INTRODUCTION TO

OPERATIONS
MANAGEMENT
CATHARINE G. CABALLERO, PhD
Associate Professor II
Faculty of Governance, Business and Management
Davao Oriental State University
What is Operations Management?
• Themanagement of systems or processes that create goods
and/or provide services
Goods – physical items that include raw materials, parts,
subassemblies and final products
Services - activities that provide some combination of time,
location, form, or psychological value.
What is Operations Management?
• Operations management (OM) is the business function that plans,
organizes, coordinates, and controls the resources needed to produce a
company’s goods and services.
• Operations management is a management function. It involves managing
people, equipment, technology, information, and many other resources.
• Operations management is the central core function of every company.
•Operation managers are concerned
with planning, organizing, and
controlling the activities which affect
human behavior through models.
Planning
• Activities
that establishes a course of action and guide
future decision-making.
• The operations manager defines the objectives for the
operations subsystem of the organization, and the
policies, and procedures for achieving the objectives.
• Thisstage includes clarifying the Role and focus of
operations in the organization’s overall strategy.
• It
also involves product Planning, facility designing and
using the conversion process.
Organizing
• Activities that establishes a structure of tasks and authority.
• Operation managers establish a Structure of roles and the flow
of information within the operations subsystem. They determine
The activities required to achieve the goals and assign authority
and responsibility for carrying Them out.
Controlling
• Activities that
assure the actual performance in accordance with
planned performance. To Ensure that the plans for the
operations subsystems are accomplished, the operations
manager Must exercise control by measuring actual outputs and
comparing them to planned operations Management.
Controlling costs, quality, and schedules are the important
functions here.
Behavior
• Operation managers are concerned with how their efforts to
plan, organize, and control affect Human behavior. They also
want to know how the behavior of subordinates can affect
Management’s planning, organizing, and controlling actions.
Their interest lies in decision making behavior
Objectives of Operations Management
1. customer service
2. resource Utilization
Customer service
• The ultimate goal is the satisfaction of customer wants.
• The operating System must provide something based on
specification which can satisfy the customer in terms of cost and
timing.
• Thus, satisfaction may be achieve by providing the “right thing
at a right price at the right time”.
Resource utilization
• utilize resources for the satisfaction of Customer wants

Example 1 : customer service must be provided with the

achievement of Effective operations through efficient use of
resources. Inefficient use of resources or inadequate Customer
service leads to commercial failure of an operating system.
Resource utilization (cont’n)
• utilize resources for the satisfaction of Customer wants

Example 2: obtaining Maximum effect from resources or

minimizing their loss, underutilization or waste. The extent Of the
utilization of the resources’ potential might be expressed in terms
of the proportion of Available time used or occupied, space
utilization, levels of activity, etc. Each measure indicates The
extent to which the potential or capacity of such resources is
utilized. This is referred as the Objective of resource utilization.
The 3 Business Functions
Finance and operations management
activities
• Budgeting
• Economic analysis of investment proposals
• Provision of funds
Marketing
• Focuses on selling and/or promoting the goods or services
• Responsible in assessing customer wants and needs
• Communicating to people
Role of Operations Management
1. to transform a company’s inputs into the finished goods or
services.
• Inputs include human resources (such as workers and managers),
facilities and processes (such as buildings and equipment), as
well as materials, technology, and information.
• Outputs are the goods and services a company produces.
• Ata factory the transformation is the physical change of raw
materials into products, such as transforming leather and rubber
into sneakers, denim into jeans, or plastic into toys.
• At an airline it
is the efficient movement of passengers and their
luggage from one location to another.
• Ata hospital it is organizing resources such as doctors, medical
procedures, and medications to transform sick people into
healthy ones.
Transformation process
Inputs and outputs
• Inputs consist of the resources that are transformed into desired
output.
• Output is a generated service; throughput is an item going
through the process.
• Feedback -is the process of monitoring the outputs of a
production system and using this information to control
the production process.
Role of Operations Management (cont’n)
2. Operations management is responsible for orchestrating all the
resources needed to produce the final product. This includes
a. designing the product;
b. deciding what resources are needed;
c. arranging schedules, equipment, and facilities;
d. managing inventory;
e. controlling quality;
f. designing the jobs to make the product;
g. and designing work methods.
Transformation Process
For operations to be successful, it must add value during transformation process

1. value added – the difference between the cost of inputs and the
value or price of outputs. In nonprofit organizations, the value of
outputs, is their value to the society. The greater the value added,
the greater the effectiveness of the operations. For profit
organizations, the value of outputs is measured by the prices that
customers are willing to pay for those goods and services.
 Transformation Process (cont’n)
For operations to be successful, it must add value during transformation process

2. Efficiency - performing activities well and at the lowest possible cost.

An important role of operations is to analyze all activities, eliminate
those that do not add value, and restructure processes and jobs to
achieve greater efficiency.
• Because today’s business environment is more
competitive than ever, the role of operations
management has become the focal point of efforts to
increase competitiveness by improving value added and
efficiency.