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Operations management is an area of
management Management (or managing) is the administration of an organization An organization, or organisation (Commonwealth English The use of the English language English is a West Germanic languages, West Germanic language first spok ...

management
concerned with designing and controlling the process of
production Production may refer to: Economics and business * Production (economics) Production is the process of combining various material inputs and immaterial inputs (plans, know-how) in order to make something for consumption (output). It is the act of ...
and redesigning
business operations The outcome of business operations is the ''harvesting'' of value from assets owned by a business. Assets can be either ''tangible property, physical'' or ''intangible asset, intangible''. An example of value derived from a physical asset, like a ...
in the production of
good In most contexts, the concept of good denotes the conduct that should be preferred when posed with a choice between possible actions. Good is generally considered to be the opposite of evil Evil, in a general sense, is defined by what it ...
s or
services Service may refer to: Activities :''(See the Religion section for religious activities)'' * Administrative service, a required part of the workload of Faculty (academic staff), university faculty * Civil service, the body of employees of a governm ...
. It involves the responsibility of ensuring that
business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterprise entered into for profit." Having a business name A trad ...

business
operations are
efficient
efficient
in terms of using as few resources as needed and
effective Effectiveness is the capability of producing a desired result or the ability to produce desired output. When something is deemed effective, it means it has an intended or expected outcome, or produces a deep, vivid impression. Etymology The origi ...
in meeting customer requirements. It is concerned with managing an entire production or service system which is the process that converts inputs (in the forms of
raw material A raw material, also known as a feedstock, unprocessed material, or primary commodity, is a basic material that is used to produce goods, finished Product (business), products, energy, or intermediate materials that are feedstock for future finis ...
s,
labor Labour or labor may refer to: * Childbirth, the delivery of a baby * Labour (human activity), or work ** Manual labour, physical work ** Wage labour, a socioeconomic relationship between a worker and an employer Literature * Labor (journal), ''L ...
,
consumers A consumer is a person or a group who intends to order, orders, or uses purchased goods, products, or services Service may refer to: Activities :''(See the Religion section for religious activities)'' * Administrative service, a required part o ...
, and
energy In physics Physics is the that studies , its , its and behavior through , and the related entities of and . "Physical science is that department of knowledge which relates to the order of nature, or, in other words, to the regula ...

energy
) into outputs (in the form of goods and/or services for consumers). Operations produce products, manage quality and create services. Operation management covers sectors like banking systems, hospitals, companies, working with suppliers, customers, and using technology. Operations is one of the major functions in an organization along with supply chains, marketing, finance and human resources. The operations function requires management of both the strategic and day-to-day production of goods and services. In managing manufacturing or service operations several types of decisions are made including operations strategy, product design, process design, quality management, capacity, facilities planning, production planning and inventory control. Each of these requires an ability to analyze the current situation and find better solutions to improve the effectiveness and efficiency of manufacturing or service operations. A modern, integrated vision of the many aspects of operations management may be found in recent textbooks on the subject.


History

The history of production and operation systems begins around 5000 B.C. when
Sumer Sumer ()The name is from Akkadian language, Akkadian '; Sumerian language, Sumerian ''kig̃ir'', written and ,approximately "land of the civilized kings" or "native land". means "native, local", iĝir NATIVE (7x: Old Babylonian)from ''The ...

Sumer
ian priests developed the ancient system of recording inventories, loans, taxes, and business transactions. The next major historical application of operation systems occurred in 4000 B.C. It was during this time that the
Egyptians Egyptians ( arz, المصريين, ; cop, ⲣⲉⲙⲛ̀ⲭⲏⲙⲓ, remenkhēmi) are an ethnic group of people originating from the country of Egypt Egypt ( ar, مِصر, Miṣr), officially the Arab Republic of Egypt, is a spanning t ...
started using
planning Planning is the process A process is a series or set of activities that interact to produce a result; it may occur once-only or be recurrent or periodic. Things called a process include: Business and management *Business process A business p ...

planning
,
organization An organization, or organisation (Commonwealth English The use of the English language English is a of the , originally spoken by the inhabitants of . It is named after the , one of the ancient that migrated from , a peninsu ...

organization
, and control in large
projects A project (or program) is any undertaking, carried out individually or collaboratively and possibly involving research or design, that is carefully plan A plan is typically any diagram or list of steps with details of timing and resources, used t ...
such as the construction of the pyramids. By 1100 B.C., labor was being specialized in
China China (), officially the People's Republic of China (PRC; ), is a country in East Asia East Asia is the eastern region of Asia Asia () is Earth's largest and most populous continent, located primarily in the Eastern Hemisphere ...

China
; by about 370 B.C.,
Xenophon Xenophon of Athens (; grc, Ξενοφῶν Xenophon of Athens (; grc-gre, Ξενοφῶν, , ''Xenophōn''; – 354 BC) was an Athenian , image_skyline = File:Athens Montage L.png, center, 275px, alt=Athens mont ...

Xenophon
described the advantages of dividing the various operations necessary for the production of shoes among different individuals in
ancient Greece Ancient Greece ( el, Ἑλλάς, Hellás) was a civilization belonging to a period of History of Greece, Greek history from the Greek Dark Ages of the 12th–9th centuries BC to the end of Classical Antiquity, antiquity ( AD 600). This era wa ...
: In the
Middle Ages In the history of Europe The history of Europe concerns itself with the discovery and collection, the study, organization and presentation and the interpretation of past events and affairs of the people of Europe since the beginning of ...
, kings and queens ruled over large areas of land. Loyal noblemen maintained large sections of the monarch's territory. This hierarchical organization in which people were divided into classes based on social position and wealth became known as the
feudal system Feudalism, also known as the feudal system, was the combination of the legal, economic, military, and cultural customs that flourished in Medieval Europe In the history of Europe The history of Europe concerns itself with the disco ...
. In the feudal system,
vassal A vassal or liege subject is a person regarded as having a mutual obligation to a lord Lord is an appellation for a person or deity who has authority, control, or power (social and political), power over others, acting as a master, a chief ...
s and
serfs Serfdom was the status of many peasants under feudalism, specifically relating to manorialism, and similar systems. It was a condition of debt bondage and indentured servitude with similarities to and differences from slavery, which developed ...
produced for themselves and people of higher classes by using the ruler's land and resources. Although a large part of labor was employed in agriculture,
artisans Wood carver in Bali An artisan (from french: artisan, it, artigiano) is a skilled worker, skilled craft worker who makes or creates material objects partly or entirely by handicraft, hand. These objects may be wikt:functional, functional ...
contributed to economic output and formed
guilds A guild is an association of artisan Wood carver in Bali An artisan (from french: artisan, it, artigiano) is a skilled craft worker who makes or creates material objects partly or entirely by hand. These objects may be functiona ...
. The guild system, operating mainly between 1100 and 1500, consisted of two types: merchant guilds, who bought and sold goods, and craft guilds, which made goods. Although guilds were regulated as to the quality of work performed, the resulting system was rather rigid,
shoemakers Woodcut of shoemakers from 1568. Shoemaking is the process of making footwear Footwear refers to garments worn on the feet, which originally serves to purpose of protective clothing, protection against adversities of the environment, usually r ...

