Aitana Fernandez Sedeño
INTRODUCTION TO OPERATIONS MANAGEMENT
Definition: Business function that combines inputs (human, financial, physical resources) to produce
goods or services.
Scope: Applies to primary, secondary, and tertiary sectors.
Main Goals:
• Production: Organize resources efficiently.
• Add value: Price of product/service − cost of production.
Key Functions:
1. Planning – Organizing resources and processes.
2. Organizing – Structuring tasks and responsibilities.
3. Controlling – Monitoring processes to meet goals.
Examples: Stock control in supermarkets to ensure shelves are always filled.
Importance:
• Integral to decision-making.
• Impacts other areas:
o Human Resources
o Finance & Accounts
o Marketing
OPERATIONS MANAGEMENT
• OM is the management of creating goods and services using available resources to meet
customer demand.
• Profit comes from adding value: Price > Cost of production.
, Aitana Fernandez Sedeño
PRODUCTION / TRANSFORMATION PROCESS
• Combines inputs (factors of production) → outputs (goods/services).
• Productivity: Efficiency of transforming inputs into outputs (adding value).
Types of production:
1. Labour-intensive – relies more on human effort
o High wages relative to total costs
o Examples: Teaching, artisanal food, hairdressing, tailoring
2. Capital-intensive – relies more on machinery/equipment
o High capital costs
o Examples: Energy, car manufacturing, pharmaceuticals, steel production
OPERATIONS MANAGEMENT & BUSINESS FUNCTIONS
• OM integrates HR, Finance, and Marketing to produce goods/services efficiently.
• Impacts decision-making across the organization:
o Finance: Approves funds for large-scale or capital-intensive production
o Marketing: Guides production based on customer demand; promotes products
o HR: Recruits, trains, and develops staff, including quality control and supervisors
Examples of OM decisions affecting other functions:
• Flow/capital-intensive production → large budgets approved by finance
• Job/custom production → allows marketing to sell at premium prices
• Market research → informs OM on customer needs
• R&D expenditure → requires finance support
• Crisis management → OM ensures teams are trained and prepared
OPERATIONS/PRODUCTION METHODS
1. JOB PRODUCTION
Production of a single, unique good or service tailored to the specific requirements of a customer.
Key Characteristics:
• Highly flexible: can adapt to customer changes during production.
• Labour-intensive: relies on skilled human input, intellectual and physical effort.
• High unit cost: due to skilled labour and lack of economies of scale.
• Low output volume: one-off or small quantities.
• High customization → unique products.
Cost & Efficiency:
• High production cost per unit.
• Inefficient in terms of output volume.
• Cannot exploit economies of scale.
Impact on Other Business Functions:
INTRODUCTION TO OPERATIONS MANAGEMENT
Definition: Business function that combines inputs (human, financial, physical resources) to produce
goods or services.
Scope: Applies to primary, secondary, and tertiary sectors.
Main Goals:
• Production: Organize resources efficiently.
• Add value: Price of product/service − cost of production.
Key Functions:
1. Planning – Organizing resources and processes.
2. Organizing – Structuring tasks and responsibilities.
3. Controlling – Monitoring processes to meet goals.
Examples: Stock control in supermarkets to ensure shelves are always filled.
Importance:
• Integral to decision-making.
• Impacts other areas:
o Human Resources
o Finance & Accounts
o Marketing
OPERATIONS MANAGEMENT
• OM is the management of creating goods and services using available resources to meet
customer demand.
• Profit comes from adding value: Price > Cost of production.
, Aitana Fernandez Sedeño
PRODUCTION / TRANSFORMATION PROCESS
• Combines inputs (factors of production) → outputs (goods/services).
• Productivity: Efficiency of transforming inputs into outputs (adding value).
Types of production:
1. Labour-intensive – relies more on human effort
o High wages relative to total costs
o Examples: Teaching, artisanal food, hairdressing, tailoring
2. Capital-intensive – relies more on machinery/equipment
o High capital costs
o Examples: Energy, car manufacturing, pharmaceuticals, steel production
OPERATIONS MANAGEMENT & BUSINESS FUNCTIONS
• OM integrates HR, Finance, and Marketing to produce goods/services efficiently.
• Impacts decision-making across the organization:
o Finance: Approves funds for large-scale or capital-intensive production
o Marketing: Guides production based on customer demand; promotes products
o HR: Recruits, trains, and develops staff, including quality control and supervisors
Examples of OM decisions affecting other functions:
• Flow/capital-intensive production → large budgets approved by finance
• Job/custom production → allows marketing to sell at premium prices
• Market research → informs OM on customer needs
• R&D expenditure → requires finance support
• Crisis management → OM ensures teams are trained and prepared
OPERATIONS/PRODUCTION METHODS
1. JOB PRODUCTION
Production of a single, unique good or service tailored to the specific requirements of a customer.
Key Characteristics:
• Highly flexible: can adapt to customer changes during production.
• Labour-intensive: relies on skilled human input, intellectual and physical effort.
• High unit cost: due to skilled labour and lack of economies of scale.
• Low output volume: one-off or small quantities.
• High customization → unique products.
Cost & Efficiency:
• High production cost per unit.
• Inefficient in terms of output volume.
• Cannot exploit economies of scale.
Impact on Other Business Functions:
