SlideShare ist ein Scribd-Unternehmen logo
1 von 46
Downloaden Sie, um offline zu lesen
Operations Management/Ch. 4 Operations Strategy and Competitive Priorities
©2007 Thomson South-Western 1
Introduction to Operations
Management
(TOPIC # 1)
TOPIC 1
CHAPTER 1
OPERATIONS MANAGEMENT
An Integrated Goods and Services Approach
EVANS & COLLIER
Lecturer
Dr Nazim Baluch
STML COB UUM
nazimbaluch@uum.edu.my
nazimbaluch@gmail.com
Tel: 04 928 6960
2
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
• Operations management (OM) is the
science and art of ensuring that goods and
services are created and delivered
successfully to customers.
• The principles of OM help one to view a
business enterprise as a total system, in
which all activities are coordinated not only
vertically throughout the organization, but
also horizontally across multiple functions.
3
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Learning Objectives
1. To understand the nature of typical OM activities
in business, what operations managers do, and
how everyone uses OM principles in their work,
no matter what their functional job is.
2. To understand the nature of goods and services,
their similarities and differences,
3. The concept of a customer benefit package, and
why they are important for managing operations.
4
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
4. To understand the concept of a process and
value chain, and how they are used in operations
to support the creation of goods and services.
5. Operations Management: History and
Challenges. To be able to identify the key themes
that have evolved over the last half-century and
understand their impact on goods, services, and
operations.
Chapter 1 Learning Objectives
5
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
OM Spotlight: Ferguson Metals
• Ferguson Metals, located in Hamilton, Ohio, is a supplier
of stainless steel and high temperature alloys for the
specialty metal market. (Page #8 of text book)
• Ferguson’s primary production operations include slitting
coil stock and cutting sheet steel to customer
specifications with rapid turnaround times from order to
delivery (see Exhibit 1.1).
• Bob Vogel is the Vice President of Operations at
Ferguson. He is involved in a variety of daily activities
that draw upon knowledge of not only OM and
engineering, but also finance, accounting, organizational
behavior, and other subjects.
6
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Exhibit
1.1
Operations Management at Ferguson Metals
7
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
OM Spotlight: Ferguson Metals
While understanding specialty metals is
certainly a vital part of Mr. Vogel’s job, the
ability to understand customer needs,
apply approaches to continuous
improvement, understand and motivate
people, work cross-functionally across the
business, and integrate processes and
technology within the value chain define
Scott’s job as an operations manager.
8
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Example of “What Operations Managers
Do?”
• Brooke Wilson is a Process Manager for J.P.
Morgan Chase in the Credit Card Division.
Among his OM-related activities are
• Planning and budgeting –representing the
plastic card production area in all meetings,
developing annual budgets and staffing plans,
and watching technology that might affect the
production of plastic credit cards.
9
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Example of “What Operations Managers Do?”
• Inventory management – overseeing the
management of inventory for items such as plastic
blank cards, inserts such as advertisements,
envelops, postage, and credit card rules and
disclosure inserts.
• Scheduling and capacity –daily to annual
scheduling of all resources (equipment, people,
inventory) necessary to issue new credit cards and
reissue cards that are up for renewal, replace old or
damaged cards, and one's that are stolen.
10
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Example of “What Operations Managers
Do?”
• Brooke Wilson is a Process Manager for J.P.
Morgan Chase in the Credit Card Division.
Among his OM-related activities are
• Quality – embossing the card with accurate
customer information and quickly getting the
card in the hands of the customer.
• Brooke was an accounting major in college.
11
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Understanding Goods and Services
• A good is a physical product that you can see,
touch, or possibly consume. Examples of goods
include: oranges, flowers, televisions, soap,
airplanes, fish, furniture, coal, lumber, personal
computers, paper, and industrial machines.
• A durable good is a product that typically lasts
at least three years. Vehicles, dishwashers, and
furniture are some examples of durable goods.
12
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Understanding Goods and Services
• A non-durable good is perishable and
generally lasts for less than three years.
Examples are toothpaste, software, shoes,
and fruit.
• A service is any primary or complementary
activity that does not directly produce a
physical product.
13
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Understanding Goods and Services
• Service management integrates
marketing, human resource, and operations
functions to plan, create, and deliver goods
and services, and their associated service
encounters.
• A service encounter is an interaction
between the customer and the service
provider.
14
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Understanding Goods and Services
A broader definition is
• Service encounters consist of one or more
moments of truth – any episodes, transactions,
or experiences in which a customer comes into
contact with any aspect of the delivery system,
however remote, and thereby has an opportunity to
form an impression.
• Here, a service encounter includes the impression
an empty parking lot has on whether the customer
goes into a facility or the interaction with other
15
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Similarities Between Goods and
Services
1. Goods and services provide value and
satisfaction to customers who purchase
and use them.
2. They both can be standardized or
customized to individual wants and needs.
3. A process creates and delivers each good
or service, and therefore, OM is a critical
skill.
16
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Differences Between Goods and Services
1. Goods are tangible while services are intangible.
2. Customers participate in many service
processes, activities, and transactions.
3. The demand for services is more difficult to
predict than the demand for goods.
4. Services cannot be stored as physical inventory.
5. Service management skills are paramount to a
successful service encounter.
6. Service facilities typically need to be in close
proximity to the customer.
7. Patents do not protect services.
17
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Exhibit
1.2
How Goods and Services Affect
Operations Management Activities
18
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Exhibit
1.3
Examples of Goods and Service Content
19
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Customer Benefit Packages
• A customer benefit package (CBP) is a
clearly defined set of tangible (goods-content)
and intangible (service-content) features that the
customer recognizes, pays for, uses, or
experiences.
• In simple terms, a CBP is some combination of
goods and services configured in a certain way
to provide value to customers.
• A CBP consists of a primary good or service,
coupled with peripheral goods and/or services.
20
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Customer Benefit Packages
• A primary good or service is the “core”
