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      is the study of a field where knowledge from the social sciences (economics,
psychology, sociology), engineering and mathematics comes together to create and operate productive
systems for the satisfaction of human needs in products and services.

Sometimes in Operations Management, we are not going to get the precisely solutions like another
studies. We are going to have some alternatives and choose the best from them. That͛s why you need a
greater effort to understand about Operations Management. So you need to read more than once then
you can find the best solution from your circumstances. ½ Because for Operations Management, it will
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Because those reasons, so we are going to use Operations Management since its a ͚valuable͛ resources
for decision making as a manager.

When we are going to study about Operations Management, so it will be related with ͚product͛. Shortly,
we are studying about ͚production͛ or how you are going to produce product.


Production is any organized activity intended to provide services or to increase the value or usefulness
of material things.

Before, if we heard ͚production͛ words, mostly of the people is thinking about ͚numerous͛ mass of
production in manufacturing company. But todays, production also can be applied into service
organizations such as educational company, hospital, commercial banks, and government agencies.

It has become increasingly clear that the concepts and techniques appropriate for the management of
production activities in a factory can be effectively applied to service organizations.

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1. Management process ½ set of activities such as: (in order to determine)

- The value system and objectives.
- The organizational structure
- The design
- The planning
- The control of operations of an organizations in the private
or public sector of economy.
ÿ. @asic purpose ½ Basic purpose or Mission ½ How to achieve our goal with any methods
employed that suit for our company͛s policy. So the company attempts to satisfy:
a. Its owners
b. Its customers ½ quality = competitive cost
c. Its employee ½ adequate compensation in salary
d. Its society ½ corporate social responsibility
3. R ectives ½ to fulfill its basic purpose ½ it is necessary to determine its objective ½ to achieve
the desirable states.
4. cargets ½ represents how far in that direction we wish to advance in a given time.
5. ^roduction process ½ the set of all activities that are required to transform a set of inputs
(human resources, raw materials, energy, etc.) into more valuable outputs such as finished
products an or services.
6. ^roduction or Rperations System ½ It will help us to control effectivity and efficiency for
productivity of company.

So we͛re going to analyze our production system (I-P-O) like example:

Input ½ Transformation (process) ½ Output


Input ½ Human Resources, materials, energy, and information.

Transformation (process) ½ Production process (such as in: factory, hospital, bank, or airlines)

Output ½ Products ( goods or services)

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1. ^rofit oriented VS Non-profit oriented production systems ½ since profit is the difference
between revenues and costs, it is often more fruitful to analyze production decision :
i. åor profit oriented systems with the objective of
minimizing costs.
ii. åor non-profit oriented systems maximizing some
measure of effectiveness in providing needed services
subject to restrictions concerning their budget, etc.
ÿ. ^roduct VS Service Systems ½ physical products often lend themselves to a considerable amount
of standardization that permits mass production. ½ this is not usually the case with service

Service systems, there is a more pronounced need for personalized. Despite their distinctive
difference, it is highly rewarding to see that both categories have considerable similarities in the
problems that arise and the way they are resolved.

The role of operations management ½ to manage the production or operations function of an


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1. cranslation of an organization͛s value system into operational o ective. ½ it will help manager
to interpret about value system and give them operational meaning precisely.
ÿ. Rrganizational structure and utilization of human resources. ½ Nowadays, human resources
represent an organization͛s most valuable asset. ½ Means that a great deal of thought must be
given to the most desirable form of organizational structure and deployment of people in the
production process. So, we are really j
a. Specification of job descriptions.
b. Determination of clear lines of authority and assignment of responsibility appropriate to
a given organizational structure.
c. Determination of a smooth and efficient communication network.
d. Determination and complete descriptions of effective decision mechanisms for resolving
the variety of problems encountered in managing a production process.
3. Oesign of production system ½ the design of a production system involves a number of critical
long-term decisions that establish the technical performance and operational characteristics of
organizations. It will about:
a. Product design
b. Capacity determination
c. Process design
d. Work design and measurement ½ the determination of job content, work methods, and
time standards.
e. åacilities layout
f. åacilities location
g. Management information systems
4. Rperations planning ½ to determine the best utilization of existing resources (labor force,
inventories, facilities, etc.) that will satisfy expected demand. Some types of operations
a. ggregate planning ½ planning production activity in broad terms for a period up to 1
b. Operations scheduling ½ more detailed and shorter period than aggregate planning.
½ to assign actual orders to specific resource center
and sequence then to meet specific criteria.
5. Rperations control ½ we need a control system while operate a production so we are going to
finish everything on time with our standard quality.
 control system ½ to secure conformance to a plan or to identify reasons for adjusting such a
 control system ½ 

a. Sensing significant deviations of actual from planned performance.
b. Initiating corrective action to remove such deviations.
c. Proposing desirable adjustment to the plan or even to the production system itself if
warranted by changes in the environment.
d. Evaluating the degree to which broad organizational objectives are served by accepted
operations management objectives and revising the latter if necessary.

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a. Physical performance To satisfy anticipated demand.

b. Economic performance

d. a. ^hysical performance:

½ åor demand satisfaction: (performance criteria)

Y uantity - Output rate
- Inventory levels
Y Timing - Inventory service levels
- Production schedules
Y uality - Percent defective
- Reliability
- Numbers of complaints
Y ]ocation
½ åor evaluating operations management
Y ]abor efficiency
Input (labor, materials, energy, etc.)
Y Materials utilizations
Y Energy utilizations
Y Equipment utilization
Y Output rate Production process
Y Inventory levels
Y uantity
Y Timing Output (Product,
Y uality service)
Y ]ocation

d. . Economic ^erformance

½ Measureable
Y ]abor cost
Input (labor, materials, energy, etc.)
Y Materials cost
Y Energy cost
Y Production overhead:
w Rents
w Salaries Production process
w Insurance
w §tilities
w Etc.
½ Intangible
Y Poor selection of :
w Suppliers
Input (labor, materials, energy, etc.)
w Parts and or materials
w Improperly trained workers
w §nused capacity Production process
w Machine breakdowns
w Shortages
w ]oss of goodwill from dissatisfied customers:
Y Poor quality Output (Product,
Y ]ate deliveries service)
Y Poor service