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Let’s Watch Ops in Action. Feeding Folks in the Air. Why Study OM?. Every aspect of business affects or is affected by operations Many service jobs are closely related to operations Financial services Marketing services Accounting services Information services

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Let’s Watch Ops in Action

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Let s watch ops in action

Let’s Watch Ops in Action

  • Feeding Folks in the Air

Why study om

Why Study OM?

  • Every aspect of business affects or is affected by operations

  • Many service jobs are closely related to operations

    • Financial services

    • Marketing services

    • Accounting services

    • Information services

  • There is a significant amount of interaction and collaboration among the functional areas

  • It provides an excellent vehicle for understanding the world in which we live


Systems approach

Systems Approach

  • System - a set of interrelated parts that must work together

    • The business organization is a system composed of subsystems

      • marketing subsystem

      • operations subsystem

      • finance subsystem

  • The systems approach

    • Emphasizes interrelationships among subsystems

    • Main theme is that the whole is greater than the sum of its parts

    • The output and objectives of the organization take precedence over those of any one subsystem

Instructor Slides

Historical evolution of om

Historical Evolution of OM

  • Industrial Revolution

  • Scientific Management

  • Human Relations Movement

  • Decision Models and Management Science

  • Influence of Japanese Manufacturers


Industrial revolution

Pre-Industrial Revolution

Craft production - System in which highly skilled workers use simple, flexible tools to produce small quantities of customized goods

Some key elements of the industrial revolution

Began in England in the 1770s

Division of labor - Adam Smith, 1776

Application of the “rotative” steam engine, 1780s

Cotton Gin and Interchangeable parts - Eli Whitney, 1792

Management theory and practice did not advance appreciably during this period

Industrial Revolution


Let s watch ops in action

Movement was led by efficiency engineer, Frederick Winslow Taylor -Key aspects: observation, measurement, analysis and improvement of work methods, and economic incentives“Management is responsible for planning, carefully selecting and training workers, finding the best way to perform each job, achieving cooperate between management and workers, and separating management activities from work activities”Emphasis was on maximizing outputMass productionInterchangeable partsDivision of labor

Scientific Management

Scientific management contributors

Scientific Management - contributors

  • Frank Gilbreth - father of motion studies (nice guy, wife was more interesting)

  • Henry Gantt - developed the Gantt chart scheduling system and recognized the value of non-monetary rewards for motivating employees


More scientific management guys

More Scientific Management Guys

  • Harrington Emerson - applied Taylor’s ideas to organization structure

  • Henry Ford - employed scientific management techniques to his factories

    • Moving assembly line

    • Mass production

Instructor Slides

Human relations movement

Human Relations Movement

Emphasized the importance of the human element in job design – first contributor was…

Lillian Gilbreth

(Frank “Motion Studies” Gilbreth’s wife)

The Mother of Modern Management


Lillian moller gilbreth 1878 1972

Lillian Moller Gilbreth -1878-1972

  • Engineer

  • Industrial psychologist

  • Mother of 12 – One of her kids wrote “Cheaper by The Dozen”

  • Referred to as a “genius in the art of living”

  • Husband, Frank, was partner—he never went to college

Instructor Slides

Within the gilbreth marriage

Within the Gilbreth Marriage

We find a blend of the scientific/human relations approach.

  • -Frank was concerned with the technical aspects of worker efficiency - Lillian was concerned with the human aspects of time management.

Instructor Slides

Let s watch ops in action

-Her ideas were not widely adopted during her lifetime, but set direction to future but set direction of future

-She recognized that workers are motivated by indirect incentives (among which she included money) and direct incentives, such as job satisfaction.

-Her work with Frank helped create job standardization, incentive wage-plans, and job simplification.

-Finally, she was among the first to recognize the effects of fatigue and stress on time management.

