Chapter 1

Just What Do Operations Managers Do?

Operations management designs and operates productive systems--systems for getting work done. The
food you eat, the movies you watch, the stores in which you shop, and this book you are reading are
provided to you by the people in operations. Operations managers are found in banks, hospitals,
factories, and government. They design systems, ensure quality, produce products, and deliver
services. They work with customers and suppliers, the latest technology, and global partners. They
solve problems, reengineer processes, innovate, and integrate. Operations is more than planning and
controlling; it's doing. Whether it's superior quality, speed-to-market, customization, or low
cost, excellence in operations is critical to a firm's success.

Operations is often defined as a transformation process. As shown in Figure 1.1, inputs (such as
material, machines, labor, management, and capital) are transformed into outputs (goods and
services). Requirements and feedback from customers are used to adjust factors in the
transformation process, which may in turn alter inputs. In operations management, we try to ensure
that the transformation process is performed efficiently and that the output is of greater value
than the sum of the inputs. Thus, the role of operations is to create value. The transformation
process itself can be viewed as a series of activities along a value chain extending from supplier
to customer. Any activities that do not add value are superfluous and should be eliminated.

The input-transformation-output process is characteristic of a wide variety of operating systems.
In an automobile factory, sheet steel is formed into different shapes, painted and finished, and
then assembled with thousands of component parts to produce a working automobile. In an aluminum
factory, various grades of bauxite are mixed, heated, and cast into ingots of different sizes. In a
hospital, patients are helped to become healthier individuals through special care, meals,
medication, lab work, and surgical procedures. Obviously, "operations" can take many different
forms. The transformation process can be

                    physical,

                                  as in manufacturing operations;

                    locational,

                                  as in transportation or warehouse operations;

                    exchange,

                                  as in retail operations;

                    physiological,

                                  as in health care;

                    psychological,

                                  as in entertainment; or

                    informational,

                                  as in communications.
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The Operations Function

Activities in operations management (OM) include organizing work, selecting processes, arranging
layouts, locating facilities, designing jobs, measuring performance, controlling quality,
scheduling work, managing inventory, and planning production. Operations managers deal with people,
technology, and deadlines. These managers need good technical, conceptual, and behavioral skills.
Their activities are closely intertwined with other functional areas of a firm.

As shown in Figure 1.2, the three primary functions of a firm are marketing, finance, and
operations. Marketing establishes the demand for goods or services, finance provides the capital,
and operations actually makes the goods or provides the service. Of the three functions, operations
typically employs the greatest number of people and requires the largest investment in assets. For
these reasons, management of the operations function has often been viewed as an opportunity to
improve a firm's efficiency and reduce costs. But operations can also be an avenue to increase
sales, gain market share, and eliminate the competition!

Operations can also be viewed as the technical core of an organization as depicted in Figure 1.3.
In this scenario, the organization exists to produce goods and services for its customers.
Therefore, operations is the central function or "hub" of the organization in contact with every
other functional area. For example, operations interacts with marketing to receive estimates of
customer demand and customer feedback on problems; with finance for capital investments, budgets,
and stockholder requirements; with personnel to train, hire, and fire workers; and with purchasing
to order needed materials for production.

As a field of study, operations brings together many disciplines and provides an integrated view of
business organizations. To understand better the role of operations and the operations manager,
let's examine some historical events in OM.
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1-1. What constitutes "operations" at (a) a bank, (b) a retail store, (c) a hospital, (d) a cable
TV company?

*1-2. Find an interesting web site related to the operations function in a firm with which you are
familiar. Use e-mail to submit the URL and a paragraph describing what you found at the site to
your instructor.

*These exercises require a direct link to a specific Web site. Click Internet Exercises for the
list of internet links for these exercises.

A Brief History of Operations Management

Although history is full of amazing production feats--the pyramids of Egypt, the Great Wall of
China, the roads and aqueducts of Rome--the widespread production of consumer goods--and thus,
operations management--did not begin until the Industrial Revolution in the 1700s. Prior to that
time, skilled craftspersons and their apprentices fashioned goods for individual customers from
studios in their own homes. Every piece was unique, hand-fitted, and made entirely by one person, a
process known as craft production. Although craft production still exists today, the availability
of coal, iron ore and steam power set into motion a series of industrial inventions that
revolutionized the way work was performed. Great mechanically powered machines replaced the laborer
as the primary factor of production and brought workers to a central location to perform tasks
under the direction of an "overseer" in a place called a "factory." The revolution first took hold
in textile mills, grain mills, metalworking, and machine-making facilities.