shoemakers
, for example, were prohibited from tanning hides. Services were also performed in the Middle Ages by servants. They provided service to the nobility in the form of cooking, cleaning and providing entertainment. Court jesters were considered service providers. The medieval army could also be considered a service since they defended the nobility. The
industrial revolution The Industrial Revolution was the transition to new manufacturing processes in Great Britain, continental Europe Continental Europe or mainland Europe is the contiguous continent A continent is any of several large landmasse ...
was facilitated by two elements: interchangeability of parts and division of labor.
Division of labor Division or divider may refer to: Mathematics *Division (mathematics) Division is one of the four basic operations of arithmetic, the ways that numbers are combined to make new numbers. The other operations are addition, subtraction, and mult ...
has been a feature from the beginning of
civilization  A civilization (or civilisation) is a complex society A complex society is a concept that is shared by a range of disciplines including anthropology, archaeology, history and sociology to describe a stage of social formation. The concep ...

civilization
, the extent to which the division is carried out varied considerably depending on period and location. Compared to the Middle Ages, the
Renaissance The Renaissance ( , ) , from , with the same meanings. is a period Period may refer to: Common uses * Era, a length or span of time * Full stop (or period), a punctuation mark Arts, entertainment, and media * Period (music), a concept in ...

Renaissance
and the
Age of Discovery The Age of Discovery, or the Age of Exploration (sometimes also, particularly regionally, Age of Contact or Contact Period), is an informal and loosely defined term for the early modern period The early modern period of modern history ...
were characterized by a greater specialization in labor, which was a characteristic of the growing cities and trade networks of Europe. An important leap in manufacturing efficiency came in the late eighteenth century as
Eli Whitney Eli Whitney Jr. (December 8, 1765January 8, 1825) was an American inventor, widely known for inventing the cotton gin in Hamden, Connecticut Hamden is a New England town, town in New Haven County, Connecticut, New Haven County, Connecticut, ...
popularized the concept of when he manufactured 10,000 muskets. Up to this point in the history of manufacturing, each product (e.g. each musket) was considered a special order, meaning that parts of a given musket were fitted only for that particular musket and could not be used in other muskets. Interchangeability of parts allowed the mass production of parts independent of the final products in which they would be used. An entire new market to fill the need for the sale and manufacturing of muskets began at this time. In 1883,
Frederick Winslow Taylor Frederick Winslow Taylor (March 20, 1856 – March 21, 1915) was an American mechanical engineer Mechanical may refer to: Machine * Mechanical system, a system that manages the power of forces and movements to accomplish a task * Machine (mech ...
introduced the
stopwatch A stopwatch is a timepiece A clock is a device used to measure, verify, keep, and indicate time Time is the indefinite continued sequence, progress of existence and event (philosophy), events that occur in an apparently irreversi ...

stopwatch
method for accurately measuring the time to perform each single task of a complicated job. He developed the scientific study of productivity and identifying how to coordinate different tasks to eliminate wasting of time and increase the quality of work. The next generation of scientific study occurred with the development of
work sampling Work sampling is the statistical technique used for determining the proportion of time spent by workers in various defined categories of activity (e.g. setting up a machine, assembling two parts, idle…etc.). It is as important as all other statis ...
and predetermined motion time systems (PMTS). Work sampling is used to measure the random variable associated with the time of each task. PMTS allows the use of standard predetermined tables of the smallest body movements (e.g. turning the left wrist by 90°), and integrating them to predict the time needed to perform a simple task. PMTS has gained substantial importance due to the fact that it can predict work measurements without observing the actual work. The foundation of PMTS was laid out by the research and development of Frank B. and around 1912. The Gilbreths took advantage of taking motion pictures at known time intervals while operators were performing the given task. Service Industries: At the turn of the twentieth century, the services industries were already developed, but largely fragmented. In 1900 the U.S. service industry consisted of banks, professional services, schools, general stores, railroads and telegraph. Services were largely local in nature (except for railroads and telegraph) and owned by entrepreneurs and families. The U.S. in 1900 had 31% employment in services, 31% in manufacturing and 38% in agriculture. The idea of the
production line A production line is a set of sequential operations established in a factory A factory, manufacturing plant or a production plant is an Industry (manufacturing), industrial site, often a complex consisting of several buildings filled with O ...

production line
has been used multiple times in history prior to Henry Ford: the
Venetian Arsenal Entrance to the Arsenal ca. 1860–70. Photo by Venetian photographer Carlo Ponti The Venetian Arsenal ( it, Arsenale di Venezia) is a complex of former shipyard A shipyard (also called a dockyard) is a place where ships are built and re ...
(1104); Smith's pin manufacturing, in the
Wealth of Nations ''An Inquiry into the Nature and Causes of the Wealth of Nations'', generally referred to by its shortened title ''The Wealth of Nations'', is the ''magnum opus 's ''The Creation of Adam ''The Creation of Adam'' () is a fresco Fresco (pl ...

Wealth of Nations
(1776) or Brunel's
Portsmouth Block Mills The Portsmouth Block Mills form part of the Portsmouth Dockyard Her Majesty's Naval Base, Portsmouth (HMNB Portsmouth) is one of three operating bases in the United Kingdom for the Royal Navy (the others being HMNB Clyde and HMNB Devonport ...

Portsmouth Block Mills
(1802).
Ransom Olds Ransom Eli Olds (June 3, 1864 – August 26, 1950) was a pioneer of the Automotive industry in the United States, American automotive industry, after whom the Oldsmobile and REO Motor Car Company, REO brands were named. He claimed to have built hi ...
was the first to manufacture cars using the assembly line system, but
Henry Ford Henry Ford (July 30, 1863 – April 7, 1947) was an American industrialist A business magnate is someone who has achieved great success and enormous wealth through the ownership of multiple lines of enterprise. The term characteristicall ...

Henry Ford
developed the first auto assembly system where a car chassis was moved through the assembly line by a
conveyor belt A conveyor system is a common piece of mechanical handling equipment that moves materials from one location to another. Conveyors are especially useful in applications involving the transport of heavy or bulky materials. Conveyor systems allow ...

conveyor belt
while workers added components to it until the car was completed. During World War II, the growth of computing power led to further development of efficient manufacturing methods and the use of advanced mathematical and statistical tools. This was supported by the development of academic programs in
industrial Industrial may also refer to: Industry * Industrial archaeology, the study of the history of the industry * Industrial engineering, engineering dealing with the optimization of complex industrial processes or systems * Industrial loan company, a f ...
and
systems engineering Systems engineering is an interdisciplinary Interdisciplinarity or interdisciplinary studies involves the combination of two or more academic disciplines into one activity (e.g., a research project). It draws knowledge from several other f ...
disciplines, as well as fields of operations research and management science (as multi-disciplinary fields of problem solving). While
systems engineering Systems engineering is an interdisciplinary Interdisciplinarity or interdisciplinary studies involves the combination of two or more academic disciplines into one activity (e.g., a research project). It draws knowledge from several other f ...
concentrated on the broad characteristics of the relationships between inputs and outputs of generic systems, operations researchers concentrated on solving specific and focused problems. The synergy of operations research and systems engineering allowed for the realization of solving large scale and complex problems in the modern era. Recently, the development of faster and smaller computers,
intelligent systems is a Japanese video game developer best known for developing the ''Fire Emblem'', ''Paper Mario (series), Paper Mario'', ''WarioWare'', and ''Wars (series), Wars'' series. Originally, the company was headquartered at the Nintendo Kyoto Research ...

intelligent systems
, and the
World Wide Web The World Wide Web (WWW), commonly known as the Web, is an information system An information system (IS) is a formal, sociotechnical Sociotechnical systems (STS) in organizational development is an approach to complex organizational ...
has opened new opportunities for operations, manufacturing, production, and service systems.