Instructor Slides

Other important human relations contributors

Other Important Human Relations Contributors…

  • Elton Mayo – Hawthorne studies on worker motivation, 1930

  • Abraham Maslow – motivation theory, 1940s; hierarchy of needs, 1954

  • Frederick Hertzberg – Two Factor Theory, 1959

  • Douglas McGregor – Theory X and Theory Y, 1960s

  • William Ouchi – Theory Z, 1981

Instructor Slides



Influence of japanese manufacturers

Influence of Japanese Manufacturers

Refined and developed management practices that increased productivity

  • Credited with fueling the “quality revolution”

  • Just-in-Time production


Decision models management science

Decision Models & Management Science

  • F.W. Harris – mathematical model for inventory management, 1915

  • Dodge, Romig, and Shewart – statistical procedures for sampling and quality control, 1930s

  • Tippett – statistical sampling theory, 1935

  • Operations Research (OR) Groups – OR applications in warfare

  • George Dantzig – linear programming, 1947


Key issues for operations managers today

Economic conditions


Quality problems

Risk management

Competing in a global economy

Today’s OM still has traces of its past, combined in new ways

Key Issues for Operations Managers Today


Environmental concerns

Environmental Concerns

  • Sustainability

    • Using resources in ways that do not harm ecological systems that support human existence

      Sustainability measures often go beyond traditional environmental and economic measures to include measures that incorporate social criteria in decision making

      • All areas of business will be affected

        • Product and service design

        • Consumer education programs

        • Disaster preparation and response

        • Supply chain waste management

        • Outsourcing decisions


Ethical issues in operations

Financial statements

Worker safety

Product safety


The environment

The community

Hiring and firing workers

Closing facilities

Workers rights

Ethical issues arise in many aspects of operations management:

Ethical Issues in Operations


The need for supply chain management

The Need for Supply Chain Management

  • In the past, organizations did little to manage the supply chain beyond their own operations and immediate suppliers which led to numerous problems:

    • Oscillating inventory levels

    • Inventory stockouts

    • Late deliveries

    • Quality problems


What does the study of scm and om offer

What Does The Study of SCM and OM Offer?

The ability to grasp the many complexelements of Supply Chain Management. Those without an introduction to the specialty would not know where to begin…

Never mind how to address the challenges of operating a goods or service organization from a high level.

The study helps you define and refine your professional goal

The Study Helps You Define and Refine Your Professional Goal

  • This type of class give you a “bird’s eye” view of the way business operates

  • Later, you may choose to specialize in one or more areas of operations management

The broad elements of om scm

The Broad Elements of OM/SCM

  • Customers – what products/services do customers want

  • Forecasting – predicting timing and volume of customer demand

  • Design – incorporating customer wants, manufacturability, and time to market

  • Capacity planning – matching supply and demand

  • Processing – controlling quality, scheduling work

  • Inventory – meeting demand requirements while managing costs

  • Purchasing – evaluating potential suppliers, supporting the needs of operations on purchased goods and services

  • Suppliers – monitoring supplier quality, on-time delivery, and flexibility; maintaining supplier relations

  • Location – determining the location of facilities

  • Logistics – deciding how to best move information and materials


Supply chain issues

Supply Chain Issues

  • The need to improve operations

  • Increasing levels of outsourcing

  • Increasing transportation costs

  • Competitive pressures

  • Increasing globalization

  • Increasing importance of e-business

  • The complexity of supply chains

  • The need to manage inventories


Today we measure more carefully apply performance metrics to prevent control problems events

Today, We Measure More Carefully- Apply Performance Metrics To Prevent Control Problems (“Events”)

  • Measurements of performance

  • Often used in industry as measuring sticks

    • Units produced

    • OSHA reportable Incidents

    • Product defects by shift

Let s watch ops in action

Pareto Phenomenon

  • A few factors account for a high percentage of the occurrence of some event(s).

  • 80/20 Rule - 80% of problems are caused by 20% of the activities.

How do we identify the vital few, the source of the majority of our “events”?

Process management

Process Management

  • Definition = one or more actions that turn inputs into outputs.

Instructor Slides

Process management1

Process Management


Scope of operations management

The operations function includes many interrelated activities, e.g.-


Capacity planning

Facilities and layout


Managing inventories

Assuring quality

Motivating employees

Deciding where to locate facilities

And more . . .