offering that attracts customers and responds
to their basic needs. For example, the primary
service of a personal checking account is the
capability to do convenient financial
transactions.
• Examples of a primary good or service:
an airline flight, a personal digital assistance
(PDA) device, a checking account, a brief
case, a football game, tax preparation advice,
and so on.
21
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Customer Benefit Packages
• A peripheral goods or services are those that
are not essential to the primary good or service,
but enhance it.
• Examples of peripheral goods or services
for a personal checking account: on-line
access and bill payment, debit card, designer
checks, paper or electronic account statement, etc.
• Remember each primary or peripheral good or
service requires a process to create and deliver it
22
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Customer Benefit Packages
• A variant is a CBP attribute that departs from the
standard CBP and is normally location or firm
specific.
• A variant allows for adding unique goods or
services such as a fishing pond or pool at an
automobile dealership where kids can fish while
the parents shop for vehicles.
• Once a variant is incorporated and standardized
into all CBP delivery sites on a continuous basis it
23
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Exhibit
1.4
A CBP Example for Purchasing a Vehicle
24
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Exhibit
1.5
Operations Management and the
Customer Benefit Package
25
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Exhibit
1.6
Customer Wants and Needs, CBP Definition,
and Process Design Automobile Example
26
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Customer Benefit Packages
• It is very important that you understand Exhibits
1.5 and 1.6 and the difference between customer
wants and needs versus the CBP features
selected by management to fulfill those needs.
• Processes create CBP features such as the
(a) physical vehicle itself or (b) a leasing package
that fits what the customer can afford. These CBP
features fulfill certain customer’s wants and needs
such as (a) physical transportation from point A to
B, or (b) how can I pay for the vehicle?
27
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Another Example of Consumer Benefit Package
28
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Exhibit
1.7
How Primary, Support, Supplier, and
Management Processes Are Related
29
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Exhibit
1.8
Organization by Function versus Process
30
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
OM Spotlight: Pal’s Sudden Service
• Pal’s Sudden Service is a small chain of
mostly drive-through quick service
restaurants located in Northeast Tennessee
and Southwest Virginia.
• Pal’s competes against major national chains
and outperforms all of them by focusing on
important customer requirements such as
speed, accuracy, friendly service, correct
ingredients and amounts, proper food
temperature, and safety.
31
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
OM Spotlight: Pal’s Sudden Service
• Pal’s uses extensive market research to fully
understand customer requirements:
convenience; ease of driving in and out; easy-to-
read menu, simple, accurate order-system; fast
service; wholesome food; and reasonable price.
• Every process is flowcharted and analyzed for
opportunities for error, and then mistake-proofed
if at all possible.
32
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Exhibit
1.9
Pal’s Sudden Service Value Chain
33
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
OM Spotlight: Pal’s Sudden Service
• Entry-level employees – mostly high school
students in their first job – receive 120 hours of
training on precise work procedures and process
standards in unique self-teaching, classroom,
and on-the-job settings, and reinforced by a
“Caught Doing Good” program that provides
recognition for meeting quality standards and
high performance expectations.
• Pal’s collect performance measures such as
complaints, profitability, employee turnover,
safety, and productivity.
34
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Exhibit 1.10 Satisfaction Data and Linear Trend Chart
35
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Break-Even Model
The amount of sales at which the net profit is zero
– or equivalently, the point where total cost equals
total revenue – is called the break-even point.
The equation for total cost is Total cost = Fixed
cost + Variable cost. If 10,000 units were produced
and sold, the total cost would be
Total cost = 100,000 + 12(10,000) = $220,000.
36
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Break-Even Model
The revenue received from selling 10,000 units
would be 20(10,000) = $200,000, so at this
production level, the firm would incur a loss of
$220,000 - $200,000 = $20,000.
However, if 13,000 units were produced and sold,
the projected profit would be 20(13,000) -
100,000 - 12(13,000) = $4,000.
37
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Chapter 1 Introduction to Operations Management
Breakeven Model
We can find the break-even point by developing a simple
mathematical model. Let x be the sales volume at the
break-even point. Then
Total cost = 100,000 + 12x
Total revenue = 20x.
Setting the total revenue equal to total cost we have
20x = 100,000 + 12x
and hence
x = 12,500.
If sales are less than 12,500 units, the firm will incur a
loss; if sales are more than 12,500, a profit will be
realized.
38
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Exhibit 1.11 Spreadsheet Model for Break-Even
Analysis (Break Even Model.xls)
39
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Exhibit 1.12 Sensitivity Analysis of Variable Cost
for the Break-Even Model
40
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Exhibit 1.13 Five Eras of Operations Management
41
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Exhibit 1.14 U.S. 2001 Employment and Projected Change
by Major Industry (slide 1)
* Durable goods are items such as instruments, vehicles, aircraft, computer and office equipment, machinery,furniture, glass, metals, and appliances.
** Nondurable goods are items such as textiles, apparel, paper, food, coal, oil, leather, plastics, chemicals, and books.
Source:United States Bureau of Labor Statistics, October 2001, http://www.bls.gov/EMP
42
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Exhibit 1.14 U.S. 2001 Employment and Projected Change
by Major Industry (slide 2)
43
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
U.S. Economy Structure and Service Related Jobs
Goods-producing industries (manufacturing,
construction, fishing, forestry, mining, and
agriculture) account for 20 percent of the jobs in
the U.S. economy.
Service-providing industries account for 80
percent of the jobs in the U.S. economy.
One-half of those jobs in goods-producing
industries involve service processes such as
human resource management, accounting, and
financial.
44
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
U.S. Economy Structure and Service Related Jobs
Therefore, more than 90 percent of the jobs in
the U.S. economy involve designing and
managing service-, information- or
entertainment-intensive processes.
Most people in the United States are working in
the service sector or service processes or in
service-related aspects of manufacturing firms.
45
Operations Management/Ch. 1 Introduction to Operations Management
©2007 Thomson South-Western
Exhibit 1.15 Case: Dietary Department Organizational
Chart
Operations Management/Ch. 3 Frameworks for Operations Measurement
©2007 Thomson South-Western

