Chapter 1

Operations management is the systematic direction, control, and evaluation of the entire range of
processes that transform inputs into finished goods or service

Operations management involves managing the operations and processes of an organization. Some of
the functions performed by an operations manager include supply chain management, product design,
forecasting, quality control, and delivery management.

 Operations management is a management function.

 Operations management is organization’s core function.
 Operations management is in every organization whether service or Manufacturing, profit or
not for profit.

Role of operations management

Operations management transform input to output

 Input are resources as

(a) People (b) Materials (c) Money
 Outputs are goods and services

Operations management transformation process

Feedback: Measurement taken at various points in the transformation process

Control: The comparison of feedback against previously established standards to determine of

corrective action is needed

OM’s Transformation Role

 To add value
 Increase product value at each stage
 Value added is the net increase between
output product value and input material
value
 Provide an efficient transformation
 Efficiency – means performing activities well
for least possible cost
 Manufacturers vs Service Organizations Similarities for Service/Manufacturer

Services Manufacturers  Both use technology

Intangible product Tangible product  Both have quality, productivity, & response issues
Product cannot be Product is inventoried  Both must forecast demand
inventoried  Both can have capacity, layout, and location issues
High customer Low customer contact  Both have customers, suppliers, scheduling and
contact staffing issues
Short response time Longer response time
Labor intensive Capital intensive
 BASIS FOR COMPARISON GOODS
Meaning Goods are the material items
that can be seen, touched or felt
and are ready for sale to the
customers.
Nature Tangible
Transfer of ownership Yes
Evaluation Very simple and easy
Return Goods can be returned.
Separable Yes, goods can be separated
from the seller.
Variability Identical
Storage Goods can be stored for use in
future or multiple use.
Production and Consumption There is a time lag between
production and consumption of
goods.
Production of Goods VS Providing of Service
SERVICES
Services are amenities, facilities,
benefits or help provided by
other people.
Intangible
No
Complicated
Services cannot be returned
back once they are provided.
No, services cannot be
separated from the service
provider.
Diversified
Services cannot be stored.
Production and Consumption of
services occurs simultaneously.

KEY ISSUES FOR TODAY’S BUSINESSOPERATIONS

There are a number of issues that are high priorities of many business organizations. Although not every
business is faced with these issues, many are. Chief among the issues are the following:

Economic conditions.

The lingering recession and slow recovery in various sectors of the economy has made managers
cautious about investment and rehiring workers that had been laid off during the recession.

Innovating.

Finding new or improved products or services are only two of the many possibilities that can provide
value to an organization. Innovations can be made in processes, the use of the Internet, or the supply
chain that reduce costs, increase productivity, expand markets, or improve customer service.

Quality problems.

The numerous operations failures mentioned at the beginning of the chapter underscore the need to
improve the way operations are managed. That relates to product design and testing, oversight
of suppliers, risk assessment, and timely response to potential problems.

Risk management.

The need for managing risk is underscored by recent events that include the crisis in housing, product
recalls, oil spills, and natural and man-made disasters, and economic ups and downs. Managing risks
starts with identifying risks, assessing
Business information flow of operations
management

Q: Definition, Figure Draw, Explain with each point with sub point