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Lecture Outline
What Do Operations Managers Do? Operations Function Evolution of Operations Management Operations Management and Ebusiness Globalization and Competitiveness Primary Topics in Operations Management Learning Objectives for this Course
Copyright 2006 John Wiley & Sons, Inc. 1-2
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Transformation Process
Physical: as in manufacturing operations Locational: as in transportation operations Exchange: as in retail operations Physiological: as in health care Psychological: as in entertainment Informational: as in communication
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TRANSFORMATION PROCESS
Feedback
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Operations Function
Operations Marketing Finance and Accounting Human Resources Outside Suppliers
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Finance
process of handcrafting products or services for individual customers dividing a job into a series of small tasks each performed by a different worker standardization of parts initially as replacement parts; enabled mass production
Division of labor
Interchangeable parts
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Mass production
Lean production
Events/Concepts
Steam engine Division of labor Interchangeable parts Principles of scientific management
Dates
1769 1776 1790
Originator
James Watt
1911
1911 1912 1913
Time and motion studies Scientific Management Activity scheduling chart Moving assembly line
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Events/Concepts
Hawthorne studies Motivation theories
Dates
1930 1940s 1950s 1960s 1947 1951 1950s 1960s, 1970s
Originator
Elton Mayo Abraham Maslow Frederick Herzberg Douglas McGregor George Dantzig Remington Rand Operations research groups Joseph Orlicky, IBM and others
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Operations Research
Linear programming Digital computer Simulation, waiting line theory, decision theory, PERT/CPM
MRP, EDI, EFT, CIM
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Events/Concepts
WTO, European Union, and other trade agreements Internet, WWW, ERP, supply chain management
Dates Originator
1990s 2000s 1990s Numerous countries and companies ARPANET, Tim Berners-Lee SAP, i2 Technologies, ORACLE, PeopleSoft Amazon, Yahoo, eBay, and others
Internet Revolution
E-commerce
2000s
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Source: Adapted from Earl W. Sasser, R. P. Olsen, and D. Daryl Wyckoff, Management of Service Operations (Boston: Allyn Bacon, 1978), p.11. Copyright 2006 John Wiley & Sons, Inc. 1-15
B2B Commerceone.com
B2C Amazon.com
Consumer
C2B redbus
C2C eBay.com
Categories of E-Commerce
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Customer
Manufacturer
Supplier
Impact on Operations
Customer expectations escalate; quality must be maintained and costs lowered No more guessing about demand is necessary; inventory costs go down; product and service design improves; build to-order products and services is made possible Transaction costs are lower; customer support costs decrease; e-procurement saves big bucks
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Logistics change from delivering to a store or distribution center to delivering to individual homes; consumer demand is more erratic and unpredictable than business demand Outsourcing increases; more alliances and partnerships among firms are formed; supply is less certain; global supply chain issues arise
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USA: $21.33
Taiwan: $5.41
Mexico: $2.38
Hourly Wage Rates for Selected Countries Source: International Comparisons of Hourly Compensation Costs for Production Workers in Manufacturing, Bureau of Labor Statistics, U.S. Department of Labor, Updated September 30, 2003.
China: $0.50
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Trade with China: Percent of each countrys trade Source: Share of China in Exports and Imports of Major Traders, 2000 and 2002, International Trade Statistics 2003, World Trade Organization, www.wto.org
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Risks of Globalization
Cultural differences Supply chain logistics Safety, security, and stability Quality problems Corporate image Loss of capabilities
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degree to which a nation can produce goods and services that meet the test of international markets
ratio of output to input sales made, products produced, customers served, meals delivered, or calls answered labor hours, investment in equipment, material usage, or square footage
Productivity
Output
Input
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Measures of Productivity
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Source: International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends, 2002, Bureau of Labor Statistics, U.S. Department of Labor, September 2003. U.S. figures for 2002 2003 from Major Sector Productivity and Costs Index, Bureau of Labor Statistics, U.S. Department of Labor, March 2004
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Productivity Increase
Become efficient
output increases with little or no increase in input both output and input grow with output growing more rapidly output increases while input decreases output remains the same and input is reduced both output and input decrease, with input decreasing at a faster rate
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Expand
Achieve breakthroughs
Downsize
Retrench
More Efficient
Retrench
Productivity as a Function of Inputs and Outputs, 20012002 Source: International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends, 2002, Bureau of Labor Statistics, U.S. Department of Labor, September 2003
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Source: Global Competitiveness Report 20032004, World Economic Forum, January 2004, www.weforum.org
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Facility Location
Process Design & choice of technologies
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Capacity Planning
Materials mgt & Inventory control Distribution & Logistics Quality Assurance & control
How much inventory of each item should be carried? How should outputs be delivered to customers? How is quality defined? What is the acceptable quality level of inputs & outputs? How is this measured
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Copyright 2006 John Wiley & Sons, Inc. All rights reserved. Reproduction or translation of this work beyond that permitted in section 117 of the 1976 United States Copyright Act without express permission of the copyright owner is unlawful. Request for further information should be addressed to the Permission Department, John Wiley & Sons, Inc. The purchaser may make back-up copies for his/her own use only and not for distribution or resale. The Publisher assumes no responsibility for errors, omissions, or damages caused by the use of these programs or from the use of the information herein. Copyright 2006 John Wiley & Sons, Inc. 1-39