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Introduction to Operations Management Text Book
Operations management is the planning, organising and coordination of activities
involved in the production of a firm's product or service. Is the management process,
which transforms inputs and outputs.
Operations management will include decisions regarding the following:
Where to produce. What is the best location for the business?
Production facilities. What is the best scale of production? How large should the
production plant be?
Production methods. What is the best method of production? What is the best
way of combining the firm's resources? How should the production be organised?
How should the production plant be laid out?
Where to purchase supplies. How many stocks should the firm hold to meet
production and sales demands?
The objectives of operations management include
Ensuring the firm can produce the quantities demanded by customers at the time
they want them.
Producing at an appropriate level of quality
Producing products as quickly as possible
Ensuring products are dependable
Ensuring the production system is as flexible as it needs to be, e.g. in terms of the
range of products it has to provide
Ensuring the production is carried out as cost effectively as possible
However achieving these different objectives may lead to conflict; e.g. an improvement
in quality may lead to an increase in costs. Adopting flow productions techniques may
lead to lower unit costs but reduces the amount of flexibility the firm has compared
with say job production.
Indicators of the effectiveness of operations management include
Productivity e.g. the output per person, per factory machine or per minute
Unit costs i.e. the cost to produce one unit.
The number of defects, i.e. what percentage of the units produced or services
completely are faulty? How many goods are returned? What is the level of
customer satisfaction or dissatisfaction?
Effective operations management should lead to better quality products being produced
more cheaply. Ineffective operations management by comparison, is characterised by
poor quality products, delayed production and a failure to hit production targets.
To achieve their goals operations managers should work closely with the other functions
of the business. For example the marketing function musts specify exactly what
customers want and what they are willing to pay; marketing will also help determine what
needs to be produced and when. Meanwhile the finance function will specify what
equipment and processes can be afforded and the level of costs that the operations
function must achieve. The humans resource function will also need to work with
operations to know what numbers of employees are required, what skills they must have
and what training requirements there are.
The relationships between operations and the other functions are two way. For example
the marketing department may set out what customers want but the production
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Similarly the desired level of
operations might determine human resource requirements but the numbers and skills of
staff available also determine what it is possible to produce.
Categorising Operations Systems
There are, or course, many different types of production processes.…read more