Operations Management 4th Edition, Chapter 1: The Operations Functions

Operations Management
Is the field that deal with the poduction of goods and services.
The engine that creates profit for the enterprise.
Transformation Process
Inputs such as raw material, energy, and labor are turned into finished goods.
Something customers will buy at a price they are willing to pay.
Value =
Benefits / Price (benefits divided by price)
The difference between what a customer is willing to pay (price) and the cost of the product.
Objective of Operations
To produce value for the customer at the lowest possible cost.
The Essence of Operations
Operations is responsible for supplying the product or service of the organisation. Operations mangers provide value for the customer at the lowest cost making decisions for the operations function and by managing the transformation process.
4 Major Decision Responsibilities of Operations management
1. Process
2. Quality
3. Capacity
4. Inventory
Function of Operations
Supplying or providing the goods and services in the business.
Operations Process
Operations managers as managers of the conversion process.
Process Decisions
Determining the physical process or facility used to produce the product or service and the associated workforce practices.
6 Decisions for Process
1. Type of equipment
2. Technology
3. Process Flows
4. Layout of the Facility
5. Job Design
6. Workforce Policies
Quality Decisions
Ensures that quality is designed and built into the product in all stages of operations.
3 Decisions of Quality
1. Standards must be set
2. People Trained
3. Inspection of the Product
Capacity Decisions
Aimed at providing the right amount of capacity at the right place at the right time.
3 Decisions of Capacity
1. People
2. Facilities
3. Equipment
Inventory Decisions
What to order, how much to order, and when to order it.
2 Decisions of Inventory
1. How much inventory is needed
2. Where to locate the inventory
3. The flow of materials within the firm and the supply chain
The Three Primary Functions
1. Operations
2. Marketing
3. Finance
Supporting Functions
1. Human Resources
2. Information Systems
3. Accounting
Marketing Function
Responsible for creating demand and generating sales revenue.
Operations Function
Responsible for the production of goods and services
Finance Function
Responsible for the acquisition and allocation of capital
1. Labor
2. Energy
3. Material
4. Capital
5. Information