Lecture 9 - 9.19.2008 - AEM 1200: Introduction to Business...

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AEM 1200: Introduction to Business Management (Sep. 19, 2008) Definition Activities Philosophies Operations Management:   The management of the conversion or transformation of resources  (including human resources) into goods and services. History Vertical integration o Integrated production processes o Specialized supply chains o Economies of scale Interchangeable parts o “Interchangeable” labor o Emphasis on “generalist” management o Economies of scale Specialized machines o E.g. the automobile industry – Model T Ford and the assembly line led to unique  mechanisms of production o High speed of production o High investment o Economies of scale Economies of scale Reduction in cost per unit resulting from increased production, realized through  operational efficiencies. Economies of scale can be accomplished because as production  increases, the cost of producing each additional unit falls. o Higher volume results in lower costs, which means higher profits  Short term economies of scale are the result of spreading fixed costs across all 
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This note was uploaded on 08/28/2009 for the course AEM 1200 taught by Professor Perez,p.d. during the Fall '06 term at Cornell University (Engineering School).

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Lecture 9 - 9.19.2008 - AEM 1200: Introduction to Business...

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