Chapter One (Introduction to Operations *A primary function of an operations manager is to

Management) guide the system by decision making. Certain decisions

affect the design of the system, and others affect the
Goods Physical items produced by business operation of the system. Operations manager is more
organizations. involved in day-to-day operating decisions than with
Services Activities that provide some combination of decisions relating to system design
time, location, form, and psychological value. System design involves capacity, location, arrangement
Operations management The management of systems of departments, product and service planning, and
or processes that create goods and/ or provide services. acquisition and placement of equipment.
*Operations function is responsible for producing System operation involves management of personnel,
products and/or delivering services offered by the inventory planning and control, scheduling,
organization project management, and quality assurance.
*Finance is responsible for securing financial Lead time The time between ordering a good or
resources at favorable prices and allocating those service and receiving it.
resources, as well as budgeting, analyzing investment Model An abstraction of reality; a simplified
proposals, and providing funds for operations. representation of something. Physical, Schematic,
*Marketing and operations are the primary, or “line,” Math
functions. System set of interrelated parts that must work
*Marketing is responsible for assessing consumer together.
wants and needs, and selling and promoting the Pareto phenomenon A few factors account for a high
organization’s goods or services. percentage of the occurrence of some event(s).
Supply chain A sequence of activities and 1.Industrial Revolution – 1770s in England; the
organizations involved in producing and delivering a development of standard gauging systems
good or service. -Craft production System in which highly skilled
workers use simple, flexible tools to produce
*Suppliers’ suppliers -> Direct suppliers -> Producer
small quantities of customized goods.
Distributor -> Final customers 2. Scientific Management- Frederick Taylor; the best
Value-added The difference between the cost of inputs method for doing each job.
and the value or price of outputs. Frank Gilbreth - industrial engineer; father of motion
Inputs –Land, Labor, Capital & Information Henry Gantt -nonmonetary rewards to motivate
Transformation/ conversion process workers, & developed scheduling called Gantt charts.
Outputs – Goods & Services Harrington Emerson encouraged the use of experts to
improve organizational efficiency.
Process One or more actions that transform inputs into Henry Ford, the great industrialist, employed scientific
outputs. Goods Service management techniques in his factories.
*Output Tangible Intangible -Mass production -low-skilled workers use machine
Customer contact Low High to produce high volumes of standardized goods.
Labor content Low High -Interchangeable parts Parts of a product precision
Uniformity of input High Low that they do not have to be custom fitted. Eli Whitney.
Measurement of productivity Easy Difficult -Division of labor The breaking up of a production
Opportunity to correct process into small tasks, so that each worker performs a
problems before delivery High Low small portion of the overall job.; Adam Smith
Inventory Much Little 3. The Human Relations Movement- human element
Wages Narrow range Wide range in job design; Lillian & Frank Gilbreth.
Patentable Usually Not usually Elton Mayo- Hawthorne division; physical and
1. Upper-management processes. These govern the technical aspects of work.;
operation of the entire organization. Abraham Maslow developed motivational
Examples include organizational governance and theories, which Frederick Hertzberg refined in the
organizational strategy. 1950s. Douglas McGregor added Theory X- workers
2. Operational processes. These are the core processes do not like to work- rewarded and punished—to get
that make up the value stream. them to do good work & Theory Y committed to work.
Examples include purchasing, production and/or service, 4. Decision Models and Management Science- the
marketing, and sales. development of several quantitative techniques
3. Supporting processes. These support the core 5. The Influence of Japanese Manufacturers-
processes. Examples include accounting, quality revolution; lean production.
human resources, and IT (information technology).
E-business Use of the Internet to transact business.
E-commerce Consumer-to business transactions.
Technology The application of scientific discoveries to
the development and improvement of goods &services.
Management of technology is high on the list of major
trends, and it promises to be high well into the future.
Globalization , the need for global supply chains have
broadened the scope of supply chain management.
-Six sigma A process for reducing costs, improving
quality, and increasing customer satisfaction.
-Agility The ability of an organization to respond
quickly to demands or opportunities.
-Lean system System that uses minimal amounts of
resources to produce a high volume of high quality
goods with some variety.
Outsourcing Buying goods or services instead of
producing or providing them in-house.
Sustainability Using resources in ways that do not
harm ecological systems that support human existence.
Ethics A standard of behavior that guides how one
should act in various situations.
Ethical framework A sequence of steps intended to
guide thinking and subsequent decision or action.
Chapter Two (Competitiveness, Strategy, and
Productivity)
Competitiveness How effectively an organization
meets the wants and needs of customers relative to
others that offer similar goods or services.
*Business organizations compete through some
combination of their marketing and operations
functions. Marketing influences on competitiveness in
several ways, including identifying consumer wants
and needs, pricing, and advertising and promotion.
*Operating influences on competitiveness through
product and service design, cost, location, quality,
response time, flexibility, inventory, supply chain
management, service & Managers and workers.