Weitere ähnliche Inhalte

Was ist angesagt?

Standard costing
Standard costingStandard costing
Standard costingzaidul2
 
PRODUCTION SYSTEMS
PRODUCTION SYSTEMSPRODUCTION SYSTEMS
PRODUCTION SYSTEMSNaeem Akram
 
Marketing management
Marketing managementMarketing management
Marketing managementChirag Tewari
 
Productivity and operation management
Productivity and operation managementProductivity and operation management
Productivity and operation managementShreyas Metri
 
Standard costing presentation
Standard costing presentationStandard costing presentation
Standard costing presentationJay Singh
 
Introduction to supply chain management
Introduction to supply chain managementIntroduction to supply chain management
Introduction to supply chain managementPradeep Biradar
 
Introduction to managerial economics
Introduction to managerial economicsIntroduction to managerial economics
Introduction to managerial economicsSnigdha Singh
 
Facility layout ppt
Facility layout pptFacility layout ppt
Facility layout pptAnju Rana
 
Demand forecasting
Demand forecastingDemand forecasting
Demand forecastingShompa Nandi
 
Introduction to production and operation management
Introduction to production and operation managementIntroduction to production and operation management
Introduction to production and operation managementPROF.JITENDRA PATEL
 
Operations management forecasting
Operations management   forecastingOperations management   forecasting
Operations management forecastingTwinkle Constantino
 

Was ist angesagt? (20)

Standard costing
Standard costingStandard costing
Standard costing
 
PPT ON Just in time technique (JIT)
PPT ON Just in time technique (JIT)PPT ON Just in time technique (JIT)
PPT ON Just in time technique (JIT)
 
PRODUCTION SYSTEMS
PRODUCTION SYSTEMSPRODUCTION SYSTEMS
PRODUCTION SYSTEMS
 
Marketing management
Marketing managementMarketing management
Marketing management
 
Productivity and operation management
Productivity and operation managementProductivity and operation management
Productivity and operation management
 
Standard costing presentation
Standard costing presentationStandard costing presentation
Standard costing presentation
 
Introduction to supply chain management
Introduction to supply chain managementIntroduction to supply chain management
Introduction to supply chain management
 
Introduction to managerial economics
Introduction to managerial economicsIntroduction to managerial economics
Introduction to managerial economics
 
Operation management
Operation managementOperation management
Operation management
 
Supply Chain Management
Supply Chain ManagementSupply Chain Management
Supply Chain Management
 
Capacity planning
Capacity planning Capacity planning
Capacity planning
 
Marketing management
Marketing managementMarketing management
Marketing management
 
Operation management
Operation managementOperation management
Operation management
 
Facility layout ppt
Facility layout pptFacility layout ppt
Facility layout ppt
 
Demand forecasting
Demand forecastingDemand forecasting
Demand forecasting
 
Introduction to production and operation management
Introduction to production and operation managementIntroduction to production and operation management
Introduction to production and operation management
 
Operations strategy
Operations strategyOperations strategy
Operations strategy
 
Production and Operation Management
Production and Operation ManagementProduction and Operation Management
Production and Operation Management
 
Opportunities in Retail Sector
Opportunities in Retail SectorOpportunities in Retail Sector
Opportunities in Retail Sector
 
Operations management forecasting
Operations management   forecastingOperations management   forecasting
Operations management forecasting
 

Andere mochten auch

Introduction to operation management
Introduction to operation managementIntroduction to operation management
Introduction to operation managementPOOJA GOYAL
 
Introduction to Operations Management by Stevenson
Introduction to Operations Management by StevensonIntroduction to Operations Management by Stevenson
Introduction to Operations Management by StevensonWafeeqa Wafiq
 
Introduction to operations management
Introduction to operations managementIntroduction to operations management
Introduction to operations managementManish Parihar
 
Introduction to Operation Management
Introduction to Operation ManagementIntroduction to Operation Management
Introduction to Operation ManagementJoshua Miranda
 
Introduction to Operation Management
Introduction to Operation ManagementIntroduction to Operation Management
Introduction to Operation ManagementKlim Torreda
 
Mba ii pmom_unit-1.1 introduction to production & operation management a - copy
Mba ii pmom_unit-1.1 introduction to production & operation management a - copyMba ii pmom_unit-1.1 introduction to production & operation management a - copy
Mba ii pmom_unit-1.1 introduction to production & operation management a - copyRai University
 
Basic Concepts Of Strategic Management
Basic Concepts Of Strategic ManagementBasic Concepts Of Strategic Management
Basic Concepts Of Strategic Managementhassnibaba
 
Concepts of Strategic Management
Concepts of Strategic ManagementConcepts of Strategic Management
Concepts of Strategic Managementsaberkhosravi
 
Strategic management
Strategic managementStrategic management
Strategic managementapverma01
 
Production & operations management
Production & operations managementProduction & operations management
Production & operations managementshart sood
 
LinkedIn SlideShare: Knowledge, Well-Presented
LinkedIn SlideShare: Knowledge, Well-PresentedLinkedIn SlideShare: Knowledge, Well-Presented
LinkedIn SlideShare: Knowledge, Well-PresentedSlideShare
 

