Operations Management BU 385

Operations Management
BU 385
Teresa Marcon
LH 2048
ext. 4158
[email protected]
Office hours
Monday 2 3 PM
Thursday 1 2 PM
Or by appointment
Today
Course Overview
Chapter 1 Introduction to Operations
Management
What is this course about?
This course examines the role of the

operations function in the organization
by exploring planning and strategic
issues in managing manufacturing and
service operational systems
In April, Bombardier said it would be unable to meet its

deadline due to a disconnect between the company's
manufacturing plant in Mexico and its assembly plant
in Thunder Bay.
That disconnect included misaligned bolt holes, which

were discovered when the assembly crews in Thunder
Bay started to put together test vehicles.
http://www.cbc.ca/news/canada/kitchener-waterloo/lrt-delayed-until-early-2018-
http://www.forbes.com/sites/grantmartin/2015/08/31/united-airlines-turning-the-
OM in the News
corner-with-friendlier-skies-and-better-flight-management/
From the operational standpoint, the second area on which United is focusing is in the manner in
which it schedules and services its flights. Part of Uniteds operational woes this summer had to
do tight scheduling around airport gates and long turnover times between flights. The result was
aircraft that took off late, missed takeoff and landing slots and arrived at airports where gates
were already allocated. To stem that problem the airline plans to reconfigure its schedule in a way
OM in the News
Shipping volumes were down 4 percent for the year
to date compared to the same period in 2015, with
declines in the chemical, agricultural goods and
industrial goods segments, Union Pacific said.
Coal, meanwhile, fell due to mild weather and high

utility inventories.
Vehicles and related parts was the lone segment to

see an increase compared to 2014 levels, the WorldHeraldreported.
The numbers also hit Union Pacific's financial
results. The second
quarter saw a 7 percent profit
http://www.manufacturing.net/news/2015/09/union
-pacific-workers-furloughed-amid-sluggish-raildecline and Knight
said that the company likely
Why is OM important to you?
OM is one of the major functions of

the organization. It interacts with all
other major functions
We need to understand how goods

and services are provided
A large percentage of a companys

expenses occur in OM area
(improvements = more profits)
A large number of all jobs are in OM

area (purchasing, quality, planning,
scheduling, inventory, etc)
OM Job Titles some examples
Business Process Analyst

Inventory Analyst
Project Coordinator
Unit Supervisor
Supply Chain Analyst
Material Manager
Quality Assurance Specialist
Production Scheduler
Logistics Planner
Course Aims
To understand
the strategic role of operations in the
firm
how the operations function interacts
with other business functions, and
core concepts and decision making tools
used by operations managers
Course Materials
Operations Management 5th

Edited by W. J. Stevenson, Mehran Hojati,
and James Cao (McGraw-Hill) 2015
Onlineaccessprovides
ChapterSupplements
ConnectTMresources
More details on this will be provided next class

Access to Connect document is posted on MLS
Quick overview of BU385
Introduction to Operations Management

(Chapter 1)
Operations Strategy and Competitiveness
(Chapter 2)
Demand Forecasting (Chapter 3)
Product Design (Chapter 4)
Reliability (Chapter 4 Supplement)
Capacity Planning (Chapter 5)
Quality Management (Chapters 9 and 10)
Acceptance Sampling (Chapter 10
Supplement)
Process Design and Facility Layout (Chapter
6)
Evaluation Option 1
Components
Tasks / Deliverables
Weight
Examination
2-sided crib sheet allowed
October 16, 1-3 PM
25%
Examination non-cumulative
November 12, 3:30-5:30 PM
25%
Homework
McGraw-Hill Connect Assignments
15%
Participation
In Class Activities/Quizzes
5%
Final
30%
Mid terms
Evaluation Option 2
Components
Tasks / Deliverables
Weight
Examination
October 16, 1-3 PM
30%
November 12, 3:30-5:30 PM
30%
Participation
In Class Activities/Quizzes
5%
Final
35%
Mid terms
Midterm exams
Two non-cumulative exams

