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Operations Management

1. Question 1. Define The Term Operations Management?

Answer :

Operations management manages the resources needed to produce the company’s

products and services. It involves managing people, machines and information.

2. Question 2. Explain The Decisions Operations Managers Make?

Answer :

Operations managers must plan the production schedule. This entails deciding how much
to produce and in what order. This information would be used to make purchasing and
staffing decisions.

Operations managers must manage inventory. They must arrange the inventory in the
warehouse. They also facilitate the movement of inventory from the warehouse to the
retail facilities or the customer.Operations managers also must manage quality
levels. This may include inspection of materials, and the use of quality tools such as
control charts.

3. Question 3. Describe The Transformation Process Of A Business. Give Three

Examples. What Constitutes The Transformation Process At An Advertising
Agency, A Bank, And A Tv Station?

Answer :

The transformation process involves taking the various inputs and transforming them into
outputs. An advertising agency would transform the time of its staff into an advertising
campaign. A bank may use the time of a teller, an input computer, and a bank branch to
accept a deposit. A TV station could use the time of its production crew, the video
equipment, and the studio to produce a news story.

4. Question 4. What Are The Three Major Business Functions, And How Are They
Related To One Another? Give Specific Examples?
Answer :

The three major business functions are finance, marketing and operations. Operations
entail the production of a product or service and must manage the inputs to production
such as workers' time, aluminum, and machine time to create airplane parts Finance
manages the assets, such as the building used for production, investments and cash flows
related to production, such as providing the needed machines. Marketing generates sales
of the product or service, such as finding customers for the proposed airplanes.

5. Question 5. Identify The Two Major Differences Between Service And

Manufacturing Organizations. Find An Example Of A Service And Manufacturing
Company And Compare Them?

Answer :

Manufacturing organizations produce a physical product that can be stored in

inventory. Service organizations cannot create an inventory of the service since it is
intangible. For example, Ford Motors is a manufacturer. It makes automobiles, customers
have little contact with the operation, and they can create an inventory of vehicles.
McDonalds is an example of a service organization. Customers go directly to the
restaurant where they are served quickly by the staff.


Question 6. What Are The Three Historical Milestones In Operations Management?

How Have They Influenced Management?

Answer :

Three historical milestones are the industrial revolution, total quality management (TQM)
and global competition. The industrial revolution changed production processes from a
labor focus to a machine focus. TQM caused managers to be more focused on quality
and preventing defects. Finally, global competition caused managers to further increase
their focus on quality, realizing that to not improve was to “lose the race.”

Companies are using the Internet to reach out to customers, and suppliers directly.
has been able to sell books and many other items directly from its warehouse to people like you
and me. The Internet is changing how the supply chains work since we can now eliminate the
“middle man” or distributor by selling directly from the factory to the final or end customer.
Companies can also ease transactions between businesses, known as B2B commerce, by using
electronic trading networks.
Question 7. Identify Three Current Trends In Operations Management And Describe
Them. How Do You Think They Will Change The Future Of Om?
Answer :
The lean systems concept is a current trend in operations management. This involves taking a
total system approach to creating an efficient operation. This includes concepts such as just-in-
time (JIT), total quality management (TQM), continuous improvement, resource planning, and
supply chain management (SCM).
Large information systems, called Enterprise Resource Planning (ERP) systems, are allowing
companies to increase efficiency. These large, sophisticated software programs coordinate,
across the entire enterprise, the activities involved in producing and delivering products to
Each of these concepts makes intensive use of information and cooperation between partners.
OM will most likely continue to be more information intensive and require greater cooperation
among all the players in the value chain.


Question 8. Define The Terms Total Quality Management, Just-in-time, And

Reengineering. What Do These Terms Have In Common?

Answer :

Total quality management (TQM) is a philosophy that focuses on meeting the needs of
the customer. TQM is not inspection, but actually the prevention of defects. It involves
everyone in the organization. Just-in-time is a philosophy that focuses on reducing
inventory and other wastes and on the production of the right number of items at the right
time. Reengineering focuses on improving business processes in order to improve
efficiency. Each of these techniques strives to allow more responsive and more efficient
production leading to higher quality and higher customer satisfaction.


Question 9. Describe Today’s OM Environment. How Is It Different From That Of

A Few Years Ago? Identify Specific Features That Characterize Today’s Om

Answer :

Today’s OM environment is more global, more service oriented, and uses more
information technology than that of even a few years ago. Companies can outsource steps
of their operation easier. Now even service operations are outsourced off-shore.
Information technology allows companies to cooperate more closely, creating tighter
supply chains, quicker response and less waste. Specific features include greater
outsourcing, greater use of information technology, and deeper cooperation in the supply


Question 10. Is Operations Management Important In All Types Of Organization?

