Chapter 1 - Introduction to Operations Management

Chapter 1 - Introduction to Operations Management - Chapter...

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Chapter 1 - Introduction to Operations Management I. Introduction a. Operations Operations is the part of a business organization that is responsible for producing goods and/or services Goods : physical items that include raw materials, parts, subassemblies, and final products Services : activities that provide some combination of time, location, form, or psychological value Ideal situation for a business is to achieve a match of supply and demand Excess supply or excess capacity is wasteful and costly Too little supply means lost opportunity and customer dissatisfaction Businesses have three basic functional areas 1. Finance a. Responsible for securing financial resources at favorable prices and allocating those resources throughout the organization b. Budgeting, analyzes investment proposals, and providing funds for operations 2. Marketing a. Responsible for assessing consumer wants and needs b. Sells and promotes the organization’s goods or services 3. Operations a. Responsible for producing the goods or services offered by a business i. Core component of what a business does Operations Management : management of systems or processes that create good and/or provide services
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Supply Chain : sequence of organizations – their facilities, functions, and activities – that are involved in producing and delivering a product or service Suppliers’ suppliers Direct Suppliers Producer Distributor Final Customer a. Both external and internal to the organization i. External parts of a supply chain provide raw materials, parts, equipment, supplies, and deliver outputs that are goods to the customers ii. Internal parts are part of the operations function itself, supplying operations with parts and materials, performing work on products, and passing the work on to the next step in the process Creation of goods or services involves transforming or converting inputs into outputs Transformation processes include storing, transporting, and repairing a. To ensure that the desired outputs are obtained, an organization takes measurements at various points in the process, called feedback , and then compares them with previously established standards, called control . Companies sell product packages, which are a combination of goods and services, because most goods and services often occur jointly Essence of the operations function is to add value during the transformation process Value-added: term used to describe the difference between the cost of inputs and the value or price of outputs a. In non-profit organizations, the value of outputs is their value to
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Chapter 1 - Introduction to Operations Management - Chapter...

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