Industrial Revolution

Before the
First industrial revolution The Industrial Revolution was the transition to new manufacturing processes in Great Britain, continental Europe, and the United States, in the period from about 1760 to sometime between 1820 and 1840. This transition included going from cra ...
work was mainly done through two systems:
domestic system The putting-out system is a means of subcontracting work. Historically, it was also known as the workshop system and the domestic system. In putting-out, work is contracted by a central agent to subcontractors who complete the work in off-site facil ...
and
craft guilds A guild is an association of artisans and merchants who oversee the practice of their craft/trade in a particular area. The earliest types of guild formed as organizations of tradesmen, belonging to: a professional association, a trade union, ...
. In the domestic system
merchants A merchant is a person who trades in Commodity, commodities produced by other people, especially one who trades with foreign countries. Historically, a merchant is anyone who is involved in commerce, business or trade. Merchants have operated fo ...

merchants
took materials to homes where artisans performed the necessary work, craft guilds on the other hand were associations of
artisans Wood carver in Bali An artisan (from french: artisan, it, artigiano) is a skilled worker, skilled craft worker who makes or creates material objects partly or entirely by handicraft, hand. These objects may be wikt:functional, functional ...
which passed work from one shop to another, for example: leather was tanned by a tanner, passed to curriers, and finally arrived at
shoemakers Woodcut of shoemakers from 1568. Shoemaking is the process of making footwear Footwear refers to garments worn on the feet, which originally serves to purpose of protective clothing, protection against adversities of the environment, usually r ...

shoemakers
and
saddle The saddle is a supportive structure for a rider of an animal, fastened to Mammal#Anatomy, an animal's back by a girth (tack), girth. The most common type is the equestrian saddle designed for a Back (horse), horse. However, specialized sad ...

saddle
rs. The beginning of the industrial revolution is usually associated with 18th century English
textile industry The textile industry is primarily concerned with the design, production and distribution of yarn Yarn is a long continuous length of interlocked fibre Fiber or fibre (from la, fibra, links=no) is a natural Nature, in the br ...
, with the invention of
flying shuttle The flying shuttle was one of the key developments in the industrialization Factories, refineries, mines, and agribusiness are all elements of industrialisation Industrialisation ( alternatively spelled industrialization) is the period of ...
by
John KayJohn Kay may refer to: * John Kay (flying shuttle) (1704–c. 1779), English inventor of the flying shuttle textile machinery * John Kay (spinning frame) (18th century), English developer of the spinning frame textile machinery * John Kay (caricatur ...
in 1733, the
spinning jenny #REDIRECT Spinning jenny #REDIRECT Spinning jenny#REDIRECT Spinning jenny upright=1.2, Model of spinning jenny in the Museum of Early Industrialisation, Wuppertal, Germany The spinning jenny is a multi- spindle spinning frame, and was one of t ...

spinning jenny
by
James Hargreaves James Hargreaves ( 1720 – 22 April 1778) was an English weaver, carpenter Carpenters in an Indian village Carpentry is a skilled trade and a craft in which the primary work performed is the cutting, shaping and installation of building m ...

James Hargreaves
in 1765, the
water frame #REDIRECT Water frame#REDIRECT Water frame upModel of a water frame in the Museum for Early Industrialisation in Wuppertal. The water frame is a spinning frame that is powered by a water-wheel. Water frames in general have existed since Ancient ...
by
Richard Arkwright Sir Richard Arkwright (23 December 1732 – 3 August 1792) was an English inventor and a leading entrepreneur during the early Industrial Revolution The Industrial Revolution was the transition to new manufacturing processes in Great ...

Richard Arkwright
in 1769 and the
steam engine from Stott Park Bobbin Mill, Cumbria, England A steam engine is a heat engine In thermodynamics Thermodynamics is a branch of physics that deals with heat, Work (thermodynamics), work, and temperature, and their relation to energ ...

steam engine
by
James Watt James Watt (; 30 January 1736 (19 January 1736 OS) – 25 August 1819) was a Scottish Scottish usually refers to something of, from, or related to Scotland, including: *Scottish Gaelic, a Celtic Goidelic language of the Indo-European lang ...

James Watt
in 1765. In 1851 at the Crystal Palace Exhibition the term
American system of manufacturing The American system of manufacturing was a set of manufacturing Manufacturing is the creation or Production (economics), production of goods with the help of equipment, Work (human activity), labor, machines, tools, and chemical or biological ...
was used to describe the new approach that was evolving in the
United States of America The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country Continental United States, primarily located in North America. It consists of 50 U.S. state, states, a Washington, D.C., ...

United States of America
which was based on two central features:
interchangeable parts Interchangeable parts are parts (components Component may refer to: In engineering, science, and technology Generic systems *System A system is a group of Interaction, interacting or interrelated elements that act according to a set of rules t ...

interchangeable parts
and extensive use of
mechanization Mechanization is the process of changing from working largely or exclusively by hand or with animals to doing that work with machinery. In an early engineering text a machine is defined as follows: In some fields, mechanization includes the ...
to produce them.


Second Industrial Revolution and post-industrial society

Henry Ford was 39 years old when he founded the
Ford Motor Company Ford Motor Company (commonly known as Ford) is an American multinational corporation, multinational automobile manufacturer headquartered in Dearborn, Michigan, Dearborn, Michigan, United States. It was founded by Henry Ford and incorporated ...
in 1903, with $28,000 capital from twelve investors. The
model T The Ford Model T (colloquially Colloquialism or colloquial language is the style (sociolinguistics), linguistic style used for casual (informal) communication. It is the most common functional style of speech, the idiom normally employed in ...

model T
car was introduced in 1908, however it was not until Ford implemented the assembly line concept, that his vision of making a popular car affordable by every middle-class American citizen would be realized. The first factory in which
Henry Ford Henry Ford (July 30, 1863 – April 7, 1947) was an American industrialist A business magnate is someone who has achieved great success and enormous wealth through the ownership of multiple lines of enterprise. The term characteristicall ...

