[PDF] AN INTRODUCTION TO OPERATIONS MANAGEMENT

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AN INTRODUCTION TO OPERATIONS MANAGEMENT

Welcome to my beach. I chose a beach as a framework for this learning endeavor because much can be learned in this setting. Beach shells remind us of the finiteness of life, something that all firms must deal with. It reminds us that Nature has an ongoing recycling program - an issue that is increasingly becoming an important issue in the business world. And the beach's mix of wave-riding surfers, child-guarding parents talking on their cellular phones reminds us that our business environment is a diverse mix of generations, genders, and lifestyles. Many of you are or soon will be actively engaged in this so-called real world. As a business student, you no doubt have to take a course that is often called production operations management (POM) or just operations management. This is the course that I teach - often to students majoring in other functional areas. This is my personal challenge because many students are all too ready to focus on their major. I fondly recall Julie, a student who informed me that "I really liked your course but there was just too much readings for me since I am an accounting major." I vividly recall my unspoken response - "damn those tunnel thinkers!" Shortly thereafter, Steven Melnyk and I wrote an introductory operations management textbook. It was comprehensive and about 81 pages shorter than the Bible. Once again, I heard my students say, "Good book but it is just too damn long!" Our fellow professors who had adopted the text also informed us that by the time students had read the chapters, there wasn't sufficient time left to do anything else. We got the message. What follows is my attempt to correct this problem. What used to be called a chapter is now called a learning shell. They are called shells because each is, by design, incomplete. Each shell is approximately 20 pages in length and can be downloaded free from the homepage. Each of the fourteen shells allows the instructor sufficient educational slack to extend the learning plan with other "stuff' that he or she thinks is needed to create a fuller learning experience. This "other stuff" might include: problem solving exercises, case analyses, field trips, POM-related article discussions, or even some additional POM topics that may be deemed important. This course format uses the mass customization concept -- an approach that permits a firm to produce goods and services that are more responsive to customer needs by using a mix of standardize components and custom features. MyPOM, the standardized component, has fourteen shells. We leave it up to your instructor to customize your course to create a truly great learning endeavor. So Julie, wherever you are - this course is dedicated to you and the belief that learning POM can and should be fun. 2

Table of Contents

Shell Zero An Introduction to Operations Management 1

Bucket One: A Value Driven Approach

3 myPOM's Guide to Learning 4 Shell One: Operations Management Circa 2003 5

Shell Two: Value 25

Shell Three: Building the Capacity to Deliver Value 45 Shell Four: Processes and Process Thinking 61 Shell Five: Managing for Process Improvement 81

Bucket Two: Operations System Design 102

Shell Six: Demand Forecasting 103

Shell Seven: Long Term Capacity Management 125

Shell Eight: Product Design and Process Selection---Services 147 Shell Nine: Designing Products and Product Delivery Systems - Goods 169 Shell Ten: Designing Supply Chain Management Systems 189

Bucket Three: Managing for Value 209

Shell Eleven: Short Term Operations Planning 211

Shell Twelve: Managing for Quality 235

Shell Thirteen: Managing the Flow of Materials 255

Shell Fourteen: Scheduling Work 279

Epilogue

301

3 BUCKET ONE

A VALUE DRIVEN APPROACH

Since we are using the beach as a metaphor, we placed our learning shells into three buckets. Bucket One

1

AN INTRODUCTION TO OPERATIONS MANAGEMENT

Welcome to my beach. I chose a beach as a framework for this learning endeavor because much can be learned in this setting. Beach shells remind us of the finiteness of life, something that all firms must deal with. It reminds us that Nature has an ongoing recycling program - an issue that is increasingly becoming an important issue in the business world. And the beach's mix of wave-riding surfers, child-guarding parents talking on their cellular phones reminds us that our business environment is a diverse mix of generations, genders, and lifestyles. Many of you are or soon will be actively engaged in this so-called real world. As a business student, you no doubt have to take a course that is often called production operations management (POM) or just operations management. This is the course that I teach - often to students majoring in other functional areas. This is my personal challenge because many students are all too ready to focus on their major. I fondly recall Julie, a student who informed me that "I really liked your course but there was just too much readings for me since I am an accounting major." I vividly recall my unspoken response - "damn those tunnel thinkers!" Shortly thereafter, Steven Melnyk and I wrote an introductory operations management textbook. It was comprehensive and about 81 pages shorter than the Bible. Once again, I heard my students say, "Good book but it is just too damn long!" Our fellow professors who had adopted the text also informed us that by the time students had read the chapters, there wasn't sufficient time left to do anything else. We got the message. What follows is my attempt to correct this problem. What used to be called a chapter is now called a learning shell. They are called shells because each is, by design, incomplete. Each shell is approximately 20 pages in length and can be downloaded free from the homepage. Each of the fourteen shells allows the instructor sufficient educational slack to extend the learning plan with other "stuff' that he or she thinks is needed to create a fuller learning experience. This "other stuff" might include: problem solving exercises, case analyses, field trips, POM-related article discussions, or even some additional POM topics that may be deemed important. This course format uses the mass customization concept -- an approach that permits a firm to produce goods and services that are more responsive to customer needs by using a mix of standardize components and custom features. MyPOM, the standardized component, has fourteen shells. We leave it up to your instructor to customize your course to create a truly great learning endeavor. So Julie, wherever you are - this course is dedicated to you and the belief that learning POM can and should be fun. 2

Table of Contents

Shell Zero An Introduction to Operations Management 1

Bucket One: A Value Driven Approach

3 myPOM's Guide to Learning 4 Shell One: Operations Management Circa 2003 5

Shell Two: Value 25

Shell Three: Building the Capacity to Deliver Value 45 Shell Four: Processes and Process Thinking 61 Shell Five: Managing for Process Improvement 81

Bucket Two: Operations System Design 102

Shell Six: Demand Forecasting 103

Shell Seven: Long Term Capacity Management 125

Shell Eight: Product Design and Process Selection---Services 147 Shell Nine: Designing Products and Product Delivery Systems - Goods 169 Shell Ten: Designing Supply Chain Management Systems 189

Bucket Three: Managing for Value 209

Shell Eleven: Short Term Operations Planning 211

Shell Twelve: Managing for Quality 235

Shell Thirteen: Managing the Flow of Materials 255

Shell Fourteen: Scheduling Work 279

Epilogue

301

3 BUCKET ONE

A VALUE DRIVEN APPROACH

Since we are using the beach as a metaphor, we placed our learning shells into three buckets. Bucket One