Chaptero09o-hManagementoofoQuality
CHAPTER 01 INTROD o o
UCTION TO OPERATIONS MANAGEMENT
o o o
TeachingoNotes
Manyostudentsocomeotoothisocourseowithonegativehfeelings,operhapsobecauseotheyohaveoheardhthatotheocouo
rseoincludeshaocertainoamountoofoquantitativeomaterialo(whichomanyofeelouncomfortableowith),ooroperhapo
sobecauseotheocourseostrikeshthemoaso“howotoorunoaofactory.”oOthersoseemotoohaveoveryolittleoideaoaboutowo
hatooperationsomanagementois.oIoviewothehinitialomeetingowithomyoclasses,oandhthisofirstochapter,oasooppoo
rtunitieshtoodispelosomeoofotheseonotions,oandotoogenerateoenthusiasmoforotheocourse.
Highlightsoofothehchapteroincludehtheofollowing:
1. Operationsoasooneoofothehthreeomainofunctionaloconcernsoofomostoorganizations.
2. Theoroleoandojoboofotheooperationsomanageroasoaoplanneroandodecision-maker.
3. Differentowaysoofoclassifyingo(andounderstanding)oproductionhsystems.
4. Systemodesignoversusosystemooperation.
5. Majorocharacteristicsoofoproductionosystems.
6. Contemporaryoissuesoinooperationsomanagement.
7. Operationsoasoessentiallyomanagerialo(planning,ostaffing,oetc.)
8. Theohistoricaloevolutionoofoproduction/operationsomanagement.
9. Manufacturingooperationsoversusoservicehoperations.
10. Theoneedotoomanageothehsupplyochain.
Reading:oWhyoManufacturingoMatters
1.
GivenothatotheoU.S.oeconomyoisobecomingomoreoserviceobased,otheopercentageoofoemploymeo
ntoinomanufacturingoisodecliningowhileotheopercentageoofoemploymentoinhthehserviceoindustryoisoio
ncreasing.oInoaddition,otheolossoofomanufacturingojobsoresultsoinhthehlossoofoserviceojobsoasowello(o
aogeneraloestimateoisothatofouroserviceojobsharehlostoforoeachomanufacturinghjobolost).
2. Theogovernmentocouldoofferocompaniesotaxoincentivesoforopurchasingonewoequipmentooroforohirio
nghworkers.oInoaddition,otheogovernmentocouldoworkhwithomanufacturingocompaniesotoore-
trainoworkersoinomoreoadvancedomanufacturinghprocesses.
3. Manufacturingoinnovationhisoimportantobecauseoithrequireshhighovalue-
addedoknowledgehworkothatosupportsofutureoinnovation.oSecond,oinnovationogeneratesohigh-
opayinghjobs.oThird,oinnovationoisoimportantobecauseoitoimproves oproductivity,otherebyoslowingoto
heooutsourcingoofojobsotoolowerowageocountries.
Reading:oAgilityoCreatesoaoCompetitiveoEdge
TheofirstosolutionocouldobeoforoU.S.oretailersotoocontinuehsourcingofromoChinahthatopartoofodemandothatoisoc
ertainoandotohsourceouncertainodemandofromotheosameolow-costoproducersoinoRomaniaoandoTurkey.
9-1
Copyrighto©o2021oMcGraw-Hill.oAllorightshreserved.oNohreproductionoorodistributionowithouththeopriorowrittenoconsentoofoMcGraw-Hill.
,Chaptero09o-oManagementoofoQuality
9-2
Copyrighth©o2021oMcGraw-Hill.oAllorightsoreserved.oNooreproductionoorhdistributionowithoutotheopriorhwrittenoconsenthofoMcGraw-Hill.
,Chaptero09o-hManagementoofoQuality
Thisoapproachoprovidesotheoadvantageshofolow-
costomanufacturingoinoChinaoandotheoflexibilityoprovidedhbyotheosuppliersoinoRomaniahandoTurkey.oTheho
disadvantageoofothisoapproachoisothatotransportationotimeshforoU.S.oretailersostillowillobehlongerothanhtheotro
ansportationotimesofacedhbyoZara’soandoHo&oM.