Henry Ford
used the concept of the was Highland Park (1913), he characterized the system as follows: This became one of the central ideas that led to
mass production Mass production, also known as flow production or continuous production, is the production of substantial amounts of standardized Standardization or standardisation is the process of implementing and developing technical standard A techni ...
, one of the main elements of the
Second Industrial Revolution The Second Industrial Revolution, also known as the Technological Revolution, was a phase of rapid standardization Standardization or standardisation is the process of implementing and developing technical standards based on the consensus ...
, along with emergence of the
electrical industry The electric power industry covers the generation A generation is "all of the people born and living Living or The Living may refer to: Common meanings *Life, a condition that distinguishes organisms from inorganic objects and dead organism ...
and
petroleum industry The petroleum industry, also known as the oil industry or the oil patch, includes the global processes of hydrocarbon exploration, exploration, extraction of petroleum, extraction, oil refinery, refining, Petroleum transport, transporting (often ...
. The
post-industrial economy A post-industrial economy is a period of growth within an industrialized economy An economy (from Greek language, Greek οίκος – "household" and νέμoμαι – "manage") is an area of the Production (economics), production, Distribut ...
was noted in 1973 by Daniel Bell. He stated that the future economy would provide more GDP and employment from services than from manufacturing and have a great effect on society. Since all sectors are highly interconnected, this did not reflect less importance for manufacturing, agriculture, and mining but just a shift in the type of economic activity.


Operations management

Although productivity benefited considerably from technological inventions and division of labor, the problem of systematic measurement of performances and the calculation of these by the use of formulas remained somewhat unexplored until Frederick Taylor, whose early work focused on developing what he called a "differential piece-rate system" and a series of experiments, measurements and formulas dealing with cutting metals and manual labor. The differential piece-rate system consisted in offering two different pay rates for doing a job: a higher rate for workers with high productivity (efficiency) and who produced high quality goods (effectiveness) and a lower rate for those who fail to achieve the standard. One of the problems Taylor believed could be solved with this system, was the problem of soldiering: faster workers reducing their production rate to that of the slowest worker. In 1911 Taylor published his " The Principles of Scientific Management", in which he characterized
scientific management Scientific management is a theory of management Management (or managing) is the administration of an organization An organization, or organisation (Commonwealth English The use of the English language English is a West G ...
(also known as
Taylorism Scientific management is a theory of management Management (or managing) is the administration of an organization, whether it is a business, a not-for-profit organization, or government body. Management includes the activities of setting ...
) as: # The development of a true
science Science () is a systematic enterprise that builds and organizes knowledge Knowledge is a familiarity or awareness, of someone or something, such as facts A fact is something that is truth, true. The usual test for a statement of ...

science
; # The scientific selection of the
worker The workforce or labour force is the labour Labour or labor may refer to: * Childbirth Childbirth, also known as labour or delivery, is the ending of pregnancy where one or more babies leaves the uterus by passing through the vagina or ...

worker
; # The scientific education and development of the worker; # Intimate friendly
cooperation Cooperation (written as co-operation in British English British English (BrE) is the standard dialect A standard language (also standard variety, standard dialect, and standard) is a language variety that has undergone substantial ...

cooperation
between the management and the workers. Taylor is also credited for developing
stopwatch A stopwatch is a timepiece A clock is a device used to measure, verify, keep, and indicate time Time is the indefinite continued sequence, progress of existence and event (philosophy), events that occur in an apparently irreversi ...

stopwatch
time study, this combined with
Frank Frank may refer to: People As a name * Frank (given name) * Frank (surname) Groups of people * A member of the medieval Germanic people, the Franks * Crusaders in medieval Middle Eastern history * Levantines (Latin Christians) known as Franco ...
and Gilbreth motion study gave way to
time and motion study A time and motion study (or time-motion study) is a business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterpr ...
which is centered on the concepts of standard method and
standard time Standard time is the synchronization of clocks within a geographical region to a single time standard, rather than a local mean time standard. Generally, standard time agrees with the local mean time at some meridian that passes through the regi ...
. Frank Gilbreth is also responsible for introducing the
flow process chart The flow process chart is a graphical and symbolic representation of the activities performed on the work piece during the operation in industrial engineering. History The first structured method for documenting process flow, e.g., in flow sho ...
in 1921. Other contemporaries of Taylor worth remembering are Morris Cooke (rural electrification in the 1920s and implementer of Taylor's principles of scientific management in the Philadelphia's Department of Public Works), (speed-and-feed-calculating slide rules ) and
Henry Gantt Henry Laurence Gantt (; May 20, 1861 – November 23, 1919) was an American mechanical engineer Mechanical may refer to: Machine * Mechanical system, a system that manages the power of forces and movements to accomplish a task * Machine (mecha ...

