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Summary Operations Management
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Summary of Operations Management for BA3 Business Economics at the VUB.
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OPERATIONS MANAGEMENTBUSINESS ECONOMICS III, SEMESTER I
- Chapter 1: Basics of Operations Management p. 1
- Chapter 2: Strategy and Productivity p. 19
- Chapter 3: Product and Process Design p. 29
- Chapter 4: Global Supply Chain Management p. 43
- Chapter 8: Forecasting p. 59
- Chapter 12: Inventory Management Policies p. 75
- Chapter 13: Sales and Operations Planning p. 95
- Chapter 14: Materials Planning p. 113
- Chapter 5: Managing Quality p. 133
- Chapter 6: Quality Control and Six Sigma p. 151
- Chapter 7: Lean Systems p. 175
- Chapter 10: Layout Planning p. 189
- Chapter 15: Operations Scheduling p. 201
- Chapter 9: Capacity and Locations Decisions p. 209
- Separate Chapter: Logistics p. 231
p. 245
DO NOT FORGET THE GUESTLECTURES!
, OPERATIONS MANAGEMENT BUSINESS ECONOMICS III
INTERNATIONAL BUSINESS
Operations Management:
Practical information:
- Module 1: Theory and exercises:
o Lectures and guest speakers + exercise sessions
- Textbook operations Management: An integrated Approach by Read and Sanders (5th edition)
CHAPTER 1: Basics of Operations Management p. 2-26
Learning objectives:
1. Define operations management
2. Explain the role of operations management in business
3. Describe decisions hat operations managers make
4. Describe the differences between service and manufacturing operations
5. Identify major historical developments in operations management
6. Identify current trends in operations management
7. Describe the flow of information between operations management and other business
functions.
Creating value:
The company creates value
through those steps and creates a
margin (profit) à the consumer is
willing to pay more for a finish
good than for all the primary
goods separately
Ex.: a consumer wants a driving
car, not all parts of the car
Value Chain of Porter, based on value proposition: separately
- Inbound Logistics:
o How can we assure that we have the right materials how can we make sure that we
3 main subjects of
have these on time?
this course
§ Ex.: An orange juice manufacturer needs to make sure to have oranges and
bottles.
- Operations:
o How are we going to ensure that our final products will be ready on time?
§ Ex.: The oranges are pressed and bottled into fresh orange juice
- Outbound Logistics:
o How can we make sure that our finished products reaches the consumers?
- Marketing and sales:
o Promotions, advertisements etc. à beyond this course
1
,OPERATIONS MANAGEMENT BUSINESS ECONOMICS III
INTERNATIONAL BUSINESS
What is Operations Management?
- Every business is managed through 3 major function: finance, marketing and operations
management.
The figure illustrated this by showing that the vice presidents of each of these functions report directly to the
president or CEO of the company.
- Finance is the function responsible for managing cash flow, current assets, and capital
investments.
- Marketing is responsible for sales, generating customer demand, and understanding
customer want and needs.
- Operations management is the business function that plans, organizes, coordinates, and
controls the resources needed to produce a company’s goods and services.
Operations Management (OM) = the business function responsible for planning, coordinating, and controlling the
resources needed to produce a company’s goods and services.
o It is a management function.
§ It evolves managing people, equipment, technology, information, and many
other resources.
o It is the central core business function of every company
§ All the other organizational functions are there primarily to support the
operations function.
• Without operations, there would be no goods or services to sell. The
marketing function provides promotions for the merchandise, and
the finance function provides the needed capital. The operations
function, however, plans and coordinates all the resources needed to
design, produce, and deliver the merchandise to the various retail
locations.
Major Business Functions:
- Every departments have its own responsibilities
2
, OPERATIONS MANAGEMENT BUSINESS ECONOMICS III
INTERNATIONAL BUSINESS
Role of Operations Management:
- To transform a company’s inputs into the finished goods or services.
o Inputs:
§ Human resources (such as workers and managers), facilities and processes
(such as buildings and equipment), as well as materials, technology, and
information.
§ A lot of different inputs that creates output (goods or services) through the
transformation process.
o Output:
§ The goods and services a company produces
§ The finished goods
• A car for example (which are a lot of different inputs together)
• A consumer is willing to pay more for an output than for all inputs
separately, because the consumer is looking for a car that rides, not
all components separately)
- The transformation Process: transforming input into output
o At a factory the transformation is the physical change of raw materials into products,
such as transforming leather and rubber into sneakers, denim into jeans, or plastic
into toys.
§ At an airline it is the efficient movement of passengers and their luggage
from one location to another.
§ At a hospital it is organizing resources such as doctors, medical procedures,
and medications to transform sick people into healthy ones.
o Operations management is responsible for orchestrating all the resources needed to
produce the final product.
§ Including deciding what resources are needed to produce, designing the jobs
to make the product, and designing work methods.
à Operations management is responsible for all aspects of the process of
transforming inputs into outputs.
3
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