THE ROLE OF OPERATIONS MANAGEMENT

Customer Feedback

THE
TRANSFORMATIO
INPUTS N OUTPUTS
PROCESS

Performance Information
 TYPES OF INPUTS, TRANSFORMATIONS, AND OUTPUTS

INPUTS TRANSFORMATIONS OUTPUTS

Materials Physical Products
Raw Materials Locational Services
Purchased Parts Storage
Supplies Exchange
Energy Informational
People Educational
Workers Attitudinal
Technicians Physiological
Supervisors
Managers
Maintenance
Custodial
Equipment
Land
Buildings
Machines
Tools
Office Equipment
Computers

TRANSFORMATION EXAMPLES:
Physical or Chemical – Manufacturing, chemical processing, oil refining, etc.
Locational – Airline companies, trucking companies, package delivery services.
Storage – Warehousing operations, banks.
Exchange – Wholesale and retail operations.
Informational – T.V. news departments, newspapers, computer information services
Educational – Schools, colleges, universities.
Attitudinal – Entertainment industry, movie companies, theme parks.
Physiological – Hospitals and healthcare institutions.
 BASIC PRODUCTIVITY EQUATION

Value of Output
Productivity =
Value of Input

A fundamental principle of the transformation process is that value should be

added during the transformation process. In that way the value of the output will
exceed the value of the input, and the firm will be profitable. If the value of the
output is less than the value of the input, one will not be in business very long.
 STRATEGIC VS. TACTICAL DECISIONS IN OPERATIONS

Operations Decisions

Strategic Decisions Tactical Decisions

(system design issues) (system operation & control issues)
- Broad in scope - Narrow in scope
- Long-term in nature - Short-term in nature
- All encompasing - Concerning a small group of
issues

Some Examples of Some Examples of

Strategic Decisions Tactical Decisions

Selection of product or service Forecasting

Design of product or service Inventory decisions
Job design Materials acquisition
Capacity decision Labor scheduling
Facility location Production scheduling
Selection of processing equipment Quality control decisions
Physical layout of facility Maintenance decisions
MANUFACTURING AND SERVICE DISTINCTIONS

Nature of output
Customer contact
Storability of output
Transportability of output
Number of outlets
Location of outlets
Size of outlets
Response time
Use of capital and labor
Measurement of quality
Measurement of productivity
CHARACTERISTICS OF MANUFACTURING AND SERVICE ENTITIES

Characteristic Manufacturing Organization Service Organization

Nature of Output Physical, durable product Intangible, perishable service

Customer Contact Low customer contact High customer contact

Storability Output can be inventoried Output cannot be inventoried

Output can be transported
Transportability Output cannot be transported
from one location to another
Number of Outlets Few outlets Many outlets

Location of Outlets Centrally located Geographically dispersed

Size of outlets Large facilities Small facilities

Response Time Long response time Short response time

Use of Capital and Labor Capital intensive Labor intensive

Measurement of Quality Easily measured Difficult to measure

Measurement of Productivity Easily measured Difficult to measure

 DIFFERENT OPERATING SYSTEM CONFIGURATIONS

VOLUME/VARIETY CONTINUUM IN OPERATIONS

High Volume/Low Variety Low Volume/High Variety

-----------------------------------------
continuum-------------------------------------------


Repetitive Operations Intermittent Operations
Line Processes Batch Processes Job-Shop Processes
Continuous Processes Project Processes
 SOME EXAMPLES FOR THE VOLUME/VARIETY CONTINUUM

Repetitive Operations (High Volume, Low Variety side of the continuum)

Line Processes are typified by systems that have discrete units moving through the processing
stages. In manufacturing we think of assembly line operations, where examples would include
such things as automobiles, pencils, toasters, etc. Even some non-manufacturing systems could
have characteristics of a line process (for example, a cafeteria line in a high school).

Continuous Processes differ in that we do not have discrete, individually identifiable items
moving through the processing stages. Instead, we tend to have some amorphous matter moving
through the processing. Examples here would include an oil refinery, a soft drink bottler, a
brewery, or a chemical processing plant.

Intermittent Operations (Low Volume, High Variety side of the continuum)

Job-Shop Processes are typified by systems that handle custom work that requires relatively
small amounts of resources and time. Examples cited in class include machine shops that custom
manufacture metal parts, fabricators of advertising signs and neon signs, and print shops. In the
realm of non-manufacturing, walk-in emergency clinics and insurance claims offices exhibit job
shop tendencies.

Project Processes are typified by systems that handle custom work that requires large (or even
massive!) amounts of resources and time. There are many examples in the area of construction,
such as building bridges, apartment complexes, shopping centers, etc. A non-manufacturing
example would be a team of information systems consultants engaged in the design and
implementation of a new management information system for a hospital.

Operations between Repetitive and Intermittent

Batch Processes are typified by systems that have a moderate number of different outputs and
moderate demand for each. These systems will produce a small run of a particular item (on a
repetitive basis), then switch to a small run of another item, and so on. Examples include
furniture manufacturers and book publishers.
 DIFFERENCES BETWEEN
REPETITIVE AND INTERMITTENT OPERATIONS
Dimension Repetitive Operations
Product variety Low
Product volume High
Degree of standardization High
Organization of resources Line flow to accommodate
processing needs
Path of products through Line flow
facility
(product layout)
Factor driving production Forecast of future demand
(make to stock)
Critical resource Capital intensive operation
(equipment, automation,
technology important)
Type of equipment Specialized
Degree of automation High
Throughput time Shorter
Work-in-process inventory Less
Intermittent Operations
High
Low
Low
Grouped by function
In a varied pattern, depending
on product needs
(process layout)
Customer orders
(make to order)
Labor intensive operation
(worker skills important)
General purpose
Low
Longer
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