Chapter One

Introduction to Operations Management

NAME: COMA, KRISTINE D. SCORE:
SECTION: BS MANAGEMENT
ACOUNTING 3-5

LEARNING ACTIVITY
Answers to these study questions are to be submitted for assessment.
Submit your output online (via Edmodo) on or before September 27, 2020

Study Questions:
1. Identify the three major functional areas of business organizations and
briefly describe how they interrelate.
Finance is responsible for securing financial resources at favorable prices and
allocating those resources throughout the organization, as well as budgeting,
analyzing investment proposals, and providing funds for operations.
Marketing is responsible for assessing consumer
wants and needs, and selling and promoting the organization’s goods or
services.
Operations is responsible for producing the goods or providing the services
offered by the organization. To put this into perspective, if a business
organization were a car, operations would be its engine. And just as the
engine is the core of what a car does, in a business organization, operations is
the core of what the organization does.
It doesn’t matter whether the business is a retail store, a hospital, a
manufacturing firm, a car wash, or some other type of business; all business
organizations have these three basic functions.There is significant interfacing
and collaboration among the various functional areas, involving exchange of
information and cooperative decision making. The three primary functions in
business organizations perform different activities, many of their decisions
impact the other areas of the organization.Marketing’s focus is on selling
and/or promoting the goods or services of an organization.
Marketing is also responsible for assessing customer wants and needs, and for
communicating those to operations people (short term) and to design people
(long term). That is, operations needs information about demand over the
short to intermediate term so that it can plan accordingly (e.g., purchase
materials or schedule work), while design people need information that
relates to improving current products and services and designing new ones.
Marketing, design, and production must work closely together to successfully
implement design changes and to develop and produce new products.
Marketing can provide valuable insight on what competitors are doing.
Marketing also can supply information on consumer preferences so that
design will know the
kinds of products and features needed; operations can supply information
about capacities and judge the manufacturability of designs. Operations will
also have advance warning if new equipment or skills will be needed for new
products or services. Finance people should be included in these exchanges in
order to provide information on what funds might be available (short term)
and to learn what funds might be needed for new products or services
(intermediate to long term). One important piece of information marketing
needs from operations is the manufacturing or service lead time in order to
give customers realistic estimates of how long it will take to fill their orders.
Thus, marketing, operations, and finance must interface on product and
process design, forecasting, setting realistic schedules, quality and quantity
decisions, and keeping each other informed on the other’s strengths and
weaknesses.

2.Describe the operations function and the nature of the operations

manager’s job.
The operations function includes many interrelated activities, such as
forecasting, capacity planning, scheduling, managing inventories, assuring
quality, motivating employees, deciding where to locate facilities, and more.
Operation function in business can also be viewed from a more far-reaching
perspective: The collective success or failure of companies’ operations
functions has an impact on the ability of a nation to compete with other
nations, and on the nation’s economy.Operations function in business
organizations is responsible for producing goods and providing services. It is
a core function of every business. Supply chains are the sequential system of
suppliers and customers that begins with basic sources of inputs and ends
with final customers of the system. Operations and supply chains are
interdependent—one couldn’t exist without the other, and no business
organization could exist without both.
The operations function includes many interrelated activities, such as
forecasting, capacity planning, scheduling, managing inventories, assuring
quality, motivating employees, deciding where to locate facilities, and more.
Operations managers, like all managers, have the responsibility to make
ethical decisions.
Ethical issues arise in many aspects of operations management, including:
 Financial statements: accurately representing the organization’s financial
condition.
 Worker safety: providing adequate training, maintaining equipment in
good working condition, maintaining a safe working environment.
 Product safety: providing products that minimize the risk of injury to
users or damage to property or the environment.
 Quality: honoring warranties, avoiding hidden defects.
 The environment: not doing things that will harm the environment.
 The community: being a good neighbor.
 Hiring and firing workers: avoiding false pretenses (e.g., promising a
long-term job
when that is not what is intended).
 Closing facilities: taking into account the impact on a community, and
honoring
commitments that have been made.
 Workers’ rights: respecting workers’ rights, dealing with workers’
problems quickly and fairly

3. Explain the term value-added.

The term "value-added" describes the economic enhancement a company
gives its products or services before offering them to customers. Value added
helps explain why companies are able to sell their goods or services for more
than they cost to produce. Adding value to products and services is very
important as it provides consumers with an incentive to make purchases, thus
increasing a company's revenue and bottom line.Value-added is the
additional features or economic value that a company adds to its products
and services before offering them to customers.Adding value to a product or
service helps companies attract more customers, which can boost revenue and
profits.Value-added is effectively the difference between a product's price to
consumers and the cost of producing it. Value can be added in several
different ways, such as adding a brand name to a generic product or
assembling a product in an innovative way.

4. Why is it important to match supply and demand? If a manager believes

that supply and demand will not be equal, what actions could the manager
take to increase the probability of achieving a match?
It is very important for managers to understand the
mechanics of demand and supply. Manager's decisions on pricing of goods
and allocation of company's scarce resources are crucial for the success and
failures of a business, and they need to evaluate the outcome of their business
decisions. The closer we anticipate and match demand with supply, the less
waste and more profit.
 5. List the trade-offs you would consider for each of these decisions:
a. Buying a computer now versus waiting for an improved model.

Depending on what exactly what you use your computer for, that would

determine whether you’ll upgrade or buy when the time comes. Do you have

an immediate use for this item? If not, you might want to wait until you truly

need it and make a plan to save up for it. Patience ain't sexy, but it pays off.

We need to wait for an improved model to be able to satisfy what we truly

need. But if we really need it, it is better to look for a durable computer which

we can use for a long time.

b. Speaking up in class versus waiting to get called on by the instructor.
Speaking in class helps us to be confident in ourselves and it also helps us
prepare ourselves for our leadership for our future jobs In many professional
contexts, people need to be able to speak up in a group. They may need to offer
information, ask questions, or argue for a different solution. People don’t learn to
speak up in a group by reading about how to do it—it’s one of those skills best
developed with practice. And it’s one of those skills that develops better with
feedback. If participation is being used to teach students this public
communication skill, they will need feedback.It’s hard to maintain students’
focus and attention when all they hear is the professor talking. It helps to hear
another voice as well as an answer or another point of view. Whereas if we do
not often speak in class, it only store the wisdom that we should also share with
others.

c. A small business owner having a website versus newspaper advertising.

Online advertising is generally more cost-effective and more effective, period,

because you're able to target your advertising budget at a more select group

of people, and closely measure how that audience responds to your

advertising. Having a website is an innovative technology because it is more

accessible than having a newspaper advertisement. On the website it has

more people to reach than the newspaper.

6. Discuss the importance of each of the following:

a. Matching supply and demand
It's important to match supply and demand because it effects cost and how
efficient which has a direct effect on the company's profit. When we have too
much supply on hand now we are paying for storage only. If we are not stock
to the customers demand we would lose sales and profit The closer we
anticipate and match demand with supply, the less waste and more profit.
b. Managing a supply chain
It is well known that supply chain management is an integral part of most
businesses and is essential to company success and customer
satisfaction. Supply chain management has the power to boost customer
service, reduce operating costs and improve the financial standing of a
company. Customers expect the correct product assortment and quantity to
be delivered. Supply chain management helps lower the cost of doing
business, it provides a way for a business to form a competitive advantage
without needing to lower its prices while allowing it to deliver orders more
quickly to customers.