Chapter 3 - definition

• Operation management

  The coordination of resources within a business to achieve the efficient and effective output of finished goods and services
• Efficiency

  How productively a business uses its resources when producing a good or services
• Effectiveness

  The extent to which a business achieves its stated objectives
• Inputs

  • Resources that go into producing a good or services
• Processes

  • Actions performed by a business to transform inputs into outputs
• Outputs

  • The final product presented to the customer, either as goods (tangible) or services (intangible)
• Manufacturing business

  A type of business that uses resources and raw materials to produce a finished physical good
• Service business

  Businesses that utilise their operations systems to produce intangible products
• Automated production line

  Involve machinery and equipment that are arranged in a sequence, and the product is developed as it proceeds through each step
• Robotics


  Programmable machines that are capable of performing specified tasks
• Computer-aided design (CAD)

  Digital design software that aids the creation, modification, and optimisation of a design and the design process
• Computer-aided manufacturing (CAM)

  Techniques that involve the use of software that controls and directs production processes by coordinating machinery and equipment through a computer
• Artificial intelligence (AI)

  Involves using computerised systems to simulate human intelligence and mimic human behaviour
• Online services


  Services that are provided via the internet
• Forecasting

  A materials planning tool that predicts customer demand for an upcoming period using past data and market trends
• Master production line

  A plan that outlines what a business intends to produce, in specific quantities, within a set period of time
• Materials requirement planning (MRP)

  A process that itemises the types and quantities of materials required to meet production targets set out in the master production schedule
• Just in time

  An inventory control approach that delivers the correct type and quantity of materials as soon as they are needed for production
• Quality

  A good or service's ability to satisfy a customer's need
• Quality control

  Involves inspecting a product at various stages of the production process, to ensure it meets designated standards, and discarding those that are unsatisfactory
• Quality assurance

  Involves a business achieving a certified standard of quality in its production after an independent body assesses its operations system
• Total Quality Management (TQM)

  A holistic approach whereby all employees are committed to continuously improving the business's operations system to enhance quality for customers
• Waste minimisation

  The process of reducing the amount of unused material, time, or labour within a business
• Waste minimisation strategies

  • Reduce
  • Reuse
  • Recycle
• Lean management

  The process of systematically reducing waste in all areas of a business's operations system whilst simultaneously improving customer value
• Pull

  A lean management strategy that involves customers determining the number of products a business should produce for sale
• One-piece flow

  A lean management strategy that involves processing a product individually through a stage of production and passing it onto the next stage of production before processing the next product, continuing this process throughout all stages of production
• Takt

  A lean management strategy that involves synchronising the steps of a business's operations system to meet customer demand
• Global sourcing of inputs

  Involves a business acquiring raw materials and resources from overseas suppliers
• Overseas manufacturing

  Involves a business producing goods outside of the country where its headquarters are located
• Global outsourcing

  Involves transferring specific business activities to an external business in an overseas country