BAM 199 Operations Management (TQM)

Module #2

Name: _______________________________________________________ Class number: _______

Section: ___________ Schedule:__________________________________ Date: _______________

Lesson Title: Introduction to Operations Management Materials:

Lesson Objectives: SAS
At the end of this module, I should be able to:
1. Identify the similarities and differences between production of References:
goods and service operations Operations Management with Total
2. Explain the importance of learning about operations Quality Management, 2019 edition
management. by Stevenson and Defeo (textbook)

Productivity Tip: “Work hard, be kind, and amazing things will happen.” – Conan O’brien

A. LESSON PREVIEW/REVIEW
1) Introduction (2 mins)

What are you holding right now? Is it your pen and/or your student activity sheets? Are you
wearing eyeglasses? Are you sitting in a chair? When was your last visit to a salon/barber shop to
get your hair cut? Did you ride on a public utility vehicle to get here? When was the last time you
went to a restaurant?

Remembering the content of your previous module, it said that there are countless examples of
goods and/or services found around you. Isn’t true? Although goods and services often come as a
package, there are some very basic differences between the two, differences that impact the
management of the goods portion versus the management of the service portion, which you will
learn as you go along with this module. There are also many similarities between the two.

2) Activity 1: What I Know Chart, Part 1 (3 mins)

First, let us test what you already know about the topic. Try answering the questions below by
writing your ideas under the column “What I Know”. Writing keywords or phrases that you think are
related to the questions will do. You may now start.

What I Know Questions: What I Learned (Activity 4)

What do you mean by tangible?

What do you mean by intangible?

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This document is the property of PHINMA EDUCATION.
 BAM 199 Operations Management (TQM)
Module #2

Name: _______________________________________________________ Class number: _______

Section: ___________ Schedule:__________________________________ Date: _______________

Why is operations management

important to businesses?

B. MAIN LESSON
1) Activity 2: Content Notes (13 mins)

LO1: Identify the similarities and differences between production of goods and service
operations.

Production of goods results in tangible output, such as automobile, eyeglasses, a golf ball, a
refrigerator – anything that we can see or touch. It may take place in a factory, but it can occur
elsewhere. For example, farming and restaurants produce non-manufactured goods.

Delivery of service generally implies an act. A physician’s examination, TV and auto repair, lawn
care, and the projection of a film in a theater are examples of services. Service organizations
usually produce intangible products such as ideas, assistance, or information that cannot be
produced ahead of time.

It is important to note that goods are produced and services are performed.

Production of goods and delivery of service are often different in terms of what (tangible and
intangible) is done but quite similar in terms of how it is done. Consider these points of
comparison:

✔ Degree of customer contact – many services involve a high degree of customer contact and
that contact or interaction between the provider of the service and customer becomes a
“moment of truth” that will be judged by the customer. Examples include health centers,
hotels, public transportation, retail stores, and schools.

✔ Labor content of jobs – services often have a higher degree of labor content, although
automated services are an exception. Service providers are more labor-intensive. They hire
more people for their professional services and skills. While manufacturers tend to be
capital-intensive.

✔ Uniformity of inputs – service operations are often subject to a high degree of variability of
inputs. Each client, patient, customer, repair job, and so on presents a somewhat unique
situation that requires assessment and flexibility. They tend to be more customized. While
manufacturers typically have more control of variability of their inputs or resources.

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 BAM 199 Operations Management (TQM)
Module #2

Name: _______________________________________________________ Class number: _______

Section: ___________ Schedule:__________________________________ Date: _______________

✔ Measurement of productivity - can be more difficult for service jobs due to variations in service
requirements from job to job. While in manufacturing, measuring productivity is
straightforward.

✔ Quality assurance – more challenging for services because delivery of the service and its
consumption occur at the same time, therefore, less opportunity to avoid exposing the
customer to mistakes.

✔ Inventory – many services tend to involve less use of inventory. Services must be provided on
demand.

✔ Wages – manufacturing jobs are often well paid, and have less wage variation. While in
service, it may depend on professional skills and degree of expertise.

✔ Ability to patent – product designs are often easier to patent than service designs.

