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THE ROLE OF OPERATIONS MANAGEMENT

INPUTS OUTPUTS

THETRANSFORMATIO

NPROCESS

Customer Feedback

Performance Information

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TYPES OF INPUTS, TRANSFORMATIONS, AND OUTPUTS

INPUTS TRANSFORMATIONS OUTPUTSMaterials

Raw MaterialsPurchased PartsSuppliesEnergy

PeopleWorkersTechniciansSupervisorsManagersMaintenanceCustodial

EquipmentLandBuildingsMachinesToolsOffice EquipmentComputers

PhysicalLocationalStorageExchangeInformationalEducationalAttitudinalPhysiological

ProductsServices

TRANSFORMATION EXAMPLES:Physical or Chemical Manufacturing, chemical processing, oil refining, etc.Locational Airline companies, trucking companies, package delivery services.Storage Warehousing operations, banks.Exchange Wholesale and retail operations.Informational T.V. news departments, newspapers, computer information servicesEducational Schools, colleges, universities.Attitudinal Entertainment industry, movie companies, theme parks.Physiological Hospitals and healthcare institutions.

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BASIC PRODUCTIVITY EQUATION

Productivity =Value of Output

Value of Input

A fundamental principle of the transformation process is that value should beadded during the transformation process. In that way the value of the output willexceed the value of the input, and the firm will be profitable. If the value of theoutput is less than the value of the input, one will not be in business very long.

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STRATEGIC VS. TACTICAL DECISIONS IN OPERATIONS

Operations Decisions

Strategic Decisions(system design issues)

Tactical Decisions(system operation & control issues)

- Broad in scope- Long-term in nature- All encompasing

- Narrow in scope- Short-term in nature- Concerning a small group of

issues

Some Examples of Strategic Decisions

Selection of product or serviceDesign of product or serviceJob design

Capacity decisionFacility locationSelection of processing equipmentPhysical layout of facility

Some Examples of Tactical Decisions

ForecastingInventory decisionsMaterials acquisition

Labor schedulingProduction schedulingQuality control decisionsMaintenance decisions

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MANUFACTURING AND SERVICE DISTINCTIONS

Nature of outputCustomer contact

Storability of outputTransportability of outputNumber of outletsLocation of outletsSize of outletsResponse timeUse of capital and laborMeasurement of qualityMeasurement of productivity

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CHARACTERISTICS OF MANUFACTURING AND SERVICE ENTITIES

Characteristic Manufacturing Organization Service Organization

Nature of Output Physical, durable product Intangible, perishable service

Customer Contact Low customer contact High customer contact

Storability Output can be inventoried Output cannot be inventoried

Transportability Output can be transportedfrom one location to another Output cannot be transported

Number of Outlets Few outlets Many outlets

Location of Outlets Centrally located Geographically dispersed

Size of outlets Large facilities Small facilities

Response Time Long response time Short response time

Use of Capital and Labor Capital intensive Labor intensive

Measurement of Quality Easily measured Difficult to measure

Measurement of Productivity Easily measured Difficult to measure

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SOME EXAMPLES FOR THE VOLUME/VARIETY CONTINUUM

Repetitive Operations (High Volume, Low Variety side of the continuum)

Line Processes are typified by systems that have discrete units moving through the processingstages. In manufacturing we think of assembly line operations, where examples would includesuch things as automobiles, pencils, toasters, etc. Even some non-manufacturing systems couldhave characteristics of a line process (for example, a cafeteria line in a high school).

Continuous Processes differ in that we do not have discrete, individually identifiable itemsmoving through the processing stages. Instead, we tend to have some amorphous matter movingthrough the processing. Examples here would include an oil refinery, a soft drink bottler, a

brewery, or a chemical processing plant.

Intermittent Operations (Low Volume, High Variety side of the continuum)

Job-Shop Processes are typified by systems that handle custom work that requires relativelysmall amounts of resources and time. Examples cited in class include machine shops that custommanufacture metal parts, fabricators of advertising signs and neon signs, and print shops. In therealm of non-manufacturing, walk-in emergency clinics and insurance claims offices exhibit jobshop tendencies.

Project Processes are typified by systems that handle custom work that requires large (or evenmassive!) amounts of resources and time. There are many examples in the area of construction,such as building bridges, apartment complexes, shopping centers, etc. A non-manufacturingexample would be a team of information systems consultants engaged in the design and

implementation of a new management information system for a hospital.

Operations between Repetitive and Intermittent

Batch Processes are typified by systems that have a moderate number of different outputs andmoderate demand for each. These systems will produce a small run of a particular item (on arepetitive basis), then switch to a small run of another item, and so on. Examples includefurniture manufacturers and book publishers.

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DIFFERENCES BETWEENREPETITIVE AND INTERMITTENT OPERATIONS

Dimension Repetitive Operations Intermittent OperationsProduct variety Low HighProduct volume High LowDegree of standardization High LowOrganization of resources Line flow to accommodate

processing needsGrouped by function

Path of products throughfacility

Line flow

(product layout)

In a varied pattern, dependingon product needs(process layout)

Factor driving production Forecast of future demand(make to stock)

Customer orders(make to order)

Critical resource Capital intensive operation(equipment, automation,technology important)

Labor intensive operation(worker skills important)

Type of equipment Specialized General purposeDegree of automation High LowThroughput time Shorter Longer Work-in-process inventory Less More