Chapter 1: Intro to Operation Management
Operations management: the management of processes or systems that create goods and/or provide services.
Forecasting: forecasting the demand for flights and the growth in the industry
Capacity planning: the number of planes to use
Scheduling: of planes for flights, maintenance..
Managing inventories: of food beverages, spare parts
Assuring quality: with reservations, safety and in-flight service.
Employee motivation and training: in all phases
Location of facilities: where to provide service and maintenance etc
Buying materials: fuel, food bags, spare parts etc
A large percentage of a company’s expenses occur in OM area
(OM is such a costly part of any organization)
Value added: difference between the cost of inputs and the value or
price of outputs.
Lead time: the time between ordering a good and receiving it.
Marketing obtains this info from operations.
Marketing, finance, design, manufacturing engineering,
personnel/human resources, accounting..
Creation of goods and services involves designing and operating the
– Designing decisions (capacity, location, equipment)
– Operating decisions
System design (system capacity, location of facilities, arrangement of departments, placement of equipment, product
and service planning, inventory planning and control etc )is the most important because many of the parameters of the
system operation are decided by design, costs, space, capacities and quality are directly affected by design decisions.
A number of features differentiate operations systems
– Degree of product standardization
Standardized: high degree of uniformity, radios, tvs cars etc or automatic car washes, fast food
Customized: good designed for a specific case, eye glasses, custom fitted c