Select Page
  

One issue with products/services is they may fail to update to current technology or consumer needs. how an outdated/bad product was initially developed and what need it served. Then define how the current needs/technologies have changed with respect to the product/service. Finally, redesign the product/service to the current needs/technology. The steps for the assignment are: 1. Recreate the requirements gathering process that could have led to the outdated/bad design of the product. 2. Define how modern day requirements would change the product. 3. Redesign the product. Based on your redesign, how long do you estimate the product life cycle to be before another redesign/update is needed?Assignment format:Using a well-organized Word document, answer the three questions above. Please make sure to use headings to separate the three parts of the assignment.
operations_and_productivity.pdf

Unformatted Attachment Preview

Don't use plagiarized sources. Get Your Custom Essay on
Requirements gathering process for the outdated design of the product
Just from $10/Page
Order Essay

PART ONE
Introduction to Operations Management
GLOBAL COMPANY PROFILE: Hard Rock Cafe

What Is Operations Management? 4

Organizing to Produce Goods
and Services 4

The Supply Chain 6

Why Study OM? 6

What Operations Managers Do 7

The Heritage of Operations Management 8




Operations for Goods and Services 11
The Productivity Challenge 13
Current Challenges in Operations
Management 18
Ethics, Social Responsibility, and
Sustainability 19
Alaska Airlines
CHAPTER
OUTLINE
C H A P T E R
1
Operations and Productivity
10
OM
STRATEGY
DECISIONS





Design of Goods and Services
Managing Quality
Process Strategy
Location Strategies
Layout Strategies





