Chapter 18

Managing Service and

Manufacturing
Operations

MGMT
Designed & Prepared by
Chuck Williams B-books, Ltd.
1
Operations Management
Operations Management

Managing the daily production of

goods and services.

2
 Why Productivity Matters

Higher Lower Lower

Productivity Costs Prices

Higher
Higher
Standard Higher
Market
of Profits
Share
Living

1.1
3
 Kinds of Productivity

Partial productivity =

Outputs
Single Kind of Input

Multifactor productivity =
Outputs
Labor + Capital + Materials + Energy

1.2
4
 Quality

Quality-Related Quality-Related
Product Service
Characteristics Characteristics

ISO
9000 & 14000

Baldrige Total
National Quality
Quality Award Management
2 5
 Meanings for Quality

…A product or service
free of deficiencies

Quality
…The characteristics of a product or
service that satisfy customer needs

2
6
 Service Operations
Services… Goods…

• are performed • are made

• are intangible • are tangible
• are unstorable • are storable
• 57.2% of GDP • 32.7% of GDP

3
7
 Service Operations

Service-Profit
Chain

Service
Recovery
and
Empowerment
3
8
 Manufacturing Operations

Amount of Flexibility
Processing of Manufacturing

4 9
 Inventory

Types of Measuring
Inventory Inventory Levels

Costs of Systems for

Maintaining Managing
Inventory Inventory

5 10
 Managing Inventory

Economic
EOQ
Order Quantity

Just-in-Time
JIT
Inventory

Materials
MRP
Requirement Planning

5.4
11