Introduction to Operations Management
Chapter 1

utdallas.edu/~metin

1

Learning Objectives
Operations Management Introduction. Manufacturing and Service Operations. How can Operations Management help?

utdallas.edu/~metin

2

OM = Operations Management
Management of ANY activities/process that create goods and provide services
» Exemplary Activities:
Forecasting Scheduling, Quality management

Profit 10% OM Cost 20% Marketing Cost 25%

Why to study OM
» Cost and profit breakdown at a typical manufacturing company » How to make more profit?
Cost cutting. Which costs affect the revenue?

» Management of operations is critical to create and maintain competitive advantages utdallas.edu/~metin Manufacturing Cost 45%
3

Operations Management
Operations management: The management of the efficient transformation of inputs into outputs to effectively satisfy customers. The active role of operations:
– Inputs become Outputs after some Transformation (Process or Operation) – Food processing example: Inputs
Energy, Raw vegetables Energy, Metal sheets Energy, Vegetables Energy, Water, Vegetables Energy, Cans, Boiled vegetables utdallas.edu/~metin Transformation
Cleaning Cutting/Rolling/Welding Cutting/Chopping Cooking Placing

Outputs
Clean vegetables Cans Cut vegetables Boiled vegetables Can food
4

Operations in services: Health care
Inputs
Doctors, nurses Hospital Medical Supplies Equipment Laboratories

Processes
Examination Surgery Monitoring Medication Therapy

Outputs
Healthy patients

SOM offers medical management MBA and Master of Science See http://som.utdallas.edu/amme/index.html. Question: What are Inputs, Processes and Outputs in education? Who is the customer? utdallas.edu/~metin 5

Operations are everywhere !
Operations
Goods producing

Examples
Farming, mining, construction

Storage/transportation Warehousing, trucking, mail, taxis, buses, hotels