Andere mochten auch (14)

Introduction to operation management
Introduction to operation managementIntroduction to operation management
Introduction to operation management
 
Introduction to Operations Management by Stevenson
Introduction to Operations Management by StevensonIntroduction to Operations Management by Stevenson
Introduction to Operations Management by Stevenson
 
operations management
operations managementoperations management
operations management
 
Introduction to operations management
Introduction to operations managementIntroduction to operations management
Introduction to operations management
 
Introduction to Operation Management
Introduction to Operation ManagementIntroduction to Operation Management
Introduction to Operation Management
 
Introduction To Operation Management
Introduction To Operation ManagementIntroduction To Operation Management
Introduction To Operation Management
 
Introduction to Operation Management
Introduction to Operation ManagementIntroduction to Operation Management
Introduction to Operation Management
 
Mba ii pmom_unit-1.1 introduction to production & operation management a - copy
Mba ii pmom_unit-1.1 introduction to production & operation management a - copyMba ii pmom_unit-1.1 introduction to production & operation management a - copy
Mba ii pmom_unit-1.1 introduction to production & operation management a - copy
 
Basic Concepts Of Strategic Management
Basic Concepts Of Strategic ManagementBasic Concepts Of Strategic Management
Basic Concepts Of Strategic Management
 
Concepts of Strategic Management
Concepts of Strategic ManagementConcepts of Strategic Management
Concepts of Strategic Management
 
Strategic management
Strategic managementStrategic management
Strategic management
 
Production & operations management
Production & operations managementProduction & operations management
Production & operations management
 
Strategic management ppt
Strategic management pptStrategic management ppt
Strategic management ppt
 
LinkedIn SlideShare: Knowledge, Well-Presented
LinkedIn SlideShare: Knowledge, Well-PresentedLinkedIn SlideShare: Knowledge, Well-Presented
LinkedIn SlideShare: Knowledge, Well-Presented
 

Ähnlich wie introduction to operation management

CE2 Chapter 01 - Operation and Technology Management
CE2 Chapter 01 - Operation and Technology ManagementCE2 Chapter 01 - Operation and Technology Management
CE2 Chapter 01 - Operation and Technology ManagementMentari Pagi
 
B526 ops pm lecture_t001b_with notes
B526 ops pm lecture_t001b_with notesB526 ops pm lecture_t001b_with notes
B526 ops pm lecture_t001b_with notesmoduledesign
 
OPERATIONS MANAGEMENT chapter 1
OPERATIONS MANAGEMENT chapter 1OPERATIONS MANAGEMENT chapter 1
OPERATIONS MANAGEMENT chapter 1MuhammadZeeshan535
 
Unit-1 Operations management notes - MBA
Unit-1 Operations management notes - MBAUnit-1 Operations management notes - MBA
Unit-1 Operations management notes - MBAEricPotts6
 
Operation management.pptx
Operation management.pptxOperation management.pptx
Operation management.pptxBunnyJjang
 
Operation Management Chapter one silde presentations
Operation Management Chapter one silde presentationsOperation Management Chapter one silde presentations
Operation Management Chapter one silde presentationsAdisuMasresha
 
Facilities managment
Facilities managmentFacilities managment
Facilities managmentwael harb
 
Unit I - Introduction to Operations Management.pptx
Unit I - Introduction to Operations Management.pptxUnit I - Introduction to Operations Management.pptx
Unit I - Introduction to Operations Management.pptxHannaViBPolido
 
Production Of Production And Operation Management
Production Of Production And Operation ManagementProduction Of Production And Operation Management
Production Of Production And Operation ManagementApril Wbnd
 
operations mgt.doc hand out 1
  operations mgt.doc hand out 1  operations mgt.doc hand out 1
operations mgt.doc hand out 1ALLEN NUWAMANYA
 
Topic 1 & 2 operations mgt.doc hand out 1
Topic 1 & 2  operations mgt.doc hand out 1Topic 1 & 2  operations mgt.doc hand out 1
Topic 1 & 2 operations mgt.doc hand out 1ALLEN NUWAMANYA
 
Lecture1 strategy, productivity Operation Mnagement
Lecture1 strategy, productivity Operation MnagementLecture1 strategy, productivity Operation Mnagement
Lecture1 strategy, productivity Operation MnagementAbu Sadat Mohammad Saleh
 
Operation management
Operation managementOperation management
Operation managementPawan Kawan
 
Operation Management_Module jhsfkudf jhysdfy
Operation Management_Module jhsfkudf jhysdfyOperation Management_Module jhsfkudf jhysdfy
Operation Management_Module jhsfkudf jhysdfyUdayNerahanth
 

Ähnlich wie introduction to operation management (20)

CE2 Chapter 01 - Operation and Technology Management
CE2 Chapter 01 - Operation and Technology ManagementCE2 Chapter 01 - Operation and Technology Management
CE2 Chapter 01 - Operation and Technology Management
 
Lecture 1
Lecture 1Lecture 1
Lecture 1
 
B526 ops pm lecture_t001b_with notes
B526 ops pm lecture_t001b_with notesB526 ops pm lecture_t001b_with notes
B526 ops pm lecture_t001b_with notes
 
OPERATIONS MANAGEMENT chapter 1
OPERATIONS MANAGEMENT chapter 1OPERATIONS MANAGEMENT chapter 1
OPERATIONS MANAGEMENT chapter 1
 
Unit-1 Operations management notes - MBA
Unit-1 Operations management notes - MBAUnit-1 Operations management notes - MBA
Unit-1 Operations management notes - MBA
 
Operation management.pptx
Operation management.pptxOperation management.pptx
Operation management.pptx
 
