CHAPTER

INTRODUCTION TO

1
OPERATIONS MANAGEMENT
AND PRODUCTIVITY
 LEARNING OUTCOMES

At the end of this chapter, you should be able to:

Define operations management
Discuss the basic components of operations system
Understand the reasons for studying operations
management
Identify the roles of operations managers
Identify the objectives of operations management

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 LEARNING OUTCOMES (cont.)

 Discuss the characteristics of services and

manufactured products
 Explain the relationship between operations and
other functions
 Understand productivity and its measurement
 Explain the challenges in operations management

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 OPERATIONS MANAGEMENT

Definition:

Activities related to the creation of goods or services

by converting or transforming inputs into outputs.

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 BASIC COMPONENTS OF AN
OPERATIONS SYSTEM

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 BASIC COMPONENTS OF AN
OPERATIONS SYSTEM (cont.)

1. Input
The basic materials needed to produce goods and
services, such as raw materials, financial support,
human resources, equipment and information.
2. Transformation process
The activities related to the conversion of inputs into
outputs that involve operating strategies.
3. Output
The final results obtained after the transformation process,
which includes goods or services.

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 IMPORTANCE OF
OPERATIONS MANAGEMENT

 One of the major functions in an organization.

 Know how goods and services are produced.
 Understand what operations managers do.

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 ROLES OF OPERATIONS
MANAGERS

1. Planning
2. Organizing
3. Staffing
4. Leading
5. Controlling

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 OBJECTIVES OF OPERATIONS
MANAGEMENT

1. Achieving customers’ satisfaction

2. Using resources efficiently
3. Smooth production processes
4. Meeting expected demand and delivery dates
5. Being an effective producer
6. Adapting for future survival

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 OPERATIONS FOR GOODS
AND SERVICES

Characteristics of services:
a) Intangible outputs
b) Outputs that cannot be stored
c) High interaction with customers
d) Labour intensive
e) Difficulty in measuring quality

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 OPERATIONS FOR GOODS
AND SERVICES (cont.)

Characteristics of goods:
a) Tangible products
b) Outputs that can be stored
c) Low interaction with customers
d) Capital intensive
e) Ease in measuring quality

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 RELATIONSHIP BETWEEN
OPERATIONS AND OTHER
FUNCTIONS

The three main subsystems in an organization:

Operations/Production
• producing and delivering goods and services
• converting inputs into outputs
Finance
• securing resources, such as raising funds
• preparing a budget to be spent within a certain
period of time

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 RELATIONSHIP BETWEEN
OPERATIONS AND OTHER
FUNCTIONS (cont.)

 Marketing
• promoting and selling goods and services
• assessing customers’ needs and wants
• communicating the information gathered to the
operations function

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 RELATIONSHIP BETWEEN
OPERATIONS AND OTHER
FUNCTIONS (cont.)

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 PRODUCTIVITY

Definition:

The ratio of outputs (goods and services) divided by

the inputs (resources, e.g. labour and capital).

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 IMPORTANCE OF
PRODUCTIVITY

1. Low unemployment
2. Improved living standards for the nation
3. Reduced operating costs and increased
revenue

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 PRODUCTIVITY
MEASUREMENTS

1. Single factor productivity measurement

Uses just one resource input; labour-hours.

2. Multifactor productivity measurement

Uses multiple resource inputs, such as capital, labour,
material, energy and other resources.

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 PRODUCTIVITY VARIABLES

 Labour
 Capital
 Management

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 CHALLENGES IN OPERATIONS
MANAGEMENT

 Global focus
 Supply-chain partnering
 Sustainability
 Rapid product development
 Mass customization
 Just-in-time performance
 Empowering employees

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