© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-1

Who am I? Syllabus highlights Who are you? Introduction to Operations Management

BA 357 Operations ManagementBA 357 Operations ManagementJohn SloanJohn Sloan

Day 1 Agenda

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-2

Third year on the OSU Faculty, teaching BA 357, BA 462, and BA 550

28 years of operations / project management experience with Hewlett-Packard: Different geographical locations Different product lines Different functional responsibilities International experience Experience teaching in business setting

BA Mathematics, 4 years USAF, MBA

Who am I?Who am I?

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-3

Get the book Come to class. I will not formally take attendance –

but if you don’t come, don’t expect to do well. Be prepared for class & participate in class Eight quizzes – You can drop one (1/3 of grade) Midterm exam (1/3 of grade) Final exam (1/3 of grade) All subject to change

Syllabus HighlightsSyllabus Highlights

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-4

All students are expected to abide by the university rules on academic honesty, which forbid cheating or plagiarism. Failure to do so will result in failing the class.

Policy on CheatingPolicy on Cheating

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-5

    Schedule – BA 357 Section 4    

         

Date   Chapter / Topic   Quiz / Assignment due

1/4/05  

IntroductionsSyllabus reviewCh 1: Introduction to Operations Management  

1/6/05   Ch 2: Operations Strategy Regal Marine Video Homework 1

1/11/05   Ch 3: Business Processes King Sooper Video Quiz 1

1/13/05   Supplement 7: Capacity Planning

1/18/05 Quantitative Module A: Decision-Making Tools Quiz 2 Homework 2

1/20/05   Ch 6: Quality Management Quiz 3 Homework 3

1/25/05   Ch 12: Inventory Management  

1/27/05   Ch 16: JIT / Lean Systems Quiz 4 Homework 4

2/1/05   JIT Exercise Two Canneries Video  

2/3/05   Midterm course review / Catch-up  

2/8/05   Midterm exam  

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-6

Schedule – p2Schedule – p2

2/10/05   Quantitative Module D: Waiting Line Models  

2/15/05   Quantitative Module F: Simulation   Quiz 5 Homework 5

2/17/05   Supplement 11: SCM & E-Commerce RM Video  

2/22/05   Ch 4: Forecasting

2/24/05 Ch 13: Aggregate Planning Air NZ Video Quiz 6 Homework 6

3/1/05   Ch 14: MRP & ERP   Quiz 7 Homework 7

3/3/05  Ch 14: MRP & ERP (continued)Ch 15: Short-Term Scheduling Quiz 8 Homework 8

3/8/05 Ch 3 (Heizer): Project Management     Homework 9

3/10/05SustainabilityFinal course review  

3/14/05 Final exam 7:30 AM    

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-7

Name and major Work experience I know it is early for some of you, but…

What do you want to be doing once you graduate?

Who Are You?Who Are You?

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-8

Operations Operations ManagementManagement

IntroductionIntroductionChapter 1Chapter 1

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-9

Operations & Operations ManagementOperations & Operations Management

Operations: the collection of people, technology, and systems within an organization that has primary responsibility for providing the organization’s products or services

Operations management: the planning, scheduling, and control of the activities that transform inputs into finished goods and services

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-10

Supply Chain & SCMSupply Chain & SCM Supply chain: the network of manufacturers and service

providers that work together to move goods from the raw materials stage through to the end user. These manufacturers and service providers are linked together through physical flows, information flows, and monetary flows.

Supply chain management: the active management of supply chain activities and relationships to maximize customer value and achieve a sustainable competitive advantage. It represents a conscious effort by a firm or group of firms to develop and run supply chains in the most effective and efficient ways possible.

