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OperationsManagement,Chapter1OperationsandProductivity,PowerPointpresentationtoaccompanyHeizer/RenderPrinciplesofOperationsManagement,7eOperationsManagement,9e,Outline,GlobalCompanyProfile:HardRockCafe,WhatIsOperationsManagement?OrganizingtoProduceGoodsandServicesWhyStudyOM?WhatOperationsManagersDoHowThisBookIsOrganized,Outline-Continued,TheHeritageofOperationsManagementOperationsintheServiceSectorDifferencesbetweenGoodsandServicesGrowthofServicesServicePayExcitingNewTrendsinOperationsManagement,Outline-Continued,TheProductivityChallengeProductivityMeasurementProductivityVariablesProductivityandtheServiceSectorEthicsandSocialResponsibility,LearningObjectives,Whenyoucompletethischapteryoushouldbeableto:,DefineoperationsmanagementExplainthedistinctionbetweengoodsandservicesExplainthedifferencebetweenproductionandproductivity,LearningObjectives,Whenyoucompletethischapteryoushouldbeableto:,Computesingle-factorproductivityComputemultifactorproductivityIdentifythecriticalvariablesinenhancingproductivity,TheHardRockCafe,Firstopenedin1971Now121restaurantsinover40countriesRockmusicmemorabiliaCreatesvalueintheformofgoodfoodandentertainment3,500+custommealsperdayinOrlandoHowdoesanitemgetonthemenu?RoleoftheOperationsManager,WhatIsOperationsManagement?,Productionisthecreationofgoodsandservices,Operationsmanagement(OM)isthesetofactivitiesthatcreatesvalueintheformofgoodsandservicesbytransforminginputsintooutputs,OrganizingtoProduceGoodsandServices,Essentialfunctions:MarketinggeneratesdemandProduction/operationscreatestheproductFinance/accountingtrackshowwelltheorganizationisdoing,paysbills,collectsthemoney,OrganizationalCharts,CommercialBank,Figure1.1(A),OrganizationalCharts,Airline,Figure1.1(B),OrganizationalCharts,Manufacturing,Figure1.1(C),WhyStudyOM?,OMisoneofthreemajorfunctions(marketing,finance,andoperations)ofanyorganization,Wewant(andneed)toknowhowgoodsandservicesareproducedWewanttounderstandwhatoperationsmanagersdoOMissuchacostlypartofanorganization,OptionsforIncreasingContribution,WhatOperationsManagersDo,PlanningOrganizingStaffingLeadingControlling,BasicManagementFunctions,TenCriticalDecisions,Table1.2,TheCriticalDecisions,DesignofgoodsandservicesWhatgoodorserviceshouldweoffer?Howshouldwedesigntheseproductsandservices?ManagingqualityHowdowedefinequality?Whoisresponsibleforquality?,Table1.2(cont.),TheCriticalDecisions,ProcessandcapacitydesignWhatprocessandwhatcapacitywilltheseproductsrequire?Whatequipmentandtechnologyisnecessaryfortheseprocesses?LocationstrategyWhereshouldweputthefacility?Onwhatcriteriashouldwebasethelocationdecision?,Table1.2(cont.),TheCriticalDecisions,LayoutstrategyHowshouldwearrangethefacility?Howlargemustthefacilitybetomeetourplan?HumanresourcesandjobdesignHowdoweprovideareasonableworkenvironment?Howmuchcanweexpectouremployeestoproduce?,Table1.2(cont.),TheCriticalDecisions,SupplychainmanagementShouldwemakeorbuythiscomponent?Whoareoursuppliersandwhocanintegrateintooure-commerceprogram?Inventory,materialrequirementsplanning,andJITHowmuchinventoryofeachitemshouldwehave?Whendowere-order?,Table1.2(cont.),TheCriticalDecisions,IntermediateandshorttermschedulingArewebetteroffkeepingpeopleonthepayrollduringslowdowns?Whichjobsdoweperformnext?MaintenanceWhoisresponsibleformaintenance?Whendowedomaintenance?,Table1.2(cont.),WherearetheOMJobs?,Figure1.2,WherearetheOMJobs?,Technology/methodsFacilities/spaceutilizationStrategicissuesResponsetimePeople/teamdevelopmentCustomerserviceQualityCostreductionInventoryreductionProductivityimprovement,SignificantEventsinOM,Figure1.3,TheHeritageofOM,Divisionoflabor(AdamSmith1776;CharlesBabbage1852)Standardizedparts(Whitney1800)ScientificManagement(Taylor1881)Coordinatedassemblyline(Ford/Sorenson1913)Ganttcharts(Gantt1916)Motionstudy(FrankandLillianGilbreth1922)Qualitycontrol(Shewhart1924;Deming1950),TheHeritageofOM,Computer(Atanasoff1938)CPM/PERT(DuPont1957)Materialrequirementsplanning(Orlicky1960)Computeraideddesign(CAD1970)Flexiblemanufacturingsystem(FMS1975)BaldrigeQualityAwards(1980)Computerintegratedmanufacturing(1990)Globalization(1992)Internet(1995),EliWhitney,Born1765;died1825In1798,receivedgovernmentcontracttomake10,000musketsShowedthatmachinetoolscouldmakestandardizedpartstoexactspecificationsMusketpartscouldbeusedinanymusket,FrederickW.Taylor,Born1856;died1915KnownasfatherofscientificmanagementIn1881,aschiefengineerforMidvaleSteel,studiedhowtasksweredoneBeganfirstmotionandtimestudiesCreatedefficiencyprinciples,TaylorsPrinciples,MatchingemployeestorightjobProvidingthepropertrainingProvidingproperworkmethodsandtoolsEstablishinglegitimateincentivesforworktobeaccomplished,ManagementShouldTakeMoreResponsibilityfor:,FrankLillian(1878-1972)Husband-and-wifeengineeringteamFurtherdevelopedworkmeasurementmethodsAppliedefficiencymethodstotheirhomeand12children!Bookdied1947In1903,createdFordMotorCompanyIn1913,firstusedmovingassemblylinetomakeModelTUnfinishedproductmovedbyconveyorpastworkstationPaidworkersverywellfor1911($5/day!),HenryFord,W.EdwardsDeming,Born1900;died1993EngineerandphysicistCreditedwithteachingJapanqualitycontrolmethodsinpost-WW2UsedstatisticstoanalyzeprocessHismethodsinvolveworkersindecisions,ContributionsFrom,HumanfactorsIndustrialengineeringManagementscienceBiologicalsciencePhysicalsciencesInformationtechnology,NewChallengesinOM,CharacteristicsofGoods,TangibleproductConsistentproductdefinitionProductionusuallyseparatefromconsumptionCanbeinventoriedLowcustomerinteraction,CharacteristicsofService,IntangibleproductProducedandconsumedatsametimeOftenuniqueHighcustomerinteractionInconsistentproductdefinitionOftenknowledge-basedFrequentlydispersed,IndustryandServicesasPercentageofGDP,GoodsVersusServices,Table1.3,GoodsandServices,Figure1.4,ManufacturingandServiceEmployment,Figure1.5(A),ManufacturingEmploymentandProduction,Figure1.5(B),DevelopmentoftheServiceEconomy,Figure1.5(C),OrganizationsinEachSector,Table1.4,OrganizationsinEachSector,Table1.4,OrganizationsinEachSector,Table1.4,NewTrendsinOM,Figure1.6,NewTrendsinOM,Figure1.6,NewTrendsinOM,Figure1.6,NewTrendsinOM,GlobalfocusJust-in-timeperformanceSupplychainpartneringRapidproductdevelopmentMasscustomizationEmpoweredemployeesEnvironmentallysensitiveproductionEthics,ProductivityChallenge,Productivityistheratioofoutputs(goodsandservices)dividedbytheinputs(resourcessuchaslaborandcapital),Theobjectiveistoimproveproductivity!,ImportantNote!Productionisameasureofoutputonlyandnotameasureofefficiency,TheEconomicSystem,Figure1.7,ImprovingProductivityatStarbucks,Ateamof10analystscontinuallylookforwaystoshavetime.Someimprovements:,ImprovingProductivityatStarbucks,Ateamof10analystscontinuallylookforwaystoshavetime.Someimprovements:,MeasureofprocessimprovementRepresentsoutputrelativetoinputOnlythroughproductivityincreasescanourstandardoflivingimprove,Productivity,ProductivityCalculations,LaborProductivity,Oneresourceinputsingle-factorproductivity,Multi-FactorProductivity,AlsoknownastotalfactorproductivityOutputandinputsareoftenexpressedindollars,Multipleresourceinputsmulti-factorproductivity,CollinsTitleProductivity,CollinsTitleProductivity,CollinsTitleProductivity,=.25titles/labor-hr,CollinsTitleProductivity,CollinsTitleProductivity,CollinsTitleProductivity,CollinsTitleProductivity,=.0077titles/dollar,CollinsTitleProductivity,=.0077titles/dollar,=.0097titles/dollar,MeasurementProblems,Qualitymaychangewhilethequantityofinputsandoutputsremainsconstant,ExternalelementsmaycauseanincreaseordecreaseinproductivityPreciseunitsofmeasuremaybelacking,ProductivityVariables,Labor-contributesabout10%oftheannualincrease,Capital-cont