Around the same time, Adam Smith's Wealth of Nations (1776) proposed the division of labor, in
which the production process was broken down into a series of small tasks, each performed by a
different worker. The specialization of the worker on limited, repetitive tasks allowed him or her
to become very proficient at those tasks and further encouraged the development of specialized
machinery.

The introduction of interchangeable parts by Eli Whitney (1790s) allowed the manufacture of
firearms, clocks, watches, sewing machines, and other goods to shift from customized one-at-a-time
production to volume production of standardized parts. This meant the factory needed a system of
measurements and inspection, a standard method of production, and supervisors to check the quality
of the worker's production.

Advances in technology continued through the 1800s. Cost accounting and other control systems were
developed, but management theory and practice were virtually nonexistent.

In the early 1900s an enterprising laborer (and later chief engineer) at Midvale Steel Works named
Frederick W. Taylor approached the management of work as a science. Based on observation,
measurement, and analysis, he identified the best method for performing each job. Once determined,
the methods were standardized for all workers, and economic incentives were established to
encourage workers to follow the standards. Taylor's philosophy became known as scientific
management. His ideas were embraced and extended by efficiency experts Frank and Lillian Gilbreth
and Henry Gantt, among others. One of Taylor's biggest advocates was Henry Ford.

Henry Ford applied scientific management to the production of the Model T in 1913 and reduced the
time required to assemble a car from a high of 728 hours to 1-1/2 hours. A Model T chassis moved
slowly down a conveyor belt with six workers walking along beside it, picking up parts from
carefully spaced piles on the floor and fitting them to the chassis.^1 The short assembly time per
car allowed the Model T to be produced in high volumes, or "en masse," yielding the name mass
production.

American manufacturers became adept at mass production over the next fifty years and easily
dominated manufacturing worldwide. The human relations movement of the 1930s, led by Elton Mayo and
the Hawthorne studies, introduced the idea that worker motivation, as well as the technical aspects
of work, affected productivity. Theories of motivation were developed by Herzberg, Maslow,
McGregor, and others. Quantitative models and techniques spawned by the operations research groups
of World War II continued to develop and were applied successfully to manufacturing and services.
Computers and automation led still another upsurge in technological advancements applied to
operations. These events are summarized in Table 1.1.

From the Industrial Revolution through the 1960s, the United States was the world's greatest
producer of goods and services, as well as the major source of managerial and technical expertise.
Looking back, 1960 was probably the peak for American manufacturing. From then on, industry by
industry, U.S. manufacturing superiority was challenged by lower costs and higher quality from
foreign manufacturers, led by Japan.

In the 1970s, U.S. productivity rose an average of only 1.3 percent per year, and in the 1980s,
barely 0.2 percent (with many years negative), while foreign competitors boasted annual increases
of 4 percent and 5 percent. Several studies published during those years confirmed what the
consumer already knew--U.S.-made products of that era were inferior and could not compete on the
world market. Table 1.2 compares the product performance of U.S. versus Japanese automobiles,
semiconductors, air conditioners, and color televisions of the 1970s and 1980s.

Early rationalizations that the Japanese success in manufacturing was a cultural phenomenon were
disproved by the successes of Japanese-owned plants in the United States, such as the Matsushita
purchase of a failing Quasar television plant in Chicago from Motorola. Part of the purchase
contract specified that Matsushita had to retain the entire hourly work force of 1,000 persons.
After only two years, with the identical workers, half the management staff, and little or no
capital investment, Matsushita doubled production, cut assembly repairs from 130 percent to 6
percent, and reduced warranty costs from $16 million a year to $2 million a year. You can bet
Motorola took notice. (Today Motorola is one of the success stories of American manufacturing.)

How did this come about? How did a country that dominated manufacturing for most of the twentieth
century suddenly become no good at it? Quite simply, U.S. companies weren't paying attention. They
thought mass production had solved the "problem" of production, so they delegated the function of
manufacturing to technical specialists (usually engineers) who ignored changes in the consumer
environment and the strategic importance of operations. Decisions were made based on short-term
financial goals rather than long-term strategic initiatives.

