1. Operations management is in the business area concerned with the efficiency and effectiveness of the operation in support and development of the firm’s strategic goals. ‘Operations’ is the only MBA subject that concerns itself with actually making products and providing services – the ultimate purpose of business.
2. Three management styles used in the plant: (a) Theory X – believe that people are inherently lazy and need to be pushed to produce with rewards and punishments. (b) Theory Y – Workers are inventive and should be consulted for ideas to improve productivity. (c) Theory Z – Combination of Theory X and Y, workers and management work together in quality circles.
3. There are five-issue framework applies to all operational situations:
(a) Capacity – how much I can produce?
There are six M’s to guide you in manufacturing analysis – Methods, Materials, Manpower, Machinery, Money and Messages.
(b) Scheduling – how am I going to do it?
There are tools to help production manager to do scheduling. Optimal timing should be determined so that the sequence of production tasks could be efficiently planned, coordinated, and performed.
(c) Inventory – How much inventory is there and how can I reduce it?
There are different methods and tools to control inventory in a factory. MRP (material requirements planning) system is used to plan and control inventories required in a factory.
(d) Standards – What do I consider efficient production and quality control?
With all the information about the production process, standards are being setup so that managers can use them to measure and control performance.
(e) Controls – Is the production process working?
There are different tools to do production control for example (i) statistical process control (SPC) – distinguishing acceptable variations from variations that could indicate problems, statistical probability provides a method of making that distinction; and (ii) Six sigma – the range of variation that occurs 68 percent of the time was called on standard deviation or one sigma from the expected quantity. Any production measure outside a one-sigma-tolerance quality standard would signal a production problem. Six sigma refers to a program developed by Motorola that refers to a goal of six-sigma standard or 3.4 defects per million. Many companies have six-sigma programs in place to reduce defects and increase profits.
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