Activity

• Using the example of a car manufacturer, and using the

5 decision categories on the

right

• List 3 decisions that would be made in each category

• As a class develop a list

LEARNING OUTCOME 4

Define the key

operational management

terms and

concepts

Operations Management Decisions

Operations A set of activities concerned with transforming

resource inputs into desired outputs.

Operations Systems The configuration of the activities concerned with transforming resources within an organisation. Each system is an attempt to achieve the optimum match between organisational capabilities

Operations Management The management of an operating system to achieve the desired organisational outputs within an optimum balance of economy, efficiency and effectiveness.

The 3 “O” terms of operations management

Definitions – Operations Management

Economic

Relating to the production development, and management of

material wealth, as of a country, household, or business enterprise.

Financially rewarding

Effective

Producing a decided, decisive, or desired effect.

Effectiveness

[mass noun] The degree to which something is successful in producing a

desired result; success.

Efficient

Achieving maximum productivity with minimum wasted effort or expense.

Preventing the wasteful use of a particular resource.

Working in a well-organised and competent way.

The 4 “Es” of Operations

Management

Why is operations management important?

There are three key areas where operations

management can provide companies

1. Better output – improving and optimizing

processes which leads to lower defects, lower

costs, etc.

2. Competitive Advantage – Defining and

honing the competitive advantage of a

business

3. Higher Profits – These two approaches assist

in increasing profits

Cost centres vs Profit centres

Cost Centres

- Areas of the company which do not generate any income and also cost the company to run – e.g. HR

and IT

Profit Centres

- Areas of the company responsible for

generating the company running costs and

profits

Student Activity

• What would be important to a boss

running a cost centre in a company

versus one running a profit centre?

Initial Workshop on Assessment 1

• Accessing online and other resources to

conduct research

• Accessing and using electronic databases

• Academic writing at an MBA level

• Address these issues as a class and invite

individual students to contribute from their

previous experience.

Student Activity

• What is Harvard Referencing? • Individually identify the key elements of the

Harvard Referencing System. • What makes a Harvard Reference appear

different to an APA Reference (its most similar counterpart)?

• In pairs discuss your findings and opinions. • Enlist one student to write a complete Harvard

Reference for a text and an academic journal on the whiteboard and invite the class to critique it.

Exit Activity

Quick Quiz 1. Without looking at your notes name and define three

terms you learnt this lesson

2. True or False - In manufacturing industries there is

more casualisation of staff than in service industries?

3. What were the 3 Ps mentioned by Lee Iacocca ?

4. There are 6 key operational management concepts

listed on the hexagon diagram. Can you name three?