Henry Gantt
(Gantt chart). Also in 1910 published the first
industrial engineering Industrial Engineering is an engineering profession that is concerned with the optimization of complex processes A process is a series or set of Action (philosophy), activities that interact to produce a result; it may occur once-only or be recu ...
book: Factory Organization and Administration. In 1913 Ford Whitman Harris published his "How many parts to make at once" in which he presented the idea of the
economic order quantity Economic Order Quantity (EOQ), also known as Economic Purchase Quantity (EPQ), is the order quantity that minimizes the total holding cost In marketing, carrying cost, carrying cost of inventory or holding cost refers to the total cost of holding i ...
model. He described the problem as follows: This paper inspired a large body of mathematical literature focusing on the problem of
production planning Production planning is the planning Planning is the process A process is a series or set of activities that interact to produce a result; it may occur once-only or be recurrent or periodic. Things called a process include: Business and manage ...
and
inventory control Inventory control or stock control can be broadly defined as "the activity of checking a shop's stock." It is the process of ensuring that the right amount of supply is available within a business. However, a more focused definition takes into accou ...
. In 1924 Walter Shewhart introduced the
control chart Control charts, also known as Shewhart charts (after Walter A. Shewhart) or process-behavior charts, are a statistical process control tool used to determine if a Manufacturing process management, manufacturing or business process is in a state of ...
through a technical memorandum while working at
Bell Labs Nokia Bell Labs (formerly named Bell Labs Innovations (1996–2007), AT&T Bell Laboratories (1984–1996) and Bell Telephone Laboratories (1925–1984)) is an American industrial research and scientific development company A company, ab ...
, central to his method was the distinction between common cause and special cause of variation. In 1931 Shewhart published his Economic Control of Quality of Manufactured Product,Shewhart, Walter Andrew, Economic control of quality of manufactured product, 1931, New York: D. Van Nostrand Company. pp. 501 p.. (edition 1st). LCCN 132090. OCLC 1045408. LCC TS155 .S47. the first systematic treatmentD.C. Montgomery, ''Statistical Quality Control: A Modern Introduction'', 7th edition 2012 of the subject of Statistical Process Control (SPC). He defined control: In the 1940s methods-time measurement (MTM) was developed by Harold Bright Maynard, H.B. Maynard, J.L. Schwab and G.J. Stegemerten. MTM was the first of a series of predetermined motion time systems, predetermined in the sense that estimates of time are not determined in loco but are derived from an industry standard. This was explained by its originators in a book they published in 1948 called "Method-Time Measurement". Up to this point in history, optimization techniques were known for a very long time, from the simple methods employed by F.W.Harris to the more elaborate techniques of the calculus of variations developed by Euler in 1733 or the Lagrange multipliers, multipliers employed by Lagrange in 1811, and computers were slowly being developed, first as analog computers by Sir William Thomson (1872) and James Thomson (engineer), James Thomson (1876) moving to the eletromechanical computers of Konrad Zuse (1939 and 1941). During World War II however, the development of mathematical optimization went through a major boost with the development of the Colossus computer, the first electronic digital computer that was all programmable, and the possibility to computationally solve large linear programming problems, first by Kantorovich in 1939 working for the Soviet government and latter on in 1947 with the simplex method of George Dantzig, Dantzig. These methods are known today as belonging to the field of operations research. From this point on a curious development took place: while in the United States the possibility of applying the computer to business operations led to the development of management software architecture such as Material requirements planning, MRP and successive modifications, and ever more sophisticated optimization techniques and Simulation of production systems, manufacturing simulation software, in post-war Japan a series of events at Toyota Motor led to the development of the Toyota Production System (TPS) and Lean Manufacturing. In 1943, in Japan, Taiichi Ohno arrived at Toyota Motor company. Toyota evolved a unique manufacturing system centered on two complementary notions: just in time (business), just in time (produce only what is needed) and autonomation (automation with a human touch). Regarding JIT, Ohno was inspired by American supermarkets: workstations functioned like a supermarket shelf where the customer can get products they need, at the time they need and in the amount needed, the workstation (shelf) is then restocked. Autonomation was developed by Toyoda Sakichi in Toyoda Spinning and Weaving: an automatically activated loom that was also foolproof, that is automatically detected problems. In 1983 J.N Edwards published his "MRP and Kanban-American style" in which he described JIT goals in terms of seven zeros: zero defects, zero (excess) lot size, zero setups, zero breakdowns, zero handling, zero lead time and zero surging. This period also marks the spread of Total Quality Management (TQM) in Japan, ideas initially developed by American authors such as W. Edwards Deming, Deming, Joseph M. Juran, Juran and Armand V. Feigenbaum. TQM is a strategy for implementing and managing quality improvement on an organizational basis, this includes: participation, work culture, customer focus, supplier quality improvement and integration of the quality system with business goals. Schnonberger identified seven fundamentals principles essential to the Japanese approach: # Process control: Statistical process control, SPC and worker responsibility over quality # Easy able -to-see quality: boards, gauges, meters, etc. and poka-yoke # Insistence on compliance: "quality first" # Line stop: stop the line to correct quality problems # Correcting one's own errors: worker fixed a defective part if he produced it # The 100% check: automated inspection techniques and foolproof machines # Continual improvement: ideally zero defects Meanwhile, in the sixties, a different approach was developed by George W. Plossl and Oliver W. Wight,R.B. Grubbström, Modelling production opportunities - an historical overview, Int. J. Production Economics 1995 this approach was continued by Joseph Orlicky as a response to the TOYOTA Manufacturing Program which led to Material Requirements Planning (MRP) at IBM, latter gaining momentum in 1972 when the American Production and Inventory Control Society launched the "MRP Crusade". One of the key insights of this management system was the distinction between dependent demand and independent demand. Independent demand is demand which originates outside of the production system, therefore not directly controllable, and dependent demand is demand for components of final products, therefore subject to being directly controllable by management through the bill of materials, via product design. Orlicky wrote "Materials Requirement Planning" in 1975, the first hard cover book on the subject. MRP II was developed by Gene Thomas at IBM, and expanded the original MRP software to include additional production functions. Enterprise resource planning (ERP) is the modern software architecture, which addresses, besides production operations, Distribution (business), distribution, accounting, human resources and procurement. Dramatic changes were occurring in the service industries, as well. Beginning in 1955 McDonald's provided one of the first innovations in service operations. McDonald's is founded on the idea of the production-line approach to service. This requires a standard and limited menu, an assembly-line type of production process in the back-room, high customer service in the front-room with cleanliness, courtesy and fast service. While modeled after manufacturing in the production of the food in the back-room, the service in the front-room was defined and oriented to the customer. It was the McDonald's operations system of both production and service that made the difference. McDonald's also pioneered the idea of franchising this operation system to rapidly spread the business around the country and later the world. FedEx in 1971 provided the first overnight delivery of packages in the U.S. This was based on the innovative idea of flying all packages into the single airport in Memphis Tenn by midnight each day, resorting the packages for delivery to destinations and then flying them back out the next morning for delivery to numerous locations. This concept of a fast package delivery system created a whole new industry, and eventually allowed fast delivery of online orders by Amazon and other retailers. Walmart provided the first example of very low cost retailing through design of their stores and efficient management of their entire supply chain. Starting with a single store in Roger's Arkansas in 1962, Walmart has now become the world's largest company. This was accomplished by adhering to their system of delivering the goods and the service to the customers at the lowest possible cost. The operations system included careful selection of merchandise, low cost sourcing, ownership of transportation, cross-docking, efficient location of stores and friendly home-town service to the customer. In 1987 the International Organization for Standardization (ISO), recognizing the growing importance of quality, issued the ISO 9000, a family of standards related to quality management systems. There standards apply to both manufacturing and service organizations. There has been some controversy regarding the proper procedures to follow and the amount of paperwork involved, but much of that has improved in current ISO 9000 revisions. With the coming of the Internet, in 1994 Amazon.com, Amazon devised a service system of on-line retailing and distribution. With this innovative system customers were able to search for products they might like to buy, enter the order for the product, pay online, and track delivery of the product to their location, all in two days. This required not only very large computer operations, but dispersed warehouses, and an efficient transportation system. Service to customers including a high merchandise assortment, return services of purchases, and fast delivery is at the forefront of this business. It is the customer being in the system during the production and delivery of the service that distinguishes all services from manufacturing. Recent trends in the field revolve around concepts such as: * Business Process Re-engineering (launched by Michael Martin Hammer, Michael Hammer in 1993): a business management strategy focusing on the analysis and design of workflows and business processes within an organization. BPR seeks to help companies radically restructure their organizations by focusing on the ground-up design of their business processes. * Lean systems is a systemic method for the elimination of waste ("Muda (Japanese term), Muda") within a manufacturing or service process. Lean also takes into account waste created through overburden ("Muri (Japanese term), Muri") and waste created through unevenness in work loads ("Mura (Japanese term), Mura"). The term lean manufacturing was coined in the book The Machine That Changed the World (book), The Machine that Changed the World. Subsequently, lean services has been widely applied. * Six Sigma (an approach to quality developed at Motorola between 1985 and 1987): Six Sigma refers to control limits placed at six standard deviations from the mean of a normal distribution, this became very famous after Jack Welch of General Electric launched a company-wide initiative in 1995 to adopt this set of methods to all manufacturing, service and administrative processes. More recently, Six Sigma has included DMAIC (for improving processes) and DFSS (for designing new products and new processes) * Reconfigurable Manufacturing Systems: a production system designed at the outset for rapid change in its structure, as well as its hardware and software components, in order to quickly adjust its production capacity and functionality within a part family in response to sudden market changes or intrinsic system change. * Project Production Management: the application of the analytical tools and techniques developed for operations management, as described in Factory Physics to the activities within major capital projects such as encountered in oil & gas and civil infrastructure delivery.


