Introduction to Operations

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Introduction to Operations
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WHAT IS OPERATIONS MANAGEMENT?

• Operations management is the design, operation,
  and improvement of the production systems that
  create a firms primary goods and services.

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What is a Production System?

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

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The Transformation Process --
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Transformations

• Physical--manufacturing
• Locational--transportation
• Exchange--retailing
• Storage--warehousing
• Physiological--health care
• Informationalcomputers/telecommunications

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SOME OPERATIONS MANAGEMENT DECISIONS --

• How much will we sell?
• How do we measure quality?
• Which product do we offer?
• How to produce good / provide service?
• Where do we locate our facility?
• Is subcontracting a good idea?
• How much inventory should we keep?

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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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Core services -- Definition

• Core services are basic things that customers
  want from products they purchase.
• Examples??

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Value-added services -- Definition

• Value-added services differentiate the
  organization from competitors and build
  relationships that bind customers to the firm in
  a positive way
• Examples??

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CHARACTERISTICS OF GOODS SERVICES

• GOODS
• Tangible product
• Consistent product definition
• Production usually separate from consumption
• Can be inventoried
• Low customer interaction

• SERVICES
• Intangible product
• Inconsistent product definition
• Produced consumed at same time
• Cannot be inventoried
• High customer interaction

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Current Issues in OM

• Effectively consolidating the operations
  resulting from mergers.
• Developing flexible supply chains to enable mass
  customization of products and services.
• Managing global supplier, production and
  distribution networks.
• Increased commiditization of suppliers.
• Achieving the Service Factory.
• Achieving good service from service firms.

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Exercise

• Via the McGraw-Hill Operations Site (see Web
  Links), take several plant tours observe how
  items are produced, how services are provided,
  and what are some outstanding issues discussed.
• Deliverable Briefly note some of the products
  produced and some of the operations issues
  encountered