Operation Management Chapter one silde presentations
Operation Management Chapter one silde presentationsOperation Management Chapter one silde presentations
Operation Management Chapter one silde presentations
 
Facilities managment
Facilities managmentFacilities managment
Facilities managment
 
JWhitmore CV Nov 2015
JWhitmore CV Nov 2015JWhitmore CV Nov 2015
JWhitmore CV Nov 2015
 
Unit I - Introduction to Operations Management.pptx
Unit I - Introduction to Operations Management.pptxUnit I - Introduction to Operations Management.pptx
Unit I - Introduction to Operations Management.pptx
 
Production Of Production And Operation Management
Production Of Production And Operation ManagementProduction Of Production And Operation Management
Production Of Production And Operation Management
 
operations mgt.doc hand out 1
  operations mgt.doc hand out 1  operations mgt.doc hand out 1
operations mgt.doc hand out 1
 
Topic 1 & 2 operations mgt.doc hand out 1
Topic 1 & 2  operations mgt.doc hand out 1Topic 1 & 2  operations mgt.doc hand out 1
Topic 1 & 2 operations mgt.doc hand out 1
 
Chap 1
Chap 1Chap 1
Chap 1
 
Ch 1 Introduction.ppt
Ch 1 Introduction.pptCh 1 Introduction.ppt
Ch 1 Introduction.ppt
 
unit 1.ppt
unit 1.pptunit 1.ppt
unit 1.ppt
 
Lecture1 strategy, productivity Operation Mnagement
Lecture1 strategy, productivity Operation MnagementLecture1 strategy, productivity Operation Mnagement
Lecture1 strategy, productivity Operation Mnagement
 
Operation management
Operation managementOperation management
Operation management
 
Operation Management_Module jhsfkudf jhysdfy
Operation Management_Module jhsfkudf jhysdfyOperation Management_Module jhsfkudf jhysdfy
Operation Management_Module jhsfkudf jhysdfy
 
OPM101Chapter1.ppt
OPM101Chapter1.pptOPM101Chapter1.ppt
OPM101Chapter1.ppt
 

Kürzlich hochgeladen

Computer 10 Lesson 8: Building a Website
Computer 10 Lesson 8: Building a WebsiteComputer 10 Lesson 8: Building a Website
Computer 10 Lesson 8: Building a WebsiteMavein
 
Vision Forward: Tracing Image Search SEO From Its Roots To AI-Enhanced Horizons
Vision Forward: Tracing Image Search SEO From Its Roots To AI-Enhanced HorizonsVision Forward: Tracing Image Search SEO From Its Roots To AI-Enhanced Horizons
Vision Forward: Tracing Image Search SEO From Its Roots To AI-Enhanced HorizonsRoxana Stingu
 
world Tuberculosis day ppt 25-3-2024.pptx
world Tuberculosis day ppt 25-3-2024.pptxworld Tuberculosis day ppt 25-3-2024.pptx
world Tuberculosis day ppt 25-3-2024.pptxnaveenithkrishnan
 
Zero-day Vulnerabilities
Zero-day VulnerabilitiesZero-day Vulnerabilities
Zero-day Vulnerabilitiesalihassaah1994
 
LESSON 5 GROUP 10 ST. THOMAS AQUINAS.pdf
LESSON 5 GROUP 10 ST. THOMAS AQUINAS.pdfLESSON 5 GROUP 10 ST. THOMAS AQUINAS.pdf
LESSON 5 GROUP 10 ST. THOMAS AQUINAS.pdfmchristianalwyn
 
Introduction to ICANN and Fellowship program by Shreedeep Rayamajhi.pdf
Introduction to ICANN and Fellowship program  by Shreedeep Rayamajhi.pdfIntroduction to ICANN and Fellowship program  by Shreedeep Rayamajhi.pdf
Introduction to ICANN and Fellowship program by Shreedeep Rayamajhi.pdfShreedeep Rayamajhi
 
A_Z-1_0_4T_00A-EN_U-Po_w_erPoint_06.pptx
A_Z-1_0_4T_00A-EN_U-Po_w_erPoint_06.pptxA_Z-1_0_4T_00A-EN_U-Po_w_erPoint_06.pptx
A_Z-1_0_4T_00A-EN_U-Po_w_erPoint_06.pptxjayshuklatrainer
 
Benefits of doing Internet peering and running an Internet Exchange (IX) pres...
Benefits of doing Internet peering and running an Internet Exchange (IX) pres...Benefits of doing Internet peering and running an Internet Exchange (IX) pres...
Benefits of doing Internet peering and running an Internet Exchange (IX) pres...APNIC
 
Presentation2.pptx - JoyPress Wordpress
Presentation2.pptx -  JoyPress WordpressPresentation2.pptx -  JoyPress Wordpress
Presentation2.pptx - JoyPress Wordpressssuser166378
 
Check out the Free Landing Page Hosting in 2024
Check out the Free Landing Page Hosting in 2024Check out the Free Landing Page Hosting in 2024
Check out the Free Landing Page Hosting in 2024Shubham Pant
 
WordPress by the numbers - Jan Loeffler, CTO WebPros, CloudFest 2024
WordPress by the numbers - Jan Loeffler, CTO WebPros, CloudFest 2024WordPress by the numbers - Jan Loeffler, CTO WebPros, CloudFest 2024
WordPress by the numbers - Jan Loeffler, CTO WebPros, CloudFest 2024Jan Löffler
 
Niche Domination Prodigy Review Plus Bonus
Niche Domination Prodigy Review Plus BonusNiche Domination Prodigy Review Plus Bonus
Niche Domination Prodigy Review Plus BonusSkylark Nobin
 
