Introduction to

Operations
Management
Decision Sciences and
Innovation
Mentor: Mr. Melvin V. Moraga

Attempt great things.

Short Essay

Write a one-page essay sharing your key takeaways about the past and current field of operations.
This exercise aims to reflect upon and appreciate the applications of operations management in
real life.
https://hbr.org/2015/06/the-history-and-future-of-operationsLinks to an external site.

Reading List: Choose either of the articles and share at least three key takeaways

Five Decades of Operations Management and the Prospects Ahead

https://www.researchgate.net/publication/220534595_Five_Decades_of_Operations_Management_
and_the_Prospects_Ahead

Covid-19 Outcomes of Supply Chain

file:///C:/Users/melvn/Downloads/Chowdhury2020_Article_ACaseStudyOnStrategiesToDealWi.pdf
 Application Based
Case Problem & Activity, 10%
Presentation, 15%

Individual
Assignment, 10%
Peer Evaluation,
5%

Grading
Group Term Quizzes, 20%,
System
Project, 20% 20%

Final Exam
(Departmental),
20%
Roadmap

Understand Comparing
Link of OM to
the nature manufacturing
and scope of other areas in
and service
Operations business
operations

Explore the Examine

evolution of decision Describe the
operations making operations
function and the
management Approaches role of operations
managers
… responsible for producing
goods and services.

physical
items

activities
… concerned with producing goods
and services.

Involves managing systems or

processes that create goods and
services
Three Basic Functions
Essence of
Operations

• Engine is the
core of what a car
does

• Operations is the
heart of what a
company does
Operations Link
 • Supply chain involves a sequence of activities and
Link of Operations organizations involved in producing and delivering a
good or service.
and Supply Chain • Supply chains are both external and internal to the
organization.
Supply and Demand
Operations &
Sales & Marketing
Supply Chains

Wasteful
Supply
> Demand Costly

Opportunity Loss
Supply
< Demand Customer
Dissatisfaction

Supply
= Demand Ideal
Operations Key Role: Value Creation

Feedback = measurements taken at various points in the transformation process

Control = comparison of feedback against previously established standards to determine if corrective
action is needed
Why Value Creation is the Foundation of Business: How to
define it, measure it, and manage it

https://medium.com/evergreen-business-weekly/why-value-
creation-is-the-foundation-of-business-how-to-define-it-
measure-it-and-manage-it-147c92b87aca
 Decision Making

Food Processing
Inputs Processing Outputs
Raw Vegetables Cleaning Canned
Metal Sheets Making cans vegetables
Water Cutting
Energy Cooking
Labor Packing
Building Labeling
Equipment
 Decision Making

Hospital Operation
Inputs Processing Outputs

Doctors, nurses Examination Healthy

Hospital Surgery patients
Medical Supplies Monitoring
Equipment Medication
Laboratories Therapy
 Decision Making

ACTIVITY
Describe the inputs, transformation
process as well as outputs required
for the following operations…

Airline Bank Restaurant

 Decision Making

Goods-Services Continuum
Automobile
Computer
Installed carpeting
Fast-food meal
Restaurant meal/auto repair
Hospital care
Advertising agency/
investment management
Consulting service/
teaching
Counseling
100% 75 50 25 0 25 50 75 100%
| | | | | | | | |

Percent of Product that is a Good Percent of Product that is a Service

Key Factors in Designing
and Managing of
operations systems

• Degree of customer’s
involvement

• Degree of technology
used
How Amazon Automated Work and Put Its People to Better Use
https://hbr.org/2020/09/how-amazon-automated-work-and-put-its-people-to-better-use
 Decision Making

Manufacturing & Service

Key Differences

Degree of Labor contents Uniformity of Measurement of

customer contact inputs productivity
 Decision Making

Manufacturing & Service

Key Differences – cont.

Quality Amount of
assurance inventory
 Decision Making

Manufacturing vs Service

Why is it important to recognize the difference between managing

manufacturing and service operations?
Process Management
Process - one or more actions that transform inputs into outputs

Three Categories of Business Processes:

Upper-management These govern the operation of the

processes entire organization.

Operational processes These are core processes that make up

the value stream.

Supporting processes These support the core processes.

Scope of Operations Management
The scope of operations management ranges across the organization.

The operations function includes many interrelated activities such as:

▪ Forecasting
▪ Capacity planning ▪ Scheduling
▪ Facilities and layout ▪ Managing inventories
▪ Assuring quality ▪ Motivating employees
▪ Facility location
▪ and more …
 Decision Making
Role of Operations Manager
The Operations function consists of all activities directly
related to producing goods or providing services.

… guide the system

by decision making
Decision Making
 Decision Making

System capacity location

Design arrangement of
These are typically strategic departments
decisions that usually require long-
term commitment of resources
determine parameters of system product and service
operation
planning

acquisition and
placement of equipment
 Decision Making
Personnel
management

Inventory
System
planning &
control Operation
Tactical and operations
scheduling decisions

Quality
Operations managers spend
control more time on system operation
decision than any other decision
area
 Decision Making
Key Decisions of Operations Managers

What?
When?
Where?
How?
Who?
 Decision Making
Key Decisions of Operations Managers

What: What resources are needed, and in what

amounts?
When: When will each resource be needed? When
should the work be scheduled? When should
materials and other supplies be ordered?
Where: Where will the work be done?
How: How will he product or service be designed?
How will the work be done? How will resources be
allocated?
Who: Who will do the work?
 Decision Making
Decision Making Approaches

Metrics &
Trade-offs
Systems
Quantitative
Approach

Models
Decision Establishing
Making Priorities
 Decision Making
Use of Models

Modeling is a key tool used by all decision makers

Model - an abstraction of reality; a simplification of something.

