Operations management is concerned with producing the right goods and services at the right quality and quantity. They need to turn the factors of production (land, capital, enterprise and people) into output. In production the five Ms are Material, Machines, Money, Manpower and Management. They have to make sure the value-added to a product will outweigh the cost of production. Key aspects of operations management Size, type and timing of production Production planning Location New products and innovation Methods of production

Types of production Job production is when a job is started and finished by one company. (Tailor makes a suit, a team may paint a house, construction company builds a house, a production company makes a movie) Advantages Quality customer service because customers can ask for specific things. (personal attention is paid to every customer) Motivation – workers can see what they are producing a nd feel a sense of pride. Specialized workers in some cases but not all Uniqueness/ Flexibility – What is produced for a customer is only for them and they can change things as they go. Disadvantages Expensive way of producing and time consuming. Hard to speed up production but easy to slow it down. Long working capital cycle because most consumers do not pay the total amount for the product till it is done and that can take time. Very little chance to take advantage of economies of scale because the businesses will tend to buy material as they need it.

Batch production is when a business will make one identical thing over and over until a certain number is reached. It can be useful for when quantity is not clear. (Bakery will bake all its bread for the day before switching to bake cookies) Advantages Economies of scales – material can be bought in huge amounts while producing one batch. (it could be a very large number). Specialization because the workers are focused on doing one thing over and over again. Can get some variety in production using this method Disadvantages Hard to change production in the middle of a batch Can end up in semi-finished goods ending up with storage costs Can lead to boredom which is de-motivating!

Flow, line and mass production – producing millions of standardized (all the same) products. (books newspapers, cars……..) Flow production making a product all at once then sending it out. (Soft drinks) Line production (assembly line production) products move down a line and people/machines add on parts. Mass production – like line and batch production but with highly specialized workers. Usually very special and expensive equipment is used.

Advantages of mass/flow production Purchasing economies of scale because they buy huge amounts of material. Technical economies of scale because special machines can only be used when the production amount is very large. Should have very similar products because the process that is repeated is done many times. Most labor costs can be low because machines do the work. Disadvantages of mass/line production Motivation is very low and workers become bored Any breakdown causes huge delays Very hard to alter what is being produced once the line is set. Huge set up and running costs. (Barriers of entry) Well run storage is needed.

Labor intensive work is production that costs more in (man hours) than in the set up of equipment. Capital intensive work is where the cost of set up or machines is higher. Capital intensive production can be good but the need for high levels of demand is great. Also some people do not like standardized products. Labor intensive production is usually seen as more skilled workers. (hospitals, schools, accounting firms…..) Most consumers feel they get more for their money with labor intensive production because they feel more personal service goes into it. Capital or labor intensive Is decided by If labor costs in an area are high a business will try to be capital intensive Large markets are more capital intensive Objectives of an organization (businesses looking for many customers then they will be more capital intensive) (if they want to serve customers better they may choose labor intensive (better customer care))

Production methods and business strategy Businesses will always try to be as efficient as possible (most output for least amount of money put into it). Always avoid idle resources. Productivity is measured by how much work gets done. This can be helped by motivation of staff or better technology. (Workers do not like change) It is important for businesses to be realistic on how much they can speed up a production process without giving up quality. What ever production method a business uses they must be careful that they are using all resources effectively. These include labor, machines, money and raw materials. (make sure raw materials are standardized).