Factors of Production => Organize Human Resources Operations
ManagementManagement Information Systems Marketing Accounting
Finance => $$$$$$$$$
The process of turning factors of production into saleable goods and services.
Transforming things Fabrication, Assembly, Chemical , Transportation
Production implies that we make products. Products are tangible goods.
Capacity Planning; forecast likely demand, are the facilities (shop, factory,
warehouse, restaurant) big enough?
Location Planning: figure out best place to locate facility.
Close to –skilled labour, market, suppliers, sources of capital
Layout Planning: Design the facility in a logical fashion
Scheduling: When is your facility open? Many services are “high contact”.
Services cannot be stored.
Principal Topics Covered in this Lecture
Operations defined - making the good or service
Production vs. Operations - why we call it "operations"
Producing "goods" vs. "services" - why services more difficult to provide
What Operations Managers do
The Importance of Operations Management
Remember definition of business:
"An organised effort to produce something that customers will buy.... " Definition of "business" implies:
ability to make / produce / provide / supply the things people want.
Customers will pay money if product or service you offer provides benefits.
You must manage business in way that the product you claim to be offering is
indeed what you offer.
Trivial example: A coffee shop must be able to make coffee have it available
around coffee time.
Business must be able to make / produce / provide / supply good or services:
on time, (when people want it)
on budget, (at a price they can afford)
on specification, (according to customers' needs).
Production management, or "operations" management is function of business
concerned with producing things:
as possible, to provide value or benefit to customers. Operations Management - 2 useful definitions
The systematic direction and control of the processes that
transform resources into finished goods
The management of the creation of goods and services using the
factors of production: land, labour, capital, entrepreneurship
Operations Create Value
Business is a "box" that takes factors of production (raw material, labour, capital)
and transforms them into products or services which customers value.
Operations involve taking raw materials/other factors of production and adding
value or utility.
Here's how you turn barley, and water, into beer: HOW TO MAKE BEER Examples of operations
Fabrication: Cut something in half, bend it. Make a tree into paper.
Assembly: Put pieces/different ingredients together. Make bread and cheese into a
Transport: Moving products/raw material f