Answer :

In some types of organization it is relatively easy to visualize the operations function and
what it does, even if we have never seen it. For example, most people have seen images
of automobile assembly. But what about an advertising agency? We know vaguely what
they do – they produce the advertisements that we see in magazines and on television –
but what is their operations function? The clue lies in the word ‘produce’. Any business
that produces something, whether tangible or not, must use resources to do so, and so
must have an operations activity. Also the automobile plant and the advertising agency do
have one important element in common: both have a higher objective – to make a profit
from producing their products or services. Yet not-for-profit organizations also use their
resources to produce services, not to make a profit, but to serve society in some way.


Question 11. What Is Operations Management In The Smaller Organization?

Answer :

Operations management is just as important in small organizations as it is in large ones.

Irrespective of their size, all companies need to produce and deliver their products and
services efficiently and effectively. However, in practice, managing operations in a small
or medium-size organization has its own set of problems. Large companies may have the
resources to dedicate individuals to specialized tasks but smaller companies often cannot,
so people may have to do different jobs as the need arises. Such an informal structure can
allow the company to respond quickly as opportunities or problems present themselves.
But decision making can also become confused as individuals’ roles overlap. Small
companies may have exactly the same operations management issues as large ones but
they can be more difficult to separate from the mass of other issues in the organization.

Question 12. What Is Operations Management In Not-for-profit Organizations?

Answer :

Terms such as competitive advantage, markets and business, which are used in this book,
are usually associated with companies in the for-profit sector. Yet operations
management is also relevant to organizations whose purpose is not primarily to earn
profits. Managing the operations in an animal welfare charity, hospital, research
organization or government department is essentially the same as in commercial
organizations. Operations have to take the same decisions – how to produce products and
services, invest in technology, contract out some of their activities, devise performance
measures, and improve their operations performance and so on.

However, the strategic objectives of not-for-profit organizations may be more complex

and involve a mixture of political, economic, social and environmental objectives.
Because of this there may be a greater chance of operations decisions being made under
conditions of conflicting objectives. So, for example, it is the operations staff in a
children’s welfare department who have to face the conflict between the cost of providing
extra social workers and the risk of a child not receiving adequate protection.

Nevertheless the vast majority of the topics covered in this book have relevance to all
types of organization, including non-profit, even if the context is different and some
terms may have to be adapted.


Question 13. What Is The Input–transformation–output Process?

Answer :

All operations produce products and services by changing inputs into outputs using an
‘input-transformation-output’ process. Put simply, operations are processes that take in a
set of input resources which are used to transform something, or are transformed
themselves, into outputs of products and services. And although all operations conform to
this general input–transformation–output model, they differ in the nature of their specific
inputs and outputs. For example, if you stand far enough away from a hospital or a car
plant, they might look very similar, but move closer and clear differences do start to
emerge. One is a manufacturing operation producing ‘products’, and the other is a service
operation producing ‘services’ that change the physiological or psychological condition
of patients.

Question 14. What Is The Processes Hierarchy?

Answer :

So far we have discussed operations management, and the input–transformation–output

model, at the level of ‘the operation’. For example, we have described ‘the whistle
factory’, ‘the sandwich shop’, ‘the disaster relief operation’, and so on. But look inside
any of these operations. One will see that all operations consist of a collection of
processes (though these processes may be called ‘units’ or ‘departments’) interconnecting
with each other to form a network. Each process acts as a smaller version of the whole
operation of which it forms a part, and transformed resources flow between them. In fact
within any operation, the mechanisms that actually transform inputs into outputs are these
processes. A process is ‘an arrangement of resources that produce some mixture of
products and services’. They are the ‘building blocks’ of all operations, and they form an
‘internal network’ within an operation.

Each process is, at the same time, an internal supplier and an internal customer for other
processes. This ‘internal customer’ concept provides a model to analyse the internal
activities of an operation. It is also a useful reminder that, by treating internal customers
with the same degree of care as external customers, the effectiveness of the whole
operation can be improved.

 Question 15. Operations Management Is Relevant To All Parts Of The Business?

