Handout 1

Pressures on business or management -global competition -rapid change in technology -shortening of Product Life Cycle -diversification of customer needs -continuous increase in labor cost

definition of Production/Operation : transforming inputs(resources) into outputs(product/service) to create or to add values for customer benefit and satisfaction agriculture/plantation, mining/collecting, fishing physical/chemical transforming(manufacturing) transportation(passenger/freight/cargo) storage/inventory distribution(wholesale/retail) psychological, behavioral change(service)

meaning of 'Operation Management' - the systematic design, direction and control of processes that transform inputs into products and services which offer customers benefits and satisfaction -ultimate goal: to minimize overall costs related (not partial minimization but global minimization)

development(a brief history) of OM

1) F. Taylor: the father of scientific management -time/motion study(observation, measurement, job design) : design of work methods and work process to improve performances(output, quantity) -setting up standards: determining a workers fair work quantity per day -motivation by differentiated wage system
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2) H. Ford: founded mass production system which includes assembly line -division of labor and introduction of moving assembly line manufacturing system -3S: simplification, specialization, standardization

3) OR/MS after World War II -introduced mathematical models in order to solve decision making problems and, as a result, applying to actual decision problems -uses interdisciplinary approach -uses computer in order to minimize time to solve problems and to minimize human mistakes in problem-solving process

4) Japans impact on manufacturing in the 1990's: JIT(by Toyota), TQM, keiretzu() etc. -try to prevent wastes, mistakes -emphasize continuous effort -give emphasis on supplier relationship :a foundation of Supply Chain Management as an extended approach

Competitiveness(competitive priorities) in OM

-cost the ability to produce(manufacture) and to deliver the same level of products services at lower cost level than competitors one

-flexibility the ability to meet change in demand volume (to absorb fluctuation of demand) and to satisfy variety of customer needs
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: volume flexibility: the ability of controlling or changing production quantity or service capacity in accordance with demand fluctuation : variety flexibility: variety of product line or assortment to satisfy customer's various needs

-quality : the ability to meet or to satisfy customers expectations and industry standards : consistency - the ability of preventing variation in offering product/service

-time : the ability of more rapid release of new product/service than competitors : shorter time span of offering product/service than competitors one : timeliness - the ability to supply properly(on time) when each customer needs most

cf. core competence(competency) : a companys unique strength or advantage in technology, process, customer relationship or supply relationship, etc. ex) Sony, Caterpillar, Harley-Davidson : a companys area of specialized expertise ex) Honda in engine area, Xerox in copy machine

Strategy : a directing plan to mobilize its limited resources in order to achieve an organization's goal

cf. competitive strategy(M. Porter) - three kinds of generic strategies in a certain industry -low cost strategy -differentiation strategy
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-concentration strategy

Operation Strategy : a concept of making full use of the function of operations in a company as a competitive weapon -requires to consider corporate strategy, market analysis(S-T-P), competitiveness, competency