1 Introduction

2 Intro Look down Main St. in any town and you will see small businesses. In larger cities you will note the large corporations with office complexes and manufacturing facilities. All are in business to produce goods or services in hopes of generating profit. You may recall from your economics class (you didn’t totally forget that experience, did you?) that in a broad sense the 4 basic resources used in an economy are land, labor, capital and entrepreneurial ability. So, production and operations management (POM) is basically about an examination of how the firm goes about the actual production of goods and services from the inputs it has at its disposal.

3 3 points to Emphasize In his opening remarks about POM, the author of the text wants to emphasize 3 points: 1) decisions 2) function, 3) process. Let’s look at each point in more detail. Decisions The operations area of a business makes decisions on process, quality, capacity and inventory.

4 3 points to Emphasize Function Operations is 1 function of an organization. Other functions include marketing and finance. The author notes that from time to time we will study the “cross functional nature” of decision making. Process While POM is about the process of transforming inputs to outputs, it is also about the design and analysis of the very processes used. Plus, incites gained from POM may be carried over to other functions. For example, a sales office may be thought of as a producer using inputs to make output.

5 Process Decisions Certainly in the larger corporations, and likely even in small firms, the production process involves the purchase of significant capital goods (the machines and equipment used in production). Process decisions include the way capital goods will be utilized along with how the facility is laid-out, job design and workplace policies.

6 Quality Decisions As firms think about the quality of their products, standards must be set, people must be trained and inspections must occur to ensure the quality is being met. The notion of continuous quality improvement is a hot topic in business circles these days.

7 Capacity and Inventory Decisions The firm has to balance factors such as facility capacity (maximum productive capability), number of shifts per day, the number of workers per shift and whether or not to rent addition space. The inventory decisions range from purchasing and storing raw materials down to the amount of output in finished goods inventory.

8 Cross-Function nature of business The author suggest the 3 primary functions of a business are the operations, marketing and finance functions. Supporting functions include human resources, information systems and accounting. Page 10 in the book suggests how operations is cross functionally related to these other areas.

9 Contemporary Themes In POM, like in any field of study, there are current events and hot topics that we will study. These include differences/similarities in producing goods and producing services, customer-directed operations, lean operations, cross-functional decision making, environmental concerns, supply chain management and globalization of operations.