The function of a business is to make a profit
Have people- human resources
Make things - operations
Information- mis, management information systems
The direction and control of processes that transform resources into finished
The management of the creation of goods and services, using the factors of production
Why Its Called “Operations” (Not productions)
“Production” implies that Canadian businesses make “products”.
In fact: 80% of Canadians work in “services”
Bankers, doctors, lawyers, professors, accountants: DON’T make products They provide
ideas, analyses, information.
But: These things still need to be planned, managed, supplied.
Differences between products and services
Products can be stored and made without a customer and should all be the same
Services cannot be stored or made without a customer and should NOTall be the same
Demand planning- forecast how much they will need to make
Capacity planning- enough space and workers to meet demand
Location planning- find best location for getting employees, materials, and transport to market
Layout planning- arrange store or factory for best flow of materials
Schedule - to finish on time, start on time
Operations: take factors of production and add value or utility by turning them into products
How does operations add value?
Fabrication: Cut something in half, bend it. Make a tree into paper.
Assembly: Put pieces/different ingredients together. Make bread and cheese into a sandwich.
Transport: Moving products/raw material from A to B. Move furniture from Halifax to
Clerical: Add information/advice/packaging knowledge. Turn financial data into an investment
Chemical: Through heat/cold/mixture change material's composition.
Principle Points Productivity: Explained & defined
Productivity: Some common measures
Productivity: Why it’s important
Quality: Explained & defined
Quality: Why it’s important
Quality: Total Quality Management (TQM)
Productivity is the ratio between
Resources and products
Inputs and outputsNational productivity is
GDP of workers or population
A country is productive when it has plentiful, cheap, high quality factors of production
Business productivity: an individual business' measure of outputs: inputs
Inputs: labour, $$$$, materials
Higher ratio of output:input means higher products
*Productivity: Common Ratios*
Manufacturing: Labour hours / product
Retailing: Sales / square foot
Restaurants: Revenue / table Or Revenue / store
Productivity: Why It Matters
People and raw materials cost $$
The more time you spend making a product: the more it costs
The more materials you spend making a product: the more it costs
Operations managers concerned with the best way to “make” things
A product’s fitness for use in terms of offering the features that consumers want.
Meeting or surpassing the customer’s expectations
both mention: customer expectations
Benefits of quality:
1. Fewer costs
2. Additional revenues
because no returns, repairs, less time oncustomer service, defective products, and less
Give the customers what they want: Easy sales, repeat customers, and then u can charge more
If customers arem't happy then they complain
If customers aren’t happy:
They demand repairs
They demand refund
They stop buying
They tell others
Unhappy customers: 90% don’t complain!
They just…don’t go back.
Business loses all future sales
Unhappy customers, on average… Tell 9 other people about their experience
Businesses must recognize the relationship between quality (make it right the first time, meet
expectations) and productivity (fewer defects and fewer repairs)
Total Quality Management Everyone in the business is responsible for ensuring that product/service meets customer
Cheaper to do it properly the first time, then to repair or replace defects.
Business must minimise time, cost, and effort of making products
Today's Main Points:
Why Businesses need information
Data vs. information vs. knowledge
Information technology: explained
Electronic Information Technologies
Impact of more and better Information
Why Businesses Need Info
World’s worst Coffee Shop:
Know when to make coffee
Know how much to make
Know when to order sugar
World’s worst restaurant:
Know when to order salmon
Know when to order Merlot wine
Know how to cook customer’s steak
Data is raw facts and figures, lacking analyses and context ( useless on its own)
Examples are: temp is 39, midterm marks is 78
Information is data analyzed and given context
Example: My midterm mark was 78%, and the class average was 72%. The highest mark was
82% The temperature is 30○ C. Yesterday it was 28 ○ C. Tomorrow will be 31○ C.
Knowledge: Through education and experience, the use of information to make decisions.
Examples: My marks are above average. I’m near the top of the class. I won’t drop MGTA04, and I’ll
continue my current study habits. It’s very hot. I will buy summer clothes.
Management Information Systems
Systems that support an organization’s managers by providing daily reports, schedules, pla