Mass production can produce large volumes of goods quickly, but it cannot adapt very well to
changes in demand. Today's consumer market is characterized by product proliferation, shortened
product life cycles, shortened product development times, changes in technology, more customized
products, and segmented markets. Mass production does not "fit" that type of environment. Using a
concept known as just-in-time, Japanese manufacturers changed the rules of production from mass
production to lean production. Lean production prizes flexibility (rather than efficiency) and
quality (rather than quantity). The total quality fervor has since spread across the globe and is
the focus of operations in many successful global enterprises.

The emphasis on quality and the strategic importance of operations is especially important today as
continuing advances in information technology have further increased competition and customer
expectations. Technology, together with changing political and economic conditions, have prompted
an era of industrial globalization in which companies compete worldwide for both market access and
production resources. Although both products and services are becoming more customized in wider
global markets, services, in many cases, are the key to competitiveness.

Let's examine globalization, services, and competitiveness from an operations perspective.
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1-3. Briefly describe how operations have been affected as we have moved from the Industrial
Revolution to the current era of globalization.

1-4. Why did the United States experience competitive problems in the 1970s and 1980s?
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Services

In the United States and other highly industrialized nations, the economy has shifted away from
manufacturing toward service industries. Nearly 80 percent of workers worldwide are employed in
services. Services account for 75 percent of the gross domestic product (GDP) for the United
States, and service jobs are expected to provide virtually the entire net gain in U.S. employment
over the next decade. The expansion in service jobs is primarily in high-tech firms, too, in
contrast to the predominantly low-pay, low-skilled service jobs of the past. U.S. service exports
more than doubled from 1988 to 1998, providing a healthy trade surplus and helping to reduce the
overall trade deficit. The foreign market for services, exceeding $1.2 trillion in 1996, has
tremendous potential barely tapped by U.S. firms.

Six of the top ten firms on Fortune's Global 500 list are services and eight of the top ten largest
employers are service firms. As services have grown in the worldwide economy, the distinction
between service operations and manufacturing operations has become increasingly blurred. The
preparation of hamburgers at McDonald's and the processing of packages at Federal Express look
remarkably like assembly work in a factory. For machine tool and heavy equipment manufacturers, the
installation and servicing of the equipment yields far greater returns than its physical
manufacture. IBM markets itself as a provider of computer solutions, rather than a manufacturer of
computers.

It is apparent that manufacturing and service operations go hand-in-hand. Manufacturing companies
cannot function without the support of services such as accounting, personnel, advertising,
transportation, financial and legal; and many services would not exist if the goods they support
were not produced. Television repair shops would be obsolete without televisions, and televisions
would be no good without broadcasting services! In this text, we provide plentiful examples of both
service and manufacturing operations, recognizing their common and unique concerns.
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*1-8. Access the Department of Commerce's site on International Trade in Services. Name the top
five service exports. How does the export of services compare to the export of goods? To what
country are most services exported? Comment on the balance of trade in services.

*These exercises require a direct link to a specific Web site. Click Internet Exercises for the
list of internet links for these exercises.

Competitiveness

A global marketplace for both products and services means more customers and more intense
competition. Competitiveness can be viewed from a national, industry, or firm perspective.

In the broadest terms, we speak of competitiveness in reference to other countries rather than to
other companies. That's because competitiveness affects the economic success of a nation and the
quality of life for its citizens. Competitiveness is "the degree to which a nation, can, under
demanding and rapidly changing market conditions, produce goods and services that meet the test of
international markets while simultaneously maintaining or expanding the real incomes of its
citizens."^3 We measure a nation's competitiveness by its gross domestic product (GDP),
import/export ratio, and increases in productivity.

Productivity as a Measure of Competitiveness

Productivity, the most common measure of competitiveness, is calculated by dividing units of output
by units of input.

The predominant input in productivity calculations is labor hours. According to the Bureau of Labor
Statistics, even though labor is the only factor of production explicitly considered, comparisons
of productivity over time implicitly reflect the joint effects of many other factors, including
technology, capital investment, capacity utilization, energy use, and managerial skills. Thus,
productivity statistics provided in government reports typically measure changes in productivity
from month to month, quarter to quarter, year to year, or over a number of years.

