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Operations Management | Online Assignment Help

MGT214 Operations Management

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Module 1 – Chapter 1

Introduction to Operations Management

YANBU UNIVERSITY COLLEGE

Management Science Department

© Yanbu University College

© Yanbu University College

1

What Is Operations Management?

Organizing to Produce Goods and Services

Why Study OM?

What Operations Managers Do

Operations in the Service Sector

Differences between Goods and Services

The Productivity Challenge

Productivity Measurement

Ethics and Social Responsibility

Outline

Slide 2

© Yanbu University College

When you complete this chapter you should be able to:

Define operations management

Explain the distinction between goods and services

Explain the difference between production and productivity

Compute single-factor productivity

Compute multifactor productivity

Learning Objectives

Slide 3

© Yanbu University College

Hard Rock Café

Slide 4

© Yanbu University College

4

Hard Rock Cafe is a chain of theme restaurants founded in 1971 in London

More than 129 restaurant (branches) in more than 40 countries

In Florida branch, 3500 meals are prepared per day

Every year, they have more than 35 million customers.

Slide 5

Hard Rock Café

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5

How does Hard Rock

Café achieve that?

Slide 6

Hard Rock Café

© Yanbu University College

6

Operations of HRC

Design products

Efficient layout.

Labor requirements

Customer satisfaction

Source for qualified suppliers

Quality of the meals

Slide 7

Hard Rock Café

© Yanbu University College

7

Production is the production of goods and services

Operations management (OM):

is the set of activities that creates

value in the form of goods and

services by transforming inputs

into outputs

It is the management of the production system

What Is Operations Management?

Slide 8

© Yanbu University College

8

Organizing to Produce Goods and Services

Essential functions:

Slide 9

Finance or Accounting

Production or

Operations

Marketing

Ensure and allocating financial resources

Produce / create goods and services

Assess customers needs

Sell / Promote goods and services

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Upper Level Management

Operational Processes

Supporting Processes

9

Organizing to Produce Goods and Services

Essential functions:

Slide 10

© Yanbu University College

Organizing to Produce Goods and Services

Essential functions:

Slide 11

© Yanbu University College

Why Study OM?

We want to study how people organize themselves for productive enterprise

We want (and need) to know how goods and services are produced

We want to understand what operations managers do

OM is such a costly part of an organization

Slide 12

© Yanbu University College

What Operations Managers Do?

Basic Management Functions (POSLC)

Planning

Organizing

Staffing

Leading

Controlling

Slide 13

© Yanbu University College

Ten Critical Decisions of OM

Slide 14

© Yanbu University College

Where are the OM Jobs

Slide 15

© Yanbu University College

Operation in the Service Sector

Slide 16

Differences between goods and services

Goods are:

Tangible product

Consistent product definition

Production usually separated from consumption

Can be inventoried

Low customer interaction

© Yanbu University College

16

Operation in the Service Sector

Slide 17

Differences between goods and services

Services are:

Intangible product

Produced and consumed at same time (no stored inventory)

Often unique

High customer interaction

Often knowledge-based (education, medical, legal, etc.)

Frequently dispersed

© Yanbu University College

17

Differences Between Goods and Services

Slide 18

Attributes of Goods (Tangible Product)

Attributes of Services (Intangible Product)

Revenue generated primarily from tangible product

Can be resold

Can be inventoried

Some aspects of quality measurable

Selling is distinct from production

Product is transportable

Often easy to automate

Revenue generated primarily from the intangible service

Reselling unusual

Difficult for inventory

Quality difficult to measure

Selling is part of service

Provider, not product, is often transportable

Often difficult to automate

© Yanbu University College

Productivity Challenge

Productivity is the ratio of output (goods and services) divided by the inputs (resources such as labor and capital)

The objective is to improve productivity.

Efficiency Vs. Effectiveness

Slide 19

Important Note

Production is a measure of output only and not a measure of efficiency

Improved productivity leads to improved efficiency

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19

The Economic System

Slide 20

Why ‘Feedback Loop’?

How to improve productivity?

© Yanbu University College

Slide 21

OM in Action > Improving Productivity at Starbucks

“This is a game of seconds..” says Silva Peterson, whom Starbucks has put in charge of saving seconds. Her team of 10 analysts is constantly asking themselves: “How can we shave time off this?”

Perterson’s analysis suggested that there were some obvious opportunities. First, stop requiring signatures on credit-card purchase under $25. This sliced 8 seconds off the transaction time at the cash register.

Then analysts noticed that Starbucks’s largest cold beverage, the Venti size, required two bending and digging motions to scoop up enough ice. The scoop was too small. Redesign of the scoop provided the proper amount in one motion and cut 14 seconds off the average time of 1 minute.

Third were new espresso machines; with the push of a button, the machines grind coffee beans and brew. This allowed the server, called a “barista” in Stabuck’s vocabulary,to do other things. The saving: about 12 second per espresso shot.

As a result, operation at Starbucks outlets have increased the average yearly volume by $250,000, to about 1 million in the past 7 years. This is a 27% improvement in productivity-about 4,5% per year. In the service industry, a 4,5% per year increase is very tasty.

© Yanbu University College

Improving Productivity at Starbucks

A team of 10 analysts continually look for ways to save time. Some improvement made were….

