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Chapter 2

Chapter 2 Notes

5 Pages

Management (MGT)
Course Code
Chris Bovaird

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Focus on Process and Output: service operations require different skills from manufacturing
Focus on Service Characteristics:
· Intangibility
· Customization
· Unstorability: services cannot be produced ahead of time and stored
Focus on the Customer-Service Link: service operations must be sensitive to customer’s needs in
order to meet the requirements of the customers
Ecommerce: Customers interact electronically with sellers
Customers have around-the-clock access to information
Focus on Service Quality Consideration: Customers use different criteria to judge services and
Operations Planning
The main elements of operations planning include:
Capacity Planning
Capacity: The amount of a good that a firm can produce under normal working conditions
Depend on the number of employees and the size of its facilities
Capacity Planning for Producing Goods:
Capacity slightly exceeds the normal demand for its good
Capacity Planning for Producing Services
· In low-contact processes, capacity is set at the level of average demand (when
amounts exceed the average demand, service is placed aside in to “to-be-done”
· In high-contact processes, capacity is set at the level of peak demand
Location Planning
Location Planning for Producing Goods:
· Location decisions are influenced by proximity to raw materials and markets,
availability of labour, energy and transportation, regulations and taxes, and
community living conditions
Location Planning for Producing Services:
· In low-contact services, companies can be located near resource supplies, labour,
customers or transportation outlets
· In high-contact services, must locate near customers

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