Figure 1.7 shows annual percent changes in productivity from 1990 to 1996 for the United States,
Germany, and Japan. Although productivity varied widely in the first half of the 1990s, by 1996 the
three countries had virtually identical rates of productivity growth. Upon further examination of
the input and output data provided in Figure 1.8, however, we can see that the manner in which each
country increased productivity differed significantly. Japan increased productivity solely by using
its existing inputs more efficiently to produce greater output. The United States achieved the same
effect by producing more output with a slight decrease in input. Germany did not increase output or
input--rather, a slight decrease in output was offset by a dramatic decrease in input. Figure 1.8
also shows changes in input and output for France, Italy, Sweden, the United Kingdom, and Canada.
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1-9. Examine Figure 1.8. How did productivity change for France, Italy, Sweden, the United Kingdom,
and Canada?

*1-10. Investigate the role of government in improving industrial competitiveness. Begin with the
U.S. Council on Competitiveness and United Kingdom's Study of Manufacturing and Business Processes.
What is the state of industrial competitiveness in each country? What are the panel's concerns?
Their recommendations? Find a similar site for at least one other country and compare their
priorities and initiatives.

*These exercises require a direct link to a specific Web site. Click Internet Exercises for the
list of internet links for these exercises.
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^3Report of the President's Commission on Industrial Competitiveness, chaired by John A. Young,
President and CEO, Hewlett-Packard, 1985.

Competitive Industries

Competition within industries is more intense when the firms are relatively equal in size and
resources, products and services are standardized, and industry growth is either slow (so that one
company gains at the expense of another) or exponential (so that gaining a foothold in the market
is a strategic imperative). Industry competitiveness can be measured by the number of major players
in the industry, average market share, and average profit margin. Probably the most competitive
industry worldwide is pharmaceuticals, in which the largest manufacturer holds a mere 4.7 percent
market share. Price wars, relentless advertising (such as nightly phone calls from long-distance
carriers), frequency of new product or service introductions, and purchasing incentives (extended
warranties, financial packages, switching bonuses, and so on) provide additional evidence of
competition within industries.

In some industries, competition is limited because it is difficult for new firms to enter the
industry. Many of the barriers to entry^4--economies of scale, capital requirements, access to
supply and distribution channels, and learning curves--are operations oriented. Let's explore them
in more detail.
 1. Economies of scale. In many industries, as the number of units produced increases, the cost of
producing each individual unit decreases, which is known as economies of scale. New companies
entering such an industry may not have the demand to support large volumes of production, and thus,
their unit cost would be higher.
 2. Capital investment. Large initial investments in facilities, equipment, and training may be
required to become a "player" in some industries. For example, opening a new hospital requires an
enormous investment in facilities, equipment, and professional personnel; in contrast, a day-care
center may operate out of an existing home with only minimal equipment, training, and licensing
requirements.
 3. Access to supply and distribution channels. Existing firms within an industry have established
supply and distribution channels that may be difficult for new firms to replicate. Examples: Toys
'R Us dominates its suppliers. Wal-Mart's information and distribution systems provide a strong
competitive advantage. VISA will not allow its member banks to do business with American Express.
 4. Learning curves. Lack of experience can be a barrier to entry in an industry with significant
learning curves. For example, U.S. firms dominate the aerospace industry because of their
experience and expertise in airplane design and construction. However, this may not always be the
case, as component manufacturers in Korea and Japan are gaining valuable experience as suppliers to
aerospace firms. Shipbuilders claim a 10 percent learning curve (and corresponding cost advantage)
for each similar vessel built. Hospitals performing heart transplants exhibit an amazing 79 percent
learning curve.^5
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*1-11. Examine this year's Global 500 by industry. Which industries are the most competitive? Which
industries are the least competitive? Are some industries dominated by certain countries? Which
industries are the most profitable?

1-12. Explore the emergence of high-tech industries and the changing rules of competition. How does
e-commerce affect competitiveness?

1-13. Discuss four common barriers that firms may experience as they try to enter a new industry.

1-14. Choose an industry on which you will be the class "expert" for the duration of this course.
Write an initial profile of major players, customers, structure, and competitive issues.

