Introduction

The roles of Operations

Management and of Finance
Dr. Rakshitha Hitibandara
Senior Lecturer in Accounting and Finance
Teesside University Business School
01642 342880
R.Hitibandara@tees.ac.uk

1
Teesside University Business School
Intended learning out comes

• Introduce a business as a transformation system.

• Introduce basic accounting concept and terminologies
• Familiarise with basic accounting equation and double
entry book keeping

Teesside University Business School 2

 The Management of Operations

Operations managers are responsible for producing the

supply of goods or services in an organisation. Operations
managers make decisions regarding the operations function
and the transformation systems used. Operations
management is the study of decision making in the
operations function.
Schroeder 1993

3
Teesside University Business School
 Internal and External Environment
External Environment
Regulators Investors

Internal Environment Competitors

Suppliers Finance &
HR Customers
Accounting

Inputs Operations Transformation system Outputs

Engineering IT & MIS Marketing

Political Technological

Economical Social and Cultural

4
Teesside University Business School
 An organised activity

Production
Can take many forms
Manufacturing The focus depends on
Assembly what is seen as
Service strategically important

Support
Indirect support
Engineering
Maintenance
Administrative support
Finance Production led (support
Accounting is subordinate)
HR
Marketing
5
Teesside University Business School
 A System
Holism: the system as a whole behaves
as more than the sum of its
parts.

Hierarchy: systems are divided into parts

that are also systems.

6
Teesside University Business School
 What is a system?

1. A system is an assembly of components connected together in an

organised way.

2. The components are affected by being in the system and the

behaviour of the system is changed if they leave it.

3. This organised assembly of components does something.

4. This assembly as a whole has been identified by someone who is

interested in it.

7
Teesside University Business School
 Subsystems

• E.g Objectives

• Production Main activity

• Maintenance Ensures smooth running

• Adaptation Helping to achieve change

• Management Directing and co-ordinating

8
Teesside University Business School
 Why does a system require
management?

Any system tends to entropy (think about any

physical system such as a plant)

Entropy is disorder in a system

Systems also require control to give direction

Management is the process of control in an

organisational system (although some aspects of
control may be performed automatically)

Question – any examples of automatic management

control in systems?

9
Teesside University Business School
 The transformation system:
A possible representation

Inputs from Transform Output to

suppliers -ation customers

Physical assets Manufacturing Goods

materials service services
labour information information
information

10
Teesside University Business School
Jenny’s Pizza Parlour

• Jenny manages her own Pizza Parlour.

• Show Jenny’s Pizza Parlour as a business system.

• Identify inputs, transformation and outputs.

• Identify the operations to be managed

11
Teesside University Business School
 Jenny’s Pizza Parlour

INPUTS TRANSFORMATION OUTPUTS

Pizza served to customers

Gas and electricity

Pizza ingredients Preparation and Baking

Labour

Purchasing
Operations to be managed:- Delivery and storage of purchased goods
Kitchen operations – Preparation & Baking
Service to customers
12
Teesside University Business School
Jenny has to deal with some
questions…

The investors
want to know
how is the
business doing? Well.. we make
excellent pizzas
quickly and we are
always full... but

What’s happening
to the money???

13
Teesside University Business School
 MONEY

• Transformation systems acquire and use resources

• Money is used to acquire the resources

• And usually is received for the outputs

• We can measure inputs and outputs (sometimes) in money terms

• Money is a common denominator

• We can use it to develop overall performance measures

14
Teesside University Business School
Well I have the bank statements,
but does that tell me if I’ve
made a profit? What shall I tell
the investors??

Back to the system!

For the pizza parlour –
Identify the financial
information that you would
want to generate and say why.

15
 INPUTS TRANSFORMATION OUTPUTS

Pizza served to customers

Gas and Electricity
Utility bills, rates, depreciation
advertising, maintenance
Pizza Ingredients
Cost of materials used, Preparation and Baking
consumables
Labour
Wages of staff – kitchen
Waiters, cleaners,
office Operations to be managed:- Money collected from
Purchasing customers

Cost of inputs Delivery and storage of purchased goods

Kitchen operations – Preparation & Baking Market value
bought in the
Service to customers of outputs
market

16
 Lecture 1
Management operation

Dr. Rakshitha Hitibandara

Senior Lecturer in Accounting and Finance
Teesside University Business School
01642 342880
R.Hitibandara@tees.ac.uk
Main Aims

• Introduce the accounting equation

• Introduce the relationship of accounting equation to the income

statement and the financial position
Main Aims

• Introduce the accounting equation

• Introduce the relationship of accounting equation to the income
statement and the financial position
• Interduce the father of accounting
 Capital + Liability = Assets
Capital + Income – Expense + Liability = Assets
Story about Anna and alligator Coffee
What is next?
+ Cart £5,000
+ Capital £6,000
+Income £1,500
(-)Expenses (£,500) + Cash £1,000
Anna

+ Cash £500
Liability£500

Sales + Cash £1,500

Equity + Liability = Assets Purchases (-) Cash (£500)

Profit

Capital + Income – Expense + Liability = Assets

 Accounting Equation

Capital + Liability = Assets

Capital + Income – Expenses + Liability = Assets
Dr Capital + Income + Liability = Assets + Expenses Cr
Assets + Expenses = Capital + Income + Liability
Assets = Capital + Profit + Liabilities
Assets = Equity + Liability
Assets - Liability = Equity

Please go through this YouTube video clip Accounting double entry practice example online
Double entry Book keeping explained in 10 minutes Please do all the examples in this website

https://www.youtube.com/watch?v=ijPDIy6gXxc&t=4s https://www.double-entry-bookkeeping.com/bookkeeping-basics/debits-and-credits-quiz/
Any Questions ?

24