 Production is the creation of goods & services.

 Operation Management is the set of activities that

creates values in terms of goods & services by
transforming inputs into outputs.
Three functions which always exist
 Marketing
 Finance / Accounts
 Production/ operation management
Why study OM
There are three reasons for studying OM
 OM is one of three major function
 We want to know how goods and services are produced.
 We want to understand what operation Manger does
 It is a costly part of organization
Options for increasing contribution
Options for increasing contribution
Conclusion : The OM options yields the greatest
involvement in results.
Learning exercise : what is the impact of only 15%
decrease in cost in OM options?
Answer : $ 19,500
What Operation Manger Does
 All good manager performs the basic function of
management process .
 Management process consists of planning, organizing,
staffing, leading & controlling
What Operation Manger Does
What Operation Manger Does
Heritage of Operation Management
Operation in Service Sector
 Economic activity that produce an intangible product
such as education, entertainment, hospital, financial
services etc is called service.
New trends in operation management
 Global focus
 Just in time performance
 Supply chain partnering
 Rapid product development
 Mass customization
 Empowered employee
 Environmental sensitive production
 Ethics
Productivity
 It is a measure of the effective use of resources used
as ratio of output to input
 productivity = units produces/ inputs used