Human Resources
Supply-Chain Management
Inventory Management
Scheduling
Maintenance
1
M01_HEIZ0422_12_SE_C01.indd 1
01/12/15 2:18 PM
C H A P T E R
1
Operations Management at
Hard Rock Cafe
GLOBAL COMPANY PROFILE
Hard Rock Cafe
O
perations managers throughout the world are producing products every day to provide
for the well-being of society. These products take on a multitude of forms. They may be
washing machines at Whirlpool, motion pictures at DreamWorks, rides at Disney World, or
food at Hard Rock Cafe. These firms produce thousands of complex products every day—to be
delivered as the customer ordered them, when the customer wants them, and where the customer wants them. Hard Rock does this for over 35 million guests worldwide every year. This is a
challenging task, and the operations manager’s job, whether at Whirlpool, DreamWorks, Disney,
or Hard Rock, is demanding.
Operations managers are interested in
the attractiveness of the layout, but they
must be sure that the facility contributes
to the efficient movement of people and
material with the necessary controls to
ensure that proper portions are served.
Demetrio Carrasco/Rough Guides/Dorling Kindersley, Ltd.
Andre Jenny/Alamy
Hard Rock Cafe in Orlando, Florida,
prepares over 3,500 meals each day.
Seating more than 1,500 people, it is
one of the largest restaurants in the
world. But Hard Rock’s operations
managers serve the hot food hot and
the cold food cold.
2
M01_HEIZ0422_12_SE_C01.indd 2
01/12/15 2:18 PM
Presselect/Alamy
Efficient kitchen layouts, motivated
personnel, tight schedules, and the right
ingredients at the right place at the right time
are required to delight the customer.
Jack Picone/Alamy
Lots of work goes into designing
designing, testing,
testing and costing
meals. Then suppliers deliver quality products on time,
every time, for well-trained cooks to prepare quality
meals. But none of that matters unless an enthusiastic
waitstaff, such as the one shown here, holding guitars
previously owned by members of U2, is doing its job.
Orlando-based Hard Rock Cafe opened its first restau-
ingredients, labor requirements, and customer satisfaction.
rant in London in 1971, making it over 45 years old and the
On approval, menu items are put into production—and then
granddaddy of theme restaurants. Although other theme
only if the ingredients are available from qualified suppliers.
restaurants have come and gone, Hard Rock is still going
The production process, from receiving, to cold storage,
strong, with 150 restaurants in more than 53 countries—and
to grilling or baking or frying, and a dozen other steps, is
new restaurants opening each year. Hard Rock made its
designed and maintained to yield a quality meal. Operations
name with rock music memorabilia, having started when Eric
managers, using the best people they can recruit and train,
Clapton, a regular customer, marked his favorite bar stool
also prepare effective employee schedules and design
by hanging his guitar on the wall in the London cafe. Now
efficient layouts.
Hard Rock has 70,000 items and millions of dollars invested
Managers who successfully design and deliver goods
in memorabilia. To keep customers coming back time and
and services throughout the world understand operations.
again, Hard Rock creates value in the form of good food and
In this text, we look not only at how Hard Rock’s manag-
entertainment.
ers create value but also how operations managers in other
The operations managers at Hard Rock Cafe at Uni-
services, as well as in manufacturing, do so. Operations
versal Studios in Orlando provide more than 3,500 custom
management is demanding, challenging, and exciting. It
products—in this case meals—every day. These products
affects our lives every day. Ultimately, operations managers
are designed, tested, and then analyzed for cost of
determine how well we live.
3
M01_HEIZ0422_12_SE_C01.indd 3
01/12/15 2:19 PM
L E A RNING
OBJECTIVES
LO 1.1
Define operations management 4
LO 1.2
Explain the distinction between goods and services 11
LO 1.3
Explain the difference between production and productivity 13
LO 1.4
Compute single-factor productivity 14
LO 1.5
Compute multifactor productivity 15
LO 1.6
Identify the critical variables in enhancing productivity 16
STUDENT TIP
Let’s begin by defining what
this course is about.
LO 1.1 Define
operations management
VIDEO 1.1
Operations Management
at Hard Rock
VIDEO 1.2
Operations Management at
Frito-Lay
Production
The creation of goods and
services.
Operations management (OM)
Activities that relate to the creation
of goods and services through
the transformation of inputs to
outputs.
STUDENT TIP
Operations is one of the
three functions that every
organization performs.
What Is Operations Management?
