Chapter 1 - Study Guide (2nd edition)

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16 Jan 2011
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Chapter 1 Study Guide
Business: an organized effort to provide things that customers want to buy
This implies: the ability to provide the things that people want to buy
Operations: The direction and control of processes that transform resources into
finished goods OR The management of the creation of goods and services, using the
factors of production
-Operations managers make things or make things happen
-Production implies that Canadian businesses make products
Fact: 80% of Canadians work in “services & services make up 69.1% of the GDP
Service Operations: Production activities that yield intangible services
Goods Production: Production activities that yields tangible products
Operation (Production) Management: The systematic direction and control of
the processes that transform resources into finished goods and services
Production Manger: managers responsible for ensuring that operations process
create value and provide benefits
Operation Process: A set of methods and technologies used in the production of a
good or service
Types of production are classified according to differences in their
-Goods manufacturing can be broken down according to the type of
transformation technology:
Chemical process: raw materials are chemically altered [steel,
gas, paint]
Fabrication process: mechanically alter basic shape and form of
a product [metals, woodworking, textile]
Assembly process: put together various components [electronics,
Transport process: goods acquire place utility by being moved
from one location to another [trucks move widgets from
warehouse to showroom]
Clerical process: transform information [accounting]
oAnalytic process: any production process in which resources
are broken down
oSynthetic process: any production process in which resources
are combined
-Service manufacturing can be broken down through extent of customer contact:
oHigh-contact system: where services cant be provided without the
customer being in the system [transit system]
oLow-contact system: where services can be provided without the
customer being physically in the system [lawn care services]
-Focus on performance is much more complex for services. Service operation
feature a unique link between production and consumption both on making a
pizza and delivering it to the buyer
-Focus on service characteristics:
Intangibility: customer pleasure or satisfaction with the service
Customization: the service each person gets is customized for them
Unstorability: services cannot be produced ahead of time
-As physical participants in the operations process, service consumers have the
unique ability to affect that process. [open at convenient times, location]
-Quality of work and Quantity of service are not synonymous [good repair but
late service]
Demand planning
Forecast: estimates of future demands for both new and existing products
Capacity planning: ensure enough space & workers to meet demand
Capacity: the amount of good that firm can produce under normal working
-Manufacturing firms capacity should slightly exceed demand
-Service firms:
oLow contact: capacity = average demand
oHigh contact: capacity = peak demand
Location planning: Find best location for getting materials, good employees,
transport to market
Layout planning: Arrange store/factory for smooth flow of materials
Process layout: a way of organizing production activities such that
equipment and people are grouped together according their function
Cellular layout: used to produce goods when families of products can follow
similar flow paths
Product layout: a way of organizing production activities such that
equipment and people are set up to produce only one type of good
Assembly line: a type of product layout in which a partially finished
product moves through a plant on a conveyor belt or other equipment
Quality planning
Methods planning: identify each step and process so that step by step analysis can
be done
-Service flow analysis: an analysis that shows the process flows that
are necessary to provide a service to customers; it allows managers to
determine which processes are necessary
-Designing To Control Employee Discretion In Services
-Design For Customer Contact In Service [hygiene at dentists]
Schedule : To finish on time: Start on time!
Master Production Schedule: Schedule showing which products will be
produced, when production will take place, and what resources will be used
Operations Control: Managers monitor production performance by comparing
results with plans and schedules