Professional Documents
Culture Documents
to Accompany
Management, 9/e
John R. Schermerhorn, Jr.
Chapter 19:
Operations Management and Services
Operations management
Managing productive systems that transform
resources into finished products, goods, and
services for customers.
Typical operations management decisions
include:
Resource acquisition
Inventories
Facilities
Workflows and technologies
Product quality
Productivity
• Quantitative measure of the efficiency
with which inputs are transformed into
outputs.
• Productivity = Output / Input.
Competitive advantage
• A core competency that clearly sets an
organization apart from competitors and
gives it an advantage over them in the
marketplace.
Speed to market
Manufacturing flexibility
Product/service quality
Technology
The combination of knowledge,
skills, equipment, computers, and
work methods used to transform
resource inputs into organization
outputs.
Manufacturing technology.
Service technologies.
Value chain
Sequence of step-by-step activities resulting in
finished goods or services with customer value.
Inventory control
Goal is to ensure that inventory is just
the right size to meet performance
needs, thus minimizing the cost.
Methods of inventory control:
Economic order quantity
Just-in-time scheduling
Inventory control
Economic order quantity
Inventory replenished with fixed quantity
order when inventory falls to predetermined
level.
Just-in-time scheduling
Materials arrive at workstation or facility
‘just-in-time’ for use.
Virtually eliminates carrying costs of
inventories.
Break-even analysis
Determination of the point at which
sales revenues are sufficient to
cover costs.
Break-Even Point =
Fixed Costs / (Price – Variable Costs)
Used in evaluating:
New products
New program initiatives
Continuous improvement
• Constant search for new ways to improve current
performance.
• Reduce cycle time between order receipt and
delivery.
Quality circle
• Small group of workers who meet to improve
quality
• Assumes responsibility for quality
• Taps into members’ creativity
Process reengineering
Systematic and complete analysis of work
processes.
Design of new and better work processes.
Work process
“A related group of tasks that create a result of
value for the customer.” (Michael Hammer)
Workflow
Movement of work from one point to another in
the manufacturing or service delivery process.