OPERATIONS MANAGEMENT

DR. ROWEL E. ANTONIO

School of Accountancy & Management
Graduate School
INTRODUCTION TO OPERATIONS MANAGEMENT

GENERAL APPROACHES TO DECISION MAKING

QUANTITATIVE APPROACHES (Mathematical)

Developed in WW II
To handle complex military logistics problems

Linear Programming
-(optimum allocation of scarce resources)

Queuing Techniques
-useful for analyzing situations in which
waiting lines form.
INTRODUCTION TO OPERATIONS MANAGEMENT
Inventory Models
(used to control inventory)

Project Models
PERT (Program Evaluation and
Review technique)
CPM (Critical Path Method)

Forecasting Technique are widely used

in planning and scheduling.

Statistical Models currently used in many

areas of decision making.
INTRODUCTION TO OPERATIONS MANAGEMENT

ANALYSIS OF TRADE-OFFS
(Advantages and disadvantages or pros and cons)

SYSTEM APPROACH

System is a set of interrelated parts that

must work together.

It emphasizes interrelationships among

subsystems, but its main theme is that
the WHOLE is greater than the sum of
its individual parts.

.
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The output and objectives of the organization

as a whole take precedence over those of
any one subsystem.

It is important if something is being:

• Designed
• Redesigned
• Implemented
• Improved
• Changed
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ESTABLISHING PRIORITIES

Enables the managers to direct their

efforts to where they will do the most
good to avoid wasting time and energy
on insignificant elements.
Recognition of priorities means devoting more
attention to what is more important.

PARETO PHENOMENON

It means that all things are not equal; some things will be
very important for achieving an objective or solving a problem,
and other things will not
INTRODUCTION TO OPERATIONS MANAGEMENT

ETHICAL ISSUES IN OPERATIONS MANAGEMENT

Operations Manager have the responsibility to make ethical decisions.

Ethical issues arise in many aspects of Operations Management

including:

Worker safety
 provide adequate training
 maintaining equipment in good working condition
 maintaining a safe working environment
INTRODUCTION TO OPERATIONS MANAGEMENT

Product Safety
 providing products that minimize the risk of injury to
users or damage to property or the environment.
Quality
 honoring warranties
 avoiding hidden defects

The Environment
 obeying government regulations

The Community
 being a good neighbor
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Hiring and Firing Workers

 don’t hire under false pretenses
( promising a long-term job when that is not
what is intended).

Closing Facilities
 taking into account the impact on a community, and honoring
commitments that have been made.

Workers’ Rights
 respecting workers’ rights, dealing with worker problems
quickly and fairly.

•
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RECENT TRENDS
They currently command considerable attention in
business, as they heavily influence planning and
decision making.

1. GLOBAL MARKET PLACE

Markets and companies are becoming global in nature.

Cross-border transactions.

Transnational corporations.
INTRODUCTION TO OPERATIONS MANAGEMENT

The North American Free Trade Agreement

(NAFTA)

General Agreement on tariffs and Trade

(GATT)
Among many others......

They have agreed to open their economies, reduce

tariffs and subsidies and expand intellectual protection.
INTRODUCTION TO OPERATIONS MANAGEMENT

2. OPERATIONS STRATEGY

Companies neglected to include in the Corporate Strategy

and some of them paid dearly for that neglect.

Many companies are recognizing the importance of

Operations Strategy on the overall success of their
business, and necessity for relating it to their overall
business strategy.
INTRODUCTION TO OPERATIONS MANAGEMENT

3. QUALITY MANAGEMENT

A never ending quest to improve the quality of goods and

services.

Key Features:

•Team Approach
•Finding and Eliminating Problems
•Emphasizes on serving the customer
•Continuously working to improve the system
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4. FLEXIBILITY

The ability to adapt quickly to change.

Changes in:

•volume of demand
•mix of products demanded
•product design

In manufacturing, AGILE Manufacturing is sometimes used

to connote flexibility.
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5. TIME REDUCTION
Efforts on reducing the time needed to accomplish various tasks in order to gain a
competitive edge.

Time reductions are being achieved in processing, information retrieval, product

design, and the response to customer complaints.

6. TECHNOLOGY

Technology advances have led to a vast array of new products and processes.

The computer has had and will continue to have the greatest impact on business
organizations.
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7. WORKER INVOLVEMENT

Pushing the responsibility for decision making problem

solving to lower levels in the organization.

Recognition of the knowledge workers posses about the

production process and the contributions they can make to
improving the production system.

The use of teams and make decisions on a consensus

basis.
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8. REENGINEERING

A fundamental rethinking and radical redesign of business

process to achieve dramatic improvements in critical
measures of performance such as cost, service, and speed.

