Chapter 1 Flashcards
Operations is the part of a business organization which…
is responsible for producing goods and/or services
Goods
Physical items (i.e. raw materials, parts etc.)
Services
activities that provide some combination
of time, location, form or psychological value.
What does the collective sucess or failure of companies’ operations functions have an impact on?
The ability of a nation to compete with other nations, and on the nation’s economy.
All business organizations have three basic function areas
1) Finance
2) Marketing
3) Operations
Finance is responsible for…
- securing financial resources at favorable prices
-allocating those resources throughout the organization
-budgeting
-analyzing investment proposals
-providing funds for operations.
Marketing is responsible for…
- Assessing consumer wants and needs
- Selling and promoting the organizations’ goods or services.
Operations is responsible for…
-Producing the goods
- Providing the services.
Operations management
The management of systems or processes that create goods and/or provide services.
Supply chain
A sequence of organizations -their facilities, functions, and activities- that are involved in producing and delivering a product or service.
Value-added
The difference between the cost of inputs and the value or price of outputs
The greater the value-added …
the greater the profit
Value-added for non-profit organisation is …
their value-added to society.
The greater the value-added …
The greater the profit.
Similarities of managing production and managing services:
1) Forecasting and capacity planning to match supply and demand.
2) Process Management
3) Managing variations
4) Monitoring and controlling costs and productivity
5) Supply chain management
6) Location planning, invertory management, quality control and scheduling.
Jobs which are closely related to operations.
-Finacial services
-Accounting services
-Information services
What do finance and operations management personnel exchange information and expertise in?
1) Budgeting
2) Economic analysis of investment proposals
3 Provision of funds
Besides finance and marketing, other functional areas of organization Operations interact with.
- Legal
- Management information system (MIS)
- Accounting
- Human resources
- Public relations
Lead time
The time between ordering a good or service and receiving it.
Key decisions which operations managers make. (They affect the entire organisation)
> What resources will be needed and in what amounts.
When will each resource be needed, when should the work be scheduled, when is corrective action needed, when should materials and other supplies be ordered.
Where will the work be done
How will the product or service be designed, how will the work be done, how will resources be allocated
Who will do the work
Model
Abstraction of reality, a simplified representation of something.
Physical model
a model that looks like their real-life counterparts
advantage: physical correspondence to reality
Schematic model
a model that is more abstract, they have less resemblance to the physical reality.
advantage: they are simple to construct and change, have some degree of visual correspondence.
Mathmatical model
very abstract, do not at all look like their physical counterparts and are easy to manipulate.
Benefits of models:
1) Easy to use and less expensive
2) Requires organization and quantification of info, often indicating areas where additional info is needed.
3) Increase understanding of the problem.
4) Enables managers to analyze what-if questions.
5) It is a consistent tool for evaluation, providing a standardized format for problem analysis.
6) Enable users to bring the power of mathematics to bear on a problem.
Limitations of models:
1) Quantitative information may be emphasized, at the expense of qualitative information.
2) They can be incorrectly applied and results can be misinterpreted.
3) Does not guarantee good decisions.
Pareto Phenomenon
The principle that a small number of factors or inputs (the vital few) often account for a large percentage of results or outputs. (This concept is applicable to various levels of management and decision-making).
Trade-off decisions
a situational decision that involves diminishing or losing one quality, quantity, or property of a set or design in return for gains in other aspects.
Customization
The degree to which products or services are tailored to individual customer needs. (Highly customized products or services are labor-intensive, time-consuming, and involve skilled professionals and flexible equipment.)
System
Set of interrelated parts that must work together.
