MGT3100 Notes - Chapter 1 - Operations & Productivity - Pages 2-24 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. Activities are also called services. They may be hidden from the public and even from the customer. These things are necessary for an organizations survival and to produce goods and services. Marketing, which generates demand, or at least takes the order for a product or service. Nothing can happen until there is a sale. Production/Operations, which creates a product Finance/accounting, which tracks how well the organization is doing, pays the bills, and collets money. All organizations market (sell), nance (account), and produce (operate). The management process consists of planning, organizing, stafng, leading, and controlling. Eli Whitney is credited for the early popularization of interchangeable parts, which was achieved through standardization and quality control, it 1800. In 1881, Frederick Taylor, known as the father of scientic management, contributed to personnel selection, planning and scheduling, motion study, and the now popular eld of personnel ergonomics. He believed managers should assume responsibility for Matching employees to the right job Providing the proper training Providing proper work methods and tools Establishing legitimate incentives for work to be accomplished. Services are dened as including repair and maintenance, government, food and lodging, transportation, insurance, trade, nancial, real estate, education, legal, medical, entertainment, and other professional occupations The differences in goods and services Services are intangible as opposed to tangible. Services are often produced and consumed simultaneously Services are often unique Services have higher customer interaction Services have inconsistent product denition Services are knowledge based Services are frequently dispersed. When a tangible product is not included in a service, it is called a pure service. The service sector is the segment of the economy that includes trade, nancial, lodging, education, legal, medical, and other professional occupations. Some challenges of operations management include: Global focus Just-in-time performance Supply chain partnering Rapid product development Mass customization Empowered employees Environmentally sensitive production

MGT3100 Notes - Chapter 1 - Operations & Productivity - Pages 2-24 Ethics Productivity is the ratio of outputs (goods or services) divided by the inputs (resources such as capital and labor).The OMs job is to improve on these inputs. This improvement can be done through reducing inputs while keeping output constant or increasing output while keeping inputs constant. High production does not always mean high productivity. Measurement of productivity is a excellent way to evaluate a countrys ability to provide an improving standard of living for its people. Only though increasing productivity can standard of living improve. Productivity = units produced / inputs used Single-factor productivity indicates the ratio of one resource (input) to the good and services produced (outputs) Multi-factor productivity indicates the ratio of many or all resources (inputs) to the good and services produced (outputs) Productivity = output / Labor + Material + Energy + Capital + Miscellaneous If labor productivity growth is entirely the result of capital spending, measuring just labor distorts the results. Multi-factor productivity is usually better, but more complicated. Some problems of measurement are: Quality may change while quantity of inputs and outputs remain constant. External elements may cause an increase or decrease in productivity for which the system under study may not be directly responsible. Precise units of measure may be lacking. Productivity variables: Labor, which contributes to about 10% of the annual increase Capital, which contributes to about 38% of the annual increase Management, which contributes about 52% of the annual increase in productivity. Thee variables for improved labor productivity: Basic education appropriate for an effective labor force Diet of the labor force Social overhead that makes labor available, such as transportation or sanitation Management is responsible for making sure that labor and capital are effectively used to increase productivity. Knowledge societies are those in which much of the labor force has migrated from manual work to technical and information-processing tasks requiring ongoing education. Productivity of the service sector has proven difcult to improve because servicesector work is Typically labor intensive Frequently focused on unique individual attributes or desires Often an intellectual task performed by processionals Often difcult to mechanize and automate Often difcult to evaluate for quality. Ethical challenges facing operations managers are: Efciently developing and producing safe, quality products, maintaining a clean environment and safe workplace, and honoring community commitments