Answer :
It is not just the operations function that manages processes; all functions manage processes. For
example, the marketing function will have processes that produce demand forecasts, processes
that produce advertising campaigns and processes that produce marketing plans. These processes
in the other functions also need managing using similar principles to those within the operations
function. Each function will have its ‘technical’ knowledge. In marketing, this is the expertise in
designing and shaping marketing plans; in finance, it is the technical knowledge of financial

 ‘Operations’ as a function, meaning the part of the organization which produces the
products and services for the organization’s external customers;
 ‘Operations’ as an activity, meaning the management of the processes within any of the
organization’s functions.

 Question 16. What Is Mixed High- And Low-visibility Processes?

Answer :

Some operations have both high- and low-visibility processes within the same operation.

In an airport, for example: some activities are totally ‘visible’ to its customers such as
information desks answering people’s queries. These staff operate in what is termed a
front-office environment. Other parts of the airport have little, if any, customer
‘visibility’, such as the baggage handlers. These rarely-seen staff perform the vital but
low-contact tasks, in the back-office part of the operation.

Question 17. What Are Implications Of The Four Vs Of Operations Processes?

Answer :

All four dimensions have implications for the cost of creating the products or services.

Put simply, high volume, low variety, low variation and low customer contact all help to
keep processing costs down. Conversely, low volume, high variety, high variation and
high customer contact generally carry some kind of cost penalty for the operation. This is
why the volume dimension is drawn with its ‘low’ end at the left, unlike the other
dimensions, to keep all the ‘low cost’ implications on the right. To some extent the
position of an operation in the four dimensions is determined by the demand of the
market it is serving. However, most operations have some discretion in moving
themselves on the dimensions.

Question 18. What Are The Activities Of Operations Management?

Answer :

Operations managers have some responsibility for all the activities in the organization
which contribute to the effective production of products and services. And while the
exact nature of the operations function’s responsibilities will, to some extent, depend on
the way the organization has chosen to define the boundaries of the function, there are
some general classes of activities that apply to all types of operation.

o Understanding the operation’s strategic performance objectives. The first

responsibility of any operations management team is to understand what it is
trying to achieve. This means understanding how to judge the performance of the
operation at different levels, from broad and strategic to more operational
performance objectives. This is discussed.
o Developing an operations strategy for the organization. Operations management
involves hundreds of minute-by-minute decisions, so it is vital that there is a set
of general principles which can guide decision-making towards the organization’s
longer-term goals. This is an operations strategy.
o Designing the operation’s products, services and processes. Design is the activity
of determining the physical form, shape and composition of products, services
and processes. It is a crucial part of operations managers’ activities.
o Planning and controlling the operation. Planning and control is the activity of
deciding what the operations resources should be doing, then making sure that
they really are doing it. various planning and control activities.
o Improving the performance of the operation. The continuing responsibility of all
operations managers is to improve the performance of their operation.
o The social responsibilities of operations management. It is increasingly
recognized by many businesses that operations managers have a set of broad
societal responsibilities and concerns beyond their direct activities. The general
term for these aspects of business responsibility is ‘corporate social responsibility’
or CSR. It should be of particular interest to operations managers, because their
activities can have a direct and significant effect on society.
 Question 19. What Is The Model Of Operations Management?

Answer :

The first is the input–transformation–output model and the second is the categorization of
operations management’s activity areas. The model now shows two interconnected loops
of activities.

The bottom one more or less corresponds to what is usually seen as operations
management, and the top one to what is seen as operations strategy.

Question 20. What Is The Visibility Dimension?

Answer :

Visibility is a slightly more difficult dimension of operations to envisage. It refers to how

much of the operation’s activities its customers experience, or how much the operation is
exposed to its customers. Generally, customer-processing operations are more exposed to
their customers than material- or information-processing operations. But even
customerprocessing operations have some choice as to how visible they wish their
operations to be. For example, a retailer could operate as a high-visibility ‘bricks and
mortar’, or a lower-visibility web-based operation. In the ‘bricks and mortar’, high-
visibility operation, customers will directly experience most of its ‘value-adding’
activities. Customers will have a relatively short waiting tolerance, and may walk out if
not served in a reasonable time.

Customers’ perceptions, rather than objective criteria, will also be important. If they
perceive that a member of the operation’s staff is discourteous to them, they are likely to
be dissatisfied (even if the staff member meant no discourtesy), so high-visibility
operations require staff with good customer contact skills. Customers could also request
goods which clearly would not be sold in such a shop, but because the customers are
actually in the operation they can ask what they like! This is called high received variety.
This makes it difficult for high-visibility operations to achieve high productivity of
resources, so they tend to be relatively high-cost operations.

