25 Questions
Which strategic decision involves defining what is required of operations and how product design impacts cost, quality, sustainability, and human resources?
Design of goods and services
What does managing quality strategic decision involve?
Determining customer quality expectations
Which strategic decision involves committing management to specific technology, quality, human resources, and investments?
Process and capacity design
What does the location strategy decision take into consideration?
Nearness to customers, suppliers, and talent
Which strategic decision focuses on integrating capacity needs, personnel levels, technology, and inventory for efficient material, people, and information flow?
Layout strategy
What is the main purpose of finance/accounting within an organization?
Tracking organizational performance and managing finances
Why is it important to study Operations Management (OM)?
To study how people organize themselves for productive enterprise
What are the basic management functions that Operations Managers perform?
Planning, organizing, staffing, leading, and controlling
What does the supply chain refer to?
A network of organizations collaborating to supply goods and services to a firm
Which strategic decision is related to designing goods and services according to the text?
Designing goods and services
What is the main focus of operations management?
Creating value by transforming inputs into outputs
Which of the following is NOT listed as one of the essential functions in organizing to produce goods and services?
Accounting - managing financial records
What is the primary goal of production according to the text?
Creating value through goods and services
What does single-factor productivity measure?
The efficiency of transforming inputs to outputs using a single variable
Which function is responsible for creating the product in organizing to produce goods and services?
Operations management
What is the main goal of productivity?
To improve the ratio of outputs to inputs
What key technique did Henry Ford introduce in 1913?
Moving assembly line for Model T
In the context of W. Edwards Deming, what did his methods involve?
Implementing quality control techniques in Japan
What is the difference between productivity and production?
Productivity measures efficiency, while production measures output only
What issue may arise even when the quantity of inputs and outputs remains constant?
A change in productivity
Which individual demonstrated that machine tools could make standardized parts to exact specifications?
Eli Whitney
Who is known as the 'father of scientific management'?
Frederick W. Taylor
What did Frederick W. Taylor study while serving as the chief engineer for Midvale Steel?
How tasks were done
Which principle emphasized by Taylor suggests that management should match employees to the right job?
Matching employees to right job
Which engineering team applied efficiency methods not only in their work but also in managing a large family?
Frank and Lillian Gilbreth
Study Notes
What is Operations Management?
- Operations management (OM) is the set of activities that creates value in the form of goods and services by transforming inputs into outputs.
- OM is essential for any organization, as it involves planning, organizing, staffing, leading, and controlling the production of goods and services.
Organizing to Produce Goods and Services
- Three essential functions of an organization:
- Marketing – generates demand
- Production/operations – creates the product
- Finance/accounting – tracks how well the organization is doing, pays bills, and collects money
The Supply Chain
- A global network of organizations and activities that supplies a firm with goods and services.
- Members of the supply chain collaborate to achieve high levels of customer satisfaction, efficiency, and competitive advantage.
Why Study OM?
- OM is one of three major functions of any organization.
- Understanding how goods and services are produced is crucial.
- Operations managers play a vital role in organizations.
- OM is a costly part of an organization.
Ten Strategic Decisions of Operations Management
- Design of goods and services
- Managing quality
- Process and capacity strategy
- Location strategy
- Layout strategy
- Human resources and job design
- Supply-chain management
- Inventory management
- Scheduling
- Maintenance
The Strategic Decisions
- Design of goods and services: defines what is required of operations and determines cost, quality, sustainability, and human resources.
- Managing quality: determines customer quality expectations and establishes policies to achieve that quality.
- Process and capacity design: determines how goods or services are produced and commits management to specific technology, quality, human resources, and investments.
- Location strategy: considers nearness to customers, suppliers, and talent, as well as costs, infrastructure, logistics, and government.
- Layout strategy: integrates capacity needs, personnel levels, technology, and inventory to determine the efficient flow of materials, people, and information.
Significant Events in OM
- Eli Whitney: developed interchangeable parts for muskets in 1798.
- Frederick W. Taylor: known as the "father of scientific management," introduced efficiency principles and time studies.
- Frank and Lillian Gilbreth: developed work measurement methods and applied efficiency methods to their home and family.
- Henry Ford: introduced the moving assembly line in 1913 to produce the Model T.
- W. Edwards Deming: taught Japan quality control methods and used statistics to analyze process.
Operations for Goods and Services
- Services: economic activities that produce an intangible product (e.g., education, entertainment, lodging, government, financial, and health services).
Productivity Challenge
- Productivity: the ratio of outputs (goods and services) divided by the inputs (resources such as labor and capital).
- The objective is to improve productivity.
- Note: production is a measure of output only and not a measure of efficiency.
Test your knowledge on strategic decisions in operations management including design of goods and services, process and capacity strategy, location strategy, layout strategy, human resources and job design, supply-chain management, inventory management, scheduling, and maintenance. Copyright © 2020 Pearson Education Ltd.
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