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-11

Processes and OperationsProcesses and Operations

Outputs•Services•Goods

Internal andexternal customers

Information on performance

Processes and operations

5

1

2

3

4

Inputs•Workers•Managers•Equipment•Facilities•Materials•Services•Land•Energy

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-12

Goods vs. ServicesGoods vs. Services

Goods Services

Tangible

Intangible

Yes No

Raw materials, WIP, No – produced and consumed

Relatively easy - consistent Very hard – each customer different

Can be low

Generally high

Yes No

Where convenient to produce

Convenient to customer

Product

Resale

Inventory

Quality

Customer Interaction

Transportability

Location

Automation Yes Yes – standardized services

Frequently centralized Frequently dispersed

at same time

product definition

finished goods

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-13

Goods Contain Services & Goods Contain Services & Services Contain GoodsServices Contain Goods

0 25 50 75 100255075100

AutomobileComputerInstalled Carpeting

Fast-food MealRestaurant Meal

Auto RepairHospital Care

Advertising AgencyInvestment Management

Consulting ServiceCounseling

Percent of Product that is a Good Percent of Product that is a Service

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-14

Organization ChartOrganization Chart

Operations Finance/Accounting

Marketing

ProductionControl

Manufacturing QualityControl

Purchasing

General manager

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-15

Some Cross-functional LinkagesSome Cross-functional Linkages

Engineering: what products and processes are needed

Marketing: can we make what we wish to sell / what products cost the most to make / customer expectations

Accounting: inventory management / JIT / work standards / cost verses price

Finance: make verses buy / quantifying quality / cash flow and capital requirements / cost verses price

Human resources: what skills do our employees need / who to hire / type of compensation to match strategy

Information Systems: what information is needed and by whom / flow of goods / linkages to rest of supply chain

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-16

Trends in Operations & SCMTrends in Operations & SCM

E-commerce improves speed, quality and cost of business communication

Increased competition and globalization in markets increasing rate of change in markets, products and technology

Relationship management of all operations activities, the most susceptible to break down

The freethinking of one age is the common sense of the next

Matthew Arnold (1822 – 1888)

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-17

Why Study Operations Management?Why Study Operations Management? Every organization must make a product or provide a service

that someone values

Operations has primary responsibility for providing the organization’s products or services

Most organizations function as part of larger supply chains

Supply chains are networks of manufacturers and service providers that work together to move goods from the raw materials stage through to the end user

Organizations must carefully manage their operations and supply chains in order to prosper, and indeed, survive

Decisions and actions in operations directly affect company growth, market share, and profitability

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-18

Why Study Operations Management?Why Study Operations Management?

This is where the good or service comes into being – if you do not understand this part of the company, you are not being the best accountant, marketer, or whatever, that you could be.

Strategies in all functional areas must be linked/aligned to support the business strategy.

This is where companies focus a great deal of energy – because this is where most companies incur the majority of their costs. Therefore this is an area where you can have a major impact on a firm’s competitiveness.

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-19

Options for Increasing ContributionOptions for Increasing Contribution

Current

Sales $100,000

Cost of Goods

-80,000

Gross Margin

20,000

Finance Costs

-6,000

Net Margin

14,000

Taxes @ 25%

-3,500

Contribution 10,500

Marketing Option

Sales + 50%

$150,000

-120,000

30,000

-6,000

24,000

-6,000

18,000

Finance/Acct Option

$100,000

-80,000

20,000

-3,000

17,000

-4,250

12,750

OM Option

$100,000

-64,000

36,000

-6,000

30,000

-7,500

22,500

Finance Costs 50% –

Production Costs 20% –

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-20

Productivity = output / input (bigger is better)

Single-factor productivity output / labor hours output / labor $ sales / sales rep sales / retail outlet, etc

Multi-factor productivity output / (labor + material + overhead)

ProductivityProductivity

Productivity WorksheetProductivity Worksheet

© 2004 by Prentice Hall, Inc., Upper Saddle River, N.J. 074581-21

Conclusions for Day 1Conclusions for Day 1 OM is the management of the processes that add

value directly to our goods and services. Functional area strategies must be linked to

support the business strategy There is lots of money in improving operations

Goods and services are part of the same continuum Productivity is the ratio of output to input, either

single-factor or multi-factor. Homework assignment 1 in public folder