Chapter 1 - Intro to Operations Management PDF

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Summary

Intro to Operations Management...

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Chapter 1 Production: is the creation of goods and services Operations management (OM): is the set of activities that creates value in the form of goods and services by transforming inputs into outputs

Essential functions: 

Marketing – generates demand

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Production/operations – creates the product

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Finance/accounting – tracks how well the organization is doing, pays bills, collects the money

Characteristics of Goods

Characteristics of Service

Tangible product

Intangible product

Consistent product definition

Produced and consumed at same time

Production usually separate from

Often unique

consumption Can be inventoried

High customer interaction

Low customer interaction

Inconsistent product definition Often knowledge-based Frequently dispersed

Goods

Services

Can be resold

Reselling unusual

Can be inventoried

Difficult to inventory

Some aspects of quality measurable

Quality difficult to measure

Selling is distinct from production

Selling is part of service

Product is transportable

Provider, not product, is often transportable

Site of facility important for cost

Site of facility important for customer contact

Often easy to automate

Often difficult to automate

Revenue generated primarily from tangible

Revenue generated primarily from the

product

intangible service

Productivity Challenge Productivity: is the ratio of outputs (goods and services) divided by the inputs (resources such as labor and capital)



Measurement of productivity is an excellent way to evaluate a country’s ability to provide an improving standard of living for its people.



Only through increases in productivity can the standard of living improve.

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Only through increases in productivity can labor, capital, and management receive additional payment.

Important Note: Production is a measure of output only and not a measure of efficiency Productivity = Units produced / Input used 

Measure of process improvement



Represents output relative to input

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If the productivity ratio is improved, then the efficiency is improved, vice versa.

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Improvement can be done by: o Reducing inputs while keeping output constant o Increasing output while keeping inputs constant

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High production occurs when there are more people working, but that does not suggest high productivity is achieved.

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If returns to labor, capital, and management increase while the productivity doesn’t increase, prices will rise.

Single-Factor Productivity (One resource input) Labor Productivity= Units produced / Labor-hours used

Multi-Factor Productivity (Multiple resource inputs, also known as total factor productivity) Productivity = Output / Labor + Material + Energy + Capital + Miscellaneous 

The inputs can be expressed in dollars and summed up...