Forecasting/MAD/Exponential Smoothing problem solving homework (Operations Management)
MDNAQ
w01_intro_to_om.pptxMGMT19126: OPERATIONS MANAGEMENT
Week 1: Operations and Productivity
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Text
Heizer, J and Render B (11th, 10th or 9th edition), Operations Management, Upper Saddle River, NJ: Prentice Hall.
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Outline
What is Operations Management?
Transformation Process
Production Systems
Goods and Services
Why study OM?
Productivity
Global company profile: Hard Rock Café
What is Operations Management?
Production is the creation of goods and services
Operations Management is the set of activities that create value in the form of goods and services by transforming inputs into outputs. (Heizer, 11th edition)
Or
The American Production and Inventory Control Society (APICS) dictionary defines Operations management as-the planning, scheduling and control of activities that transform inputs into finished goods and services
© 2011 Pearson Education, Inc. publishing as Prentice Hall
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Value
If a customer gets a better car without changing the price, then value has gone up.
OM Involves Managing Transformations
Transformation
Process
(Value Adding)
Goods or services
Input
Output
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Kamrul Ahsan, PhD, S2 2009
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Example of Transformation Processes
| Operation | Input/ resources | Transformation | Outputs |
| Departmental store | Customers/ Goods for sale Staff sales Computerized registers | Display goods, give sales advice, sell goods | Customers and goods assembled together |
| Publishing house | Printers and designers, printing presses, paper, ink | Design, print, bind | Printed materials |
| University, Bus service, Hotel room | ? | ? | ? |
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1/24/2016
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The activities of operations management
ENVIRONMENT
ENVIRONMENT
INPUT
OUTPUT
GOODS AND SERVICES
INPUT TRANSFORMED RESOURCES
MATERIALS INFROMATION CUSTOMERS
FACILITIES STAFF
INPUT TRASNFORMED RESOURCES
OPERATIONS STRATEGY
DESIGN
PLANNING AND CONTROL
IMPROVEMENT
Transformation
Physical– as in manufacturing
Locational– as in transportation
Exchange– as in retailing
Storage—as in warehousing
Physiological– as in health care
Informational—as in telecommunications
Goods and Services
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Characteristics of Goods
Tangible product
Consistent product definition
Production usually separate from consumption
Can be inventoried
Low customer interaction
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Characteristics of Service
Intangible product
Produced and consumed at same time
Often unique
High customer interaction
Inconsistent product definition
Often knowledge-based
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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
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Organizational Charts
© 2011 Pearson Education, Inc. publishing as Prentice Hall
Operations
Teller Scheduling
Check Clearing
Collection
Transaction processing
Facilities design/layout
Vault operations
Maintenance
Security
Finance
Investments
Security
Real estate
Accounting
Auditing
Marketing
Loans
Commercial
Industrial
Financial
Personal
Mortgage
Trust Department
Commercial Bank
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What Operations Managers (OM) Do?
Plan Organize Staff Lead Control
Mostly take short term decisions
Org.
Policy
OM
Resource
Management
Customers
Managers
decisions
are limited by:
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This is the typical breakdown one finds in many business courses. It may be helpful to the students if you discuss each of these elements in relationship to something you or they have done. Work on a group project, for example, can provide a useful vehicle for the discussion.
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New Trends in OM: Summary
Ethics
Global focus
Environmentally sensitive production
Rapid product development
Environmentally sensitive production
Mass customization
Empowered employees
Supply-chain partnering
Just-in-time performance
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Productivity
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Improving Productivity at Starbucks
© 2011 Pearson Education, Inc. publishing as Prentice Hall
A team of 10 analysts continually look for ways to save time. Some improvements:
| Stop requiring signatures on credit card purchases under $25 | Saved 8 seconds per transaction | |
| Change the size of the ice scoop | Saved 14 seconds per drink | |
| New espresso machines | Saved 12 seconds per shot |
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Improving Productivity at Starbucks
© 2011 Pearson Education, Inc. publishing as Prentice Hall
A team of 10 analysts continually look for ways to save time. Some improvements:
| Stop requiring signatures on credit card purchases under $25 | Saved 8 seconds per transaction | |
| Change the size of the ice scoop | Saved 14 seconds per drink | |
| New espresso machines | Saved 12 seconds per shot |
Operations improvements have helped Starbucks increase yearly revenue per outlet by $200,000 to $940,000 in six years.
Productivity has improved by 27%, or about 4.5% per year.
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Productivity Challenge
Productivity is the ratio of outputs (goods and services) divided by the inputs (resources such as labor and capital)
The objective is to improve this measure of efficiency
Important Note!
Production is a measure of output only and not a measure of efficiency
Productivity
© 2011 Pearson Education, Inc. publishing as Prentice Hall
Measure of process improvement
Represents output relative to input
Productivity =
Units produced
Input used
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S2, 2005
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Productivity Variables
Productivity=
Output
Inputs(Labor + material + energy + capital + miscellaneous)
Productivity can be improved by either reducing Input while keeping Output constant, or increasing Output while keeping Input constant
Partial measures=output/(single input)
Multi-factor measures=output/(multiple inputs)
Total measure=output/(total inputs)
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Productivity variables- continued
Increase in productivity -> labor, capital, and management receive additional payments
If returns to labor, capital and management are increased without increased productivity, prices rise
When productivity increases, sometimes downward pressure is placed on prices- because more is being produced in the same resources
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Key Variables for Labor Productivity
Basic education appropriate for the labor force
Maintaining and enhancing skills in the middle of rapidly changing technology and knowledge
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You might first ask students to consider the conditions under which each of the key variables is most important. Once the conditions are identified, you might list the conditions on the board or screen and ask students to develop a method for comparing various countries on the basis of these conditions. Where would they place the U.S.? Developing countries? Etc.
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Collins Title Productivity
Staff of 4 works 8 hrs/day 8 titles/day
Payroll cost = $640/day Overhead = $400/day
Old System:
14 titles/day Overhead = $800/day
New System:
8 titles/day
$(640 + 400)
14 titles/day
$(640 + 800)
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Old multifactor productivity
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New multifactor productivity
= .0077 titles/dollar
= .0097 titles/dollar
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Service Productivity
Typically labor intensive
Frequently focused on unique individual attributes or desires
Often an intellectual task performed by professionals
Often difficult to mechanize
© 2011 Pearson Education, Inc. publishing as Prentice Hall
Significant Events in OM
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10 OM Decisions
Goods and service design
Quality
Process and capacity design
Location selection
Layout design
© 2011 Pearson Education, Inc. publishing as Prentice Hall
Human resources and job design
Supply-chain management
Inventory
Scheduling
Maintenance
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Tutorial : Week 1
Review: ( Rapid review page 61)
Define operations management.
Why study OM? What operations managers do?
New trends in OM
Explain the distinction between goods and services.
Explain the difference between production and productivity.
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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
Price
Quality
Value
=