To have a clearer understanding of their differences, take a look at this overview:

Characteristic Goods Services

Output Tangible Intangible

Customer contact Low High

Labor content Low High

Uniformity of input High Low

Measurement of productivity Easy Difficult

Opportunity to correct problems before delivery High Low

Inventory Much Little

Wages Narrow range Wide range

Patentable Usually Not usually

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This document is the property of PHINMA EDUCATION.
 BAM 199 Operations Management (TQM)
Module #2

Name: _______________________________________________________ Class number: _______

Section: ___________ Schedule:__________________________________ Date: _______________

!!!

Since you already identified the differences of the two, what do you think are their similarities?

Here is the preview of the similarities of the two. This topic is highlighted on the separate modules.
So, I will just give you a little preview of the primary factors:

a. Forecasting and capacity planning to match supply and demand.

b. Process Management
c. Managing variations
d. Monitoring and controlling costs and productivity
e. Managing the supply chain
f. Location planning, inventory management, quality control and scheduling

Meaning, the job of operations management which is overseeing the processes and systems of
transforming the resources into goods and services is essentially the same for both.

LO2: Explain the importance of learning about operations management

Whether operations management is your major or not at all, the skill set you will gain from
studying operations management will serve you well in your career in the near future.

There are many career-related reasons for wanting to learn about operations management,
whether you plan to work in the field of operations or not. This is because every aspect of
business affects or is affected by operations. Operations and sales are the two line functions in a
business organization. All other functions support the two functions.
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 BAM 199 Operations Management (TQM)
Module #2

Name: _______________________________________________________ Class number: _______

Section: ___________ Schedule:__________________________________ Date: _______________

Among the service jobs that are closely-related to operations are:

Operations management skills can be applied across all industries.

Apart from the career-related reasons is a not so obvious one: Through learning about operations
and those activities related to it and understanding the role it plays in an organization, you will
have a better understanding of the world you live in, the global dependencies of companies and
nations, some of the reasons that companies succeed or fail, and the importance of working with
others as well.

So, why study operations management? The answer is very simple. You will find tools and
information to become the best manager possible.

2) Activity 3: Skill-building Activities (18 mins + 2 mins checking)

Let’s have a drill! Test your knowledge about companies! After completing each exercise, you may
refer to the Key to Corrections for feedback. Try to complete each exercise before looking at the
feedback.

Exercise 1: Read each scenario and tell whether you are purchasing goods or a service. Write
the word good or service on the blank space provided.
Activity Good / Service

1. You get your hair cut.

2. You buy a book from a garage sale.

3. You buy your mother a flower from a flower shop

4. You hire someone to cut your lawn.

5. You visit the doctor for a check-up.

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 BAM 199 Operations Management (TQM)
Module #2

Name: _______________________________________________________ Class number: _______

Section: ___________ Schedule:__________________________________ Date: _______________

6. You purchase a game to give as a birthday gift.

7. You pay your sister Php100 to clean your messy bedroom.

8. You buy an ice cream from an ice cream truck.

9. You take an airplane when you go on a trip.

10. Your brother sells you his old baseball bat for Php200.

Exercise 2: Differentiate goods from services by completing the table below with the provided
characteristic for each as your guide.

Characteristic Goods Services

1 The nature and consumption of output

2 Uniformity of input

3 Labor content of jobs

4 Uniformity of output

5 Measurement of productivity

6 Opportunity to correct problems before delivery

7 Inventory

8 Wages

9 Patentable

Exercise 3: In 1-2 sentences, answer the following questions below.

1. Why are service-providing organizations important?

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This document is the property of PHINMA EDUCATION.
 BAM 199 Operations Management (TQM)
Module #2

Name: _______________________________________________________ Class number: _______

Section: ___________ Schedule:__________________________________ Date: _______________

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

2. Why is manufacturing important?

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

3. Services are often knowledge-based. Provide two examples, and explain why they are
knowledge-based.

__________________________________________________________________________

__________________________________________________________________________

__________________________________________________________________________

3) Activity 4: What I Know Chart, Part 2 (2 mins)

It’s time to answer the questions in the “What I Know Chart” in Activity 1. Log in your answers in
the “What I Learned” column. Let’s go!

