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Course Name: Operations Management

Course code: BUS 3202

Course Teacher: Dr. Md. Miraj Hossen

Associate Professor

Contact: 01911643826, 01817505403

E-mail: miraj.hossen@gmail.com

Reference Books:
1. Operations Management: Krajewski/ Ritzman/
Malhotra
2. Production and Operations Management: William J.
Stevenson
3. Operations and Supply Management: Jacobs, Chase,
and Aquilano
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Welcome to a Session
on
Chapter 01:
Introduction to
Operations Management
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Chapter Contents

• Define Operations Management

• Subject matters of Operations Management
• Different types of operations
• Scope/ areas/ Subject matters of operations management
• Different roles of operations management
• Transformation/ Operations process (Model)
• Manufacturing & service organizations’ process: Differences
• Tasks and responsibilities of an operations manager
• Quality dimensions in service and manufacturing firms
• Value-added concept in operations management
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Defining Operations Management

According to Krajewski, Ritzman, and Malhotra:

• Operations Management the direction and control of the

process that transform inputs into products and services.

• The systematic design, direction, and control of processes

that transform inputs into services and products for internals,
as well as external, customers.

• Processes can be linked together to form a supply chain –

interrelated processes within a firms and across different
firms that produce a service or product to the satisfaction of
the customers
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Operations Management
According to W. J. Stevenson, Operations Management is
the management of systems or processes that create goods
and/or provide services

Organization

Finance Operations Marketing

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Typical Organization Chart

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Areas/ Subject matters of OM

Operations Management includes:

• Product and process design
• Layout and location planning
• Forecasting
• Capacity planning
• Scheduling
• Managing inventories
• Assuring quality
• Motivating employees
• Supply chain strategy
• And more . . .
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Different Types of Operations

Operations Examples
Goods Producing Farming, mining, construction,
manufacturing, power generation
Storage/Transportation Warehousing, trucking, mail
service, moving, taxis, buses,
hotels, airlines
Exchange Retailing, wholesaling, banking,
renting, leasing, library, loans
Entertainment Films, radio and television,
concerts, recording
Communication Newspapers, radio and television
newscasts, telephone, satellites
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Different Roles of Operations Management

1. OM Transforms inputs to outputs

• Inputs are resources such as
• People, Material, and Money
• Outputs are goods and services

2. To add value:
• Increase product value at each stage
• Value added is the net increase between output
product value and input material value

3. Provide an efficient transformation:

• Efficiency – means performing activities well for least
possible cost. 11
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Value-Added
The difference between the cost of inputs and the value or
price of outputs.

Value added
Inputs
Transformation/ Outputs
Land
Conversion Goods
Labor
process Services
Capital
Feedback

Control
Feedback Feedback
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Stage of Production Value Value of

Added Product
Farmer produces and harvests wheat $0.15 $0.15
Wheat transported to mill $0.08 $0.23
Mill produces flour $0.15 $0.38
Flour transported to baker $0.08 $0.46
Baker produces bread $0.54 $1.00
Bread transported to grocery store $0.08 $1.08
Grocery store displays and sells bread $0.21 $1.29
Total Value-Added $1.29
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OM’s Transformation Process

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A Process View of OM
External environment

Internal and external

customers

Inputs Outputs
Processes and
• Workers operations • Goods
• Managers • Services
• Equipment 1 3
• Facilities
5
• Materials
• Land 2 4
• Energy

Information on
performance

Figure: Process View of OM

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OM Process of Food Processor

Inputs Processing Outputs

Raw Vegetables Cleaning Canned
Metal Sheets Making cans vegetables
Water Cutting
Energy Cooking
Labor Packing
Building Labeling
Equipment
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OM Process of Hospital
Inputs Processing Outputs

Doctors, nurses Examination Healthy

Hospital Surgery patients
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy
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Manufacturing or Service Organizations:

Continuum of characteristics of manufacturing and service organizations

More like a More like a

manufacturing service
process process

• Physical, durable output • Intangible, perishable output

• Output can be inventoried • Output cannot be inventoried
• Low customer contact • High customer contact
• Long response time • Short response time
• Capital intensive • Labor intensive
• Quality easily measured • Quality not easily measured

Figure 1.3
Copyright © 2010 Pearson Education,
Inc. Publishing as Prentice Hall.
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Manufacturing Vs. Service Firms: Key Differences

• Customer contact
• Uniformity of input
• Labor content
• Uniformity of output
• Measurement of productivity
• Quality assurance

These differences are beginning to fade

in many cases
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Manufacturing Vs. Service

Characteristic Manufacturing Service

Output Tangible Intangible
Customer contact Low High
Uniformity of input High Low
Labor content Low High
Uniformity of output High Low
Measurement of productivity Easy Difficult
Opportunity to correct High Low
quality problems
High
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Major Tasks and Responsibilities of Operations

Managers

Major Tasks:
 Quality Production
 Timely Production
 Cost-effective Production

Major Responsibilities:
 Planning
 Organizing
 Staffing
 Directing
 Controlling
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Major Responsibilities of Operations Management

Planning Organizing
– Capacity – Degree of centralization
– Location – Subcontracting
– Products & services Staffing
– Make or buy – Hiring/laying off
– Layout – Use of Overtime
– Projects Directing
– Scheduling – Incentive plans
Controlling – Issuance of work orders
– Inventory – Job assignments
– Quality
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Pareto Phenomenon

• A vital few things are important for reaching

an objective or solving a problem.
• 80/20 Rule - 80% of problems are caused by
20% of the activities.

