CHAPTER 1

THE NATURE OF OPERATING SYSTEMS AND

OPERATIONS MANAGEMENT
1.1 Resources and Functions of Operating Systems
♦Operations managers are principally concerned with the use
of physical resources
♦This necessitates taking a physical view of operating
systems; concentrating on the physical resources the system
used by the system

Physical Resources

i) Materials
- The physical items consumed or converted by the system
eg. Raw materials, fuel, indirect materials

ii) Machines
- The physical items used by the system e.g. plant,
tools, vehicles etc.

iii) Labor
- People who provide or contribute to the operation of
the system. Without these, neither machines nor
materials are effectively used

Principle Functions of Operating Systems

 Manufacture
o Goods of a given, requested or acceptable specifications
are created.
o Other considerations for this function are cost
(purchase price or cost of obtaining goods.) and timing
(delivery delay from order or request to receipt of
goods.)

 Transport
o Movement of goods of a given, requested or acceptable
specifications to the customer.

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 o Considerations include: Duration or time to move, Wait
or delay from requesting to its receipt.
 Supply
- The ownership or possession of goods is changed.
Unlike in manufacture, goods output from the system
are physically the same as those input
- There is no physical transformation and the system
function is primarily one of change in possession
utility of a resource
 Service
o The treatment or accommodation of something or someone.
There is a change in state utility of a resource.
o Considerations include: Duration or time required for
treatment, Wait or delay from requesting treatment to
its commencement.

1.2 The Nature of Operations Management

 Dynamic- Operations management is dynamic in nature. It keeps
on changing as per market trends and demands.

 Transformational Process– Operation management is the

management of activities concerned with the conversion of raw
materials into finished products.

 Continuous Process– Operation management is a continuous

process. It is employed by organizations for managing its
activities as long as they continue their operations.

 Administration– Operation management administers and controls

all activities of the organization. It ensures that all
activities are going efficiently and there is no
underutilization or misutilization of any resource.

1.3 Operations Management Objectives

 Customer Service
o To provide agreed/adequate levels of customer service
(and hence customer satisfaction) by providing goods
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 or services with the right specification, at the right
cost and at the right time.
 Resource utilization
o To achieve adequate levels of resource utilization
(or productivity) e.g., to achieve agreed levels of
utilization of materials, machines and labor.
o The extent of the utilization of the resources’
potential might be expressed in terms of the
proportion of available time used or occupied, space
utilization, levels of activity, etc. Each measure
indicates the extent to which the potential or
capacity of such resources is utilized.

1.4 Balance and Conflicts of Objectives

 The Balance of Objectives

♦ the type of balance established between and within the two
basic objectives of customer service and resource utilization
will be influenced by market considerations, competition,
strengths and weaknesses of the organization.

♦ the operations manager should make a contribution when

these objectives are set, but such decisions rarely rest
entirely within the operating function.

♦ the fact of this difference is one reason why the operations

management job is not the same in different organizations.

 The Conflict of Objectives

♦ Operations management is concerned with the achievement of

satisfactory customer service and resource utilization, so
operations managers must attempt to balance these two basic
objectives

♦ The relative importance attached by any organization to

each objective may be influenced by all objectives; an
improvement in one objective will often give rise to a
deterioration of the other.

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 ♦ All activities of operations management must be tackled
with these two objectives in mind; and it is from this
conflict that many of the problems faced by operations
managers arise.

1.5 The Structure of Operating Systems

♦ Given that the nature of the system influences how operations

managers tackle problems, a managerial perspective is needed as a
way of categorizing operating systems

♦ This enables us to distinguish between systems from an internal

managerial view point. One way to achieve this is to consider the
structure of operating systems

Simple Structures of Operating Systems

♦Make from stock, to stock, to customer

- All input resources are stocked and the customer is
served from a stock of finished goods

♦Make from source, to stock, to customer

- No input resource stocks are held but goods are
provided to stock

♦Make from stock, direct to customer

- All input resources are stocked but goods are made
only against and on receipt of customer orders

♦Make from source, direct to customer

- No input resource stocks are held and all goods are
made against and on receipt of customer orders

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REFERENCES

Brown S,Bessant J, Jones P, AND Lamming R (2000) Strategic

Operations Management, Oxford; Butterworth-Heinemann

Russel R.S and Taylor B.W. (2000) Operations Management 3rd Edn,
New Jersey: Prentice-Hall

Wright J.N (1999) The Management of Service Operations, London:

Cassel