Operations management (OM) is a discipline that applies to restaurants like Hard Rock Cafe
as well as to factories like Ford and Whirlpool. The techniques of OM apply throughout the
world to virtually all productive enterprises. It doesn’t matter if the application is in an office,
a hospital, a restaurant, a department store, or a factory—the production of goods and services requires operations management. And the efficient production of goods and services
requires effective applications of the concepts, tools, and techniques of OM that we introduce
in this book.
As we progress through this text, we will discover how to manage operations in an economy
in which both customers and suppliers are located throughout the world. An array of informative examples, charts, text discussions, and pictures illustrates concepts and provides information. We will see how operations managers create the goods and services that enrich our lives.
In this chapter, we first define operations management, explaining its heritage and exploring
the exciting role operations managers play in a huge variety of organizations. Then we discuss
production and productivity in both goods- and service-producing firms. This is followed by a
discussion of operations in the service sector and the challenge of managing an effective and
efficient production system.
Production is the creation of goods and services. Operations management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs.
Activities creating goods and services take place in all organizations. In manufacturing firms,
the production activities that create goods are usually quite obvious. In them, we can see the
creation of a tangible product such as a Sony TV or a Harley-Davidson motorcycle.
In an organization that does not create a tangible good or product, the production function may be less obvious. We often call these activities services. The services may be “hidden”
from the public and even from the customer. The product may take such forms as the transfer
of funds from a savings account to a checking account, the transplant of a liver, the filling of
an empty seat on an airplane, or the education of a student. Regardless of whether the end
product is a good or service, the production activities that go on in the organization are often
referred to as operations, or operations management.
Organizing to Produce Goods and Services
To create goods and services, all organizations perform three functions (see Figure 1.1). These
functions are the necessary ingredients not only for production but also for an organization’s
survival. They are:
1. Marketing, which generates the demand, or at least takes the order for a product or service (nothing happens until there is a sale).
2. Production/operations, which creates, produces, and delivers the product.
3. Finance/accounting, which tracks how well the organization is doing, pays the bills, and
collects the money.
Universities, churches or synagogues, and businesses all perform these functions. Even a volunteer group such as the Boy Scouts of America is organized to perform these three basic
4
M01_HEIZ0422_12_SE_C01.indd 4
01/12/15 2:19 PM
CHAP TER 1
|
OPERATIONS AND PRODUCTIVITY
Figure
(A)
((A
A
1.1
Organization Charts for Two
Service Organizations and One
Manufacturing Organization
Commercial
Com
om
mm
mer
errccia
ia
al B
Bank
a
an
ank
stockshoppe/Shutterstock
5
Operations
ns
Finance
Fi
Fin
inanc
ance
ance
an
Ma
M
Mar
Marketing
ar
Teller scheduling
heduling
Check clearing
earing
Collection
n
Transaction
on processing
Facilities design/layout
Vault operations
erations
Maintenance
nce
Security
Investments
Invest
Inv
nv
ves
estmen
est
nts
ts
Securities
Se
Sec
S
ec
curi
uritie
ties
s
Real
Re
Rea
R
ea
eal esta
e
estate
sta
tate
te
te
Accounting
Acccoun
Ac
Acc
ou tin
ing
g
Loans
Loa
L
Lo
o ns
Commercial
Commerc
Industrial
Financial
Personal
Mortgage
Auditing
A
Au
Aud
iti
it
iting
ting
Trust
department
T st dep
Tr
Tru
d
de
pa
(A) a bank, (B) an airline, and
(C) a manufacturing organization.
The blue areas are OM activities.
STUDENT TIP
The areas in blue indicate the
significant role that OM plays in both
manufacturing and service firms.
(B)
Sergiy Serdyuk/Fotolia
Airline
Operations
support
Ground supp
port
rtt equipment
Maintenance
M intenance
Ma
e
Ground
Gro
round
ro
und
un
d operations
opera
op
pe
era
ra
atio
ons
ns
Facility
tyy maintenance
maiinte
ntenan
nt
tena
nance
nan
ance
ce
Catering
Flight
Fllig
Fli
Fl
gh
ght
h operations
operatio
op
erra
era
er
ations
tio
io
ons
ns
Crew scheduling
sche
che
hed
he
duliling
du
dul
ing
in
Flying
Communications
Dispatching
Management science
Finance/accounting
Accounting
Accounts payable
pay
yabl
ab e
Accounts
Accoun
u ts receivable
un
re eiv
rec
va
abl
bl
ble
General
Gen
