Chapter 1
Introduction to
Operations Management
and Productivity
Learning Outcomes
At the end of this chapter, you should be able to:
♦ Define operations management
♦ Discuss the operations system’s basic components
♦ Understand the reasons for studying Operations Management
♦ Explain the roles of operations managers
♦ Understand the objectives of operations management
♦ Discuss the characteristics of services and manufactured products
♦ Explain the relationship between operations and other functions
♦ Understand productivity and its measurement
♦ Identify the challenges in operations management
♦ Discuss the trends in operations management
Definition of Operations Management
Activities related to the creation of goods or services by
converting or transforming inputs into outputs.
Operations System
An operations system is defined as the part of an
organisation that produces the organisation’s physical
goods and services.
Components of Operations System
the basic materials needed for the purpose of producing goods and
Inputs services
Transformation the activities related to the conversion of inputs into outputs that
involve operating strategies
process
Outputs the final results obtained after the transformation
process, which include goods or services
acts as a control mechanism, measuring the actual performance against
Feedback the expected or planned performance
Operations System
Importance of Operations Management
• One of the major functions in an organization
• Enables us to know how goods and services are produced
• Allows us to understand what operations managers do
• Ensures timely delivery of the products
• Improves the overall productivity
Roles of Operations Managers
Planning Organising Staffing
Leading Controlling
Objectives of Operations Management
Operations for Goods and Services
Characteristics of goods and services
Relationship between Operations
and Other Functions
The ratio of outputs (goods and services) divided by
the inputs/resources (e.g.,labour and capital).
Productivity
1 Low unemployment
Why is
Productivity 2 Improved living standards for
the nation
Important?
3 Reduced operating costs and
increased revenue
Productivity Measurement
Single factor Multifactor
productivity productivity
Uses just one resource
Uses combined inputs
input
E.g. labour, capital,
E.g. labour-hours energy, materials, and
purchased services
Productivity Measurement
Single factor productivity = Units produced (outputs)
Inputs used
Multifactor productivity = Outputs
Labour + Material + Energy + Capital + Miscellaneous
Productivity Measurement:
Single factor productivity
Productivity Measurement:
Multifactor productivity
Productivity Measurement
Productivity
Measurement
SOLUTION TO EXAMPLE 1.3
Productivity Variables
Labour Capital Management
Challenges in Operations Management
• Global focus
• Supply-chain partnering
• Sustainability
• Rapid product development
• Mass customisation
• Just-in-time performance
• Empowering employees
Trends in Operations Management
Mobile
Automation Outsourcing Communication
Tools
Thank You
