INTRODUCTION TO OPERATIONS MANAGEMENT

Operations Management, 14e William Stevenson (Solutions Manual All Chapters) 1-1 Copyright © 2021 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.

CHAPTER 01

INTRODUCTION TO OPERATIONS MANAGEMENT

Teaching Notes Many students come to this course with negative feelings, perhaps because they have heard that the course includes a certain amount of quantitative material (which many feel uncomfortable with), or perhaps because the course strikes them as “how to run a factory.” Others seem to have very little idea about what operations management is. I view the initial meeting with my classes, and this first chapter, as opportunities to dispel some of these notions, and to generate enthusiasm for the course.

Highlights of the chapter include the following:

• Operations as one of the three main functional concerns of most organizations.
• The role and job of the operations manager as a planner and decision-maker.
• Different ways of classifying (and understanding) production systems.
• System design versus system operation.
• Major characteristics of production systems.
• Contemporary issues in operations management.
• Operations as essentially managerial (planning, staffing, etc.)
• The historical evolution of production/operations management.
• Manufacturing operations versus service operations.

10.The need to manage the supply chain.

Reading: Why Manufacturing Matters

• Given that the U.S. economy is becoming more service based, the percentage of employment in

manufacturing is declining while the percentage of employment in the service industry is increasing. In addition, the loss of manufacturing jobs results in the loss of service jobs as well (a general estimate is that four service jobs are lost for each manufacturing job lost).

• The government could offer companies tax incentives for purchasing new equipment or for hiring

workers. In addition, the government could work with manufacturing companies to re-train workers in more advanced manufacturing processes.

• Manufacturing innovation is important because it requires high value-added knowledge work that

supports future innovation. Second, innovation generates high-paying jobs. Third, innovation is important because it improves productivity, thereby slowing the outsourcing of jobs to lower wage countries.

Reading: Agility Creates a Competitive Edge

The first solution could be for U.S. retailers to continue sourcing from China that part of demand that is certain and to source uncertain demand from the same low-cost producers in Romania and Turkey. 1 / 4

Chapter 01 - Introduction to Operations Management 1-2 Copyright © 2021 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.This approach provides the advantages of low-cost manufacturing in China and the flexibility provided by the suppliers in Romania and Turkey. The disadvantage of this approach is that transportation times for U.S. retailers still will be longer than the transportation times faced by Zara’s and H & M.A second approach could be that U.S retailers find low-cost, flexible suppliers just across the border in Mexico. The advantages of this approach include low wages and shorter transportation times. The primary disadvantages to this approach involve the time and expense of locating new suppliers.Additionally, the U.S. retailers might have to lend considerable support developing the capabilities of these suppliers.

Reading: Sustainable Kisses

• Hershey’s and other companies engage in sustainable business practices because consumers

prefer to do business with companies that practice sustainable sourcing and ethical treatment of workers. Many of the leaders in these businesses hold the same values. By educating farmers, Hershey’s can also help to increase the longevity and yield of cocoa plants.

• Hershey’s actions may influence retailers and customers in its supply chain to become better-

educated about sourcing, which may influence competitors to adopt similarly sustainable business practices.

Operations Tour: Wegmans Food Markets

1. Customers judge the quality of a supermarket based on:

• Quality of individual products.
• Exterior and interior physical look of the store.
• Effectiveness and efficiency of service personnel.
• Customer satisfaction is the major key to the success of any operation; without it, the

company cannot survive.

• Forecasting allows the company to plan the workforce levels, purchase quantities, inventory

levels, and capacity.

• Capacity planning allows the company to balance the trade-off between shortages and excess

inventories and between waiting lines and idle time.

• A good location can have a significant impact in attracting customers, thus improving sales.
• Planning and controlling levels of inventory will assist with avoiding stockouts and avoiding

excess inventory levels.

• Good layout of the store can assist in maximizing customer service and sales by strategically

directing customers through the store. An effective layout can also improve the efficiency of the operations.

• Effective scheduling of company workers and work hours can improve both customer service

and efficiency. An effective schedule provides convenient store hours, minimal customer waiting lines, and minimal employee idle time.

