MGMT 361 1st EditionLecture 1Outline of Last Lecture (N/A)Outline of Current Lecture I. What is Operations Management (OM)?II. Why should you care about OM?III. Intro to manufacturing versus Service IV. Course overview-objectives, projects, assignments, grading etc. Current LectureI. Why does Operations Management Matter?a. Deciding between In-house or Outsourcing- Boeing example, i. Outsourcing: Adv; specialization, lower costs/Disadv: harder to control, quality issues, extra transportation costs, transactions costs, and monitoring costs—doesn’t save time II. What us Operations Management?Operations Management in a Nutshell- 3 Major Parts1. All businesses create a salable “product”2. Product is made by transforming inputs into outputs 3. Operations function manages this transformation process-EX. Ford-Inputs: steel, ties, parts of carProcess: Assembly line Output: Car Mayo ClinicInputs: sick people, medicine, and doctors Process: treatment diagnosis Outputs: healthy people Three Major Functions of every business: Marketing, Finance, and Operations - United States only focuses 5% on operations vs. other newer countries like Vietnam or China Why? —US can streamline technology, and cheap Labor* These notes represent a detailed interpretation of the professor’s lecture. GradeBuddy is best used as a supplement to your own notes, not as a substitute.- New trend for manufacturing plants are moving back to US- cost of monitoring and transportation is higher abroad (India and China no longer have competitive advantage.-Operations and Marketing Interactions; Think Apple -Operations and Financing Interactions; Think Gas Prices are now cheap- consumers are more willing to buy SUVs and Trucks - Operations can provide a competitive advantageo EX. Dell vs. HP; Dell has customization o Toyota vs. GM; Toyota uses mass production o Walmart vs. K-mart; Walmart has Every day low prices and uses RFID (Radio Frequency Identification – significantly reduces labor costs- need less people) o Southwest vs. American Airlines; Southwest is cheaper, sitting system, overbooking - Operations can impact Performance – Toys R Us- Christmas 1999; wrong inventory estimate leads to wrong processes- failure in operations- they ran out of inventory - Recessions force companies to refocus operations- Starbucks 2009III. Introduction to Manufacturing vs. Service Manufacturing: tangible, inventory, low contact with process; apparel, pharmaceuticals, computers, furnitureVS Service: Intangible, high contact with process, banks, colleges, hospitals,