ACC119

• Operations is that part of a business organization that is responsible for producing goods and/or services
• Goods – are physical items that include raw materials, parts, subassemblies such as motherboards that go into computers.
• Services – activities that provide some combination of time, location, form, or psychological value
• The ideal situation for a business organization is to achieve an economic match of supply and demand
• Business organizations have three basic functional areas: finance, marketing and operations
• Operations management is the management of systems or processes that create goods and/or provide services
• Supply chain – sequence of organizations – their facilities, functions, and activities – that are involved in producing and delivering a product or service
• The value of the product increases as it moves through the supply chain
• The creation of goods or services involves transforming or converting inputs into outputs
• To ensure desired outputs are obtained, an organization takes measurements at various points in the transformation process (feedback) and then compares them with previously established standards to determine whether corrective actions are needed (control)
• Value-added is the term used to describe the difference between the cost of inputs and the value or price of outputs
• The essence of the operations function is to add value during the transformation process
• In non-profit organizations, the value of outputs is their value to society
• In for-profit organizations, the value of outputs is measured by the prices that customers are willing to pay for those goods or services
• Finance and operations management personnel cooperate by exchanging information and expertise in activities such as budgeting, economic analysis of investment proposals, and provision of funds
• Marketing’s focus is on selling and/or promoting the goods or services of an organization
• They are responsible for assessing customer wants and needs

  Marketing
• Legal department must be consulted on contracts with employees, customers, suppliers, and transporters, as wells as on liability and environmental concerns
• Accounting supplies information to management on costs of labor, materials, and overhead, and may provide reports on items such as scrap, downtime, and inventories
• Management information systems is concerned with providing management with the information it needs to effectively manage
• Public relations is responsible for building and maintaining a positive public image of the organization
• Business process management (BPM) activities include process design, process execution, and process monitoring
• Two basic aspects of this for operations and supply chain management are managing processes to meet demand and dealing with process variability
• The variety of goods or services being offered. The greater the variety of goods and services, the greater the variation in production or service requirements.
• Structural variation in demand. These variations, which include trends and seasonal variations, are generally predictable. They are particularly important for capacity planning.
• Random variation. This natural variability is present to some extent in all processes, as well as in demand for services and products, and it cannot generally be influenced by managers.
• Assignable variation. These variations are caused by defective inputs, incorrect work methods, out-of-adjustment equipment, and so on. This type of variation can be reduced or eliminated by analysis and corrective action.
• The standard deviation quantifies variation around the mean. The mean and standard deviation are used with variation. So, too, is the normal distribution.
• A primary function of an operations manager is to guide the system by decision making
• System design involves decisions that relate to system capacity, the geographic location of facilities, the arrangement of departments and the placement of equipment within physical structures, product and service planning, and the acquisition of equipment.  They are typically strategic decisions
• System operation involves management of personnel, inventory planning and control, scheduling, project management, and quality assurance. These are generally tactical and operational decisions.
• Purchasing is responsible for the procurement of materials, supplies, and equipment
• Industrial engineering is often concerned with scheduling, performance standards, work methods, quality control, and material handling
• Distribution involves the shipping of goods to warehouses, retail outlets, or final customers
• Maintenance is responsible for general upkeep and the repair of equipment, the buildings and grounds, heating and air-conditioning, parking, removing toxic wastes, and perhaps security
• The operations manager is the key figure in the system He or she has the ultimate responsibility for the creation of goods or provision of services.
• The chief role of an operations manager is that of planner and decision maker
• A model is an abstraction of reality, a simplified representation of something
• Models are sometimes classified as physical, schematic, or mathematical
• The variety of models in use is enormous. Nonetheless, all have certain common features: They are all decision-making aids and simplifications of more complex real-life phenomena