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Chapter 1
Overview: Introduction to the
Field

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OBJECTIVES

Operations Management
Why Study Operations Management?
Production System Defined
Operations as a Service
Plan of This Book
Historical Development of OM

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What is Operations Management?


Defined
Operations management (OM) is
defined as the design, operation, and
improvement of the systems that
create and deliver the firms primary
products and services

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Why Study Operations Management?


Systematic Approach
to Org. Processes

Business Education

Operations
Management

Career Opportunities

Cross-Functional
Applications
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What is a Production System?


Defined
A production system is defined as a
user of resources to transform
inputs into some desired outputs

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Transformations
Physical--manufacturing
Locational--transportation
Exchange--retailing
Storage--warehousing
Physiological--health care
Informational--telecommunications

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What is a Service and What is a


Good?
If you drop it on your foot, it wont hurt
you. (Good or service?)

Services never include goods and


goods never include services. (True or
false?)
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Comparison of Goods and Services


GOODS

100%

75%

SERVICES

50%

25%

100%

75%

50%

25%

Self service groceries


Automobile
Installed carpeting
Fast food restaurant meal
Restaurant meal
Auto maintenance
Hospital Care
Consulting services
Motel service

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OM in the Organization Chart


Finance

Operations
Operations

Marketing

Plant
Plant
Manager
Manager

Operations
Operations
Manager
Manager

Director
Director

Manufacturing,
Manufacturing, Production
Production control,
control,
Quality
Quality assurance,
assurance, Engineering,
Engineering,
Purchasing,
Purchasing, Maintenance,
Maintenance, etc
etc
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Core Services
Defined
Core services are basic things that
customers want from products
they purchase

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Core Services Performance Objectives


Quality

Flexibility

Operations
Management

Speed

Price (or cost


Reduction)

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Value-Added Services
Defined
Value-added services differentiate
the organization from competitors
and build relationships that bind
customers to the firm in a positive
way
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Value-Added Service Categories


Problem Solving

Information

Operations
Management

Sales Support

Field Support

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Plan of This
Book

I. Operations Strategy
and Managing Change

2. Operations Strategy
and Competitiveness

II. Product Design


and Process
Selection
4. Process
Analysis
5. Product
Design and
Process Selection
-Manufacturing

1. Introduction
to the Field

6. Product
Design and
Process Selection
-Services

III. Supply
Chain Design

9. Supply
Chain Strategy

10. Strategic
Capacity
Management
IV. Planning and
Controlling the
Supply Chain

11. Just-in-Time
and Lean
Systems

12. Forecasting
and Demand
Management

13. Aggregate Sales and


Operations Planning

7. Quality
Management
8. Operations Consulting
and Reengineering

3. Project
Management

14. Inventory
Control

15. Materials
Requirements Planning
16. Operations Scheduling

17. Synchronous Manufacturing


and Theory of Constraints
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Historical Development of OM
JIT and TQC
Manufacturing Strategy Paradigm
Service Quality and Productivity
Total Quality Management and
Quality Certification

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Historical Development of OM (contd)


Business Process Reengineering
Supply Chain Management
Electronic Commerce

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End of Chapter 1

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