*These exercises require a direct link to a specific Web site. Click Internet Exercises for the
list of internet links for these exercises.
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^4These are adapted from Michael Porter, Competitive Advantage (New York: Free Press, 1985).

^5David Smith and Jan Larson, "The Impact of Learning on Cost: The Case of Heart Transplantation,"
Hospital and Health Services Administration (Spring 1989): 85-97. Learning curves are discussed in
more detail in Chapter 8.

Issues and Trends in Operations

Operations is a field that is rapidly changing and growing in importance. Current issues and future
trends in operations include:
 1. Intense competition. The intensity of worldwide competition continues to increase. Global
restructuring, the emergence of newly industrialized economies, and the Internet have opened new
markets worldwide. As world markets grow, so do potential customers, as well as the number and
quality of competitors.
 2. Global markets, global sourcing, and global financing. Few companies are able to survive by
competing in the domestic market alone. Companies need to learn about foreign societies, understand
foreign customers, build networks, and forge partnerships. Production takes place wherever in the
world it can be done the cheapest, access to capital markets is worldwide, and the global supply
chain reaches around the world.
 3. Importance of strategy. Companies need long-term global strategies to survive in the
marketplace. Vertically integrated partnerships, partnerships with other companies in the same
industry, partnerships with educational institutions, and partnerships with government are needed
to strengthen competitive positions. A new type of capitalism based on strategic alliances and
cooperative specialization within industries may become a necessity.
 4. Product variety and mass customization. An increasing variety of products and services will be
offered, in many cases, customized for individuals. This means the expected life of products will
continue to decrease, and product and service innovations will hit the market at an increasing
rate.
 5. More services. Eighty percent of jobs in the United States are provided by the service sector.
Many corporations we think of as successful manufacturing firms, such as GM, GE, IBM, and
Westinghouse, actually generate more than half of their income from services. For both
manufacturing and service firms, customer service is a competitive battleground that will continue
to intensify.
 6. Emphasis on quality. The quality of products and services continues to improve as customer
expectations of quality grow. Zero defects will be the norm. Quality that delights the customer and
provides a competitive advantage will be the goal.
 7. Flexibility. The most successful production systems are the most flexible, measured by the
ability to adjust to changes in product design, changes in product mix, changes in the volume of
demand, and changes in process technology.
 8. Advances in technology. Information technology, electronic commerce, and telecommunications
will continue to advance at a rapid rate. Advanced materials (metal-based composites, polymer-based
composites, and high-tech ceramics), smart materials, advanced machining (EDM, lasers, electron
beams, plasma flame cutting, flexible tooling and fixturing), intelligent sensors, smart robots,
biotechnology, digital imaging, artificial intelligence, superconductors and supercomputing will
dramatically change how products and services are designed and how firms compete.
 9. Worker involvement. The empowerment of the workforce has had a significant impact on operations
in the 1990s. This trend will continue in the future as the ability to create, absorb, and utilize
knowledge holds the key to success. Countries that perform the best in the world market will have
the best research and development (R&D), the best education system, the brightest people, and the
savvy to use those assets to their fullest.
10. Environment and ethical concerns. Companies and industries increasingly consider the
environmental impact of the design, manufacture, distribution, use, and disposal of their products
and services. The impetus for environmental responsibility may shift from government regulations to
customer requirements. As companies compete and produce across national borders, corporate ethics
and social responsibility will be dictated more by customer expectations and corporate culture than
by legalities in the host country.

THE COMPETITIVE EDGE

                             Malden Mills' Greatest Asset--Its People

A five-alarm fire destroys your textile factory in Massachusetts where costs are high. Do you
retire and pocket the insurance money? Do you use the opportunity to relocate to the Sunbelt or
overseas? Not if you're Aaron Feuerstein, the 70-year-old owner of Malden Mills. You rebuild on the
same site, and you pay full wages to your 1,000 employees until production can be restarted--that's
a $15 million payout for months of idle labor. Crazy, you say? Feuerstein calls it good business.

"Why would I chase cheap labor [or alienate my workers] when I might run the risk of losing the
advantage I've got, which is superior quality?" says Feuerstein. The key to continued success is to
create unsurpassed value "with superior products, service, teamwork, productivity and cooperation
with the buyer." To do that, you need capable, experienced textile designers, engineers, and
workers.