AosecondhapproachocouldobeothatoU.Soretailersofindolow-
cost,oflexibleosuppliersojustoacrossotheoborderoinoMexico.oTheoadvantagesoofothisoapproachoincludehlowowo
agesoandhshorterotransportationotimes.oTheoprimaryodisadvantagesotoothisoapproachoinvolveotheotimeoandho
expenseoofolocatinghnewosuppliers.oAdditionally,otheoU.S.oretailersomightohaveotoolendoconsiderableosuppo
ortodevelopingotheocapabilitiesoofotheseosuppliers.
Reading:oSustainableoKisses
1.
Hershey’soandhotherocompaniesoengageoinosustainableobusinessopracticesobecauseoconsumero
sopreferotohdoobusinessowithocompaniesothathpracticeosustainableosourcingoandoethicalotreatmento
ofoworkers.oManyoofotheoleadersoinotheseobusinessesoholdotheosameovalues.oByoeducatingofarmers
,oHershey’socanoalsoohelpotooincreasehthehlongevityoandoyieldoofococoaoplants.
2. Hershey’soactionsomayoinfluenceoretailersoandocustomersoinoitsosupplyochainotoobecomeobetter-
oeducatedoaboutosourcing,owhichomayoinfluenceocompetitorshtooadoptosimilarlyosustainablehbusin
oessopractices.
OperationsoTour:oWegmansoFoodoMarkets
1. Customershjudgehthehqualityoofoaosupermarkethbasedoon:
a. Qualityoofoindividualoproducts.
b. Exteriorhandointeriorophysicalolookoofotheostore.
c. Effectivenessoandoefficiencyoofoserviceopersonnel.
2. a.
Customerosatisfactionoisotheomajorokeyotootheosuccessoofoanyooperation;owithoutoit,othehcoo
mpanyocannotosurvive.
b.
Forecastingoallowsotheocompanyotooplanotheoworkforceolevels,opurchasehquantities,oinveo
ntoryolevels,oandocapacity.
c. Capacityoplanninghallowsotheocompanyotoobalanceotheotrade-
offobetweenoshortageshandoexcessoinventoriesoandobetweenowaitingolinesoandoidleotime.
d.
Aogoodolocationocanohaveoaosignificantoimpactoinoattractingocustomers,othushimprovingoso
ales.
e.
Planningoandocontrollingolevelsoofoinventoryowilloassistowithoavoidinghstockoutsoandoavoo
idingoexcessoinventoryolevels.
9-3
Copyrighto©o2021oMcGraw-Hill.oAllorightshreserved.oNohreproductionoorodistributionowithouththeopriorowrittenoconsentoofoMcGraw-Hill.
, Chaptero09o-oManagementoofoQuality
f.
Goodolayoutoofotheostoreocanoassistoinomaximizingocustomeroserviceoandosalesobyostrategoi
callyodirectingocustomersothroughotheostore.oAnheffectiveolayoutocanoalsohimproveothehefficioe
ncyoofothehoperations.
g.o Effectiveoschedulingoofocompanyoworkersoandhworkhhoursocanoimproveobothhcustomeroservio
ceoandoefficiency.oAnoeffectiveoschedulehprovidesoconvenientostorehhours,ominimalocustomeo
rowaitingolines,oandominimaloemployeeoidleotime.
3.
Wegmansouseshtechnologyotootrackoinventoryoandomanageoitsosupplyochain,owhicholesseo
notheoriskhofooccurrencesoofoout-of-
stockhevents,oandotoomaintainofreshnessoinoitshmeatoandoproduceodepartments.
AnswersotooDiscussionoandoReviewoQuestions
1.
Theotermooperationsomanagementorelatesotootheomanagementoofosystemsooroprocessesothatocro
eateogoodshand/oroprovideoservices.oTheseoprocessesoinvolveotheoplanning,ocoordination,oandoexo
ecutionhofoalloactivitiesowithinhanhorganizationothatocreateogoodshandoservices.oAosupplyochainoiso
thehsequenceoofoorganizations,oincludinghtheirofacilities,ofunctions,oandoactivities,othatoareoinvolvo
edoinoproducingoandodeliveringoaoproductoorhservice.oThisosequenceobeginsowithobasicosupplierso
oforawomaterialsoandhendsowithotheofinalocustomer.oAosupplyochainoincludesoactivitiesoandofacilitoi
esoexternalotootheointernalooperationsofunction,oe.g.,osourcingoandotransportationoofoinboundomatoe
rials.