Two-sided 8-inch by 11-inch information
sheet allowed - no restriction on its
contents
Calculator, capable of arithmetic,
exponentiation, and root calculations
required
The midterm and final exams will include
questions that require calculations and
questions that are conceptual/qualitative in
nature
An exam statement will be posted to the
BU385 web site prior to each examination,
explaining in more details what is covered
NO Deferred Midterms Permitted
Students unable to write the midterms

must provide the instructor with
documented evidence of illness, family
emergency or other sufficient reason
If such evidence is provided, the weight
of the missed exam(s) will be added to
that of the final exam
If no such evidence is provided, a grade
of zero will be given for the midterm
Refer to the course outline for more
details
Final exam
The final exam is non-cumulative; however,

the exam will test on some of the materials
from midterm exams
Closed book
You are allowed to bring one double-sided 8inch by 11-inch information sheet with no
restriction on its contents
Bring your own calculators, capable of
arithmetic, exponentiation, and root
calculations
Midterm 2
Final
Midterm 1
Degree of difficulty
Chapter 1 - Introduction
19
What is operations management (OM)?

Three (or more) basic functions within
organizations
The scope of operations management
Differentiating goods and services
Operations managers job
Operations managers and decision
making
The historical evolution of operations
management
Major trends
What is Operations Management?

OM is the management of
activities and resources
that create goods and/or provide services
Companies use OM to improve:
efficiency (minimize cost and time) and

effectiveness (achieving intended goals: quality &
timeliness)
Organizing to Produce Goods and

Services
Essential functions:
1. Marketing generates demand
2. Operations creates the product
3. Finance/accounting tracks how
well the organization is doing,
pays bills, collects the money
+ Human Resources provides
labor, wage and salary
administration and job evaluation
+
Operations Interfaces
Maintenance
Product Design
MIS
Manufacturing
Logistics
Operations
Engineering
Purchasing
Personnel
Accounting
Adding Value
Is operations adding value during the

transformations process?
Operations function
Value Added
Inputs:
Buildings
Outputs:
Transformation/
Labour
Goods
conversion
Machines
Services
Process
Materials
Information
Feedback
Control
Feedback
Feedback
Transformation: Food Processor

Inputs
Raw
Vegetables
Metal
Sheets
Water
Energy
Labour
Building
Equipment
Process
Cleaning
Making
cans
Cutting
Cooking
Packing
Labelling
Output
Canned
vegetables
Transformation: Hospital
Inputs
Process
Output
Doctors
Nurses
Building
Medical
supplies
Equipment
Labs
Examinatio
n
Surgery
Monitoring
Medication
Therapy
Healthy
patients
Goods vs. Services

Differences
Goods
(Produce a car)
Services
(Teach a class)
Output
Tangible
Intangible
Customer contact
Low
High
Uniformity of input High
Low
Labour content
Low
High
Uniformity of
output
High
Low
Measurement of
productivity
Easy
Difficult
Quality assurance
Easy
Difficult
Most systems are a blend of both good & service.

Service sector accounts for > 78% of jobs in Canada
The Scope of Operations

Management
The Scope of OM
Decision area
Basic question
Chapter
Forecasting
What will the demand be?
Product/ service design
What customers want? How to improve products/services?
Capacity
How much capacity will be needed?
Process
What processes should be used?
Layout
What is the best arrangement for the departments?
Design of Work Systems
How to improve work methods?
Quality
How to define quality? How to improve it?
Supply Chain Management
Which supplier to choose?
11
Inventory
How much to order?
12
Aggregate planning
How much capacity will be needed over the medium term?
13
JIT systems
How to coordinate production and purchasing?
15
Scheduling
How to schedule jobs, staff?
16
Which decision is design type and which is planning/control type?
The Operations Managers Job

