1. Chapter 1: Operations Management
Prepared by: Sheena Ray

2. Definition of Operations Management – Pg 4 ( Text Book)
Operation Management: The activities, decisions and responsibilities of managing production and delivery of products and services.
Operation function: The arrangement of resources that are devoted to the production and delivery of products and resources.
Operations Managers are the people who have particular responsibility for managing some or all of the resources which compose the operations functions.
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3. Operations in the Organization
The operations function is central to the organization because it produces the goods and services which are its reason for existing, but it is neither the only the nor the most important function. It is however, one of the three core functions of any organizations: These are:
The marketing function
The product/ service development function
The operations function
In addition there are support functions which enable the core functions to operate effectively:
Accounting and Finance
Human Resource Function
Table 1.1 – examples of core functions in some organisations
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4. The input-output transformation model for operations (pg. 39 binder)
Goods
&
Services
Transformed Resources
Materials
Information
Customers
Transforming Resources
Facilities
Staff
Transformation
Process
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5. Inputs and Outputs
All operations produce products and services by changing inputs into outputs. They do this by using the input transformation output process.
Operations are processes that take in a set of input resources which are used to transform something, or are transformed themselves, into outputs of products and services.
Transformation process model –Model that describes operations in terms of their input resources transforming processes and out puts of goods and services.
Input resources: The transforming and transformed resources that form the input to operations.
Outputs: Products and services
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6. Inputs to processes
Transformed resources: The resources that are treated transformed or converted in a process usually a mixture of materials, information and customers.
Transforming Resources: The resources that act upon the transformed resources usually classified as facilities (the building, equipments and plant of an operation) and staff (the people who operate maintain and manage the operation.
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7. Inputs to the Process Transformed resources
Materials: Operations which process materials could do so to transform their physical properties ( shape or composition for example). Most manufacturing operations are like this.
Information : Operations which process information could do so to transform their informational properties (that is, the purpose or form of the information) ; accountants do this.
Customers: Operations which process customers might change their physical properties in a similar way to materials , processors, for example hairdressers or cosmetic surgeons.
Transforming Resources:
Facilities: the buildings , equipment, plant and process , technology of the operation
Staff: the people who operate maintain plan and manage the operation.
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8. Outputs from the process
All processes exist to produce products and services and although products and services are different, the distinction can be subtle. Perhaps the most obvious difference is in their respective tangibility.
Products are usually tangible and services usually intangible.
Most operations produce both products and services. Some are pure products with facilitating services and some are pure services with facilitating services.
Services and Products are merging
All operations are service providers.
Refer to Figure 1.3
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9. Operation processes have different characteristics
Although all operations are similar in that they all transform input resources into output products and services, they do differ in a number of ways, four of which are particularly important.
The volume of their output
The variety of their output
The variation in the demand for their output
The degree of visibility which customers of the production of the product or service.
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10. Operations have different characteristics
Volume: The level or rate of output from a process, a key characteristic that determines process behavior. Example of high volume production – Mc Donald’s operations. The first thing you notice is the repeatability of the tasks people are doing and the systemization of the work where standard procedures are set down in a manual, with instructions on how each part of the job should be carried out.
Variety: The range of different products and services produced by a process, a key characteristic that determines process behavior.
Variation: The degree to which the rate or level of output varies from a process over time, a key characteristic in determining process behavior.
Visibility: The amount of value added activity that takes place in the presence ( in reality or virtually) of the customer, also called customer contact. Refer to case study on Pg 21 to 23.
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11. The activities of operations management
Understanding the operation’s strategic performance objectives.
Developing an operations strategy for the organization
Designing the operations products, services and processes
Planning and Controlling the operation
Improving the performance of the operation
The social responsibilities of the operation
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12. Chapter 2: The Strategic Role and Objectives of Operations

13. Operations Objectives: 5 Performance objectives
These are the five basic ‘performance objectives’ and they apply to all types of operation.
Imagine that you are an operations manager in any kind of business – a hospital administrator, for example, or a production manager at a car plant, what kinds of things are you likely to want to do in order to satisfy customers and contribute to competitiveness?
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14. Operations Objectives: 5 Performance objectives
Quality – There are many different approaches to defining this. We define it as consistent conformance to customers’ expectectations. You would want to do things right by providing error free goods and services which are ‘fit for their purpose’. This is giving a quality advantage to your customers.
Speed- The elapsed time between customers requesting products or services and their receiving them. You would want to do things fast, thus increasing the availability of your goods and services and giving your customers a speed advantage:
Dependability : Delivering or making available products or services when they were promised to the customer. You would want to do things on time, this gives a dependability advantage to its customers.
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15. 5 performance Objectives:
Flexibility: The degree to which an operations’ process can change what it does, how it is doing it or when it is doing it. You would want to be able to change what you do; that is , being able to vary or adapt the operations’ activities to cope with unexpected circumstances or to give customers individual treatment. Hence the range of goods and services which you produce has to be wide enough to deal with all customer possibilities. Either way, being able to change far enough and fast enough to meet customer requirements gives a flexibility advantage to your customers.
Cost: You would want to do things cheaply; that is, produce goods and services at a cost which enables them to be priced appropriately for the market while still allowing for a return to the organization or , in a not- for- profit organization, give good value to the taxpayers or who ever is funding the operation. When the organization is managing to do this, it is giving a cost advantage to the customers.
Refer to figure 2.4,2.5,2.6 ,2.7 ,2.8 – Comparison of the 5 objectives for a Hospital , Automobile Plant, Bus company and Supermarket – it highlights the different things the 5 performance objectives mean in different operations
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