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Chapter 11

chapter 11

12 Pages

Rotman Commerce
Course Code
Stojanovic Dragan

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CHAPTER 11 PRODUCING GOODS AND SERVICES production activities that yield tangible and intangible service products ie y Service Operationsentertainment transportation education food preparation etc y Goods Production production activities that yield tangible products ie radios buses books etc WHAT DOES PRODUCTION MEAN TODAY y Production historically referred to the making of physical goods but now it also means services y Key difference between production and service operations is the customers involvement in the latter service y Today customers are increasingly involved in all kinds of production because electronic communications are key components in winning and keeping customers in competitive industries y Often distinction between production and service companies is blurred y All businesses are service providers to some extent The Growth of Global Operations y Many countries have recently joined the global competition that has reshaped production into a fasterpaced more complex business activity y Production operations have become more environmentally friendly than before y Instead of needing to maintain continuous mass production firms today face constant change y New technologies allow machines to run more cleanly quickly safely and to operate on a global scale CREATING VALUE THROUGH PRODUCTION y To understand the production processes of a firm you need to understand the importance of productsboth goods and services y Products provide businesses with both economic results profits wages goods purchased from other companies and noneconomic results new technology innovations pollution y Products provide consumers with what economists call utilitythe power of a product to satisfy a human want something of value y Four basic kinds of utility would not be possible without production y Time Utility the quality of a product satisfying a human want because of the time at which it is made available ie supply ornaments during Christmas y Place Utility the quality of a product satisfying a human want because of where it is made availablethe quality of a product satisfying a human want during its y Ownership Possession Utilityconsumption or use ie taking a chocolate home and eating it y Form Utility the quality of a product satisfying a human want because of its form requires raw materials to be transformed into a finished product y The term production has been replaced in recent years by operations a term which reflects both services and goods production y Operations or production Management the systematic direction and control of the processes that transform resources into finished goodsmanagers responsible for ensuring that operations processes create value y Production Managersand provide benefit are ultimately responsible for creating utility for customers y Not all production managers work at factories y farmers are also production managerscreate form utility by converting soil seeds sweat gas and other inputs beef cattle tobacco heat milk cash and other outputs Operations Processes y Operation Process a set of methods and technologies used in the production of a good or service y We classify various types of production according to differences in their operational processesy We can describe services according to the extent of customer contact required1 GoodsProducing Processes y All goodsmanufacturing processes can be classified in two different ways by the type of transformation technology that transforms raw materials into finished goods and by the analytic or synthetic nature of the transformation process a Types of Transformation Technologyy Manufacturers use the following types of information processes to turn raw materials into finished goodsIn chemical processes raw materials are chemically alteredFabrication processes mechanically alter the basic shape or form of a productAssembly processes put together various componentsIn transport processes goods acquire place utility by being moved from one location to anotherClerical processes transform information b Analytic VS Synthetic Processesy A second way of classifying production processes is by the way in which resources are converted into finished goods y Analytic Process any production process in which resources are broken downany production process in which resources are combined y Synthetic Process 2 ServiceProducing Processes y Services are classified according to the extent of customer contact
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