Chapter 9

• Production/Operation Management

  Purchasing Function:

  Procurement of the resources that are needed by the production function (and all other departments)

  Production Function:

  Uses the input (resources) bought by the Purchasing Function to transform these resources into goods/services based on the needs/wants of the market

  Marketing Function:

  Goods/Services produced by the production function are marketed to the target market
• Factors of Production

  LAND/raw materials

  • all natural resources that are used -> land you work on, the materials used

  CAPITAL

  • Includes all capital
  • Own capital -> owner contribution
  • Borrowed capital -> financial institution
  • Fixed capital -> equipment
  • Working capital -> day-to-day -> wages, stationary, insurance

  ENTREPENEURSHIP

  • Opportunities identified to combine the resources -> business idea

  LABOUR (human capital/resources)

  • Skills, knowledge, and experience
  • Physical and mental

  INFORMATION TECHNOLOGY

  • Use of technology to satisfy customer needs
• Tasks of the Production Function

  Input -> Transformation -> Output -> Acceptance

  Input

  • Raw materials
  • Plans, Organisations

  Transformation

  • Facilities
  • Labour
  • Equipment/technology
  • TIMING

  Output

  • Quality standards
  • Right timing

  Acceptance

  • Meets consumer needs
  • Marketing activities
  • Distribution
• Specific Tasks

  Long-term task

  • Before decisions are made research, consultation and discussions take place
  • Once implemented -> can not be changed quickly
  • e.g location, layout, production system, product specification, and acquiring required equipment

  Medium-term task

  • Decisions are made and can be adapted quarterly or monthly
  • budget, quantities, safety measures, materials and maintenance

  Short-term task

  • Day-to-day decisions regarding the input, transformation, and output goods and services
  • daily work-plan, correct quantity is produced, quality control