Mission The reason for the existence of an
organization.
Mission statement States the purpose of an
organization.
Goals Provide detail and scope of the mission.
Strategies Plans for achieving organizational goals.
There are three basic business strategies: Low cost,
Responsiveness, Differentiation from competitors.
Tactics The methods and actions taken to accomplish
strategies.
Core competencies special attributes or abilities that
give an organization a competitive edge.
Order qualifiers Characteristics that customers perceive
as minimum standards of acceptability to be
considered as a potential for purchase.
Order winners Characteristics of an organization’s
goods or services that cause it to be perceived as better
than the competition.
Environmental scanning monitoring of events &
trends that present threats or opportunities for a
company.
Operations strategy consistent w/ the organization
strategy, that is used to guide the operations function.
Quality-based strategy Strategy that focuses on quality
in all phases of an organization.
Time-based strategy Strategy that focuses on reduction
of time needed to accomplish tasks.
Productivity measure of the effective use of
resources,usually expressed as the ratio of output to
input.
Chapter Four (Product and Service Design)
Reverse engineering Dismantling and inspecting a
competitor’s product to discover product
improvements.
Research and development (R&D) Organized efforts
to increase scientific knowledge or product innovation.
-Basic research has the objective of advancing the state
of knowledge about a subject.
-Applied research has the objective of achieving
commercial applications.
-Development converts the results of applied research
into useful commercial applications.
Product liability The responsibility of a manufacturer
for any injuries or damages caused by a faulty product.
Uniform Commercial Code Products carry an
implication of merchantability and fitness.
Cradle-to-grave assessment The assessment of the
environmental impact of a product or service
throughout its useful life.
(Reduce) Value analysis Examination of the function
of parts and materials in an effort to reduce cost and/or
improve product performance.
(Reuse) Remanufacturing Refurbishing used products
by replacing worn-out or defective components.
Design for disassembly (DFD) Design so that used
products can be easily taken apart.
Recycling Recovering materials for future use.
Recycle for a variety of reasons, including
1. Cost savings.
2. Environment concerns.
3. Environmental regulations.
Design for recycling (DFR) Design that facilitates the
recovery of materials and components in used
products for reuse.
Standardization Extent to which a product, service, or
process lacks variety.
Mass customization A strategy of producing basically
standardized goods, but incorporating some degree of
customization.
Advantages 1. Fewer parts to deal with in inventory and 2. Product specifications
in manufacturing. 3. Process specifications
2. Reduced training costs and time. 4. Prototype development
3. More routine purchasing, handling, and inspection 5. Design review
procedures. 6. Market test
4. Orders fill able from inventory. 7. Product introduction
5. Opportunities for long production runs and 8. Follow-up evaluation
automation. Computer-aided design (CAD) Product design using
6. Need for fewer parts justifies increased expenditures computer graphics.
on perfecting designs and improving quality control Design for manufacturing (DFM) The designing of
procedures. products that are compatible with an organization’s
Disadvantages 1. Designs may be frozen with too many capabilities.
imperfections remaining. Design for assembly (DFA) Design that focuses on
2. High cost of design changes increases resistance to reducing the number of parts in a product and on
improvements. assembly methods and sequence.
3. Decreased variety results in less consumer appeal. Manufacturability The ease of fabrication /assembly.
Delayed differentiation The process of producing, but Service Something that is done to or for a customer.
not quite completing, a product or service until Service delivery system The facilities, processes, and
customer preferences are known. skills needed to provide a service.
Modular design A form of standardization in which Product bundle The combination of goods and
component parts are grouped into modules that are services provided to a customer.
easily replaced or interchanged. Service package The physical resources needed to
Reliability The ability of a product, part, or system to perform the service, the accompanying goods, and the
perform its intended function under a prescribed set of explicit and implicit services included.
conditions. Service blueprint A method used in service design to
Failure Situation in which a product, part, or system describe and analyze a proposed service.
does not perform as intended.
Normal operating conditions The set of conditions
under which an item’s reliability is specified.
Potential ways to improve Reliability
1. Improve component design.
2. Improve production and/or assembly techniques.
3. Improve testing.
4. Use backups.
5. Improve preventive maintenance procedures.
6. Improve user education.
7. Improve system design.
Robust design Design that results in products or
services that can function over a broad range of
conditions.
Taguchi’s Approach. His premise is that it is often
easier to design a product that is insensitive to
environmental factors.
Quality function deployment (QFD) An approach that
integrates the “voice of the customer” into both product
and service development.
Kano model is a theory of product and service design
developed by Dr. Noriaki Kano, a Jap prof, who
offered a perspective on customer perceptions of
quality different from the traditional view that “more is
better.”
Concurrent engineering Bringing engineering design
and manufacturing personnel together early in the design
phase.
Phases in the product development process
1. Feasibility analysis