Lecture - 1

What does the Finance people do in a firm?

What does the HR people do?

Accountants?

Marketing team?

Who deals with the production?

 Operations Management:
 The activity of managing the resources which produce and
deliver products and services.
 The management of systems or processes that create
goods and/or provide services

 Operations Function:
 The part of the organization that is responsible for this
activity.

 Operations Managers:
 The people responsible for managing some or all of the
resources which compose the operations function.
Automobile assembly factory

Physician

Management consultancy

Disaster relief

Advertising agency
 Tangibility

Can be inventoried?

Customer contact

Response time

Input intensity
 Goods Service
 Tangible product  Intangible product
 Product can be  Product cannot be
inventoried inventoried
 Low customer contact  High customer contact
 Longer response time  Short response time
 Capital intensive  Labor intensive
 Characteristic Goods Service
Customer contact Low High
Uniformity of input High Low
Labor content Low High
Uniformity of output High Low
Output Tangible Intangible
Measurement of productivity Easy Difficult
Opportunity to correct problems High Low
Inventory Much Little
Evaluation Easier Difficult
Patentable Usually Not usual
 Similarities
 Both use technology

 Both have quality, productivity, & response issues

 Both must forecast demand

 Both will have capacity, layout, and location issues

 Both have customers, suppliers, scheduling and staffing issues

 Manufacturing often provides services

 Services often provides tangible goods

 Core services are basic things that customers want

from products they purchase

 Value-added services differentiate the organization

from competitors and build relationships that

bind customers to the firm in a positive way
 Professional services (e.g., financial, health care, legal)

 Mass services (e.g., utilities, Internet, communications)

 Service shops (e.g., tailoring, appliance repair, car wash,

auto repair/maintenance)

 Personal care (e.g., beauty salon, spa, barbershop)

 Government (e.g., Medicare, mail, social services, police,

fire)
 Education (e.g., schools, universities)

 Food service (e.g., restaurants, fast foods, catering,

bakeries)

 Services within organizations (e.g., payroll, accounting,

maintenance, IT, HR, janitorial)

 Retailing and wholesaling

 Shipping and delivery (e.g., truck, railroad, boat, air)

 Residential services (e.g., lawn care, painting, general

repair, remodeling, interior design)

 Transportation (e.g., mass transit, taxi, airlines,

ambulance)

 Travel and hospitality (e.g., travel bureaus, hotels, resorts)

 Miscellaneous services (e.g., copy service, temporary help)

 Service jobs are often less structured than manufacturing
jobs
 Customer contact is higher

 Worker skill levels are lower

 Employee turnover is higher

 Input variability is higher

 Service performance can be affected by worker’s personal

factors