2.
Theothreeoprimaryofunctionsoarehoperations,ofinance,oandomarketing.oOperationsoisoconcerneo
dowithothehcreationoofogoodsoandoservices,ofinanceoisoconcernedowithoprovisionoofofundsonecessao
ryoforooperation,oandomarketingoisoconcernedhwithhpromotingoand/orosellinghgoodsooroservices.
3.
Theooperationshfunctionoconsistsoofoalloactivitiesothatoareorelatedodirectlyotooproducingogoodo
sooroprovidingoservices.oItoisotheocorehofomostobusinessoorganizationsobecauseoitoisoresponsibleofoo
rotheocreationoofoanoorganization’sogoodsooroservices.oItsoessenceoisotooaddovalueoduringotheotransof
ormationhprocesso(theodifferenceobetweenotheocostoofoinputsoandhvalueoandopriceoofooutputs).
4. Amongotheoimportantodifferencesobetweenomanufacturinghandoserviceooperationsoare:
a. Theonatureoandoconsumptionoofooutput.
b. Uniformityoofoinput.
c. Laborocontentoofojobs.
d. Uniformityoofooutput.
e. Measurementoofoproductivity.
Amongotheoimportantosimilaritiesobetweenomanufacturinghandoservicehoperationsoare:
a. Forecastinghandocapacityoplanningotoomatchosupplyoandodemand.
b. ProcessoManagement
c. Managingovariations
d. Monitoringoandocontrollinghcostsoandhproductivity
9-4
Copyrighth©o2021oMcGraw-Hill.oAllorightsoreserved.oNooreproductionoorhdistributionowithoutotheopriorhwrittenoconsenthofoMcGraw-Hill.
CHAPTER 01 INTROD o o
UCTION TO OPERATIONS MANAGEMENT
o o o
TeachingoNotes
Manyostudentsocomeotoothisocourseowithonegativehfeelings,operhapsobecauseotheyohaveoheardhthatotheocouo
rseoincludeshaocertainoamountoofoquantitativeomaterialo(whichomanyofeelouncomfortableowith),ooroperhapo
sobecauseotheocourseostrikeshthemoaso“howotoorunoaofactory.”oOthersoseemotoohaveoveryolittleoideaoaboutowo
hatooperationsomanagementois.oIoviewothehinitialomeetingowithomyoclasses,oandhthisofirstochapter,oasooppoo
rtunitieshtoodispelosomeoofotheseonotions,oandotoogenerateoenthusiasmoforotheocourse.
Highlightsoofothehchapteroincludehtheofollowing:
1. Operationsoasooneoofothehthreeomainofunctionaloconcernsoofomostoorganizations.
2. Theoroleoandojoboofotheooperationsomanageroasoaoplanneroandodecision-maker.
3. Differentowaysoofoclassifyingo(andounderstanding)oproductionhsystems.
4. Systemodesignoversusosystemooperation.
5. Majorocharacteristicsoofoproductionosystems.
6. Contemporaryoissuesoinooperationsomanagement.
7. Operationsoasoessentiallyomanagerialo(planning,ostaffing,oetc.)
8. Theohistoricaloevolutionoofoproduction/operationsomanagement.
9. Manufacturingooperationsoversusoservicehoperations.
10. Theoneedotoomanageothehsupplyochain.
Reading:oWhyoManufacturingoMatters
1.
GivenothatotheoU.S.oeconomyoisobecomingomoreoserviceobased,otheopercentageoofoemploymeo
ntoinomanufacturingoisodecliningowhileotheopercentageoofoemploymentoinhthehserviceoindustryoisoio
ncreasing.oInoaddition,otheolossoofomanufacturingojobsoresultsoinhthehlossoofoserviceojobsoasowello(o
aogeneraloestimateoisothatofouroserviceojobsharehlostoforoeachomanufacturinghjobolost).
