Class Notes: 1/30/06

Notes Taken by Thomas and Catherine

·         Distractions

o       Participate in class (no internet, IMing, etc.)

·         Extra Given for participation

·         Operations Management: Definition

o       Is the set of activities that creates value in the form of goods and services by transforming inputs into outputs

§         Value is a form of good or services or both

§         Whichever you do most, you’re at that point

Definition From Book:

Operations Management (OM) is a set of activities that create value in the form of goods and services by transforming inputs into output. Activities creating goods and services take place in all organizations. In manufacturing firmsthe production activities that create goods are usually quite obvious. It them we can see the creation of a tangible product such as a Sony TV or a Harley Davidson Motorcycle.

In organizations that do not create physical products, the production function may be less obvious.It may be “hidden” from the public and even from the customer. Examples are the transformations that take place at a bank, hospital, airline office or college.

Often when services are performed no tangible goods are produced. Instead the product may take such forms as the transfer of funds from a savings account  to a checking account, the transplant of a liver, the filling of an empty seat on an airline, or the education of a student. Regardless of whether the end product is a good or a service, the production activities that go in the organization are often referred to as operations or Operations Management.

·         1^st Quiz

o       Make at least 5-10 Questions

§         Questions come from classmates

·         Always do class journals, pay attention to material and class notes

·         What is production?

o       Book – Creation of good & services

o       Distinguish between good and services

§         Tangible – Goods

      Ex: Watermelon, Selling watermelon

o       Creation of good and services

o       Definition: Set of group activities that create value in the form of good and services by transforming input into the output

§         Input – raw material

§         Output – what you create

o       Ex: Creation of tangible product – TV, HD motorcycle

o       “Hidden” – Bank, hospital, college are examples

·         Find definition of what OM means? (few minutes)

o       Wikipedia, google, Ask Jeeves

o       Write down one paragraph of what it means

o       Professor goes around to check if someone finds the meaning

§         O. Management – type of system or a function à Not much of the definition

§         Ask Jeeves of OM Definition – Ralph 2+

      Is a system. Input such as material (any raw material), machine (any machinery), labor (workers), management (control), and capital ($) are transferred into output.

o       Ex: product, goods, & services

      Requirements and feedback from customers are used in the transformation process à altering input

§         Why study operations management? Come w/ effective and efficient transformation of input into sellable tangible products and intangible services

§         Operations Management interpretation à Good definition

      OM focuses on carefully managing the processes to produce and distribute products and services. – Steve found it

o       Process – activity

o       Carefully – manages activities that produce

§         OM interpretations – Google

      Efficient & Effective implementation of the policies and tasks necessary to satisfy a firms customer, employees, and management (stock holder as well) – Prenhall.com à Tahidul

§         Ch. 1 a university WVU - Amir

      Course #: 360

      OM – management of direct recourses required to producing goods & services provided by org.

      Management activities performed including, selecting, designing, operating, controlling, & updating productive system à good one – Amir

§         Wikipedia

      OM - area of business that is concerned w/ the production of good and services, and involves the responsibility of insuring and efficient and effective. Also the management of resources and distribution of goods & services to the customers. à Lisa

·         How old is operation management? – Kansas

o       OM critical importance of organization & business now a days. It is the management of manufacturing, production, & services operation. OM is diverse. It may be defined as the design, operation, and improvement of production system that create the firms primary products or services. – Ijaz +1

o       Syed - +1

·         History of OM

o       Where did it start?

§         Organization management – many people started to happen

§         Human History – Great wall of China

§         Relate it to the Aztecs – how they did it in the past

      Saw from airplane

§         Started as human history

      Pyramids

      Aztecs – 91 steps on each side à Anuj

      Great Wall of China – Amir explains

      UIC.edu – Samuel

o       Great Wall of China

o       Pyramid of Egypt

o       No OM

§         US Intelligence Comm. & Operations M – 1947- 1989

§         -1 Saeed

§         1856- 1915 Not OM

      Fredrick Taylor – Examine time & motion details of job, develop a better method of forming job, & trained worker. …as worker produced. à Nicole

§         Developments of this Century

      Fredrick Taylor

      Henry Ford

      Alfred Sloan (GM)

Frederick Winslow Taylor

–    Principles of scientific management - 1911

1. Scientific laws govern work so scientific methods can be used to analyze work

2. Workers are different so match workers to their job and then train them thoroughly

3. Use employee self-interest to motivate

4. Separate the responsibilities of workers and managers.

Alfred P. Sloan., Jr.

–   CEO of General Motors - 1923-1946

–   Competed with Ford through innovation

–   Developed strategy of marketing different cars with different features and prices
Installment selling (GMAC), used car trade-ins, automotive styling, annual design changes

o       Many management techniques were developed … - 1945

·         Analysis and thinking tools in OM

·         HW

o       #1 - Easy

§         Use some kind of statistical computation (any kind) up to standard deviation

o       Put all HWs on Web host

o       Make assignment from syllabus – question on quiz and tests

o       Email it to yourself – NO EXCUSES!!!!

o       PUT ON YOUR WEBHOST!!!!

·         Web host – Geocities.com – Upload it & DO IT YOURSELF à GRADE WILL BE DIVIDED IF DONE WITH MORE HELP THAN USUAL!!!!

·         ALL CAN BE FOUND ONLINE

·         Lance – read whole definition – 2 pts

·         Participate in class

·         Pg. 6 Ex. 1 in text: Fisher Technologies

You must double their dollar contribution to fix costs and profits in order to be profitable for them to purchase their new computers. If they fail, the bank will not loan them money for the new systems. If they don’t get new systems they will go out of business (employees will be fired, consumer suffer).

3 strategies:

-Marketing Option – increase sales by 50%, as a result there will be a 71% increase in contribution

-Finance / Accounting Option – Finance costs are cut in half by good financial management, will result in 21% increase.

OM Option – Reduce production costs, results in increase of 114%.

Fisher increases contribution from $10,500 to $22,500

Goods – consumable and tangible, item you can see.

Services – intangible (ex. Contractor, plumber, consulting firm).

(Dr. Ebrahimi’s papya example)

·         53% of growth last year was due to good management.

30% of growth due to goods and money (capital)

10% of growth by labor

·         Tallest bridge?

o       Taller than Eiffel Tower

·         Why do they build bridges? For the boats to go under

·         Tallest bridge connect? From Paris, France to Barcelona, Spain

·         Who made it? British company