TYPES AND DEFINITION OF ONLINE CRIMES AND HAZARDS
TYPES AND DEFINITION OF ONLINE CRIMES AND HAZARDSTYPES AND DEFINITION OF ONLINE CRIMES AND HAZARDS
TYPES AND DEFINITION OF ONLINE CRIMES AND HAZARDSedrianrheine
 
Bio Medical Waste Management Guideliness 2023 ppt.pptx
Bio Medical Waste Management Guideliness 2023 ppt.pptxBio Medical Waste Management Guideliness 2023 ppt.pptx
Bio Medical Waste Management Guideliness 2023 ppt.pptxnaveenithkrishnan
 
LESSON 10/ GROUP 10/ ST. THOMAS AQUINASS
LESSON 10/ GROUP 10/ ST. THOMAS AQUINASSLESSON 10/ GROUP 10/ ST. THOMAS AQUINASS
LESSON 10/ GROUP 10/ ST. THOMAS AQUINASSlesteraporado16
 

Kürzlich hochgeladen (15)

Computer 10 Lesson 8: Building a Website
Computer 10 Lesson 8: Building a WebsiteComputer 10 Lesson 8: Building a Website
Computer 10 Lesson 8: Building a Website
 
Vision Forward: Tracing Image Search SEO From Its Roots To AI-Enhanced Horizons
Vision Forward: Tracing Image Search SEO From Its Roots To AI-Enhanced HorizonsVision Forward: Tracing Image Search SEO From Its Roots To AI-Enhanced Horizons
Vision Forward: Tracing Image Search SEO From Its Roots To AI-Enhanced Horizons
 
world Tuberculosis day ppt 25-3-2024.pptx
world Tuberculosis day ppt 25-3-2024.pptxworld Tuberculosis day ppt 25-3-2024.pptx
world Tuberculosis day ppt 25-3-2024.pptx
 
Zero-day Vulnerabilities
Zero-day VulnerabilitiesZero-day Vulnerabilities
Zero-day Vulnerabilities
 
LESSON 5 GROUP 10 ST. THOMAS AQUINAS.pdf
LESSON 5 GROUP 10 ST. THOMAS AQUINAS.pdfLESSON 5 GROUP 10 ST. THOMAS AQUINAS.pdf
LESSON 5 GROUP 10 ST. THOMAS AQUINAS.pdf
 
Introduction to ICANN and Fellowship program by Shreedeep Rayamajhi.pdf
Introduction to ICANN and Fellowship program  by Shreedeep Rayamajhi.pdfIntroduction to ICANN and Fellowship program  by Shreedeep Rayamajhi.pdf
Introduction to ICANN and Fellowship program by Shreedeep Rayamajhi.pdf
 
A_Z-1_0_4T_00A-EN_U-Po_w_erPoint_06.pptx
A_Z-1_0_4T_00A-EN_U-Po_w_erPoint_06.pptxA_Z-1_0_4T_00A-EN_U-Po_w_erPoint_06.pptx
A_Z-1_0_4T_00A-EN_U-Po_w_erPoint_06.pptx
 
Benefits of doing Internet peering and running an Internet Exchange (IX) pres...
Benefits of doing Internet peering and running an Internet Exchange (IX) pres...Benefits of doing Internet peering and running an Internet Exchange (IX) pres...
Benefits of doing Internet peering and running an Internet Exchange (IX) pres...
 
Presentation2.pptx - JoyPress Wordpress
Presentation2.pptx -  JoyPress WordpressPresentation2.pptx -  JoyPress Wordpress
Presentation2.pptx - JoyPress Wordpress
 
Check out the Free Landing Page Hosting in 2024
Check out the Free Landing Page Hosting in 2024Check out the Free Landing Page Hosting in 2024
Check out the Free Landing Page Hosting in 2024
 
WordPress by the numbers - Jan Loeffler, CTO WebPros, CloudFest 2024
WordPress by the numbers - Jan Loeffler, CTO WebPros, CloudFest 2024WordPress by the numbers - Jan Loeffler, CTO WebPros, CloudFest 2024
WordPress by the numbers - Jan Loeffler, CTO WebPros, CloudFest 2024
 
Niche Domination Prodigy Review Plus Bonus
Niche Domination Prodigy Review Plus BonusNiche Domination Prodigy Review Plus Bonus
Niche Domination Prodigy Review Plus Bonus
 
TYPES AND DEFINITION OF ONLINE CRIMES AND HAZARDS
TYPES AND DEFINITION OF ONLINE CRIMES AND HAZARDSTYPES AND DEFINITION OF ONLINE CRIMES AND HAZARDS
TYPES AND DEFINITION OF ONLINE CRIMES AND HAZARDS
 
Bio Medical Waste Management Guideliness 2023 ppt.pptx
Bio Medical Waste Management Guideliness 2023 ppt.pptxBio Medical Waste Management Guideliness 2023 ppt.pptx
Bio Medical Waste Management Guideliness 2023 ppt.pptx
 
LESSON 10/ GROUP 10/ ST. THOMAS AQUINASS
LESSON 10/ GROUP 10/ ST. THOMAS AQUINASSLESSON 10/ GROUP 10/ ST. THOMAS AQUINASS
LESSON 10/ GROUP 10/ ST. THOMAS AQUINASS
 