Common features of models:

• They are simplifications of real-life phenomena
• They omit unimportant details of the real-life systems they mimic so that
attention can be focused on the most important aspects of the real-life
system
 – Linear Programming
Quantitative
Approaches – Queuing Techniques
An approach to obtain
mathematically optimal
solutions to problem solving
– Inventory Models

– Forecasting Models

– Project Models
Metrics and Trade-Offs
Performance metrics
◦ Use of metrics to manage and control operations
◦ Profits
◦ Costs
◦ Quality

Analysis of trade-offs
◦ A trade-off is giving up one thing in return for something
else
◦ Carrying more inventory (an expense) in order to achieve a
greater level of customer service
Systems
Approach
System: a set of interrelated
parts that must work together
◦ Emphasizes
interrelationships among
subsystems
◦ Main theme is that the whole
is greater than the sum of its
parts
◦ The output and objectives of
the organization take
precedence over those of any
one subsystem
Establishing
Priorities
Recognizing this allows managers
to focus their attention to those
efforts that will do the most good
◦ Pareto Phenomenon - a few
factors account for a high
percentage of occurrence of
some event(s)
◦ The critical few factors
should receive the highest
priority
Evolution of
Operations
Management
Industrial
Revolution
Pre-Industrial Revolution
◦ Craft production - System in which highly skilled workers
use simple, flexible tools to produce small quantities of
customized goods

Some key elements of the industrial revolution

◦ Began in England in the 1770s
◦ Division of labor - Adam Smith, 1776
◦ Application of the “rotative” steam engine, 1780s
◦ Cotton gin and interchangeable parts - Eli Whitney, 1792

Management theory and practice did not advance appreciably

during this period
Scientific Management
• Movement was led by efficiency engineer, Frederick
Winslow Taylor
• Believed in a “science of management” based on
observation, measurement, analysis and improvement
of work methods, and economic incentives
• Management is responsible for planning, carefully
selecting and training workers, finding the best way to
perform each job, achieving cooperation between
management and workers, and separating management
activities from work activities
• Emphasis was on maximizing output
Scientific Management Movement– cont.

→ Mass production
→ Interchangeable parts
→ Division of labor
Human Relations
Management
emphasizes the importance of
the human element in job design
• Lillian Gilbreth – applications of
psychology
• Elton Mayo – Hawthorne studies
on worker motivation, 1930
• Abraham Maslow – motivation
theory, 1940s; hierarchy of
needs, 1954
• Frederick Hertzberg – Two Factor
Theory, 1959
• Douglas McGregor – Theory X
and Theory Y, 1960s
• William Ouchi – Theory Z, 1981
 Decision models &
Management Science
• F.W. Harris – mathematical model for inventory
management, 1915

• Dodge, Romig, and Shewart – statistical procedures for

sampling and quality control, 1930s

• Tippett – statistical sampling theory, 1935

• Operations Research (OR) Groups – OR applications in

warfare

• George Dantzig – linear programming, 1947

Influence of Japanese
Manufacturers
• Refined and developed
management practices that
increased productivity
• Credited with fueling the “quality
revolution”
• Just-in-Time production
Key Developments
APPROXIMATE CONTRIBUTION/
YEAR CONCEPT ORIGINATOR

1776 Division of labor Adam Smith

1790 Interchangeable parts Eli Whitney
1911 Principles of Scientific Management Frederick W. Taylor
1911 Motion Study, use of industrial psychology Frank and Lilian Gilbreth
1912 Chart of scheduling activities Henry Gantt
1913 Moving assembly line Henry Ford
1915 Mathematical model for inventory ordering F. W. Harris
1930 Hawthorne studies of worker motivation Elton Mayo
1935 Statistical procedure for statistical sampling and quality H.F. Dodge, H.G. Romig, W.
control Shewhart
1940 Operations research applications in warfare Operations research group
Key Developments

Approximate Contribution/ Originator

Year Concept

1947 Linear Programming George Dantzig

1951 Commercial digital computers Sperry UNIVAC, IBM
1951 Automation Numerous
1960s Extensive development of quantitative tools Numerous
1960s Industrial dynamics Jay Forrester
1975 Emphasis on manufacturing strategy W. Skinner
1980s Emphasis on flexibility, time-based competition, lean T. Ohno, S. Shingo, Toyota
production
1980s Emphasis on quality Deming, Juran, Ishikawa
1990s Internet, supply chain management Numerous
Conceptual-based
Exercise
Conceptual-based Quiz 1

It is the difference between the cost of

input and cost or price of output.
Conceptual-based Question 2

Give one information that

marketing and operation share
with each other. Decision?
Conceptual-based Question 3

A system of production in which highly

skilled workers use simple, flexible tools to
produce small quantities of customized
goods
Conceptual-based Question 4

What era in the history of

operations management that
stresses maximization of
output?
Conceptual-based Question 5

Carrying more inventory in

order to achieve a greater
level of customer service is
what type of decision
approach?
A FINAL
WORD