Topics


Production systems

A production system comprises both the technological elements (machines and tools) and organizational behavior (division of labor and information flow). An individual production system is usually analyzed in the literature referring to a single business, therefore it's usually improper to include in a given production system the operations necessary to process goods that are obtained by purchasing or the operations carried by the customer on the sold products, the reason being simply that since businesses need to design their own production systems this then becomes the focus of analysis, modeling and decision making (also called "configuring" a production system). A first possible distinction in production systems (technological classification) is between continuous process production and discrete part production (manufacturing). *Process production means that the product undergoes physical-chemical transformations and lacks assembly operations, therefore the original raw materials can't easily be obtained from the final product, examples include: paper, cement, nylon and petroleum products. *Part production (ex:cars and ovens) comprises both Manufacturing, fabrication systems and assembly line, assembly systems. In the first category we find job shops, manufacturing cells, flexible manufacturing systems and transfer lines, in the assembly category we have fixed position systems, assembly lines and assembly shops (both manual and/or automated operations).A. Portioli, A.Pozzetti, Progettazione dei sistemi produttivi, Hoepli 2003 Another possible classification is one based on Lead Time (manufacturing lead time vs delivery lead time): engineer to order (ETO), purchase to order (PTO), make to order (MTO), assemble to order (ATO) and make to stock (MTS). According to this classification different kinds of systems will have different customer order decoupling points (CODP), meaning that work in progress (WIP) cycle stock levels are practically nonexistent regarding operations located after the CODP (except for Work in process, WIP due to queues). (See Order fulfillment#Options, Order fulfillment) The concept of production systems can be expanded to the service sector world keeping in mind that services have some fundamental differences in respect to material goods: intangibility, client always present during transformation processes, no stocks for "finished goods". Services can be classified according to a service process matrix: degree of labor intensity (volume) vs degree of customization (variety). With a high degree of labor intensity there are Mass Services (e.g., commercial banking bill payments and state schools) and Professional Services (e.g., personal physicians and lawyers), while with a low degree of labor intensity there are Service Factories (e.g., airlines and hotels) and Service Shops (e.g., hospitals and auto mechanics). The systems described above are ideal types: real systems may present themselves as hybrids of those categories. Consider, for example, that the production of jeans involves initially carding, Spinning (textiles), spinning, dyeing and weaving, then cutting the fabric in different shapes and assembling the parts in pants or jackets by combining the fabric with thread, zippers and buttons, finally Finishing (textiles), finishing and distressing the pants/jackets before being shipped to stores. The beginning can be seen as process production, the middle as part production and the end again as process production: it's unlikely that a single company will keep all the stages of production under a single roof, therefore the problem of vertical integration and outsourcing arises. Most products require, ''from a supply chain perspective'', both process production and part production.


Metrics: efficiency and effectiveness

Operations strategy concerns policies and plans of use of the firm productive resources with the aim of supporting long term competitive strategy. Metrics in operations management can be broadly classified into efficiency metrics and effectiveness metrics. Effectiveness metrics involve: # Price (actually fixed by marketing, but lower bounded by production cost): purchase price, use costs, maintenance costs, upgrade costs, disposal costs # Quality (business), Quality: specification and compliance # Time: productive lead time, information lead time, punctuality # Flexibility (engineering), Flexibility: mix (capacity to change the Proportionality (mathematics), proportions between quantities produced in the system), volume (capacity to increase system output (economics), output), gamma (capacity to expand the product family in the system) # Stock availability # Ecological Soundness: biological and Environmental impact assessment, environmental impacts of the system under study. A more recent approach, introduced by Terry Hill, involves distinguishing competitive variables in order winner and order qualifiers when defining operations strategy. Order winners are variables which permit differentiating the company from competitors, while order qualifiers are prerequisites for engaging in a transaction. This view can be seen as a unifying approach between operations management and marketing (see Market segment, segmentation and positioning (marketing), positioning). Productivity is a standard efficiency metric for evaluation of production systems, broadly speaking a ratio between outputs and inputs, and can assume many specific forms, for example: machine productivity, workforce productivity, raw material productivity, warehouse productivity (=inventory turnover). It is also useful to break up productivity in use U (productive percentage of total time) and yield η (ratio between produced volume and productive time) to better evaluate production systems performances. Cycle times can be modeled through manufacturing engineering if the individual operations are heavily automated, if the manual component is the prevalent one, methods used include:
time and motion study A time and motion study (or time-motion study) is a business Business is the activity of making one's living or making money by producing or buying and selling products (such as goods and services). Simply put, it is "any activity or enterpr ...
, predetermined motion time systems and
work sampling Work sampling is the statistical technique used for determining the proportion of time spent by workers in various defined categories of activity (e.g. setting up a machine, assembling two parts, idle…etc.). It is as important as all other statis ...
. ABC analysis is a method for analyzing inventory based on Pareto distribution, it posits that since revenue from items on inventory will be power law distributed then it makes sense to manage items differently based on their position on a revenue-inventory level matrix, 3 classes are constructed (A, B and C) from cumulative item revenues, so in a matrix each item will have a letter (A, B or C) assigned for revenue and inventory. This method posits that items away from the diagonal should be managed differently: items in the upper part are subject to risk of obsolescence, items in the lower part are subject to risk of stockout. Throughput (business), Throughput is a variable which quantifies the number of parts produced in the unit of time. Although estimating throughput for a single process maybe fairly simple, doing so for an entire production system involves an additional difficulty due to the presence of queues which can come from: machine breakdown (vehicle), breakdowns, processing time variability, scraps, setups, Maintenance, repair and operations, maintenance time, lack of orders, lack of materials, strike action, strikes, bad coordination between resources, mix variability, plus all these inefficiencies tend to compound depending on the nature of the production system. One important example of how system throughput is tied to system design are Bottleneck (production), bottlenecks: in job shops bottlenecks are typically dynamic and dependent on scheduling while on transfer lines it makes sense to speak of "the bottleneck" since it can be univocally associated with a specific station on the line. This leads to the problem of how to define Productive capacity, capacity measures, that is an estimation of the maximum output of a given production system, and Capacity utilization#Engineering and economic measures, capacity utilization. Overall equipment effectiveness (OEE) is defined as the product between system availability, cycle time efficiency and quality rate. OEE is typically used as key performance indicator (KPI) in conjunction with the lean manufacturing approach.


