An overview

of operations
management
Chapter 1
Ooperations management
The management of processes or systems that create
goods and/or provide services.

It encompasses forecasting, capacity planning,

scheduling, managing inventories, assuring quality,
motivating employees, deciding where to locate the
facilities and more.

2
Business Organization

✗ Organizations are formed to pursue

goals that are achieved more
effectively by the concerted efforts of
a group of people than by individuals
working alone.

3
Basic
Functions
Of
Business
Organizati
on
4
 PRODUCTION /
1 OPERATIONS
Production and Operation
System - Inputs are used to
obtain finished goods using
one or more transformation
processes (e.g. storing,
transporting, and cutting).

-
2 FINANCE
Comprises of activities related to securing
resources at favorable prices and allocating
those resources throughout the organization.
Finance and operations management
personnel cooperate by exchanging
information and expertise in activities
such as:
1. Budget – must be periodically prepared to plan financial
requirements.
2. Economic analysis of investment proposals – evaluation of
alternative investment in plant and equipment requires input from both
operations and finance people.
3. Provision of funds – necessary funding of operations and the
amount and timing of funding

7
3 MARKETING
- Focus on selling and/or promoting the goods and services
of an organization.
- Responsible for assessing customer wants and needs.
 other functions:
3. Purchasing –
1. Accounting – 2. Management
responsible for
supplies information Information System
procurement of
to management on (MIS) – providing
materials, supplies,
cost of labor, management with the
and equipment.
materials, and information it needs to
overhead and may effectively manage.
provide reposts on
items such as scrap,
downtime and
inventories.

9
 other functions:
6. Distribution –
4. Personnel or 5. Public Relations –
involves shipping of
Human Resources _ responsible for building
goods to warehouse,
concerned with and maintaining a
retail outlets or final
recruitment and positive image of the
consumer.
training of personnel, organization.
labor relations,
wages and salaries
and ensuring health
and safety of
employees.

10
other functions:

7. Maintenance –
responsible for general
upkeep and repair of
equipment, building and
grounds, heating and air-
conditioning, removing
toxic waste.

11
Differentiat
ing
Features of
Operations
System:
12
I. DEGREE OF
STANDARDIZATION
Standardized Customized
Output - means Output - means
that there is a high that the product or
degree of service is designed
uniformity in goods for specific case or
or services. individual.

13
II. Types of operation
The degree of standardized products and the volume of output of a producer
or service influence the way firm organizes production.
The four Vs of operations:
1. Volume – how many products or services are made by the operation?
2. Variety – how many different types of products or services are made by
the operation?
3. Variation – how much does the level of demand change over time?
4. Visibility – how much of the operation’s internal working are ‘exposed’ to
its customers?

14
III. PRODUCTION OF GOODS
VERSUS SERVICE OPERATION
Production of goods - results in a tangible
product.

Service operation - generally implies an

act.
15
III. PRODUCTION OF GOODS
VERSUS SERVICE OPERATION
Differences Between Goods and Services:
1. Customer contact
2. Uniformity of input
3. Labor content of job
4. Uniformity of output
5. Measurement of productivity
6. Simultaneous production/consumption
and delivery
7. Quality assurance
16
General
Approache
s to
Decision
Making:
17
 I. MODEL - an abstraction of reality;
a simplified version of something
Mathematical
Physical Models – Schematic Models
Models

Look like their real-life More abstract than The most abstract: they
counterparts. their physical do not look at all like their
counterparts (less real-life counterparts.
resemblance to
physical reality) these are usually the
easiest to manipulate and
There are often they are important forms
relatively simple to of inputs for computers
construct and and calculators.
change.

18
II. QUANTITATIVE
APPROACHES

Quantitative approaches to problem solving

embody an attempt to obtain mathematically
optimum solutions to managerial problems.

19
III. ANALYSIS OF TRADE-OFFS

Manager sometimes deal with decision by

listing the advantages and disadvantages – pros
and cons – of a course of action to better
understand the decision they must make.

20
 IV. SYSTEMS APPROACH
System – a set of interrelated parts that must work together.

In a business organization, the organization can be thought

of as a system composes of subsystem. The system
approach emphasizes interrelationships among subsystems,
but its main theme is that the whole is greater than the sum
of its individual parts.

21
Formative assessment
Create a simple
production system at
home. Show the input,
process, and output.

22
Than
ks!
23