Mercedes Benz Plant

Private Airways
The Operations System

Input Transformation Output Demand

Types of Operations

Unit or
Project Mass Process
Batch

Increased Volume
Difference Between Manufacturing
& Service Organizations
Manufacturing Org Service Org

Physical, Durable Intangible, Perishable

product product
Output can be Output can’t be
inventoried
Low Customer High Customer
product product
Long Response Time Short Response Time
Difference Between Manufacturing
& Service Organizations
Manufacturing Org Service Org

Regional, National or Local Markets

International Markets
Large Facilities Small Facilities

Quality easily Quality easily not

measured measured
Capital Intensive Labor Intensive
Manufacturing Sector
Auto
Chemical
Commercial Aircraft
Computer & Copiers
Consumer Electronics
Machine Tools
Steel Textiles
Service Sector
Airlines
Consulting
Education
Entertainment
Health care
Hotel & Food services
Insurance & Financial services
Tourism
Sports
Operations Strategy
How do firms compete?
Cost

Quality
 High Performance
 Consistency
 Service
Operations Strategy
Delivery Time
 Fast
 On time

 Flexibility
 Customization
 Volume Flexibility
Formula of Productivity

Output
Productivity =
Input
Calculate the productivity for the
following operation:
Three employees processed 600
insurance policies last week.
They worked 8 hours per day, 5
days per week.
Calculate the productivity for the
following operation:
A team of workers made 400 units
of a product, which has a standard
cost of $10 each. The accounting
department reported that for this
job the actual costs were $400 for a
labor, $1000 for materials & $300 for
overhead.