2. Theogovernmentocouldoofferocompaniesotaxoincentivesoforopurchasingonewoequipmentooroforohirio
nghworkers.oInoaddition,otheogovernmentocouldoworkhwithomanufacturingocompaniesotoore-
trainoworkersoinomoreoadvancedomanufacturinghprocesses.
3. Manufacturingoinnovationhisoimportantobecauseoithrequireshhighovalue-
addedoknowledgehworkothatosupportsofutureoinnovation.oSecond,oinnovationogeneratesohigh-
opayinghjobs.oThird,oinnovationoisoimportantobecauseoitoimproves oproductivity,otherebyoslowingoto
heooutsourcingoofojobsotoolowerowageocountries.
Reading:oAgilityoCreatesoaoCompetitiveoEdge
TheofirstosolutionocouldobeoforoU.S.oretailersotoocontinuehsourcingofromoChinahthatopartoofodemandothatoisoc
ertainoandotohsourceouncertainodemandofromotheosameolow-costoproducersoinoRomaniaoandoTurkey.
9-1
Copyrighto©o2021oMcGraw-Hill.oAllorightshreserved.oNohreproductionoorodistributionowithouththeopriorowrittenoconsentoofoMcGraw-Hill.
,Chaptero09o-oManagementoofoQuality
9-2
Copyrighth©o2021oMcGraw-Hill.oAllorightsoreserved.oNooreproductionoorhdistributionowithoutotheopriorhwrittenoconsenthofoMcGraw-Hill.
,Chaptero09o-hManagementoofoQuality
Thisoapproachoprovidesotheoadvantageshofolow-
costomanufacturingoinoChinaoandotheoflexibilityoprovidedhbyotheosuppliersoinoRomaniahandoTurkey.oTheho
disadvantageoofothisoapproachoisothatotransportationotimeshforoU.S.oretailersostillowillobehlongerothanhtheotro
ansportationotimesofacedhbyoZara’soandoHo&oM.
AosecondhapproachocouldobeothatoU.Soretailersofindolow-
cost,oflexibleosuppliersojustoacrossotheoborderoinoMexico.oTheoadvantagesoofothisoapproachoincludehlowowo
agesoandhshorterotransportationotimes.oTheoprimaryodisadvantagesotoothisoapproachoinvolveotheotimeoandho
expenseoofolocatinghnewosuppliers.oAdditionally,otheoU.S.oretailersomightohaveotoolendoconsiderableosuppo
ortodevelopingotheocapabilitiesoofotheseosuppliers.
Reading:oSustainableoKisses
1.
Hershey’soandhotherocompaniesoengageoinosustainableobusinessopracticesobecauseoconsumero
sopreferotohdoobusinessowithocompaniesothathpracticeosustainableosourcingoandoethicalotreatmento
ofoworkers.oManyoofotheoleadersoinotheseobusinessesoholdotheosameovalues.oByoeducatingofarmers
,oHershey’socanoalsoohelpotooincreasehthehlongevityoandoyieldoofococoaoplants.
2. Hershey’soactionsomayoinfluenceoretailersoandocustomersoinoitsosupplyochainotoobecomeobetter-
oeducatedoaboutosourcing,owhichomayoinfluenceocompetitorshtooadoptosimilarlyosustainablehbusin
oessopractices.
OperationsoTour:oWegmansoFoodoMarkets
1. Customershjudgehthehqualityoofoaosupermarkethbasedoon:
a. Qualityoofoindividualoproducts.
b. Exteriorhandointeriorophysicalolookoofotheostore.
c. Effectivenessoandoefficiencyoofoserviceopersonnel.
2. a.
Customerosatisfactionoisotheomajorokeyotootheosuccessoofoanyooperation;owithoutoit,othehcoo
mpanyocannotosurvive.
b.
Forecastingoallowsotheocompanyotooplanotheoworkforceolevels,opurchasehquantities,oinveo
ntoryolevels,oandocapacity.
c. Capacityoplanninghallowsotheocompanyotoobalanceotheotrade-
offobetweenoshortageshandoexcessoinventoriesoandobetweenowaitingolinesoandoidleotime.
d.
