Chapter 1

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16 Feb 2011
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Ch.1
Service operations production activities that yield intangible services
Goods production production activities that yield tangible products
Production the making of physical goods like automobiles, toothpaste, television, toys,
etc.
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
Operation processes a set of methods and technologies used in the production of a good
or a service
Transformation Technology
Chemical processes, raw materials are chemically altered. Such techniques are
common in the aluminum, steel, fertilizer, petroleum, and paint industries
Fabrication processes mechanically alter the basic shape or form of a product.
Fabrication occurs in the metal forming, woodworking, and textile industries
Assembly processes put together various components. These techniques are
common in the electronics, appliance, and automotive industries
Transport processes, goods acquire place utility by being moved from one location
to another. For example, trucks routinely move bicycles from manufacturing plants
to consumers through warehouses and discount stores
Clerical processes transform information. Combing data on employee absences
and machine breakdowns into a productivity report is a clerical process. So is
compiling inventory reports at a retail outlet
Analytic process any production process in which resources broken down
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Synthetic process any production process in which resources are combined
High contact system a system in which the service cannot be provided without the
customer being physically in the system. Ex. Public transport
Low contact system a system in which the service van be provided without the
customer being physically in the system. Ex. Lawn care services
Service products characterized by three key qualities: intangibility, customization, and
unstorability
Intangibility the value that the customer experiences in the form of pleasure,
satisfaction, or a feeling of safety
Customization services to be designed for your needs
Unstorability a service that cannot be produced ahead of time and then stores
Customer service link the business accustoms to the needs of the consumers store
hours, location, etc.
Forecast estimates of future demand for both new and existing products
Capacity the amount of a good that firm can produce under normal working conditions
Capacity planning for goods ensuring that a manufacturing firms capacity slightly
exceeds the normal demand for its product
Capacity planning for services in low contact, maintaining inventory allows mangers
to set capacity at low level demand. At high contact processes, managers must plan capacity
to meet peak demand
Location planning for goods influenced by proximity to raw materials and markets,
availability of labour, energy and transportation costs, local and provincial regulations and
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