Configuration and management

Designing the ''configuration of production systems'' involves both technological and organizational variables. Choices in production technology involve: dimensioning Productive capacity, capacity, fractioning capacity, capacity location, outsourcing processes, process technology, automation of operations, trade-off between volume and variety (see Hayes-Wheelwright matrix). Choices in the organizational area involve: defining worker skills and Accountability, responsibilities, team coordination, worker incentives and information flow. In ''
production planning Production planning is the planning Planning is the process A process is a series or set of activities that interact to produce a result; it may occur once-only or be recurrent or periodic. Things called a process include: Business and manage ...
'', there is a basic distinction between the Push-pull strategy, push approach and the Push–pull strategy, pull approach, with the later including the singular approach of Just in time (business), just in time. Pull means that the production system authorizes production based on inventory level; push means that production occurs based on demand (forecasted or present, that is purchase orders). An individual production system can be both push and pull; for example activities before the CODP may work under a pull system, while activities after the CODP may work under a push system. The traditional pull approach to
inventory control Inventory control or stock control can be broadly defined as "the activity of checking a shop's stock." It is the process of ensuring that the right amount of supply is available within a business. However, a more focused definition takes into accou ...
, a number of techniques have been developed based on the work of Ford W. Harris (1913), which came to be known as the
economic order quantity Economic Order Quantity (EOQ), also known as Economic Purchase Quantity (EPQ), is the order quantity that minimizes the total holding cost In marketing, carrying cost, carrying cost of inventory or holding cost refers to the total cost of holding i ...
(EOQ) model. This model marks the beginning of inventory theory, which includes the Dynamic lot-size model, Wagner-Within procedure, the newsvendor model, base stock model and the fixed time period model. These models usually involve the calculation of cycle stocks and buffer stocks, the latter usually modeled as a function of demand variability. The economic production quantity (EPQ) differs from the EOQ model only in that it assumes a constant fill rate for the part being produced, instead of the instantaneous refilling of the EOQ model. Joseph Orlickly and others at IBM developed a Push-pull strategy, push approach to inventory control and production planning, now known as material requirements planning (MRP), which takes as input both the master production schedule (MPS) and the bill of materials (BOM) and gives as output a schedule for the materials (components) needed in the production process. MRP therefore is a planning tool to manage purchase orders and production orders (also called jobs). The MPS can be seen as a kind of aggregate planning for production coming in two fundamentally opposing varieties: plans which try to Aggregate planning#Chase plans, chase demand and Aggregate planning#Level plans, level plans which try to keep uniform capacity utilization. Many models have been proposed to solve MPS problems: * Analytical models (e.g. Magee Boodman model) * Exact optimization algorithmic models (e.g. Linear programming, LP and Integer programming#Canonical and standard form for ILPs, ILP) * Heuristic models (e.g. Aucamp model). MRP can be briefly described as a 3s procedure: sum (different orders), split (in lots), shift (in time according to item lead time). To avoid an "explosion" of data processing in MRP (number of BOMs required in input) planning bills (such as family bills or super bills) can be useful since they allow a rationalization of input data into common codes. MRP had some notorious problems such as infinite capacity utilization, capacity and fixed lead times, which influenced successive modifications of the original software architecture in the form of MRP II, enterprise resource planning (ERP) and advanced planning and scheduling (APS). In this context problems of scheduling (production processes), scheduling (sequencing of production), loading (tools to use), part type selection (parts to work on) and applications of operations research have a significant role to play. Lean manufacturing is an approach to production which arose in Toyota between the end of World War II and the seventies. It comes mainly from the ideas of Taiichi Ohno and Toyoda Sakichi which are centered on the complementary notions of Just in time (business), just in time and autonomation (jidoka), all aimed at reducing waste (usually applied in PDCA style). Some additional elements are also fundamental: production smoothing (Heijunka), capacity buffers, setup reduction, cross-training and plant layout. * Heijunka: production smoothing presupposes a level strategy for the Master Production Schedule, MPS and a final assembly schedule developed from the MPS by smoothing aggregate production requirements in smaller time buckets and sequencing final assembly to achieve repetitive manufacturing. ''If these conditions are met'', Expected value, expected throughput (business), throughput can be equaled to the inverse of takt time. Besides volume, heijunka also means attaining mixed-model production, which however may only be feasible through set-up reduction. A standard tool for achieving this is the Heijunka box. * Capacity buffers: ideally a JIT system would work with zero breakdowns, this however is very hard to achieve in practice, nonetheless Toyota favors acquiring extra capacity over extra WIP to deal with starvation. * Setup cost, Set-up reduction: typically necessary to achieve mixed-model production, a key distinction can be made between internal and external setup. Internal setups (e.g. removing a die) refers to tasks when the machine is not working, while external setups can be completed while the machine is running (ex:transporting dies). * Cross-training (business), Cross training: important as an element of Autonomation, Toyota cross trained their employees through rotation, this served as an element of production flexibility, holistic thinking and reducing boredom. * Process layout, Layout: U-shaped lines or cells are common in the lean approach since they allow for minimum walking, greater worker efficiency and flexible capacity. A series of tools have been developed mainly with the objective of replicating Toyota success: a very common implementation involves small cards known as kanbans; these also come in some varieties: reorder kanbans, alarm kanbans, triangular kanbans, etc. In the classic kanban procedure with one card: * Parts are kept in containers with their respective kanbans * The downstream station moves the kanban to the upstream station and starts producing the part at the downstream station * The upstream operator takes the most urgent kanban from his list (compare to Kendall's notation#D: The queue's discipline, queue discipline from queue theory) and produces it and attach its respective kanban The two-card kanban procedure differs a bit: * The downstream operator takes the production kanban from his list * If required parts are available he removes the move kanban and places them in another box, otherwise he chooses another production card * He produces the part and attach its respective production kanban * Periodically a mover picks up the move kanbans in upstream stations and search for the respective parts, when found he exchanges production kanbans for move kanbans and move the parts to downstream stations Since the number of kanbans in the production system is set by managers as a constant number, the kanban procedure works as Work in process, WIP controlling device, which for a given arrival rate, per Little's law, works as a lead time controlling device. In Toyota the TPS represented more of a philosophy of production than a set of specific lean tools, the latter would include: *Single-Minute Exchange of Die, SMED: a method for reducing changeover times *Value stream mapping: a graphical method for analyzing the current state and designing a future state *lot-size reduction *elimination of time batching *Production flow analysis#Rank Order Clustering, Rank Order Clustering: an algorithm which groups machines and product families together, used for designing manufacturing cells *single-point scheduling (production processes), scheduling, the opposite of the traditional push approach *multi-process handling: when one operator is responsible for operating several machines or processes *poka-yoke: any mechanism in lean manufacturing that helps an equipment operator avoid (''yokeru'') mistakes (''poka'') *5S (methodology), 5S: describes how to organize a work space for efficiency and effectiveness by identifying and storing the items used, maintaining the area and items, and sustaining the new order *backflush accounting: a product costing approach in which costing is delayed until goods are finished Seen more broadly, JIT can include methods such as: product standardization and Modularity#Modularity in technology and management, modularity, group technology, total productive maintenance, job enlargement, job enrichment, flat organization and vendor rating (JIT production is very sensitive to replenishment conditions). In heavily automated production systems production planning and information gathering may be executed via the control system, attention should be paid however to avoid problems such as deadlocks, as these can lead to productivity losses. Project Production Management (PPM) applies the concepts of operations management to the execution of delivery of capital projects by viewing the sequence of activities in a project as a production system. Operations managements principles of variability reduction and management are applied by buffering through a combination of capacity, time and inventory.


