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MNO2601 Summarised Study Notes
PART 1: FOUNDATIONS OF OPERATIONS MANAGEMENT
1.1 What is Operations Management?
Definition: Operations Management is the activity of managing the resources
devoted to the production and delivery of products and services. It is a core
function of any business, sitting alongside marketing and finance.
The Transformation Process Model:
At the heart of operations is the Input-Transformation-Output model.
• Transformed Resources (The things being
processed): Materials, Information, Customers.
• Transforming Resources (The things doing the
processing): Facilities (buildings/equipment), Staff (people).
• Output: Products or Services.
1.2 The "Four V's" of Operations
Operations differ depending on their position on these four dimensions. The
four V's determine the cost of producing goods/services.
Dimension
Low Impact
High Impact
Volume
Low Volume (Job
Shop) = High Unit
Cost
High Volume (Mass
Production) = Low
Unit Cost
Variety
Low Variety
(Standardized) =
Low Cost
High Variety
(Customized) =
High Cost
Variation (Demand)
Predictable
Demand = Low
Cost
Unpredictable
Demand = High
Cost
Visibility (Customer
contact)
Low Visibility
(Back office) =
High Efficiency
High Visibility
(Front office) =
High Customer
Interaction
1.3 The 5 Performance Objectives
Operations Managers use these 5 objectives to measure performance. They are
the "translation" of strategy into action.