How do we identify the vital few?

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Recent Trends and Continuing Trends

Recent Trends:
 The Internet
 E-Business
 Supply Chain Management

Continuing Trends
• Quality and process improvement
• Technology
• Globalization
• Operations strategy
• Environmental issues
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Important Quality Dimensions in Manufacturing

Industry:

• Performance
• Features
• Reliability
• Conformance
• Durability
• Serviceability
• Aesthetics
• Perceived Quality
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• Dimension 1: Performance
• Does the product or service do what it is supposed to do, within
its defined tolerances?
• Performance is often a source of contention between customers
and suppliers, particularly when deliverables are not adequately
defined within specifications.
• The performance of a product often influences profitability or
reputation of the end-user. As such, many contracts or
specifications include damages related to inadequate
performance.

• Dimension 2: Features
• Does the product or services possess all of the features specified,
or required for its intended purpose?
• While this dimension may seem obvious, performance
specifications rarely define the features required in a product.
Thus, it’s important that suppliers designing product or services
from performance specifications are familiar with its intended
uses, and maintain close relationships with the end-users.
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Dimension 3: Reliability
 Will the product consistently perform within specifications?
 Reliability may be closely related to performance. For
instance, a product specification may define parameters for
up-time, or acceptable failure rates.
 Reliability is a major contributor to brand or company image,
and is considered a fundamental dimension of quality by
most end-users.

Dimension 4: Conformance
 Does the product or service conform to the specification?
 If it’s developed based on a performance specification,
does it perform as specified? If it’s developed based on a
design specification, does it possess all of the features
defined?
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Dimension 5: Durability
 How long will the product perform or last, and under what
conditions?
 Durability is closely related to warranty. Requirements for
product durability are often included within procurement
contracts and specifications.
 For instance, fighter aircraft procured to operate from aircraft
carriers include design criteria intended to improve their
durability in the demanding naval environment.

Dimension 6: Serviceability
 Is the product relatively easy to maintain and repair?
 As end users become more focused on Total Cost of
Ownership than simple procurement costs, serviceability (as
well as reliability) is becoming an increasingly important
dimension of quality and criteria for product selection.
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Dimension 7: Aesthetics
 The way a product looks is important to end-users. The
aesthetic properties of a product contribute to a company’s or
brand’s identity. Faults or defects in a product that diminish its
aesthetic properties, even those that do not reduce or alter
other dimensions of quality, are often cause for rejection.

Dimension 8: Perception
 Perception is reality. The product or service may possess
adequate or even superior dimensions of quality, but still fall
victim to negative customer or public perceptions.
 As an example, a high quality product may get the reputation
for being low quality based on poor service by installation or
field technicians. If the product is not installed or maintained
properly, and fails as a result, the failure is often associated
with the product’s quality rather than the quality of the service
it receives.
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Important Quality Dimensions in Servicing

 Time: How long must a customer wait?
 Timeliness: Will a package be delivered by 10:30 the
next morning?
 Completeness: Are all items in the order included?
 Courtesy: Do front-line employees greet each
customer cheerfully?
 Consistency: Are services delivered in the same
fashion for every customer?
 Accessibility and convenience: Is the service easy to
obtain?
 Accuracy: Is the service performed right the first time?
 Responsiveness: Can service personnel react quickly
and resolve unexpected problems?
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Exciter, Satisfier, Dissatisfier regarding Products/

Services:
• An exciter is something that a company does that leaves their
customer not just satisfied, but a raving fan! The customer is
left with an extremely positive impression and feels the need to
share their great experience with their friends and family.
• They are providing this positive feedback without being
prompted by the company to do so. In a world where word of
mouth referrals drive business more than media advertising,
this is huge!

• These are "front of the box" features that typically set your
product apart from the competition. They're typically hard to
discover or require unique assets.
• Exciters are also features that get your development team
excited to work on ‘something cool’ and keep team moral high.
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Exciter, Satisfier, Dissatisfier…….

• A satisfier is something that a company does that leaves their
customer satisfied and happy, but not necessarily with any certain
"wow" factor. An example of this would be arriving to a clean hotel
room with good customer service, but nothing beyond that. The
customer leaves with positive thoughts in their mind and if asked,
would give the hotel a good review.

• Dissatisfiers are features customer just expect to be there, or

defects where the product is designed to perform a task that it
doesn't (a bug).
• A dissatisfier turn a client or candidate away and send them out into
the marketplace with a negative impression of the company.
• An example would be a hotel giving someone a room that had
barely been cleaned and providing below average customer
service. The person going through that experience would be certain
to leave with a negative thought in their mind and to share that
thought with their friends and family.
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Product Life Cycle in OM

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Product Life Cycle

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Thank you

Any Questions?