Group 01

Define the Term Operation Management and Identify

Similarities and Differences between Production and
Service Operations

MGT 4043
Department of Management
Faculty of Commerce & Management
Eastern University, Sri Lanka
Group Members details

1. M. Z. Fathima Rifdha

EU/IS/2013/MS/06

2. MIF. Haseeba

EU/IS/2013/MS/28

3. Nadaraj Vimalini

EU/IS/2013/MS/45
Table of Content
1. Define the Term Operation Management

1.1 Introduction of Operation 1.4 Objective of the Operation Management

1.2 Introduction to the Operation Management 1.5 Supply chain

1.3 The Operations Function 1.6 Scope of Operation Management

2. Similarities and Differences between Production and Service Operations

2.1 Production Operation and Service Operation

2.2 Similarity of Production and Service Operation

2.3 Differences between Production and Service Operations

3. Possible Questions in this area

4. References
1. Define the Term Operation Management
1.1 Introduction of Operation
• Operations is that part of a business organization that is
responsible for producing goods and/or services.
• Goods - Physical items produced by business organizations.
• Service - Activities that provide some combination of time,
location, form, and psychological value.
• Operation is that part of an organization, which is concerned
with the transformation of a range of inputs into the required
output.
1.2 Introduction to the Operation Management

Joseph G. Monks defines “Operation management is the

process whereby resources following within a defined system
are combined and transformed by a control manner to add
value in accordance with policies communicated by
management”.
1.3 The Operations Function
1.4 Objective of the Operation Management
1.4.1 Customer service
The first objective of operating system is to utilize resources for the
satisfaction of customer wants. Provide 3R (Right thing, Right Time,
Right price can satisfactory).

1.4.2 Resource Utilization

Operation Management is concerned with the achievement of both
satisfactory customer service and resource utilization. An
improvement in one will often give rise to deterioration in the order.
1.5 Supply Chain

A supply chain is the sequence of organizations—their

facilities, functions, and activities—that are involved in
producing and delivering a product or service.
1.6 Scope of Operation Management

Operations management people are involved in:

• Product and service design
• Process selection, selection and management of technology
• Design of work systems
• Location planning
• Facilities planning
• Quality improvement of the organization’s products or services.
2. Similarities and Differences between Production and Service Operations

2.1 Production Operation and Service Operation

 Production is defined as step-by-step conversion of one form of material into
another form through chemical or mechanical process to create or enhance
the utility of the product to the user. A system is defined as a collection of
elements which are interdependent and independent to achieve objective.

 Service organizations produce intangible items that cannot be produced

ahead of time. One of the key developments in operations is the increasing
importance of service operations as service industry accounts for an
increasing importance proportion of the output of industrialized economies.
2.2 Similarity of Production and Service Operation

 Existence of a process
 Use of technology
 Concern for quality
 Productivity
 Customer satisfaction
 Capacity choice
 Location choice
 Design layouts and production facilities
2.3 Differences between Production Operations
&
Service Operations
No Characteristics Production Operation Service Operation
An intangible output- implies to
A tangible output- anything that
act.
we can see or touch.
Example- A physician’s
1 Output Example- automobile,
examination, TV and auto repair,
eyeglasses, a
lawn care, and the projection of a
golf ball, a refrigerator
film in a theater
There is a high degree of contact,
Degree of customer There is a low degree of contact
2 the interaction between server and
contact. between producer and customer.
customer.
Labors who involved in the Have a higher degree of labor
Labor content of
3 production operation is lower content, excepting in the
jobs.
than service operations. automated services.
Manufacturing operations often
have a greater ability to control Service operations are often
Uniformity of
4 the variability of inputs, which subject to a higher degree of
inputs
leads to more-uniform job variability of inputs.
requirements.
No Characteristics Production Operation
It is easy to measure the
Measurement of
5 productivity in production
productivity
operations.
There are opportunities to
6 Quality assurance correct problems before
delivery.
Have to keep more inventory
7 Inventory
to meet the customers’ needs.
Manufacturing jobs are often
8 Wages well paid, and have less wage
variation.
Product designs are often
9 Ability to patent easier to patent
than service designs.
Service Operation
Measurement of productivity can
be more difficult for service jobs.
Quality assurance is usually
more challenging for services
due to the higher variation in
input.
Less use of inventory. so the
costs of having inventory on
hand are lower.
Service jobs can range from
highly paid professional services
to minimum-wage
workers.
some services cannot be
patented, making them easier for
competitors to copy.
3. Possible Questions in this area

1. Briefly describe the terms operations management

2. Identify the three major functional areas of business
organizations and briefly describe how they interrelate
3. List five important differences between goods production and
service operations; then list five important similarities
4. Identify Similarities and Differences between Production and
Service Operations
4. References

 Operations Management by Albert Porter

 Introduction to Operations Management (12th edition) by
Stevenson
 INPUT OUTPUT Transformation INTRODUCTION TO
PRODUCTION
(www.ymcaust.ac.in/mechanical/images/mtech1stsem/chapter_1_d pcps.pdf)
 Similarities Between Goods and Services by Hajara Saleeth in
Management
(www.tutebox.com/2624/business/management)
Thank you