Chapter 20 Introducing operations management

Operations management is concerned with the use of resources- land, labour and
capital to provide goods and services that will satisfy the demands identified by the
market research department.

 Efficiency of production: keeping costs as low as possible will help to give

competitive advantage
 Quality: the goods or service must be suitable for the purpose intended
 Flexibility: the need to adapt to new methods of working and new products
is increasingly important in today’s world.

The production process

The aims in all cases is to “add values” to the inputs that are brought in by the
business so that the resulting output can be sold at a profit.

 The design of the product.

Does thus allow for economic manufacture whilst appearing to have quality feature
that will enable a high price to be charged?

 The efficiency with which the input resources are combined and managed.

For example, by reducing waste, the operations management department will

increase the value added by the production process.

 The impact of the promotional strategy and whether this convinces

consumers to pay more for the product than the cost of input.

A luxury ice creams where the marketing campaigns increase the willingness of
consumers to pay for excess of input costs for the product.

Value analysis
The process of analysing whether a product or a new product design can be made
more efficiently without reducing its consumer appeal.

Performance- does it have the features looked for by consumers and will it be
reliable? For example does a washing machine have all of the function expected by
consumers and will it last, on average, for an acceptable numbers of years?