en
nera
e l ledger
er
led
edg
dger
d
er
Finance
Fin
nanc
anc
a
nc
ce
Cash
Cas
as
sh control
cont
ontrrol
oll
International
I ern
Int
ernati
ationa
ati
ona
al
exchange
exchange
exch
exc
Marketing
ng
Traffic administration
adm
ad
dministrat
ration
rat
ra
ion
Reservations
Reserv
Reserv
Res
vat
ati
t ons
Schedules
Schedu
Sch
chedu
dulles
les
s
Tariffs
Tar
Tar
arif
iffs
iff
if
s (pricing)
(pri
p cin
cing)
ing)
Sales
Sa
Sale
Sal
ales
es
Advertising
Adv
A
Ad
d ert
dv
errttis
isi
s ng
ng
(C)
Manufacturing
Operations
Facilities
Construction; maintenance
Production and inventory
ry co
ry
ccontrol
ntrol
Scheduling; materials co
control
on
ntr
nt
trol
tr
ol
ea
nd ccontrol
on
nt ol
ntr
nt
Quality assurance
and
hain managem
ment
ntt
Supply-chain
management
Alexzel/Shutterstock
Manufacturing
nuf
ufacturing
Tooling;
oolin
oo
lin
ing;
in
g fabrication; as
g;
assem
assembly
sem
embly
embly
y
Design
Product development
velop
ve
lop
opmen
me t a
and
nd
n
dd
de
des
design
es
e
sig
iign
gn
g
n
Detailed productt spec
sspecifications
pec
pecific
cifi
ific
ficati
fic
atitions
ations
at
ons
Fin
na
anc
an
nce
e/a
/a
account
Finance/accounting
D
Dis
is
sbur
burrsem
semen
en s/c
/c
/c
Disbursements/credits
Acc
A
ccoun
ounts rreceivable
e eiv
eiv
v
Accounts
Acc
cc
cou
oun
un
u
nts
s pa
p
ayab
ab
Accounts
payable
G
Ge
Gen
e eral ledg
ed
ed
dg
ger
General
ledger
Marketing
Sales promotion
Advertising
Sales
Market research
Fu
F
Fun
u
unds
un
nds man
m
ma
an
nage
age
gement
Funds
management
Mon
Mo
oney
ym
ma
arket
ket
ke
Money
market
Int
terrna
rnationa
ona
nall e
na
xch
xc
chan
c
nge
International
exchange
Cap
C
ap
pita
ittal rrequirements
eq
equ
q ire
re
emen
m ntss
Capital
Sto
ock
k iss
is
ss
ss
ssue
Stock
issue
B
Bon
Bo
ond
on
nd iissue
s e and
ss
ssu
an
nd
d rec
rrecall
re
all
all
Bond
Industrial engineering
Efficient use of machines, sspace,
pace,
pac
e
and personnel
Process analysis
Development and installation of
production tools and equipment
M01_HEIZ0422_12_SE_C01.indd 5
01/12/15 2:19 PM
6
PA RT 1
Figure
1.2
|
I NTRODUCTI ON TO OPERATI ONS MANAGEMENT
Soft Drink Supply Chain
A supply chain for a bottle of
Coke requires a beet or sugar
cane farmer, a syrup producer, a
bottler, a distributor, and a retailer,
each adding value to satisfy a
customer. Only with collaborations
between all members of the supply
chain can efficiency and customer
satisfaction be maximized. The
supply chain, in general, starts
with the provider of basic raw
materials and continues all the
way to the final customer at the
retail store.
Supply chain
A global network of organizations
and activities that supplies a firm
with goods and services.
STUDENT TIP
Good OM managers are
scarce and, as a result,
career opportunities and
pay are excellent.
Example 1
Farmer
Syrup
producer
Bottler
Distributor
Retailer
functions. Figure 1.1 shows how a bank, an airline, and a manufacturing firm organize themselves to perform these functions. The blue-shaded areas show the operations functions in
these firms.
The Supply Chain
Through the three functions—marketing, operations, and finance—value for the customer is
created. However, firms seldom create this value by themselves. Instead, they rely on a variety
of suppliers who provide everything from raw materials to accounting services. These suppliers, when taken together, can be thought of as a supply chain. A supply chain (see Figure 1.2) is
a global network of organizations and activities that supply a firm with goods and services.
As our society becomes more technologically oriented, we see increasing specialization.
Specialized expert knowledge, instant communication, and cheaper transportation also foster
specialization and worldwide supply chains. It just does not pay for a firm to try to do everything itself. The expertise that comes with specialization exists up and down the supply chain,
adding value at each step. When members of the supply chain collaborate to achieve high levels
of customer satisfaction, we have a tremendous force for efficiency and competitive advantage.
Competition in the 21st century is not between companies; it is between supply chains.
Why Study OM?
We study OM for four reasons:
1. OM is one of the three major functions of any organization, and it is integrally related to
all the other business functions. All organizations market (sell), finance (account), and
produce (operate), and it is important to know how the OM activity functions. Therefore,
we study how people organize themselves for productive enterprise.
2. We study OM because we want to know how goods and services are produced. The production function is the segment of our society that creates the products and services we use.
3. We study OM to understand what operations managers do. Regardless of your job in an
