Assignment 1 – Chapter 1 and 2 Operations Management Section 202

Questions

1. Why is operations management important to any organization?

Ans. Operation Management is the management of processes that create goods and/or
provide services. It is important in a business organization because it helps effectively
manage, control and supervise goods, services and people.
Some key benefits of operation Management are: Enhance productivity and product
quality, helps to reduce operating cost, helps in customer satisfaction.

Hence, operations management is important to any organization.

2. Identify the three (3) major functional areas of an organization and discuss why it is
important for those functional areas to collaborate.

Ans. The three (3) major functional areas of an organization are:

 Operations: creates goods and services.
 Finance: provide funds and the economic analysis of investment proposals.
 Marketing: assess customer wants and needs and communicate them to others.

These three functions, perform different but related activities necessary for the
operation of the organization. The functions must interact to achieve the goals
and objectives of the organization, and each makes an important contribution.
Often the success of an organization depends not only on how well each area
performs but also on how well the areas collaborate with each other. For
instance, unless operations and marketing work together, marketing may
promote goods or services that operations cannot profitably deliver, or
operations may turn out goods or services for which there is no demand.
Similarly, unless finance and operations people work closely, funds for expansion
or new equipment may not be available when needed.

FINANCE:
The finance function comprises activities related to securing resources at
favourable prices and allocating those resources throughout the organization.
 Finance and operations management personnel cooperate by exchanging
information and expertise in such activities.

MARKETING:
Marketing's focus is on selling and/or promoting the goods or services of an
organization. It is also responsible for assessing customer wants and needs, and
for communicating those to operations people (short term) and to design people
(long term). That is, operations need information about demand over the short
to intermediate term so that it can plan accordingly.

OPERATIONS:
The operations function consists of all activities directly related to producing
goods or
providing services. Operation management personnel need to collaborate with
the finance personnel for funding needs and for marketing personnel for
knowing about the consumers demands need.

3. What is a good? Provide 2 examples. What is a service? Provide 2 examples.

Ans. Goods are tangible items sold to customer. Example of goods are
automobiles, clothing and appliances
Services are tasks performed for the benefit of the recipients. Examples of services are legal
advice, house cleaning, and consulting services. It is intangible in nature.
.
What is strategic planning and why is it important? (3 marks)
Ans. Strategic planning is an organization's process of defining its strategy, or direction,
and making decisions on allocating its resources to pursue this strategy. The operations
function can play a proactive role in strategic planning by helping shape the operations
strategy (as opposed to the reactive role of just fixing operations problems).
Operations strategy comprises a set of well-coordinated policies, objectives, and action
plans, directly affecting the operations function, which is aimed at securing a long-term
sustainable advantage over the competition.
 Strategic planning is crucial for a business as it creates a map for a business to follow
and course correct when need be. The first part of a strategic plan is the business plan,
which outlines the purpose of the business, budgets, goals, and the mission statement.

4. List and briefly describe the four (4) key purchasing criteria.

Ans. The four key purchasing criteria are:

 Price- It is the amount a customer must pay for the product or service. If
all other factors are equal, customers will choose the product or service
that has the lowest price. Organizations that compete on price may settle
for lower profit margins, but most focus on lowering costs of goods or
services. For instance, while purchasing any product customer compare
two different brands of products and than opt for the best suitable price
for him.

 Quality- It refers to materials and workmanship as well as design. Usually,

it relates to a buyer's perceptions of how well the product or service will
serve its intended purpose. For instance, while purchasing any product
customer will look for its durability and how long lasting it would be.

 Time- It refers to a number of different aspects of an organization's

operations. One is how quickly a product or service is delivered to a
customer. For instance, if there is an emergency of a good to a consumer,
he will opt for a fast preferred and more prioritize one.

 Variety- It refers to any special features that cause a product or service to

be
perceived by the buyer as more suitable than a competitor's product or
service. Customer look for different design and features in a product.
 Examples of competitive priorities used by companies.

5. A company produced 200 patches of fabric last week using 4 workers, and 450 patches
of fabric this week using 6 workers. In which period was labour productivity higher? Show
your work and explain.

Ans. Productivity is calculated as:

Productivity= output/input

For last week,

Output= 200
Input= 4
Therefore,
200/4=50
i.e. productivity is 50 patches of fabric per worker

For this week,

Output= 450
Input= 6
Therefore,
450/6=75
i.e. productivity is 75 patches of fabric per worker
As per the above calculated productivity the labour productivity was high for this week as it
was 75 patches of fabric per worker compared to the last week which was 50 patches of fabric
per worker.