4) Activity 5: Check for Understanding (5 mins)

Let’s check how well you understood the lesson. Write YES if the statement is correct and NO if
otherwise. Write your answer on the blank space provided.

________ 1. Goods-producing organizations are not involved in service activities

________ 2. Service operations require additional inventory because of the unpredictability of
consumer demand.
________ 3. Service often requires relatively greater labor content when compared to
manufacturing.
________ 4. Measurement of productivity in service is more straightforward than in
manufacturing since it is not necessary to take into account the cost of materials.

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This document is the property of PHINMA EDUCATION.
 BAM 199 Operations Management (TQM)
Module #2

Name: _______________________________________________________ Class number: _______

Section: ___________ Schedule:__________________________________ Date: _______________

________ 5. Service typically involves a much higher degree of customer contact than
manufacturing.

C. LESSON WRAP-UP
5) Activity 6: Thinking about Learning (5 mins)
Wow, congratulations! You are done with this session. Shade the module number you just
completed.

Did you have challenges learning the concepts in this module? If none, which parts of the module
helped you learn the concepts?
______________________________________________________________________________

Some question/s I want to ask my teacher about this module is/are:

______________________________________________________________________________

FAQs

1. What are non-manufactured goods?

Farm products are an example of non-manufacturing goods because there is no production and the
products naturally grow without human intervention.

2. What are the implications of the differences relative to managing operations?

There are many implications due to the differences between service and manufacturing operations.
For example, in a service firm, because the degree of customer contact is high, we have to make
sure that employees are better trained in customer service than employees in a manufacturing
industry are. In a pure-service industry firm, we will build a lot of slack in scheduling because of the
uncertainty of input.

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This document is the property of PHINMA EDUCATION.
 BAM 199 Operations Management (TQM)
Module #2

Name: _______________________________________________________ Class number: _______

Section: ___________ Schedule:__________________________________ Date: _______________

KEY TO CORRECTIONS

Answers to Skill-Building Exercises:

Exercise 1:
Good or Service?

1. You get your hair cut. Service

2. You buy a book from a garage sale. Good

3. You buy your mother a flower from a flower shop Good

4. You hire someone to cut your lawn. Service

5. You visit the doctor for a check-up. Service

6. You purchase a game to give as a birthday gift. Good

7. You pay your sister Php100 to clean your messy bedroom. Service

8. You buy an ice cream from an ice cream truck. Good

9. You take an airplane when you go on a trip. Service

10. Your brother sells you his old baseball bat for Php200. Good

Exercise 2:
Characteristic Goods Services

The nature and consumption of output Tangible Intangible

Uniformity of input High Low

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This document is the property of PHINMA EDUCATION.
 BAM 199 Operations Management (TQM)
Module #2

Name: _______________________________________________________ Class number: _______

Section: ___________ Schedule:__________________________________ Date: _______________

Labor content of jobs Low High

Uniformity of output High Low

Measurement of productivity Easy Difficult

Opportunity to correct problems before delivery High Low

Inventory Much Little

Wages Narrow range Wide range

Patentable Usually Not usually

Exercise 3: Answers may slightly vary.

1. Why are service-providing organizations important?
Services have been one of the strongest and fast-growing sectors of the Philippine economy. The services
being provided by these organizations is viewed as solutions to customer needs.
2. Why is manufacturing important?
Manufacturing is important in that it supplies a large proportion of exports and many service jobs are
dependent on manufacturing because they support manufacturing. Manufacturing is source of jobs.
Manufacturing is responsible for the majority of the products we consume every day.
3. Services are often knowledge-based. Provide two examples, and explain why they are
knowledge-based. Possible answers are educational, medical, legal, accounting, and financial services.

Answers to Check for Understanding:

1. FALSE - There are very few pure goods or pure services, so most companies sell product packages which
combine goods and services. Therefore, most production systems involve a blend of goods and services.
2. FALSE - Service operations cannot use inventory as a hedge against unpredictable demand.
3. TRUE
4. FALSE - Materials cost must be considered in services as well. Furthermore, the greater variation of inputs in
services tends to make measurement of productivity more difficult in services than in manufacturing.
5. TRUE

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