introduction to operation management

  • 1. Operations Management/Ch. 4 Operations Strategy and Competitive Priorities ©2007 Thomson South-Western 1 Introduction to Operations Management (TOPIC # 1) TOPIC 1 CHAPTER 1 OPERATIONS MANAGEMENT An Integrated Goods and Services Approach EVANS & COLLIER Lecturer Dr Nazim Baluch STML COB UUM nazimbaluch@uum.edu.my nazimbaluch@gmail.com Tel: 04 928 6960
  • 2. 2 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management • Operations management (OM) is the science and art of ensuring that goods and services are created and delivered successfully to customers. • The principles of OM help one to view a business enterprise as a total system, in which all activities are coordinated not only vertically throughout the organization, but also horizontally across multiple functions.
  • 3. 3 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Learning Objectives 1. To understand the nature of typical OM activities in business, what operations managers do, and how everyone uses OM principles in their work, no matter what their functional job is. 2. To understand the nature of goods and services, their similarities and differences, 3. The concept of a customer benefit package, and why they are important for managing operations.
  • 4. 4 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western 4. To understand the concept of a process and value chain, and how they are used in operations to support the creation of goods and services. 5. Operations Management: History and Challenges. To be able to identify the key themes that have evolved over the last half-century and understand their impact on goods, services, and operations. Chapter 1 Learning Objectives
  • 5. 5 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management OM Spotlight: Ferguson Metals • Ferguson Metals, located in Hamilton, Ohio, is a supplier of stainless steel and high temperature alloys for the specialty metal market. (Page #8 of text book) • Ferguson’s primary production operations include slitting coil stock and cutting sheet steel to customer specifications with rapid turnaround times from order to delivery (see Exhibit 1.1). • Bob Vogel is the Vice President of Operations at Ferguson. He is involved in a variety of daily activities that draw upon knowledge of not only OM and engineering, but also finance, accounting, organizational behavior, and other subjects.
  • 6. 6 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Exhibit 1.1 Operations Management at Ferguson Metals
  • 7. 7 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management OM Spotlight: Ferguson Metals While understanding specialty metals is certainly a vital part of Mr. Vogel’s job, the ability to understand customer needs, apply approaches to continuous improvement, understand and motivate people, work cross-functionally across the business, and integrate processes and technology within the value chain define Scott’s job as an operations manager.
  • 8. 8 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Example of “What Operations Managers Do?” • Brooke Wilson is a Process Manager for J.P. Morgan Chase in the Credit Card Division. Among his OM-related activities are • Planning and budgeting –representing the plastic card production area in all meetings, developing annual budgets and staffing plans, and watching technology that might affect the production of plastic credit cards.
  • 9. 9 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Example of “What Operations Managers Do?” • Inventory management – overseeing the management of inventory for items such as plastic blank cards, inserts such as advertisements, envelops, postage, and credit card rules and disclosure inserts. • Scheduling and capacity –daily to annual scheduling of all resources (equipment, people, inventory) necessary to issue new credit cards and reissue cards that are up for renewal, replace old or damaged cards, and one's that are stolen.
  • 10. 10 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Example of “What Operations Managers Do?” • Brooke Wilson is a Process Manager for J.P. Morgan Chase in the Credit Card Division. Among his OM-related activities are • Quality – embossing the card with accurate customer information and quickly getting the card in the hands of the customer. • Brooke was an accounting major in college.
  • 11. 11 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Understanding Goods and Services • A good is a physical product that you can see, touch, or possibly consume. Examples of goods include: oranges, flowers, televisions, soap, airplanes, fish, furniture, coal, lumber, personal computers, paper, and industrial machines. • A durable good is a product that typically lasts at least three years. Vehicles, dishwashers, and furniture are some examples of durable goods.
  • 12. 12 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Understanding Goods and Services • A non-durable good is perishable and generally lasts for less than three years. Examples are toothpaste, software, shoes, and fruit. • A service is any primary or complementary activity that does not directly produce a physical product.
  • 13. 13 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Understanding Goods and Services • Service management integrates marketing, human resource, and operations functions to plan, create, and deliver goods and services, and their associated service encounters. • A service encounter is an interaction between the customer and the service provider.
  • 14. 14 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Understanding Goods and Services A broader definition is • Service encounters consist of one or more moments of truth – any episodes, transactions, or experiences in which a customer comes into contact with any aspect of the delivery system, however remote, and thereby has an opportunity to form an impression. • Here, a service encounter includes the impression an empty parking lot has on whether the customer goes into a facility or the interaction with other
  • 15. 15 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Similarities Between Goods and Services 1. Goods and services provide value and satisfaction to customers who purchase and use them. 2. They both can be standardized or customized to individual wants and needs. 3. A process creates and delivers each good or service, and therefore, OM is a critical skill.
  • 16. 16 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Differences Between Goods and Services 1. Goods are tangible while services are intangible. 2. Customers participate in many service processes, activities, and transactions. 3. The demand for services is more difficult to predict than the demand for goods. 4. Services cannot be stored as physical inventory. 5. Service management skills are paramount to a successful service encounter. 6. Service facilities typically need to be in close proximity to the customer. 7. Patents do not protect services.
  • 17. 17 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Exhibit 1.2 How Goods and Services Affect Operations Management Activities
  • 18. 18 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Exhibit 1.3 Examples of Goods and Service Content
  • 19. 19 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Customer Benefit Packages • A customer benefit package (CBP) is a clearly defined set of tangible (goods-content) and intangible (service-content) features that the customer recognizes, pays for, uses, or experiences. • In simple terms, a CBP is some combination of goods and services configured in a certain way to provide value to customers. • A CBP consists of a primary good or service, coupled with peripheral goods and/or services.
