MGTA01H3 Chapter Notes - Chapter 1: Capacity Planning, Dry Cleaning, Socalled

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Published on 19 Apr 2013
School
UTSC
Department
Management (MGT)
Course
MGTA01H3
Professor
Chapter 1- producing goods and services
Service operations: production activities that yield intangible services
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 and services
Production managers: managers responsible for ensuring that operations processes create value
and provide benefits
-they must bring raw materials, equipment, and labour together under a production plan that
effectively uses all the resources available in the production facility
-not all production managers work in factories (farms, jewellery store, tire producer, and
furniture manufacturer are all examples of production systems)
Operations process: a set of methods and technologies used in the production of a good or a
service
o We classify various types of production according to differences in their operations processes. In
other words, we can describe goods according to the kind of transformation technology they
require, or according to whether their operations process combines resources or breaks them
into component parts. We can describe services according to the extent of customer contact
required
o All goods-manufacturing processes can be classified in two different ways:
-type of transformation technology that transforms raw materials into finished goods
-analytic or synthetic nature of the transformation process
o 1. Types of transformation processes include: chemical, fabrication, assembly, transport, and
clerical
o In chemical processes, raw materials are chemically altered (steel industry, paint industry, etc)
o Fabrication processes mechanically alter the basic shape or form of a product (woodworking
industry, metal forming industry, etc)
o Assembly processes put together various components. (These techniques are common in
electronics industries, appliance industries, automotive industries etc)
o In transport processes, goods acquire place utility by being moved from one location to another
(trucks routinely move bikes from manufacturing plants to consumers through warehouses)
o Clerical processes transform information. (compiling inventory reports at a retail outlet)
2. Analytic process: any production process in which resources are broken down
Synthetic process: any production process in which resources are combined
o Service-producing processes are classified according to the extent of customer contact
High-contact system: a system in which the service cannot be provided without the customer
being physically in the system (ex. Transit system)
-for this reason, transit managers must worry about the cleanliness of the trains and busses and
the appearance. This is usually not the case in low-contact systems
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Low-contact system: a system in which the service can be provided without the customer being
physically in the system (ex. Lawn care services, auto repair shops, or cheque-processing
operations at a bank)
o Service and manufacturing operations both transform raw materials into finished products. In
service production, however, the raw materials, or inputs, are not glass or steel. Rather, they are
people who choose among sellers because they have either unsatisfied needs or possessions for
which they require some form of care or alteration. In service operations, then, "finished
products" or "outputs" are people with needs met and possessions serviced. Key areas where
service operations differ from goods production include: focus on performance, focus on
process and outcome, focus on service characteristics, focus on the customer-service link, and
focus on service quality considerations
o 1. One very obvious difference exists between service and manufacturing operation: whereas
goods are produced, services are performed. Therefore, customer-oriented performance is a
key factor in measuring the effectiveness of a service company
o 2. Manufacturing operations focus on the outcome of the production process. The products
offered by most service operations, however, are actually combinations of goods and services.
Services, therefore, must focus on both the transformation process and its outcome (--both on
making a pizza and on delivering it to the buyer). Service operations thus require different skills
from manufacturing operations (repairing defective pipes, but also interpersonal skills necessary
to calm and reassure frightened customers about possible gas leaks)
o 3. Service companies' transactions always reflect the fact that service products are characterized
by three key qualities intangibility, customization, and unstorability
-often services cannot be touched, tasted smelled, or seen. An important value, therefore is the
intangible value that the customer experiences in the form of pleasure, satisfaction, or a feeling
or safety
-typically, services are customized (expecting services to be designed for your needs --ex. hair
cut according to your style or being examined by a physician for your symptoms)
-services are typically characterized by a high degree of unstorability
o 4. Because they transform customers or their possessions, service operations often
acknowledge the customer as part of the operations process itself. As physical participants in
the operations process, service consumers have a unique ability to affect that process (ex.
Business conveniently located, hours of operations, etc)
o 5. Service managers must understand that quality of work and quality of service are not
necessarily synonymous (ex. Although your car may have been flawlessly repaired, you might
feel dissatisfied with the service if you were forced to pick it up a day later than promised)
(operations planning)
Like all good managers, we start with planning
Forecasts: estimates of future demand for both new and existing products
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Document Summary

Service operations: production activities that yield intangible services. 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 and services. Production managers: managers responsible for ensuring that operations processes create value and provide benefits. They must bring raw materials, equipment, and labour together under a production plan that effectively uses all the resources available in the production facility. Not all production managers work in factories (farms, jewellery store, tire producer, and furniture manufacturer are all examples of production systems) Operations process: a set of methods and technologies used in the production of a good or a service: we classify various types of production according to differences in their operations processes. In other words, we can describe goods according to the kind of transformation technology they require, or according to whether their operations process combines resources or breaks them into component parts.

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