Conversely, a web-based retailer, while not a pure low-contact operation, has far lower
visibility. Behind its web site it can be more ‘factory-like’. The time lag between the
order being placed and the items ordered by the customer being retrieved and dispatched
does not have to be minutes as in the shop, but can be hours or even days. This allows the
tasks of finding the items, packing and dispatching them to be standardized by staff who
need few customer contact skills. Also, there can be relatively high staff utilization. The
web-based organization can also centralize its operation.

A process is a permanent, repetitive activity, while each project is unique and

What is Lean Synchronization?
Synchronization= flow of products and services always delivers exactly what customer want, in exact quantities, exactly
when needed, and exactly where required.

Lean synchronization= To do all things mentioned above, to the lowest possible cost.

What are the three categories of barriers to lean synchronization?

• Eliminate all waste
• Involve everyone
• Continuous improvement

There are four different types of waste, what are they?

Irregular flows
Inexact supply
waste for inflexible response
waste for variability

What are the advantages and disadvantages of product layout?

1. Amenable to high throughput 2. Capital costs spread over many units 3. Narrow tasks
reduce training costs 4. Allows wide span of supervision 5. Low material handling costs 6.
Routing and scheduling is automatic 7. High labor and equipment utilization 8.
Accounting, purchasing, inventory control are fairly routine
1. Narrow tasks can be dull and repetitive 2. Individual incentives are impractical 3.
Workers may not be motivated to quality 4. Hard to change volume 5. Highly susceptible to
breakdowns 6. Capacity for quick repair a necessary expense 86. What are the advantages
and disadvantages of work cells? The benefits of cellular manufacturing include: 1) higher
production efficiency; 2) elimination of waste; 3) reduced inventory levels; 4) optimized use
of floor space; 5) shorter production cycle times; 6) higher effective manufacturing
capacity; and 7) improved customer response time. Disadvantages are that workers cannot
help to each other and increase the level of output.

resource-based view

A management device used to assess the available amount of a business' strategic assets. In
essence, the resource-based view is based on the idea that the effective and efficient
application of all useful resources that the company can muster helps determine its
competitive advantage.
Operations strategy
The pattern of decisions and actions that shapes the long-term vision, objectives and
capabilities of the operation and its contribution to the overall strategy of the business.
What an operations strategy should do
A). Articulate a vision of how the business operations and processes can contribute to the
overall strategy
B). Translate market requirements into a message that will have some meaning within its
operations. (This means describing what customer wants in terms of a clear and prioritized
set of operations' performance objectives)
C). Identify the broad decisions that will shape the operation's capabilities, and allow their
long-term development so that they will provide the basis for the business's sustainable
D). Explain how its intended market requirements and its strategic operations decisions are
to be reconciled (fogas samman).

Hayes and Wheelwright Four-Stage Model.

Stage 1, Internal neutrality: This is the very poorest level of contribution by the operations
function. The other functions regard it as holding them back from competing effectively.
Its vision is to be 'internally neutral', a position it attempts to achieve not by anything
positive but by avoiding the bigger mistakes.

Stage 2, External neutrality: The first step of breaking out of stage 1 is for the operations
function to begin comparing itself with similar companies in the outside market. It is
measuring itself against competitors performance and trying to be 'appropriate', by
adopting 'best practice' from them. Its vision is to become 'up to speed' or 'externally
neutral' with similar business.

Stage 3, Internally supportive: Stage 3 operations have probably reached the 'first division'
in their market. They may not be better than their competitors on every aspect of
operations performance but they are broadly up with the best. Yet, the vision of stage 3
operations is to be clearly and unambiguously the very best in the market. The operation is
trying to be 'internally supportive' by providing a credible operations strategy.

Stage 4, Externally supportive: The difference between stages 3 and 4 are subtle, but
important. A stage 4 company is one where the vision for the operations function is to
provide the foundation for competitive success. Operations look to the long term.
Essentially they are trying to be 'one step ahead' of competitors in the way that they create
products and services and organise their operations - what the model terms being
'externally supportive'.
Performance objectives
1. Quality: Doing things right (providing error-free goods and services)
2. Speed: Doing this fast (minimising the time between a customer asking for goods and
services and the customer receiving them in full)
3. Dependability: Doing things on time (keeping delivery promises that have been made to
4. Flexibility: Changing what you do or how you do it (the ability to vary or adapt the
operation's activities to cope with unexpected circumstances or to give customers
individual treatment, or to introduce new products or services)
5. Cost: Doing things cheaply (producing goods and services at a low cost that enables them
to be priced appropriately for the market while still allowing a return to the organisation.

The relative importance of the five performance objectives depends on how the business
competes in the market.

because of the confluence of strategy, operations and organisational behaviour