Scope of Operations Management

The scope of operations management ranges across the organization.


Let s watch ops in action

Instructor Slides

Role of the operations manager

Role of the Operations Manager

The Operations Function consists of all activities directly related to producing goods or providing services.

A primary function of the operations manager is to guide the system by decision making.

  • System Design Decisions

  • System Operation Decisions


System operation decisions

System Operation Decisions

  • System Operation -These are generally tactical and operational decisions

    • Management of personnel

    • Inventory management and control

    • Scheduling

    • Project management

    • Quality assurance

  • Operations managers spend more time on system operation decision than any other decision area

    • They have a vital stake in system design!

  • 1-32

    Let s stop a second

    Let’s stop a second….

    • What, really, does tactical mean?

    • Understand the differences between strategy and tactics in order to grasp what a “tactical” manager is.

    Let s watch ops in action


    Future NOW



    Broad perspectiveFOCUS



    System design

    System Design

    Involves strategic decisions that

    • usually require long-term commitment of resources

    • determine parameters of system operation –physical and other scope limits

    • Capacity (how much)

    • Facility location (where)

    • Facility layout (how organized for task work)

    • Product and service planning

    • Acquisition and placement of equipment

    Decision making in sc om has as its goal

    Decision Making in SC/OM Has, as Its Goal…

    The creation of a stable, consistent, quality operation, process, product, service

    • “We aim for no surprises!”

    Instructor Slides

    Goal avoid process variation

    Goal: Avoid Process Variation

    Variations can be disruptive to operations and supply chain processes. They may result in additional costs, delays and shortages, poor quality, and inefficient work systems.

    Instructor Slides

    Let s watch ops in action

    To design a system, we need to understand what we set out to accomplish as an organization (mission) – e.g., this class started with something like this:

    Systems are everywhere

    Systems Are Everywhere!

    Decisions making in systems design

    Decisions Making In Systems Design

    Most operations decisions involve many alternatives that can have quite different impacts on costs or profits. Typical operations decisions include:

    • What: What resources are needed, and in what amounts?

    • When: When will each resource be needed? When should the work be scheduled? When should materials and other supplies be ordered?

    • Where: Where will the work be done?

    • How: How will he product or service be designed? How will the work be done? How will resources be allocated?

    • Who: Who will do the work?

    General approach to decision making

    General Approach to Decision Making

    • Modeling is a key tool used by all decision makers.

      Model - an abstraction of reality; a simplification of something.

      Common features of models:

      • They are simplifications of real-life phenomena

      • They omit unimportant details of the real-life systems they mimic so that attention can be focused on the most important aspects of the real-life system


    Model as abstraction of reality

    Model as Abstraction of Reality



    Benefits of models are many

    Benefits of Models Are MANY

    • Easier to use and less expensive than dealing with the real system

    • Require users to organize and sometimes quantify information

    • Increase understanding of the problem – as part of process!

    • Enable managers to analyze “What if?” questions

    • Serve as a consistent tool for evaluation and provide a standardized format for analyzing a problem

    • Enable users to bring the power of mathematics to bear on a problem.




    • Types of Models:

      • Physical Models

        • Look like their real-life counterparts

      • Schematic Models

        • Look less like their real-life counterparts than physical models

      • Mathematical Models

        • Do not look at all like their real-life counterparts


    Let s watch ops in action

    Schematic Example – A relatively Simple Sketch of Something Complex

    Instructor Slides

    What we can measure we must

    “What We Can Measure, We Must”

    When a mathematically optimal ideal is sought , we rely on qualitative methodologies

    • Linear programming

    • Queuing techniques – recall Disney example

    • Inventory models – recall Just in Time disc.

    • Project models

    • Forecasting techniques – coming up

    • Statistical models

    Instructor Slides

    Let s watch ops in action


    Supply demand three elements work together to keep the company stable






    Opportunity Loss

    Customer Dissatisfaction








    Supply & Demand – Three Elements Work Together to Keep The Company Stable…

    Operations &

    Supply Chains

    Sales & Marketing


    Let s watch ops in action

    Business Operations Overlap

    Figure 15




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