Managemen
t Process
Field of responsibility
Planning
Capacity, Location, Mix of products and

Services, Make or buy, Projects
Organizing
Degree of Centralization, Specialization,

Subcontracting, Staffing, Suppliers
Controlling
Inventory, Quality, Motivation, Cost,

Productivity
Directing
Scheduling, Incentive Plans, Work

Orders, Job Assignments
Operations Managers and Decision

Making
Models
A model is an abstraction of reality
Quantitative Approaches
Linear
programming (BU275)
Queuing techniques (BU275)
Inventory techniques (BU395)
Project techniques (BU385)
Statistical techniques (BU255)
Analysis of Trade-Offs
Decision on amount of inventory to stock
Increased cost of holding inventory
vs.
Level of customer service
Systems (or Holistic) Approach

The output and the objective of the organization
as a whole takes precedence over those of any
one subsystem
Emphasize interrelations among subsystems
A systems approach is essential whenever something
is being designed, redesigned, implemented, or
improved. It is important to take into account the
impact on all parts of the system
Example: A new feature is added to a product.
Designer must take into account how customers will view the
change, instructions for using new feature, the cost, training of
workers, production schedule, quality standard, advertising
must be informed about the new feature
The whole is greater than the sum of the parts
Establishing Priorities
Pareto Phenomenon
A few factors account for a high percentage of the

occurrence of some event(s)
80/20 Rule - 80% of problems are caused by 20% of the

activities
How do we identify the vital few?
Ethical Issues
http://www.cbc.ca/news/business/general-mills-aims-to-cut-greenhouse-gas-emissions-28-in-10-years-1.3209868
The Historical Evolution of OM
Trends in Business
What did we learn?
Defining OM
Interaction with other functions of the
organization
Two kinds of activities: design decisions and
planning/control decisions
Differences between products and services
What do OM managers do? Plan, organize,
control, and direct
They use models, trade-off analysis, systems
approach, priorities, and ethics in decision
making
Historical evolution of OM
Major trends currently are e-commerce,
technology, globalization, supply chains, and
sustainability
Next Class
Competitiveness, Strategic Planning, and

Productivity
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Operations Management

What is this course about?

This course examines the role of the

In April, Bombardier said it would be unable to meet its

That disconnect included misaligned bolt holes, which

Coal, meanwhile, fell due to mild weather and high

Vehicles and related parts was the lone segment to

Why is OM important to you?

OM is one of the major functions of

We need to understand how goods

A large percentage of a companys

A large number of all jobs are in OM

OM Job Titles some examples

Business Process Analyst

Operations Management 5th

More details on this will be provided next class

Quick overview of BU385

Introduction to Operations Management

McGraw-Hill Connect Assignments

Two non-cumulative exams

NO Deferred Midterms Permitted

Students unable to write the midterms

The final exam is non-cumulative; however,

What is operations management (OM)?

What is Operations Management?

Companies use OM to improve:

efficiency (minimize cost and time) and

Organizing to Produce Goods and

Is operations adding value during the

Transformation: Food Processor

Goods vs. Services

Uniformity of input High

Most systems are a blend of both good & service.

The Scope of Operations

What will the demand be?

Product/ service design

What customers want? How to improve products/services?

How much capacity will be needed?

What processes should be used?

What is the best arrangement for the departments?

Design of Work Systems

How to improve work methods?

How to define quality? How to improve it?

Supply Chain Management

Which supplier to choose?

How much to order?

How much capacity will be needed over the medium term?

How to coordinate production and purchasing?

How to schedule jobs, staff?

Which decision is design type and which is planning/control type?

The Operations Managers Job

Capacity, Location, Mix of products and

Degree of Centralization, Specialization,

Inventory, Quality, Motivation, Cost,

Scheduling, Incentive Plans, Work

Operations Managers and Decision

Decision on amount of inventory to stock

Increased cost of holding inventory