• Wegmans uses technology to track inventory and manage its supply chain, which lessen the risk

of occurrences of out-of-stock events, and to maintain freshness in its meat and produce departments. 2 / 4

Chapter 01 - Introduction to Operations Management 1-3 Copyright © 2021 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.Answers to Discussion and Review Questions

• The term operations management relates to the management of systems or processes that create

goods and/or provide services. These processes involve the planning, coordination, and execution of all activities within an organization that create goods and services. A supply chain is the sequence of organizations, including their facilities, functions, and activities, that are involved in producing and delivering a product or service. This sequence begins with basic suppliers of raw materials and ends with the final customer. A supply chain includes activities and facilities external to the internal operations function, e.g., sourcing and transportation of inbound materials.

• The three primary functions are operations, finance, and marketing. Operations is concerned with

the creation of goods and services, finance is concerned with provision of funds necessary for operation, and marketing is concerned with promoting and/or selling goods or services.

• The operations function consists of all activities that are related directly to producing goods or

providing services. It is the core of most business organizations because it is responsible for the creation of an organization’s goods or services. Its essence is to add value during the transformation process (the difference between the cost of inputs and value and price of outputs).

• Among the important differences between manufacturing and service operations are:
• The nature and consumption of output.
• Uniformity of input.
• Labor content of jobs.
• Uniformity of output.
• Measurement of productivity.

Among the important similarities between manufacturing and service operations are:

• Forecasting and capacity planning to match supply and demand.
• Process Management
• Managing variations
• Monitoring and controlling costs and productivity
• Managing the supply chain
• Location planning, inventory management, quality control and scheduling

• The Industrial Revolution began in the 1770s in England, and spread to the rest of Europe and

to the U.S. in the late eighteenth century and the early nineteenth century. A number of inventions such as the steam engine, the spinning Jenny, and the power loom helped to bring about this change. There were also ample supplies of coal and iron ore to provide the necessary materials for generating the power to operate and build the machines that were much stronger and more durable than the simple wooden ones they replaced. 3 / 4

Chapter 01 - Introduction to Operations Management 1-4 Copyright © 2021 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.

• Frederick W. Taylor, who is often referred to as the father of scientific management,

spearheaded the scientific management movement. The science of management was based on observation, measurement, analysis, improvement of work methods, and economic incentives. Management should be responsible for planning, carefully selecting and training workers, finding the best way to perform each job, achieving cooperation between management and workers, and separating management activities from work activities.

• Parts of a product made to such precision that each part would fit any of the identical items

bring produced. It meant that individual parts would not have to be custom made because they were standardized.

• Breaking up a production process into a series of tasks, each performed by a different worker.

It enabled workers to learn jobs and become proficient at them more quickly, avoiding the delays of workers shifting from one activity to another.

• The service sector now accounts for more than 70 percent of jobs in the U.S. and that figure

continues to increase.

• Manufacturing is important in that it supplies a large proportion of exports and many service

jobs are dependent on manufacturing because they support manufacturing.

• Farm products are an example of non-manufacturing goods because there is no production

and the products naturally grow without human intervention.

• Models provide an abstraction and simplification of reality. Mathematical models are the most

abstract and most used in operations management. These models are used to assist in various decision-making scenarios. One of the main reasons for building mathematical models is that the experimentation with the model enables the decision-maker to analyze the model and make inferences about a problem without actually manipulating the real situation or problem.Therefore, the experimentation with the mathematical model rather than the actual problem or situation is less time consuming and less expensive.

• The degree of customization has important implications throughout a business organization.

Generally, higher degrees of customization involve more complexity in terms of production or service, involve different forms of layout (arrangement of the workplace), require higher worker skills, and have lower productivity.

• Initial cost, convenience, parking, taxes, time, repairs, upkeep, etc.
• Cost, technology, productivity, convenience, software applicability, etc.
• Initial cost, repairs, warranty, upkeep, monthly payments and interest, dependability,

insurance costs, etc.

• Control of the situation, class participation, perception, image, etc.
• This would depend on the nature of the product or service being offered as well as the type of

customer. Computer literate customers might seek a web site. If customers are strictly local, newspaper advertising might be a reasonable choice, especially if potential customers were not actively seeking out the business. In addition, if the business is seasonal, newspaper advertising might be preferred.

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