DSC2006 : Tutorial 1 Introduction to Operations Management 1.

Operations management is the system/processes of a business organization that is responsible for creating goods and/or services which includes the design as well as the operations of the systems/processes.

2. The three major functional areas of business organizations are Finance, Marketing and Operations. Finance is responsible for securing financial resources available at favorable prices and allocating those resources throughout the organization, as well as budgeting, analyzing investment proposals, and providing funds for operations. Marketing and operations are the primary or line functions. Marketing is responsible for assessing consumer wants and needs, and selling and promotion the organizations goods or services. Operations is responsible for producing the goods and providing the services offered by the organization.

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A primary function of an operations manager is to guide the system by decision-making. In this capacity, the operations manager exerts considerable influence over the degree to which the goals and objectives of the organization are realized. (What, When, Where, How and Who questions are key. OM is also key in improving the competitiveness of organizations via improving productivity. It is also responsible for managing variations (Variety of goods/services, Structural variation in demand, random variation and assignable variation)

4. Goods are physical items that include raw materials, parts, subassemblies and final products. Whereas services are activities that provide some combination of time, location, form or psychological value. They are often bundled together as a packaged good offering both service and goods. They can be quantified and advertised? Output Tangible v Intangible Consistent product definition Uniformity of input/output are high/low Customer Contact Interaction is high/low + production usually separate/together with consumption. Inventoried Can/cannot be inventoried Measurement of productivity easy v hard Quality evaluation is easy v hard + opportunity to correct problem is high v low.

Labor content of production high v low Patents common v uncommon

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15. Value Added: to improve competitiveness by effectively meeting the wants and needs of customers relative to others that offer similar goods or services. (Add value through operations promotions process). Improving productivity by 1. 2. 3. 4. 5. Developing productivity measures for all operations in the process, Determining critical (bottleneck) operations Develop methods for productivity improvements Establish reasonable goals Make it clear that managements supports and encourages productivity improvement 6. Measure and publicize improvements. Critical Thinking: The implicit differences between goods and services would indicate that there are different methods to tackle the related operations management problems. For one, goods can be inventoried but service cannot hence, there has to be a constant supply of staff for the service to be operational. This is unlike goods whereby production can stop when there is an excess of products to meet the demand. However there is a limitation to this in the case of perishable goods, which cannot be inventoried indefinitely. As fore mentioned, the quality of goods are much easier to ascertain than that of service hence operations managers need to implement training regimes to try to standardize the quality of service offered by each of their officers.

Chapter 2 2. Production & service design, cost, location, quality, quick response, flexibility, inventory management, supply chain management, service, managers and workers. 9.

a) Productivity is an index that measures output (goods and services) relative to the input (labor, materials, energy and other resources) used to produce them. It is usually expressed as the ratio of input to output P=O/I. b) Productivity measures can be based on a single input (partial productivity), on more than one input (multifactor productivity), or on all inputs (total productivity). They are useful on a number of levels. For an individual department or organization, productivity measures can be used to track performance over time. This allows managers to judge performance and to decide where improvements are needed. They can also be used to judge the performance of an entire industry or the productivity of a country as a whole. They serve as aggregate measures. c) Essentially, productivity measures serve as scorecards of the effective use or resources, which is relevant in the real world as it is a proxy for competitiveness and hence economic success. Furthermore there is also a close link between productivity and a nations standard of living, which is of prime concern to government bodies. For businesses, a higher level of productivity as compared to their competitors would enable them to reap a larger profit margin or even undercut their competitors to increase their market shares. The most productive companies being those that can reap the greatest output with the least amount of input. d)

e) Efficiency is a narrower concept that pertains to getting the most out of a fixed set of resources; productivity is a broader concept that pertains to effective use of overall resources.