4. Why Study OM?Why Study OM?
OM is one of three major functions
(marketing, finance, and operations) of any
organization
We want (We want (and needand need) to know how goods and) to know how goods and
services are producedservices are produced
We want to understand what operationsWe want to understand what operations
managers domanagers do
OM is such a costly part of an organizationOM is such a costly part of an organization
9. Organizing to Produce Goods and ServicesOrganizing to Produce Goods and Services
Essential functions:
Marketing generates demand
Production/operations creates the
product
Finance/accounting tracks how well
the organization is doing, pays bills,
collects the money
10. Organizational ChartsOrganizational Charts
Operations
Teller Scheduling
Check Clearing
Collection
Transaction
processing
Facilities
design/layout
Vault operations
Maintenance
Security
Finance
Investments
Security
Real estate
Accounting
Auditing
Marketing
Loans
Commercial
Industrial
Financial
Personal
Mortgage
Trust Department
Commercial Bank
Figure 1.1(A)Figure 1.1(A)
12. Marketing
Sales
promotion
Advertising
Sales
Market
research
Organizational ChartsOrganizational Charts
Operations
Facilities
Construction; maintenance
Production and inventory control
Scheduling; materials control
Quality assurance and control
Supply chain management
Manufacturing
Tooling; fabrication; assembly
Design
Product development and design
Detailed product specifications
Industrial engineering
Efficient use of machines, space,
and personnel
Process analysis
Development and installation of
production tools and equipment
Finance/
accounting
Disbursements/
credits
Receivables
Payables
General ledger
Funds Management
Money market
International
exchange
Capital requirements
Stock issue
Bond issue
and recall
Manufacturing
Figure 1.1(C)Figure 1.1(C)
16. What Is Operations Management?What Is Operations Management?
Production is the creation of
goods and services
Operations management (OM)Operations management (OM) isis
the set of activities that createsthe set of activities that creates
value in the form of goods andvalue in the form of goods and
services by transforming inputsservices by transforming inputs
into outputsinto outputs