UNIVERSITY OF PITESTI, FACULTY OF MECHANICS AND TECHNOLOGY

MASTER: AUTOMOTIVE ENGINEERING FOR A SUSTAINABLE MOBILITY

INTRODUCTION TO OPERATIONS
MANAGEMENT



STUDENT: BACAN BIANCA TEACHER: NICOLAE VIOREL



CHAPTER OUTLINE

1.1 Defining Operations Management
1.1.1 Understanding Operations
1.1.2 Comparing goods and services
1.1.3 Operations Add Value
1.1.4 Technology and Operations
1.1.5 International Trade and Competition
1.1.6 Operations and Teamwork

1.2 Understanding the Systems Approach to
Operations
1.2.1 The organization as Part of the Economic and
Government System
1.2.2 Operations as Part of the Organization
1.2.3 Operations as a Series of Related Subsystems


1.1 Defining Operations Management
Operations are the processes by which people, capital, and
material( inputs ) are combined to produce the services and goods
consumed by the public (outputs). .Operations employ labor and
management (people) and use facilites and equipment (capital) to change
materials into finished goods or to provide services.
Services are intangible products, and goods are physical
products.


Inputs
People
Capital
Material
-Transformation
process-
- Products -
Outputs
Sevices
Goods
Examples of goods and services produced by organizations:

Goods
Profit: Not-for-profit:
-electronics -dams
-air conditioners -license plates
-starter motors -highways


Services
Profit: Not-for-profit:
-health care -health care
-telephone services -parks and recreations
-banking -police protection
1.1.1 Understanding operations

Organizations produce and deliver the services and goods
demanded by customers.
To understand operations and how they can contribute to
the succes of an organization, it is important to understand the
differences and similarities between producing services and producing
goods, the value-added nature of operations, the impact that technology
can have on performance, the increasing level of international
competition, and the importance of teamwork in achieving operating and
organizational objectives.

1.1.2 Comparing goods and services

Although operating decisions for services and goods have
many similarities, there is one important difference between the two
products: a good is tangible, and a service is not. This has two important
consequences:
- first, a service operations cannot inventory finished goods because a
service is intangible;
- second, because a good is tangible, the product designer must deal with
physical characteristics.

1.1.3 Operations add value

Consumers are willing to pay more for an
organization's services and goods than the total cost of the inputs.
Without profits, a company cannot raise capital to continue its
operations and will eventually become a casualty of competition.
With profits, organizations are able to invest innew technology and
new facilities, which lead to improved operations and lower prices.

1.1.4 Technology and operations

Technology is application of knowledge to solve problems.
Product design is the determination of the characteristics and
performance of the product.
Process refers to how the product is made, and process
technology is the application of knowledge to improve process.

1.1.4 International trade and competition

A country that wants to enhance the living standard of its
people will engage in international trade. The country will import those
goods and services that are not available locally, or that cost more to
make at home than their foreign-made counterparts.
Relative advantage is defined as the difference between the
lowest-cost producer and the next-lowest- cost producer.
Organizations that will be successful in the nineties and into
the twenty-first century will develop an understanding of marketing,
distribution systems, financial and capital markets, accounting, and
operations that is global rather than national. International competition
has had and will continue to have a tremendous impact on operations and
operations managers. Product performance, product quality, efficiency,
and delivery lead time are all elements of competition affected by
operations. The impact of international competition on operations is
discussed throughout the text.

1.1.5 Operations and teamwork

1. For the organization, the ability to meet the increasing demand for high-
quality, low-cost products can lead to greater success in competitive world
markets.

2. For labor, well-managed operations provide continuing job
opportunities. An inefficient operation drives prices up and makes
the service or good subject to competitive pressure from efficient
producers, both foreign and domestic.
3. For consumers, a lower price means that more people will be able
to buy the product. In addition, consumers will have money left for
other purchases.
4. For management, lower production costs can lead to increased
sales and higher profit.

In order to effectively design, plan, and manage and
control operations, managers should be aware that:

1. Operations are composed of a series of related subsystems.
2. An organization is part of the total economic and government
system.
3. Operations are an integral part of the organization.