Aogoodolocationocanohaveoaosignificantoimpactoinoattractingocustomers,othushimprovingoso
ales.
e.
Planningoandocontrollingolevelsoofoinventoryowilloassistowithoavoidinghstockoutsoandoavoo
idingoexcessoinventoryolevels.
9-3
Copyrighto©o2021oMcGraw-Hill.oAllorightshreserved.oNohreproductionoorodistributionowithouththeopriorowrittenoconsentoofoMcGraw-Hill.
, Chaptero09o-oManagementoofoQuality
f.
Goodolayoutoofotheostoreocanoassistoinomaximizingocustomeroserviceoandosalesobyostrategoi
callyodirectingocustomersothroughotheostore.oAnheffectiveolayoutocanoalsohimproveothehefficioe
ncyoofothehoperations.
g.o Effectiveoschedulingoofocompanyoworkersoandhworkhhoursocanoimproveobothhcustomeroservio
ceoandoefficiency.oAnoeffectiveoschedulehprovidesoconvenientostorehhours,ominimalocustomeo
rowaitingolines,oandominimaloemployeeoidleotime.
3.
Wegmansouseshtechnologyotootrackoinventoryoandomanageoitsosupplyochain,owhicholesseo
notheoriskhofooccurrencesoofoout-of-
stockhevents,oandotoomaintainofreshnessoinoitshmeatoandoproduceodepartments.
AnswersotooDiscussionoandoReviewoQuestions
1.
Theotermooperationsomanagementorelatesotootheomanagementoofosystemsooroprocessesothatocro
eateogoodshand/oroprovideoservices.oTheseoprocessesoinvolveotheoplanning,ocoordination,oandoexo
ecutionhofoalloactivitiesowithinhanhorganizationothatocreateogoodshandoservices.oAosupplyochainoiso
thehsequenceoofoorganizations,oincludinghtheirofacilities,ofunctions,oandoactivities,othatoareoinvolvo
edoinoproducingoandodeliveringoaoproductoorhservice.oThisosequenceobeginsowithobasicosupplierso
oforawomaterialsoandhendsowithotheofinalocustomer.oAosupplyochainoincludesoactivitiesoandofacilitoi
esoexternalotootheointernalooperationsofunction,oe.g.,osourcingoandotransportationoofoinboundomatoe
rials.
2.
Theothreeoprimaryofunctionsoarehoperations,ofinance,oandomarketing.oOperationsoisoconcerneo
dowithothehcreationoofogoodsoandoservices,ofinanceoisoconcernedowithoprovisionoofofundsonecessao
ryoforooperation,oandomarketingoisoconcernedhwithhpromotingoand/orosellinghgoodsooroservices.
3.
Theooperationshfunctionoconsistsoofoalloactivitiesothatoareorelatedodirectlyotooproducingogoodo
sooroprovidingoservices.oItoisotheocorehofomostobusinessoorganizationsobecauseoitoisoresponsibleofoo
rotheocreationoofoanoorganization’sogoodsooroservices.oItsoessenceoisotooaddovalueoduringotheotransof
ormationhprocesso(theodifferenceobetweenotheocostoofoinputsoandhvalueoandopriceoofooutputs).
4. Amongotheoimportantodifferencesobetweenomanufacturinghandoserviceooperationsoare:
a. Theonatureoandoconsumptionoofooutput.
b. Uniformityoofoinput.
c. Laborocontentoofojobs.
d. Uniformityoofooutput.
e. Measurementoofoproductivity.
Amongotheoimportantosimilaritiesobetweenomanufacturinghandoservicehoperationsoare:
a. Forecastinghandocapacityoplanningotoomatchosupplyoandodemand.
b. ProcessoManagement
c. Managingovariations
d. Monitoringoandocontrollinghcostsoandhproductivity
9-4
Copyrighth©o2021oMcGraw-Hill.oAllorightsoreserved.oNooreproductionoorhdistributionowithoutotheopriorhwrittenoconsenthofoMcGraw-Hill.
