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Chapter 1

GMS 401 Chapter Notes - Chapter 1: Cost Accounting, Time And Motion Study, William Ouchi

Global Management Studies
Course Code
GMS 401
Robert Meiklejohn

of 5
o Performs all activities directly related to producing
goods or providing services
o Core of most organizations
! Inputs are used to obtain goods or services using
one or more transformation processes (storing,
transporting, cutting)
! Measurements are taken along the way of this
process (feedback) and then compared with
! This determines what correct action needs to be
taken (control)
o Value-added is the term used to describe the
difference between the cost of inputs and the value or
price of outputs
o Finance and operations management cooperate by
exchanging information and expertise in activities such
! Provision of funds
! Economic analysis of investment proposals
o Focuses on selling or promoting the goods or services
o Lead time: the time it between ordering a product and
receiving it; a number marketing needs to know from
o How uniform the product is or if its customizable
o The degree of standardization and the volume of output
influences the way a firm organizes its production
o Goods - Results in a tangible output
o Services – Implies an act
o Differences involve the following
! Customer contact, use of inventories, and
demand variability
! Uniformity of input
! Labour contact of jobs
! Uniformity of output
! Measurement of productivity
! Quality assurance
Has the ultimate responsibility for the creation of the goods or
provision of services
All positions are managerial
o Meaning, in every case the operations manager must
coordinate the use of resources through the
management processes of planning, organizing,
directing, and controlling
o Models are abstractions of reality; a simplified
representation of something.
o They ignore the irrelevant details so that attention can
be on the most important aspects of a situation
o Attempts to obtain optimum solutions to the
mathematical models of managerial problems.
! Linear Programming – Allocation of scarce
! Queuing Techniques – Used where lines form
! Inventory Techniques – Control inventories
! Project Scheduling Techniques – For large scale
! Forecasting Techniques – Forecasting demand
! Statistical Techniques – Used in decision
making/quality control
o Using trade-off analysis to approach two solutions
o Whenever something is being changed, the system
must be taken into account
o Pareto Phenomenon
! A few factors account for a high percentage of the
occurrence of some event(s)
o When making decisions, managers must make decisions
based on how it will affect others.
o System in which highly skilled workers use simple,
flexible tools to produce small quantities of customized
o No economies of scale
o Innovations allowed for faster and a bigger volume of
goods to be produced by substituting machine power for
human power
o Division of labour
! An operation is divided up into smaller tasks and
individual workers assigned to each task
o Interchangeable parts
! Made it so parts were standardized
! Decreased assembly time and cost
o Spearheaded by American efficiency engineer and
inventor Frederick Taylor
! He studied the most efficient and best way to
perform tasks
! Emphasized maximizing output, which some
workers thought should increase their pay as well.
! Frank Gilbreth
" Father of motion study that was applied to
small portions of a task
! Lillian Gilbreth
" Focused on the human factor in work and
dealt with worker fatigue