Operations Management As A Set of Decisions

OPERATIONS MANAGEMENT AS A SET OF DECISIONS
Decisions are:
 Strategic Decisions – less structured; have long term consequences focus on the entire
organization.
 Tactical Decisions – more structured; focus on division and departmental lines.
 Operational Decisions – repetitive and short-term; routine focus sections, units teams and
tasks.
Terminologies:
1. Strategic Decisions
- it will affect company’s future direction.
- operations managers help determine the company’s global strategies and competitive
priorities and whether its flow strategy should organize resources around
products/processes (Operations Strategy)
2. Process
-fundamental to all activity that produce goods/services
-includes:
a. Process Management – making process decisions about the types of work to be done in-
house, the amount of automation to use, and methods of improving existing processes.
b. Management of Technology – technologies to pursue and ways to provide leadership in
technological change.
c. Workforce Management – ways to structure the organization and foster team work, the
degree of specialization or enhancement of the jobs created by the processes, and
methods of making time estimates for work requirements.
3. Quality
- in a general sense, it is defined as meeting or exceeding the expectations of the
customer.
-operations manager helps establish quality objectives and seek ways to improve the
quality of the firm’s products and services (TQM)
a. Customer Satisfaction
b. Employee Involvement
c. Continuous Improvement
- use of inspection and statistical methods to monitor the quality produced by the various
processes (Statistical Process Control)
4. Capacity, Location, and Layout
- often requires long-term commitments
-operations managers help determine:
a. System’s Capacity
b. Location of new facilities, including global operations
c. Organization of department and a facility’s physical layout
5. Operating Decisions
-it is called operations infrastructure which deal with operating the facility after it has
been built.
Operations Manager:
a. Help coordinate the various parts of the internal and external supply chain (Supply Chain
Management)
b. Forecast Demand (Forecasting)
c. Manage Inventory
d. Control and Staffing Level Overtime (Aggregate Planning)
They also make decisions about releasing purchase or production orders and the qualities
to be purchased or produced (Materials Requirements Planning), whether to implement JIT
techniques, which customer or jobs to give top priority (Scheduling), and the use and scheduling
of resources in large projects (Managing Projects).
Ten Critical Decisions of Operations Management
Ten Decision Areas Issues

 What product or service should we offer?
1. Service and Product Design  How should we design these products and
services?
 Who is responsible for quality?
2. Quality Management  How do we define the quality we want in
our product or service?
 What process will these products require
and in what order?
3. Process and Capacity Design
 What equipment and technology is
necessary for these processes?
 Where should we put the facility?
4. Location  On what criteria should we base location
decisions?
5. Layout Design  How large must the facility be to meet our
plan?
 How should we arrange the facility?
 How do we provide a reasonable work
environment?
6. Human Resource and Job Design
 How much can we expect our employees to
produce?
 Who are our supplier and who can integrate
7. Supply Chain Management into our e-commerce program?
 Should we make or buy this component?
8. Inventory, Material, Equipment, Planning
and JIT (integrated set of activities designed to  How much inventory of each item should
achieve high volume production using minimal we have?
inventories or parts that arrive at work station  When do we reorder?
just on time)
 Is subcontracting production a good idea?
9. Intermediate, Short-term, and Project
 Are we better of keeping people on payroll
Scheduling
during slowdowns?
10. Maintenance  Who is responsible for maintenance?
Operations manager draws on many skill areas and quantitative analysis to solve
problems:
 Knowledge of information systems to manage vast quantities of data
 Concept of organizational behavior to aid in designing jobs and managing the workforce
 An understanding of international business methods to gain useful ideas about facility,
location, technology and inventory management
Production System is the heart of Operations Management. A primary function of an

operations manager is to guide the system by decision-making.
Two Types of Decisions:
1. System Design
- involves decisions that relate to system capacity, the geographic location of facilities,
arrangement of departments, and placement of equipment within physical structures,
product and service planning, and acquisition of equipment.
- this decision usually, but not always, requires long-term commitments.
- lies in the province of top management.
- this decision essentially determines many of the parameters of system operation (e.g.
costs, space, capacities, and quality)
2. System Operation
- decisions on management of personnel, inventory planning and control, scheduling,
project management and quality assurance.
- in most instances, the operations manager is more involved in day-to-day operating
decisions than with decision with system design.
Why study operations management(OM)?
1. OM is one of the three major functions of any organization and it is integrally related to all the
other business functions.
-to study how people organize themselves for productive enterprise
2. The production function is the segment of our society that creates the products we use.
-to know how goods/services are produced
3. To understand what operations managers do.
-to be able to develop the skills necessary to become such a manager (help explore the
numerous and lucrative career opportunities in OM)
4. It is a costly part of an organization.
-a large percentage of the revenue of most firms is spent in the OM function
Organization
s
Importance of Operations Management
Society
 The consumption of goods is an integral part of our society.

 P/O Management is responsible for creating those goods.
Organizations exist primarily to provide service or create goods. Hence, production is the
CORE FUNCTION of an organization. Without this core, there would be no need for any of the
other functions – the organization would have no purpose.

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OPERATIONS MANAGEMENT AS A SET OF DECISIONS

Ten Critical Decisions of Operations Management

Ten Decision Areas Issues

Production System is the heart of Operations Management. A primary function of an

Two Types of Decisions:

Why study operations management(OM)?

 The consumption of goods is an integral part of our society.

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