LGT 2106

Principles of Operations
Management

Lecture 1

Introduction
 Course Administration
Subject Code : LGT2106
Subject Title : Principles of Operations
Management
Lecturer : Dr. Anthony Pang
Contact : Room M625 (Tel: 2766-4126)
anthony.pang@polyu.edu.hk

Lecture Session Day Time Venue

2106 Thursday 10:30 – 12:20 Y304/CD307
Tutorial Session Day Time Venue
2106 – TUT 001 Wednesday 11:30 – 12:20 M103/M409
2106 – TUT 002 Wednesday 17:30 – 18:20 N115/M409
Lecture Venue (Tentative)
Week ROOM
1 CD307
2 Y304
3 Y304
4 Y304
5 Y304
6 Y304
7 Y304
8 Y304
9 CD307
10 Y304
11 Y304
12 Y304
13 CD307
14 Y304

3
 Course Administration
Assessment Components
COURSEWORK: 50%
Case Study/Project 15%
Quiz (2 quizzes) 10%
Midterm Exam 20%
Class Participation 5%

EXAMINATION: 50%

Students are required to pass BOTH components in order to get a

“Pass” grade for the subject.
 Course Administration
• Major Readings:
– Jacobs, F. R., and Chase, R. B., (2013), Operations and Supply Management: The Core (3rd ed.),
McGraw-Hill.
– Heizer, J. & Render, B., (2014), Operations Management (11th ed.), Pearson.
– Davis, M.M. & Heineke J., Operations Management: Integrating Manufacturing and Services,
5th edition, McGraw-Hill 2005.

• References:
– Krajewski, L. J., Ritzman, L. P., Malhotra, M. K., (2013), Operations management : processes
and supply chains (10th ed.), Pearson/Prentice Hall.
– Schroeder, R. G., Goldstein, S. M., Rungtusanatham, M. J., (2013), Operations management in
the supply chain : decisions and cases, McGraw-Hill.
– Jacobs, F. R., (2014), Operations and supply chain management (14th ed.), McGraw-Hill.
– Chase, R. B., Jacobs, F. R., and Aquilano, N. J., (2006), Operations management for competitive
advantage (11th ed.), McGraw-Hill.
 Lecture Topics
Lecture Topic
1 Introduction to Operations Management
2 Supply Chain Management
3 Forecasting
4 Aggregate Planning and Capacity Management
5 Facility Location and Layout
6 Operations Scheduling
7 Project Management
8 Quality Management
9 Inventory Management
 What Is Operations Management?
• Operations Management
– Management of the conversion process which
transforms inputs such as raw material and labor into
outputs in the form of finished goods and services.

Inputs Outputs
(customers Transformation Process (goods
and/or (components) and
materials) services)
Role of OM within an Organization

Exhibit 1.1
 Top-down Approach to OM Strategy
• Operations Strategy Decisions
– Strategic (long-range)
• Needs of customers (capacity planning)

– Tactical (medium-range)
• Efficient scheduling of resources

– Operational planning
and control (short-range)
• Immediate tasks and activities
 An Operational-Level OM Perspective
• OM’s function focuses on adding value through the
transformation process (technical core) of converting
inputs into outputs.

– Physical: manufacturing
– Locational: transportation
– Exchange: retailing
– Storage: warehousing
– Physiological: health care
– Informational: telecommunications
The Transformation Process within OM

Exhibit 1.2
 Input-Transformation-Output
Relationships for Typical Systems

Exhibit 1.3
 OM’s Contributions to Society
• Higher Standard of Living
– Ability to increase productivity
– Lower cost of goods and services

• Better Quality Goods and Services

– Competition increases quality

• Concern for the Environment

– Recycling and concern for air and water quality

• Improved Working Conditions

– Better job design and employee participation
 The Emergence of OM
• Application of OM to Service Operations
– Batch cooking operations at McDonald’s
– Automatic inventory replenishment at Wal-Mart

2010 Statistics
United States 76.7%
United Kingdom 77.1%
France 79.0%
Canada 71.3%
Japan 75.7%

Brazil 67.5%
Thailand 44.0%
Peru 52.6%
India 55.3%
Ghana 41.6%

China 43.6%
Hong Kong 92.3%
Macau 97.1%
 Growth in Services in the United States
83.5%

16.5%

2010

Source: Handbook of U.S. Labor Statistics, edited by Eva E. Jacobs,

Fifth Edition, Bernan Press, 2001, Table 2-1, pp. 161–164. Exhibit 1.6
Differences Between Goods and Services
• Goods • Services
– Tangible – Intangible

– Can be inventoried – Cannot be Inventoried

– Less interaction between – Direct interaction between

customer and process customer and process

Exhibit 1.7
Most Products Are a “Bundle”
of Goods and Services

Exhibit 1.8
Inputs Provided by OM to Other
Functional Areas

Exhibit 1.12
The Value Chain and Its Support Functions
Value Chain
All steps an organization requires to produce a good or a service
regardless of where they are performed. This concept attempts to
eliminate all non-value-added steps (such as inspections and inventory).

Exhibit 1.10
 Competitive Dimensions
• Price: make the product or deliver the service cheap

• Quality: make a great product or deliver a great service

• Delivery speed: make the product or deliver the service

quickly

• Delivery reliability: deliver it as promised

• Coping with changes in demand: change its volume

• Flexibility and new product introduction speed: change

it
Order Qualifiers and Winners Defined
• Order qualifiers: the basic criteria that permit the firms
products to be considered as candidates for purchase by
customers

• Order winners: the criteria that differentiates the products

and services of one firm from another
The End
Thank You