  • 20. 20 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Customer Benefit Packages • A primary good or service is the “core” offering that attracts customers and responds to their basic needs. For example, the primary service of a personal checking account is the capability to do convenient financial transactions. • Examples of a primary good or service: an airline flight, a personal digital assistance (PDA) device, a checking account, a brief case, a football game, tax preparation advice, and so on.
  • 21. 21 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Customer Benefit Packages • A peripheral goods or services are those that are not essential to the primary good or service, but enhance it. • Examples of peripheral goods or services for a personal checking account: on-line access and bill payment, debit card, designer checks, paper or electronic account statement, etc. • Remember each primary or peripheral good or service requires a process to create and deliver it
  • 22. 22 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Customer Benefit Packages • A variant is a CBP attribute that departs from the standard CBP and is normally location or firm specific. • A variant allows for adding unique goods or services such as a fishing pond or pool at an automobile dealership where kids can fish while the parents shop for vehicles. • Once a variant is incorporated and standardized into all CBP delivery sites on a continuous basis it
  • 23. 23 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Exhibit 1.4 A CBP Example for Purchasing a Vehicle
  • 24. 24 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Exhibit 1.5 Operations Management and the Customer Benefit Package
  • 25. 25 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Exhibit 1.6 Customer Wants and Needs, CBP Definition, and Process Design Automobile Example
  • 26. 26 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Customer Benefit Packages • It is very important that you understand Exhibits 1.5 and 1.6 and the difference between customer wants and needs versus the CBP features selected by management to fulfill those needs. • Processes create CBP features such as the (a) physical vehicle itself or (b) a leasing package that fits what the customer can afford. These CBP features fulfill certain customer’s wants and needs such as (a) physical transportation from point A to B, or (b) how can I pay for the vehicle?
  • 27. 27 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Another Example of Consumer Benefit Package
  • 28. 28 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Exhibit 1.7 How Primary, Support, Supplier, and Management Processes Are Related
  • 29. 29 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Exhibit 1.8 Organization by Function versus Process
  • 30. 30 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management OM Spotlight: Pal’s Sudden Service • Pal’s Sudden Service is a small chain of mostly drive-through quick service restaurants located in Northeast Tennessee and Southwest Virginia. • Pal’s competes against major national chains and outperforms all of them by focusing on important customer requirements such as speed, accuracy, friendly service, correct ingredients and amounts, proper food temperature, and safety.
  • 31. 31 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management OM Spotlight: Pal’s Sudden Service • Pal’s uses extensive market research to fully understand customer requirements: convenience; ease of driving in and out; easy-to- read menu, simple, accurate order-system; fast service; wholesome food; and reasonable price. • Every process is flowcharted and analyzed for opportunities for error, and then mistake-proofed if at all possible.
  • 32. 32 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Exhibit 1.9 Pal’s Sudden Service Value Chain
  • 33. 33 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management OM Spotlight: Pal’s Sudden Service • Entry-level employees – mostly high school students in their first job – receive 120 hours of training on precise work procedures and process standards in unique self-teaching, classroom, and on-the-job settings, and reinforced by a “Caught Doing Good” program that provides recognition for meeting quality standards and high performance expectations. • Pal’s collect performance measures such as complaints, profitability, employee turnover, safety, and productivity.
  • 34. 34 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Exhibit 1.10 Satisfaction Data and Linear Trend Chart
  • 35. 35 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Break-Even Model The amount of sales at which the net profit is zero – or equivalently, the point where total cost equals total revenue – is called the break-even point. The equation for total cost is Total cost = Fixed cost + Variable cost. If 10,000 units were produced and sold, the total cost would be Total cost = 100,000 + 12(10,000) = $220,000.
  • 36. 36 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Break-Even Model The revenue received from selling 10,000 units would be 20(10,000) = $200,000, so at this production level, the firm would incur a loss of $220,000 - $200,000 = $20,000. However, if 13,000 units were produced and sold, the projected profit would be 20(13,000) - 100,000 - 12(13,000) = $4,000.
  • 37. 37 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Chapter 1 Introduction to Operations Management Breakeven Model We can find the break-even point by developing a simple mathematical model. Let x be the sales volume at the break-even point. Then Total cost = 100,000 + 12x Total revenue = 20x. Setting the total revenue equal to total cost we have 20x = 100,000 + 12x and hence x = 12,500. If sales are less than 12,500 units, the firm will incur a loss; if sales are more than 12,500, a profit will be realized.
  • 38. 38 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Exhibit 1.11 Spreadsheet Model for Break-Even Analysis (Break Even Model.xls)
  • 39. 39 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Exhibit 1.12 Sensitivity Analysis of Variable Cost for the Break-Even Model
  • 40. 40 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Exhibit 1.13 Five Eras of Operations Management
  • 41. 41 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Exhibit 1.14 U.S. 2001 Employment and Projected Change by Major Industry (slide 1) * Durable goods are items such as instruments, vehicles, aircraft, computer and office equipment, machinery,furniture, glass, metals, and appliances. ** Nondurable goods are items such as textiles, apparel, paper, food, coal, oil, leather, plastics, chemicals, and books. Source:United States Bureau of Labor Statistics, October 2001, http://www.bls.gov/EMP
  • 42. 42 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Exhibit 1.14 U.S. 2001 Employment and Projected Change by Major Industry (slide 2)
  • 43. 43 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western U.S. Economy Structure and Service Related Jobs Goods-producing industries (manufacturing, construction, fishing, forestry, mining, and agriculture) account for 20 percent of the jobs in the U.S. economy. Service-providing industries account for 80 percent of the jobs in the U.S. economy. One-half of those jobs in goods-producing industries involve service processes such as human resource management, accounting, and financial.
  • 44. 44 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western U.S. Economy Structure and Service Related Jobs Therefore, more than 90 percent of the jobs in the U.S. economy involve designing and managing service-, information- or entertainment-intensive processes. Most people in the United States are working in the service sector or service processes or in service-related aspects of manufacturing firms.
  • 45. 45 Operations Management/Ch. 1 Introduction to Operations Management ©2007 Thomson South-Western Exhibit 1.15 Case: Dietary Department Organizational Chart
  • 46. Operations Management/Ch. 3 Frameworks for Operations Measurement ©2007 Thomson South-Western