CHAPTER 1: INTRODUCTION TO OPERATIONS MANAGEMENT
Operations Management: the management of processes or systems that create goods and or
Process: A series of linked actions, changes, or functions bringing about a result.
Efficiency: operating at minimum cost and time.
Effectiveness: Achieving quality and responsiveness.
Value Added: The difference between the cost of inputs and the value or price of outputs.
Increase production, may be used for R&D, investments and profits.
Lead Time: the time between ordering a good or service and receiving it.
1. Operations: create goods and services
2. Finance: provide funds and the economic analysis of investment proposals
3. Marketing: assess customer wants and needs and communicate them to others
Model: An abstraction of reality; a simplified representation of something.
System: A set of interrelated parts that must work together. •capacity,
Pareto Phenomenon: A few factors that account for a high percentage of results achieved.
• 80/20 Rule - 80% of problems are caused by 20% of the activities.
Craft Production: System in which highly skilled workers use simple, flexible tools to produce
small quantities of customized goods.
Division of Labour: Breaking up a production process into small tasks so that each worker
performs a small portion of the overall job.
Interchangeable Parts: Parts of a product made to such precision that they do not have to be
Mass Production: System in which lower-skilled workers use specialized machinery to produce
high volumes of standardized goods.
Total Quality Management: Involving every employee in a continual effort to improve quality
and satisfy the customers.
Lean Production: System that uses minimal amounts of resources to produce a high volume of
high-quality goods with some variety.
E-commerce: Use of the internet and other electronic networks to buy and sell goods and
Supply Chain: A sequence of activities and organizations involved in producing and delivering a
good or service.
TYPES OF OPERATIONS HISTORICAL EVOLUTION OF OM
EARLIEST INDUSTRIAL HUMAN DECISION JAPANESE
DAYS REVOLUTION RELATIONS MODELS & MANUFACTURES
MOVEMENT COMPUTER (1980+)
Craft Interchangeable Improve Management TQM Revolution
production, no parts ( Eli, Productivity ( Science
economies of Whitney, 1700) Elton Mayo,
Mercantilism Division of Motivational EDI Lean Production
Labour (Adam Theories (
Smith, 1776) Abraham
Scientific Employee ERP
1920s, ( Frederick Solving
Taylor, Frank& (William,
lillian Gilbreth, Ouchi, 1970s)
CHAPTER 2: COMPETITIVNESS, STRATEGIC PLANNING, AND PRODUCTIVITY
Competitiveness: Ability and performance of an organization in the marketplace compared to
other organizations that offer similar goods or services. Strategy: The long-term plans that determine the direction an organization takes to become
Strategic Planning: The managerial process that determines a strategy for the organization.
Key Purchasing Criteria: The major elements influencing a purchase: price, quality, variety, and
Order Qualifiers: Purchasing criteria that customers perceive as minimum standards of
acceptability to be considered for purchase.
Order Winners: Purchasing criteria that cause the organization to be perceived as better than
Businesses Compete Using Operations
1. COST : All other factors being equal, a customer will choose the lowest price
Firms that compete on price alone may settle for lower profit margins
Most firms focus on lowering their costs of delivering goods and/or
services to their customers.
2. QUALITY: Materials, workmanship, design. from an organization’s perspect