organization, you can perform better if you understand what operations managers do.
In addition, understanding OM will help you explore the numerous and lucrative career
opportunities in the field.
4. We study OM because it is such a costly part of an organization. A large percentage of the
revenue of most firms is spent in the OM function. Indeed, OM provides a major opportunity for an organization to improve its profitability and enhance its service to society.
Example 1 considers how a firm might increase its profitability via the production function.
EXAMINING THE OPTIONS FOR INCREASING CONTRIBUTION
Fisher Technologies is a small firm that must double its dollar contribution to fixed cost and profit in
order to be profitable enough to purchase the next generation of production equipment. Management
has determined that if the firm fails to increase contribution, its bank will not make the loan and the
equipment cannot be purchased. If the firm cannot purchase the equipment, the limitations of the old
equipment will force Fisher to go out of business and, in doing so, put its employees out of work and
discontinue producing goods and services for its customers.
M01_HEIZ0422_12_SE_C01.indd 6
01/12/15 2:19 PM
CHAP TER 1
|
7
OPERATIONS AND PRODUCTIVITY
Table 1.1 shows a simple profit-and-loss statement and three strategic options (marketing, finance/accounting, and operations) for the firm. The first option is a marketing option, where
excellent marketing management may increase sales by 50%. By increasing sales by 50%, contribution
will in turn increase 71%. But increasing sales 50% may be difficult; it may even be impossible.
APPROACH c
TABLE 1.1
Options for Increasing Contribution
MARKETING
OPTIONa
FINANCE/
ACCOUNTING
OPTIONb
OM
OPTIONc
INCREASE SALES
REVENUE 50%
REDUCE FINANCE
COSTS 50%
REDUCE PRODUCTION
COSTS 20%
$100,000
$150,000
$100,000
$100,000
−80,000
−120,000
−80,000
−64,000
CURRENT
Sales
Costs of goods
Gross margin
20,000
30,000
20,000
36,000
Finance costs
−6,000
−6,000
−3,000
−6,000
Subtotal
14,000
24,000
17,000
30,000
Taxes at 25%
−3,500
−6,000
−4,250
−7,500
Contributiond
$ 10,500
$ 18,000
$ 12,750
$ 22,500
aIncreasing
sales 50% increases contribution by $7,500, or 71% (7,500/10,500).
bReducing
finance costs 50% increases contribution by $2,250, or 21% (2,250/10,500).
cReducing
production costs 20% increases contribution by $12,000, or 114% (12,000/10,500).
dContribution
to fixed cost (excluding finance costs) and profit.
The second option is a finance/accounting option, where finance costs are cut in half through good
financial management. But even a reduction of 50% is still inadequate for generating the necessary
increase in contribution. Contribution is increased by only 21%.
The third option is an OM option, where management reduces production costs by 20% and increases
contribution by 114%.
Given the conditions of our brief example, Fisher Technologies has increased contribution from $10,500 to $22,500. It may now have a bank willing to lend it additional funds.
SOLUTION c
INSIGHT c The OM option not only yields the greatest improvement in contribution but also may be
the only feasible option. Increasing sales by 50% and decreasing finance cost by 50% may both be virtually impossible. Reducing operations cost by 20% may be difficult but feasible.
LEARNING EXERCISE c What is the impact of only a 15% decrease in costs in the OM option?
[Answer: A $19,500 contribution; an 86% increase.]
Example 1 underscores the importance of the effective operations activity of a firm. Development of increasingly effective operations is the approach taken by many companies as they
face growing global competition.
What Operations Managers Do
All good managers perform the basic functions of the management process. The management
process consists of planning, organizing, staffing, leading, and controlling. Operations managers apply this management process to the decisions they make in the OM function. The 10
strategic OM decisions are introduced in Table 1.2. Successfully addressing each of these decisions
requires planning, organizing, staffing, leading, and controlling.
How does one get started on a career in operations? The 10
strategic OM decisions identified in Table 1.2 are made by individuals who work in the disciplines shown in the blue areas of Figure 1.1. Business students who know their accounting,
Where Are the OM Jobs?
M01_HEIZ0422_12_SE_C01.indd 7
10 Strategic OM Decisions
Design of goods and services
Managing quality
Process strategy
Location strategies
Layout strategies
Human resources
Supply-chain management
Inventory management
Scheduling
M …
Purchase answer to see full
attachment

Order your essay today and save 10% with the discount code ESSAYHSELP