Service operations

Service industries are a major part of economic activity and employment in all industrialized countries comprising 80 percent of employment and GDP in the U.S. Operations management of these services, as distinct from manufacturing, has been developing since the 1970s through publication of unique practices and academic research. Please note that this section does not particularly include "Professional Services Firms" and the professional services practiced from this expertise (specialized training and education within). According to Fitzsimmons, Fitzsimmons and Bordoloi (2014) differences between manufactured goods and services are as follows: * ''Simultaneous production and consumption.'' High contact services (e.g. health care) must be produced in the presence of the customer, since they are consumed as produced. As a result, services cannot be produced in one location and transported to another, like goods. Service operations are therefore highly dispersed geographically close to the customers. Furthermore, simultaneous production and consumption allows the possibility of self-service involving the customer at the point of consumption (e.g. gas stations). Only low-contact services produced in the "backroom" (e.g., check clearing) can be provided away from the customer. * ''Perishable.'' Since services are perishable, they cannot be stored for later use. In manufacturing companies, inventory can be used to buffer supply and demand. Since buffering is not possible in services, highly variable demand must be met by operations or demand modified to meet supply. * ''Ownership.'' In manufacturing, ownership is transferred to the customer. Ownership is not transferred for service. As a result, services cannot be owned or resold. * ''Tangibility.'' A service is intangible making it difficult for a customer to evaluate the service in advance. In the case of a manufactured good, customers can see it and evaluate it. Assurance of quality service is often done by licensing, government regulation, and branding to assure customers they will receive a quality service. These four comparisons indicate how management of service operations are quite different from manufacturing regarding such issues as capacity requirements (highly variable), quality assurance (hard to quantify), location of facilities (dispersed), and interaction with the customer during delivery of the service (product and process design). While there are differences there are also many similarities. For example, quality management approaches used in manufacturing such as the Baldrige Award, and Six Sigma have been widely applied to services. Likewise, Lean services, lean service principles and practices have also been applied in service operations. The important difference being the customer is in the system while the service is being provided and needs to be considered when applying these practices. One important difference is service recovery. When an error occurs in service delivery, the recovery must be delivered on the spot by the service provider. If a waiter in a restaurant spills soup on the customer's lap, then the recovery could include a free meal and a promise of free dry cleaning. Another difference is in planning capacity. Since the product cannot be stored, the service facility must be managed to peak demand which requires more flexibility than manufacturing. Location of facilities must be near the customers and scale economics can be lacking. Scheduling must consider the customer can be waiting in line. Queuing theory has been devised to assist in design of service facilities waiting lines. Revenue management is important for service operations, since empty seats on an airplane are lost revenue when the plane departs and cannot be stored for future use.


Mathematical modeling

There are also fields of mathematical theory which have found applications in the field of operations management such as operations research: mainly mathematical optimization problems and queue theory. Queue theory is employed in modelling queue and processing times in production systems while mathematical optimization draws heavily from multivariate calculus and linear algebra. Queue theory is based on Markov chains and stochastic processes. Computations of safety stocks are usually based on modeling demand as a normal distribution and MRP and some inventory problems can be formulated using optimal control. When analytical models are not enough, managers may resort to using Simulation of production systems, simulation. Simulation has been traditionally done through the discrete event simulation paradigm, where the simulation model possesses a state which can only change when a discrete event happens, which consists of a clock and list of events. The more recent transaction-level modeling paradigm consists of a set of resources and a set of transactions: transactions move through a network of resources (nodes) according to a code, called a process. Since real production processes are always affected by disturbances in both inputs and outputs, many companies implement some form of quality management or quality control. The Seven Basic Tools of Quality designation provides a summary of commonly used tools: *check sheets *Pareto charts *Ishikawa diagrams (Cause-and-effect diagram) *control charts *histogram *scatter diagram *stratified sampling, stratification These are used in approaches like total quality management and Six Sigma. Keeping quality under control is relevant to both increasing customer satisfaction and reducing processing waste. Operations management textbooks usually cover demand forecasting, even though it is not strictly speaking an operations problem, because demand is related to some production systems variables. For example, a classic approach in dimensioning safety stocks requires calculating the standard deviation of forecast errors. Demand forecasting is also a critical part of push systems, since order releases have to be planned ahead of actual clients’ orders. Also, any serious discussion of capacity planning involves adjusting company outputs with market demands.


Safety, risk and maintenance

Other important
management Management (or managing) is the administration of an organization An organization, or organisation (Commonwealth English The use of the English language English is a West Germanic languages, West Germanic language first spok ...

management
problems involve Maintenance, repair and operations, maintenance policies (see also reliability engineering and maintenance philosophy), safety management systems (see also safety engineering and Risk management), facility management and supply chain integration.


Organizations

The following organizations support and promote operations management: * APICS The Association for Operations Management, Association for Operations Management (APICS) which supports the ''Production and Inventory Management Journal'' * European Operations Management Association (EurOMA) which supports the International Journal of Operations & Production Management * Production and Operations Management Society (POMS) which supports the journal: ''Production and Operations Management'' * Institute for Operations Research and the Management Sciences (INFORMS) * The Manufacturing and Service Operations Management Society (MSOM) of INFORMS which supports the journal: Manufacturing & Service Operations Management * Institute of Operations Management (UK) * Association of Technology, Management, and Applied Engineering (ATMAE)


Journals

The following high-ranked academic journals are concerned with operations management issues: * ''Management Science (journal), Management Science'' * ''Manufacturing & Service Operations Management'' * ''Operations Research: A Journal of the Institute for Operations Research and the Management Sciences, Operations Research'' * ''International Journal of Operations & Production Management'' * ''Production and Operations Management'' * ''Transportation Research Part E, Transportation Research - Part E'' * ''Journal of Operations Management'' * ''European Journal of Operational Research'' * ''Annals of Operations Research''


See also

* APICS * Benchmarking * Business process management * Business process mapping * Cause-and-effect analysis * Change management * Failure mode and effects analysis * Industrial technology * Inventory management software * National Institute of Industrial Engineering * Performance metrics * Project management * Project Production Management * Requirements engineering * Root cause analysis * Silver–Meal heuristic * Work breakdown structure


References


Further reading

* Daniel A. Wren, Daniel Wren, ''The Evolution of Management Thought'', 3rd edition, New York Wiley 1987. * W. Hopp, M. Spearman, ''Factory Physics'', 3rd ed. Waveland Press, 201
online
(Part 1 contains both description and critical evaluation of the historical development of the field). * Richard B. Chase, R. B. Chase, F. R. Jacobs, N. J.Aquilano, ''Operations Management for Competitive Advantage'', 11th edition, McGraw-Hill, 2007. * Askin, R. G., C.R. Standridge, ''Modeling & Analysis Of Manufacturing Systems'', John Wiley and Sons, New York 1993. * J. A. Buzacott, J. G. Shanthikumar, ''Stochastic models of manufacturing systems'', Prentice Hall, 1993. * D. C. Montgomery, ''Statistical Quality Control: A Modern Introduction'', 7th edition, 2012. * R. G. Poluha: ''The Quintessence of Supply Chain Management: What You Really Need to Know to Manage Your Processes in Procurement, Manufacturing, Warehousing and Logistics (Quintessence Series)''. First Edition. Springer Heidelberg New York Dordrecht London 2016. . {{Portal bar, Business and economics Business terms Manufacturing Management by type Production economics Supply chain management