1.2 Understanding the systems approach to
operations

1.2.1 The organization as part of the economic and government
system

Organizations operate in an environment that includes
several interest groups- stockholders, management, labor, consumers,
and the general public. Business leaders have realized that to achieve
long-term success and to be good corporate neighbors, they should
serve all of these interests. Thus, they should be responsive to issues
involving wage rates, working conditions, pollution, product safety, and
international competition, in addition to the stockholders' return on
investment. All of these factors are part of the larger economic and
government system within which organizations operate.
The importances of these broader issues becomes clear as the
following factors are discussed.



Factor

Interest group Impact of operations
decisions
Wage rates and working
conditions
Labor and middle
management
Good working conditions
and fair wages can be
positive factors in
employee performance.
Pollution General public Well-managed operations
should not cause
pollution.
Product saftey Consumers When products are well
designed, consumers are
safer and more satisfied.
International competition Stockholders, labor,
middle management
When operations are well
managed, costs are not
excessive. This coupled
with high quality
discourages foreign
competitors.
1.2.2 Operations as part of the organizations

Strategy

Operations should be linked to the organization by
developing operating strategies consistent with the organization's
overall strategy. Links between operations and the rest of the
organization can be built into the planning process. A plan is a list
of actions that management expects to take. A plan is a basis for
allocating the organization's resources to deal with opportunities
and problems present in the environment. Resources allocated by
operations managers should help the organization achieve its
goals.
The links between strategy and operations can be
illustrated by comparing a fast-food restaurant with a four-star
restaurant. Customers expect fast-food restaurants to deliver
good-quality food at a low price, with a wait of only a few, minutes.
This implies a limited menu, some advance preparation, and a
service operation with a smooth and simple means of
communicating orders and delivering food. The training of counter
workers and cooks should emphasize speed, efficient movement,
and uniform performance of duties.

Structure

The development of strategy leads to the
questions of organizational structure. Organizational
structure is the formal relationship between different
functions or subsystems.

Understanding the operations and marketing interface


Communications

An organization should have a strategy (goals and
methods for attaining them), key policies (broad guidelines as
to how the objectives might be achieved), and a structure(a
logical way to organize its resources). To be effective, an
organization must develop a means of communicating its
strategic direction and key policies to all areas or subsystems of
the organization.






The business system








This exhibit shows the operations manager passing these
plans along to the facility managers, who prepare detailed plans for each
facility or plant. Part of the product plan is called an operating budget. It
includes estimates of the costs of the material, labor, and other facilities
necessary to meet the forecasted production goal.

1.2.3 Operations as a series of related subsystems
Earlier sections have described the relationships
between the organization and the environment in which it operates.
These sections also described an organization as a series of related
subsystems, with operations as one of those subsystems.

Overview of the systems approach to operations
The three parts of the exhibit (designing, planning, and
managing and controlling) comprise the three major sections of the
text.

Designing the system includes all the decisions
necessary to establish the facilities and information systems
required to produce the service or good. Planning the system
relates to the way in which the organization expects to use
physical facilities, people, and materials to meet the estimated
demand.
Managing and controlling the system includes
executing production plans and measuring, evaluating, and
providing feedback on performance.

Designing the system
Product design has a direct impact on both system
capacity and process design. Capacity is the maximum number of
units that can be produced in a given time period. Processdesign
determines how the product will be produced.
Designing the production system requires a careful
look at the information requirements for managing operations.
Providing this information should be an integral part of the
production system.

Planning the System
Planning operations involve considering how
present facilities can be used to meet customer demand in
existing facilities may require changes to become more
effective.This presents a fundamental problem for planners
because a firm's productive assets are fixed and are not easily
or cheaply changed. On the other hand, demand changes
continually and is difficult to forecast. Thus, the problem is how
to satisfy changing demand with fixed production resources.
Two solutions are
1. Building flexibility into the facilities so that changes can be
made easily.
2. Examining facilities to find ways to modify them easily.order to
satisfy organizational goals. This may lead back to the design
phase because


Managing and Controlling Operations
After a system is designed and planned, it can
produce services and goods. In some organizations, more
than 50 percent of the finished product cost is material.
Material management and inventory control deserve
special attention because of the tremendous impact they
can have on organizational performance.
Finally, the true test of an organization's
success in operations is determined in the marketplace.
Feedback can be gathered from customers and used to
improve product and process designs, production planning
and scheduling practices, quality management systems,
and other vital areas within operations and the
organization.