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Summary of Chapter 8
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Summary of Chapter 8
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CHAPTER 8WHAT IS PRODUCTION?
Operations management – all the activities required to produce goods and
services
To produce a product or service successfully, a business must perform a
number of specific activities, such as:
Marketing research
Planning
Control of operations Mass production
a manufacturing process
Product quality that lowers the cost
Performance standards required to produce a
Inventory
large number of identical
Production costs
or similar products over a
long period of time
CAREERS IN OPERATION MANGEMENT
analytical process
Mass production – a manufacturing process that lowers the cost
a process in operations
required to produce a large number of identical or similar products
management in which
over a long period of time
Analytical process – a process in operations management in which raw materials are broken
raw materials are broken into different component parts into different component
Synthetic process – a process in operations management in which parts
raw materials or components are combined to create a finished
product synthetic process
a process in operations
Today’s successful operations managers must: management in which
• Be able to motivate and lead people. raw materials or
• Understand how technology can make a manufacturer components are
more productive. combined to create a
• Appreciate the cost-control processes that help lower finished product
production costs and improve product quality.
• Understand the relationship between the customer, the Utility
marketing of a product, and the production of a product. the ability of a good or
service to satisfy a
THE CONVERSION PROCESS human need
The process of converting an idea/resources into useful goods or Form utility
services.
utility created by people
• The purpose of manufacturing or a service business is to provide
converting raw materials,
utility to customers.
finances, and information
into finished products
, – Although there are four types of utilities—form, place, time, and possession—
operations management focuses primarily on form utility.
• Form utility – utility created by people converting raw materials,
finances, and information into finished products
MANUFACTURING USING A CONVERSION
PROCESS
Focus or Major Resource
- The resource or resources (financial, material, information, and people) that
make up the major or most important input
e.g. financial resources are the most important for banks
Magnitude of Change
Degree at which resources are physically changed. There can be
no physical changes sometimes e.g. an airline company where
they just provide a service.
Number of Production Processes
– A single firm may employ one production process or many,
whereas larger firms that make a variety of products use multiple
production processes.
PLANNING QUALITY SERVICE
1. For a service firm, planning often begins with determining who the customer
is and what needs the customer has.
2. After customer needs are identified, the next step is to develop a plan that will
enable the firm to deliver the services that their customers want or need.
3. Once the firm provides a service to a customer, successful firms evaluate the way they
operate and measure customer satisfaction.
– If necessary, they redesign their services to improve the customer’s
experience.
EVALUTATING THE QUALITY OF A FIRMS SERVICE
The production of services is very different from the production of manufactured goods in the
following five ways:
1. Customers are much more involved in obtaining the service they want or need.
2. Services are consumed immediately and cannot be stored.
3. Services are provided when and where the customer desires the service.
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