Introduction to

Operations
Management
MGT 314, Stevenson, Chapter 1
Yurika Uematsu Bhuiyan

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https://www.bgmea.com.bd/home/pages/TradeInformation
 Learning Objective
1. Define the term operations management
2. Identify the three major functional areas of organizations and describe
how they interrelate
3. Identify similarities and differences between production and service
operations
4. Describe the operations function and the nature of the operations
manager’s job
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 Learning Objective
5. Summarize the two major aspects of process management
6. Explain the key aspects of operations management decision making
7. Characterize current trends in business that impact operations
management

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 Operations Management
• The management of systems of processes that create goods and/or provide
services
• Operations and supply chain are intrinsically linked. Supply chain is the
sequence of activities and organizations involved in producing and
delivering a good or service.

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Value-added process
Land, Labor, Capital, Information

What about the supply chain of

Goods, Services garments?

Value-added = Value or price of outputs – Cost of inputs 6 of

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Supply Chain of Garments
• Fibre Manufacturer

• Yarn Manufacturer

• Fabric Manufacturer

• Clothing Manufacturer

• Clothing Wholesaler

• Clothing Retailer

• You!

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Organization Structure
• Organization
• Finance
• Secure Fin. Resources

• Budgeting
• Funding …

• Operations
• Producing Why is it
important for
• Marketing the three areas
• Assess Customer needs to work with
one another?
• Selling & Promoting …
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Inputs Processing Outputs

Raw Vegetables Cleaning Canned vegetables

Metal Sheets Making cans
Water Cutting
Energy Cooking
Labor Packing
Building Labeling
Equipment

Inputs Processing Outputs

Doctors, nurses Examination

Hospital Surgery
Medical Supplies Monitoring Healthy patients
Equipment Medication
Laboratories Therapy
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 Product Packages
• Product packages are a combination of goods and services.
• Product packages can make a company more competitive.

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Goods-service Continuum Tangibl Ac
e t

Goods Service

Surgery, teaching

Song writing, software development

Computer repair, restaurant meal

Automobile Repair, fast food

Smart phones:
Home remodeling, retail sales Product/Service?

Automobile assembly, steel making

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Product packages = Good(s) + service(s)
Make a company more competitive- more value to customers
Key Differences between Goods and Service
Characteristic Goods Service
Customer contact Low High
Uniformity of input High Low
Labor content Low High
Uniformity of output High Low
Output Tangible Intangible
Measurement of productivity Easy Difficult
Opportunity to correct problems High Low
Inventory Much Little
Evaluation Easier Difficult
Patentable Usually Not usual 12 of 23
What are the challenges of managing
services?

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 Scope of Operations Management
• Forecasting
• Capacity planning
• Scheduling
• Managing inventories
• Assuring quality
• Motivating employees
• Deciding where to locate facilities
• Supply chain management
• And more . ..

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 Operation Manager’s role
• What
What resources/what amounts
• When
Needed/scheduled/ordered
• Where
Work to be done
• How
Designed
• Who
To do the work

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 Operations Management Decision Making
• Models
• Quantitative approaches
• Performance Metrics
• Analysis of Trade-Offs
• Degree of Customization
• Systems Approach
• Establishing priorities
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 Models
• Abstraction of reality; simplified representation of something
• Physical models – looks like their real-life counterparts
• Schematic models – has less resemblance to the physical reality
• Mathematical models – no resemblance to physical reality

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 Why are models beneficial?
• Easy to use, less expensive
• Require users to organize
• Increase understanding of the problem
• Enable “what if” questions
• Consistent tool for evaluation and standardized format
• Power of mathematics

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 Limitations of Models
• Quantitative information may be emphasized over qualitative
• Models may be incorrectly applied and results misinterpreted
• Nonqualified users may not comprehend the rules on how to use the
model
• Use of models does not guarantee good decisions

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 Quantitative Approaches

• Linear programming

• Queuing Techniques

• Inventory models

• Project models

• Statistical models
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Analysis of Trade-offs

• Customer
• Level of customer service
• Cost
• Inventory
• Inventory

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 Systems Approach
• System is a set of interrelated parts that must work together
• Organization consists of systems and subsystems (eg. Marketing
subsystem, operations subsystem) which in turn have lower subsystem
• The whole is greater than sum of its individual parts

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 Current Business Trends
• The Internet, e-commerce, e-business
• Technology
• Globalization
• Working with fewer resources
• Revenue management
• Process Analysis and Improvement
• Agility
• Ethical behavior
• Lean production
• Combination of Mass Production (high volume, low unit cost) and Craft Production (variety and
Flexibility)

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