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The operations function is that part of the organization that exists primarily to generate and produce the organizations product. All business organization, in whatever form, have a conversion process, where some resource inputs into that process which results to an output and an information feedback about the activities in the operations system. The outputs are converted into cash to sustain the continuous cycle of conversion process. Random fluctuations Inputs:
Adjustment needed? Monitor output

Land Labor Capital Management

Conversion process

Outputs Goods Services

Comparison: actual vs desired

The operations system

Random fluctuations can arise from external sources (fire. floods, earthquakes, etc) or from internal problems inherent in the conversion process. The function of the feedback loop is to provide information linkages. Without some feedback of information, management personnel cannot control operations because they do not know the result of their decisions. TECHNOLOGIES OF CONVERSION means the types of transformation activities taking place, including the level of scientific sophistication in plant, equipment, skills and product (or service) in the conversion process. MANUFACTURING VS SERVICE OPERATIONS MANUFACTURING Tangible outputs Customer consumption of outputs overtime Use less labor and more equipment Little customer contact No customer participation in the conversion process Sophisticated methods for measuring production activities and resource consumption

SERVICE Intangible outputs Immediate consumption Requires a lot of labor but some equipment Direct customer contact Frequent customer participation in the conversion process Elementary methods for measuring conversion activities and resource consumption


A system is a collection of objects united by some form of regular interaction and interdependence. A systems model of an organization may be developed like the one below:
Personnel Engineering

Production Finance
Accounting Purchasing Distribution


MANAGING THE OPERATIONS SUBSYSTEM The operations managers job is to manage the process of conve rting inputs to desired outputs. Our definition of operations management, then, is the management of the conversion process, which converts land, labor, capital and management inputs into desired outputs of goods and services. In doing his job, the operations manager uses various approaches to management, namely; (1) classical; (2) behavioural; and (3) modelling approaches. The classical management has contributed the scientific management and process theories to the operations managers knowledge. The focus of the scientific management is on economic efficiency at the production core of the organization. Of central importance is the belief that rationality on the part of the management will result to economic efficiency. Economic efficiency refers to the ratio of outputs to inputs. The process school of management views management as a continuous process involving the functions of planning, organizing, and controlling. The behavioural school of management proposed that productivity does not only increase due to physical changes in the work environment but also as a response to the attention given to the human needs of the workers. The modelling school of management is concerned with decision making, systems theory and mathematical modelling. The decision-making orientation considers decision-making as the central purpose of management. Advocates of the systems theory stress the importance of studying organizations from a total systems point of view. Mathematical modelling focuses on creating mathematical representations of management problems and organizations.