Slide 22

Stop requiring signatures on credit card purchases under @25 Saved 8 seconds per transaction
Change the size of the ice scoop Saved 14 seconds per drink
New expresso machines Saved 12 seconds per shot

Operations improvements have helped Starbucks increase yearly revenue per outlet by $200,000 to $940,000 in six years.

Productivity has improved by 27%, or about 4.5% per year.

© Yanbu University College

Productivity Measurement

Measure of process improvement

Represent output relative to input

Slide 23

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Productivity Calculations

Slide 24

Labor Productivity

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Productivity Calculations

Slide 25

Total/Multi-Factor Productivity

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Measurement Problems

Slide 26

Single-factor productivity Vs. multifactor productivity

Quality may change while the quantity of inputs and outputs remains constant

External elements may cause an increase or decrease in productivity

Precise units of measure may be lacking

© Yanbu University College

Productivity Variables

The increase in productivity depends on…

Labor – contributes about 10% of the annual increase

Capital – contributes about 38% of the annual increase

Management – contributes about 52% of the annual increase

Slide 27

© Yanbu University College

Productivity Variables

Slide 28

Key variable to labor productivity

Basic education appropriate for the labor force

Diet of the labor force

Social overhead that makes labor available

Maintaining and enhancing skills in the midst of rapidly changing technology and knowledge

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Productivity Variables – Labor Skills

Slide 29

About half of the 17-years-olds in the US cannot correctly answer questions of this type, compared to the Japanese

© Yanbu University College

Productivity Variables – Capital

Slide 30

Human beings are tool-using animals

Capital investment provides those tools

When the capital per employee drops, there will be a drop in productivity

Capital investment is necessary but seldom increase productivity

© Yanbu University College

Productivity Variables – Management

Slide 31

Ensure labor and capital are effectively used to increase productivity

Improvement made through the use of knowledge and the application of technology – knowledge society (requires ongoing education and training)

© Yanbu University College

Productivity and Service Sector

Productivity of the service sector has proven difficult to improve because service-sector work is…

Labor intensive (e.g. counseling, teaching)

Focused on unique individual attributes or desires (e.g. investment advice)

An intellectual task performed by professionals (e.g. medical diagnosis)

Difficult to mechanize and automate (e.g. haircut)

Difficult to evaluate for quality (e.g. performance of a law firm)

Slide 32

© Yanbu University College

Productivity at Taco Bell

Improvements

Revised the menu

Designed meals for easy preparation

Shift some preparation to suppliers

Efficient layout and automation

Training and employee empowerment

Slide 33

© Yanbu University College

Productivity at Taco Bell

Results:

Preparation time cut to 8 second

Management span of control increased from 5 to 30

In-store labor cut by 15 hours/day

Stores handle twice the volume with half the labor

Fast-food low-cost leader

Slide 34

© Yanbu University College

Ethics and Social Responsibility

Challenges facing operations managers

Developing and producing safe, quality products

Maintaining a clean and sustainable environment

Providing a safe workplace

Honoring community commitments

Managers must do all this in an ethical and socially responsible way while meeting and demands of the marketplace

Slide 35

© Yanbu University College

35

Production and Operations Management

Video

Slide 36

© Yanbu University College

Helpful Video

Slide 37

© Yanbu University College

37

Slide 38

Q & A

© Yanbu University College

 

Practice Operations

Practice Operations (PO) is a 3D, interactive, game-based simulation developed by McGraw-Hill Education. It allows management students to visualize how operations management’s key concepts function in a manufacturing scenario. PO provide a simple simulation for a clothing manufacturing and distribution company, named Kibby & Strand, where the player/student plays the role of an operations manager who is incharge of production decisions that include “placing bids for contracts, managing physical and human resources, ordering raw materials, turning them into refined clothing, and shipping the final products to the client”. PO aims to expose students to some issues related to the production process, supply chain management, inventory management, warehouse layout, scheduling, human resource, quality management and control, capacity planning and customer satisfaction.

 

Learning Objectives

1. Illustrate the role and responsibilities of the operations manager and the possible challenges that he/she may face.

2. Demonstrate the importance of operations management and process thinking

3. Provide a simple simulation for a manufacturing scenario to understand the structure of a production process

4. Illustrate an example of how products move in the production floor and ship to clients

5. Illustrate how receiving, production and shipping tasks are organized and related to the production process

6. Apply operations management decisions that involve production process, supply chain management, inventory management, layout, scheduling, human resource, quality management, and capacity planning.

 

Assignment Instructions

: The assignment consists of THREE core tasks: Task1: Play Practice Operations o Go to https://www.mhpractice.com/products/Practice_Operations” https://www.mhpractice.com/products/Practice_Operations and click on “Play the Demo” button to start the game.

Task2: Answer the Discussion Questions

Once you complete the first task, you can start the second one where you are required to prepare PPT slides that include the answers for the following questions. Allocate a slide for each question.

1- Describe the contracts that you completed in detail such as required materials, quantity, quality …etc. (in a table)?

2 – Describe the strategies that you have applied to meet the production schedules?

3- As an operation manager, explain the factors that influence your performance? Provide minimum 4 factors within the scope of OM decisions. Make sure you show your performance result which similar to Figure 5.

 

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