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CA (650,000)
UTSC (30,000)
MGT (300)
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Chapter 1-Producing Goods and Services

Management (MGT)
Course Code
H Laurence

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Chapter 1: Producing Goods and Services
Service Operations - Production activities that yield tangible and intangible service products
Goods Production - Production activities that yield tangible products
Operations (Production) Management - the systematic direction and control of the processes that transform resources
into finished goods
Production Managers - Managers responsible for ensuring that operations processes create value and provide benefits
Operations Processes
- A set of methods and technologies used in the production of a good or a service
Goods-Producing Processes
- all goods manufacturing processes can be classified in 2 ways:
1. Types of transformation technology - transforms raw materials into finished goods
- Chemical Processes - chemically altered (aluminum, steel, fertilizer)
- Fabrication Processes - mechanically alter the basic shape or form (metal forming, wood working)
- Assembly Processes - put together various components (common in electronics, automotive)
- Transport Processes - goods acquire place utility by being moved from one location to another
- Clerical Processes - transform information (combining employee absences, and breakdowns into report)
2. Analytic Versus Synthetic Processes
Analytic Processes - any production process in which resources are broken down
Synthetic Processes - any production process in which resources are combined
Service-Producing Processes
High-Contact Processes - A system in which the service cannot be provided without the customer being
physically in the system (transit system)
Low-Contact - A system in which the service can be provided without the customer being physically in
the system (lawn care services)
Differences Between Service and Manufacturing Operations
- Focus on performance - customer-oriented performance is key factor measuring the effectiveness of a service company
- Focus on Process and Outcome -
- Manufacturing operations focus on the outcome of production processes
- Service operations are combinations of goods and services
- Focus on Service Characteristics:
Intangibility - intangible value that a customer experiences is pleasure, satisfaction, or feeling of safety
Customization - tailored to how you need, like or want it
Unstorability - the inability to be stored, such as transportation, childcare, house cleaning etc.
- Focus on the Customer-Service Link
- often acknowledge the customer as part of the operations process itself
- meet requirements of the customer
- Focus on Service Quality Considerations
- quality of work and quality of service are not necessarily synonymous.
Operations Planning
Forecasts - Estimates of future demand for both new and existing products
Capacity Planning
Capacity - The amount of a good that a firm can produce under normal working conditions
Capacity Planning for Producing Goods
- means ensuring that a manufacturing firm's capacity slightly exceeds the normal demand for its product
Capacity Planning for Producing Services
- In low contact, maintaining inventory allows managers to set capacity at the level of average demand
- in high contact, managers must plan capacity to meet peak demand
Location Planning
Location Planning for producing goods
- location decisions are influenced by proximity to raw materials and markets, availability of labour, energy and
transportation costs, local and provincial regulations and taxes, and community living conditions
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