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MGT 2070 Lecture Notes - Human Relations Movement, Lean Manufacturing, Outsourcing

4 pages53 viewsFall 2012

Course Code
MGT 2070
Barry Stannard

of 4
MGT 2070: Operations Management September 5, 2012
Chapter 1: Intro to Operations Management
Operations management: management of processes and the systems that create G & S.
o System: set of interrelated parts that must work together
o Process: series of linked actions, changes, or functions bringing about a result
3 types
Core directly creates products/services
Support processes support core processes
Managerial processes govern the system
A typical organization has three basic functions
o Operations
Inputs are used to obtain finished goods or services using one or more
transformation/conversion processes
Essence of operations function is to add value during the transformation process
Value added: describes the difference between the cost of inputs and the
value of outputs
o Finance
Provision of funds
Economic analysis of investment proposals
o Marketing
Responsible for assessing customer wants and needs, and for communicating those
needs and feedback to operations people and to product design people
Lead time: the time between ordering a good/service and receiving it
Marketing needs this from operations in order to give customers realistic
estimated of how long it will take to fill orders.
o Other functions
Operations provide relevant data
Accounting provides financial analysis for performance and decisions
Management information systems (MIS)
Operations provide understanding of infrastructural and system needs
MIS provides systems for planning and control, and improvement
Human resources management
Operations provides understanding of human resource needs
HR provides recruitment development and training
Manufacturing engineering
Operations provides understanding of process technology needs
Engineering provides analysis of new technology options
Product Design
MGT 2070: Operations Management September 5, 2012
Operations provides understanding of capabilities and constraints of
operations processes
Product design provides new product/service ideas
An operations manager must coordinate the use of resources through the management activities of
planning, organizing, directing, and controlling.
o Chief role is that of a decision maker
o Exerts influence over the degree to which the goals/objectives of the org. are met.
Model: abstraction of reality. A simplified representation of something.
o Ignore unimportant details so that attention can be concentrated on the most important
aspects of the situation, thus increasing the opportunity to understand a problem and its
Pareto phenomenon: some things will be very important for achieving an objective and other things
will not
Craft production: system in which highly skilled workers use simple, flexible tools to produce small
quantities of customized goods
o Slow and costly
o Production costs do not decrease as volume increases
Industrial revolution made possible
o Division of labour: breaking up a production process into small tasks so that each worker
performs a small portion of the overall job
Virtually no skill is required
o Interchangeable parts: parts of a product made to such precision that they do not have to
be custom fitted
Decrease in assembly time and cost
Scientific management
o Based on observation, measurement, analysis, and improvement of work methods, and
economic incentives.
o Maximizes output
o Moving assembly line
o Mass production: systems in which lower skilled workers use specialized machinery to
produce high volumes of standardized goods
Human relations movement
o Emphasizes the importance of the human element in job design
o Lifetime employment, employee problem solving, consensus building
Influence of Japanese manufacturers
o Total quality management: involving every employee in a continual effort to improve
quality and satisfy the customers
Emphasizes quality and continual improvement, worker teams and empowerment,
achieving customer satisfaction
JIT manufacturing
MGT 2070: Operations Management September 5, 2012
o Lean production: system that uses minimal amounts of resources to produce a high volume
of high-quality goods with some variety
Less space, less inventory, less workers
Incorporated elements of mass production and craft production
Broad approach to JIT manufacturing
o Worker safety
o Product safety
o The environment
o Closing facilities
Chapter 2: Competitiveness, strategic planning, and productivity
Competitiveness: ability and performance of an organization in the marketplace compared to other
organizations that offer similar G&S.
Strategy: long-term plans that determine the direction an organization takes to become competitive
o Strategic planning: managerial processes that determines the strategy for an organization
Key purchasing criteria:
o Price
o Quality
o Flexibility/Variety
o Timeliness
Order qualifiers are those purchasing criteria that customers perceive as minimum standards of
acceptability for purchase
Order winners are those purchasing criteria that cause the organization to be perceived as better
than the competition
The key to successfully competing is *strategic planning*
o Helps build consensus within an
o Mission: where the organization is going
now. Reason for existence.
o Vision: where the organization desired to
be in the future.
o Values: shared beliefs of the
organization’s stakeholders. Drives
everything from culture, to mission,
vision, and strategy.
o While mission/vision provides a general

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