Nature and purpose of operations management (07)

Question 1

SUMMARY

Answer 1

In summary, the following are covered in this topic:
1. Operations function or ‘operations’ is the part of a business that is responsible
for producing goods and services to meet customers’ needs.
2. Operations management is concern with how businesses design, manage and
improve the processes that create and delivers goods and services to
customers. Operations manager is responsible for managing the operations
function.
3. Operations management is the heart of a business as it controls the entire
operation and focuses on managing the transformation process, productivity,
quality and inventory to fulfil customer needs.
4. All operations create and deliver products and services by transforming inputs
into outputs using an ‘input-transformation-output’ process.
5. The characteristics of the operations processes are influenced by the volume,
variety, variation and visibility dimension of the business.
6. The essence of the operations function is to add value during the transformation
process and is measured by the difference between the cost of inputs and the
value or price of outputs. The greater the value-add, the greater the
effectiveness of their operations.

Question 2

Four aspects of operations that operation management manage

Answer 2

 the transformation process;
 productivity;
 quality;
 and inventory to fulfil customer needs.

Question 3

All operations processes transform inputs into outputs. However, they differ in 4
ways which have implications in their operations. The 4 ways, aka the 4Vs are :

Answer 3

 the volume of their output;
 the variety of their ouput;
 the variation in the demand for their output; and
 the degree of visibility customers have of the creation of the output.

Question 4

To ensure
that the final output can be sold for more than their input costs, operations manager
need to pay attention to several key aspects of operations management namely:

Answer 4

 whether the design of the product allow for economic manufacture that will
enable high price to be charged, and
 whether the input resources can be combined and managed efficiently with
minimal or zero wastage to produce quality products. This is because increasing
productivity and zero wastage will reduce cost per unit and this will increase the
value-added provided prices remain unchanged.