It means starting over, asking why a company does things

the way it does, and questioning basic rules and
assumptions.
INTRODUCTION TO OPERATIONS MANAGEMENT
9. ENVIRONMENTAL ISSUES

Pollution control and waste disposal are key issues

managers must contend with.

Increasing emphasis on:

• reducing waste
• using less toxic chemicals
• making it easier for consumers to recycle products
• and designing products and parts that can be used.
• " Environmentally responsible manufacturing".
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10. DOWNSIZING

Squeezing by competition, lagging productivity,

stockholders calling for improved profits and share prices,
many corporations have responded by REDUCING THEIR
LABOR FORCES.

This has meant that operations managers often have to

find ways to produce more with fewer workers.
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11. SUPPLY-CHAIN MANAGEMENT

Organizations are increasing their attention to managing the supply

chain from suppliers and buyers of raw materials all the way to final
customers.
"Make or buy decisions"
Backward and Forward Integration
Outsourcing

12. LEAN PRODUCTION

System that uses minimal amounts of resources to produce a
high volume of high quality goods with some variety.
INTRODUCTION TO OPERATIONS MANAGEMENT
THE HISTORICAL EVOLUTION OF OPERATIONS MANAGEMENT

•THE INDUSTRIAL REVOLUTION ERA

- The “rise of the machines”

- The IR began in the 1770’s in England and spread to the rest of
Europe and the United States in the 19th century.
- During the early days of manufacturing, goods were produced
using craft production, where highly-skilled workers used simple
tools to produce goods according to customer specifications.

- Noteworthy inventors during the IR era were:

• James Watt (1764) – steam engine

• James Hargreave (1770) – spinning jenny
• Edmund Cartwright (1785) – power loom
INTRODUCTION TO OPERATIONS MANAGEMENT
THE SCIENTIFIC MANAGEMENT ERA

-The main thought of scientific management was that there was “one best
way to do work”.

-Noteworthy theorists during the scientific management period were:

– Frederick Taylor – the “father of scientific management”, the
“father of the stopwatch time study”, and the “father of the
piece-rate system”
– Frank Gilbreth – the “father of the motion study”
– Henry Gantt – developed a widely used scheduling chart called
the Gantt chart.
– Harrington Emerson – encouraged the use of experts to
improve organizational efficiency, which brought about the
functional organization that we know today.
– Henry Ford – the great industrialist, who was not a theorist but
he applied the principles of scientific management in his
factories.
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THE HUMAN RELATIONS MOVEMENT

- The focus of the HR movement was the human factor at work.

- The movement started with the Hawthorne Experiments
conducted by Elton Mayo and his Harvard associates.

Some of the other notable theorists during the HR movement were:

• Lillian Gilbreth – worker fatigue
• Abraham Maslow – Hierarchy of Needs
• Frederick Hertzberg – Motivation-Maintenance
• Douglas McGregor – Theory X and Theory Y
• William Ouchi – Theory Z
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DECISION MODELS AND MANAGEMENT SCIENCE OR THE

QUANTITATIVE SCHOOL

- The main focus of this period were the quantitative techniques

that aid managers in making intelligent decisions for the company.

Some people who contributed theories and principles during this

time were:
• F.W. Harris – a mathematical formula for inventory
management
• Dodge, Romig and Shewhart – developed statistical
procedures for sampling and quality control.
• Tippett – conducted studies that provided the groundwork for
statistical-sampling theory.
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THE INFLUENCE OF THE JAPANESE MANUFACTURERS OR

THE QUALITY REVOLUTION

– A number of Japanese manufacturers have developed or

refined management practices that have increased the
productivity of their operations and the quality of their
products.

Notable contributions during this period were from:

• W. Edwards Deming – the Deming Prize
• Joseph Juran – Quality Control Handbook
• Armand Feigenbaum – Total Quality Control
• Philip Crosby – “Do it right the first time.”
• Kaoru Ishikawa – the fishbone diagram
INTRODUCTION TO OPERATIONS MANAGEMENT
After introducing the coverage of OM, what then is the main
goal of an OM system?

– The main goal of OM is to produce PRODUCT/SERVICE

with the RIGHT QUALITY, at the RIGHT QUANTITY, at the
RIGHT TIME, at the RIGHT PLACE and at the LEAST
COST to the company.

– To achieve this goal, we shall discuss the components

of the goal during the semester as follows:

• RIGHT QUALITY- Chapter 2 (Productivity,

Competitiveness and Strategy) Chapter 4 (Product
and Service) Chapter 7 ( Design of Work System)
Chapter 9 (Management of Quality) Chapter 10
( Quality Control)
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RIGHT QUANTITY- Chapter 3 ( Forecasting)

RIGHT PLACE- Location Decision and Analysis

RIGHT TIME – Chapter 16 (Scheduling)

LEAST COST – Chapter 12 (Inventory

Management) and Chapter 14 (MRP and ERP)