It's Malden's workers that give the company its competitive edge. Employee retention at Malden
Mills is above 95 percent--so is customer retention. The correlation between loyal customers and
loyal employees is no coincidence. In the 1980s, when the market for its major product--artificial
furs--collapsed, it was employees in R&D and production who saved the company by inventing a new
fabric called Polartec. L. L. Bean, Lands' End, Patagonia, North Face, and Eddie Bauer buy as much
of the fabric as Malden can supply.

At the European trade show one year after the fire, Malden introduced a new line of fabric based on
Polartec--for upholstery. Maybe those workers weren't complete couch potatoes after all.

Source: Thomas Teal, "Not a Fool, Not a Saint," Fortune (November 11, 1996): 201-4.

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*1-16. Look for articles related to operations management in Fortune, Business Week, or CNN. How do
they relate to the trends in operations discussed in the chapter?

*1-17. Operations management is one of the most popular courses at Harvard Business School. From
the days of Wickham Skinner, Harvard has been known for its operations expertise. Link to the
Technology and Operations Management unit at Harvard. Read and summarize one of the working papers
of the faculty.

1-18. List several issues and trends in operations for the future. What actions do you recommend to
prepare for the future challenges?

*These exercises require a direct link to a specific Web site. Click Internet Exercises for the
list of internet links for these exercises.

Primary Topics in Operations Management

There are many issues, concepts, and techniques associated with the field of operations management
(OM). This text is designed as an introductory survey course in OM that covers many different
topics. In the following sections, we provide a brief overview of the primary topics in operations
management. They are presented in the order in which operational decisions are made within a firm.
It is not a coincidence that the chapters in this text are organized in a similar fashion.

Deploying Strategy

Strategy is only as good as the results it produces. Good results require that the corporation
vision and strategic plan be converted into a series of consistent, achievable action plans to be
deployed throughout the organization. Operations strategy must be consistent with corporate
strategy and may provide the distinctive competence on which a firm competes. This topic appears in
the text as operations strategy.

Assuring Quality

Quality drives operational decisions. The level of quality a company seeks to achieve is a
strategic decision that eventually determines how a product is made or a service is delivered.
Designing products and services, designing and planning the production process, locating and
developing the production facility, designing jobs and work activities, and planning and scheduling
the flow of products throughout the system are all areas of operations management that are
increasingly dominated by quality. For this reason, the first two topics presented after the
initial discussion of strategy are quality management and statistical quality control.

Designing Products and Services

The traditional starting point in the production process is designing the product or service.
Decisions related to design include converting customer requirements to product or service
characteristics, determining the desired level of quality, selecting materials, and evaluating the
resulting production costs. This topic is covered in the text as product and service design.

Planning the Production Process

Once the product or service has been designed, the physical process that will produce the product
or deliver the service must be constructed. Plans are developed for acquiring materials,
determining the types of job skills, equipment, and technology required, and managing the process.
This topic is referred to as process planning, analysis, and reengineering.

Laying Out the Facility

The production process that has been designed must be physically housed in a facility and laid out
in an effective manner so that the product can be produced or service delivered as efficiently as
possible. Decision making focuses on how to arrange different parts of the production or delivery
process in the facility in order to ensure a smooth flow and minimal cycle time. The title of this
area of operations management is facility layout.

Designing Jobs and Work

A primary component of the production process is the work performed by people, alone, together, or
with machines and equipment. Human resources management is the area of OM concerned with making
sure that jobs meet the requirements of the production process in the most efficient and effective
manner possible.

Managing the Supply Chain

Once the production process and facility have been designed, decisions must be made regarding where
to locate the facility in relation to customers and suppliers and how to manage the supply chain. A
supply chain encompasses all the facilities, functions, and activities involved in producing and
delivering a product or service, from the suppliers (and their suppliers) to the customer (and
their customers).

Forecasting Demand for Products and Services

Once the physical facility and production process are in place to produce a product or deliver a
service, a host of planning decisions are required to determine how much to produce and when to
produce it. These decisions are based on customer demand. Forecasting involves using a number of
different methods and quantitative techniques to provide accurate estimates of demand, which are
subsequently used to make production decisions.

Production Planning and Scheduling

Once management has determined how much product or service is needed to meet the demand, production
schedules that involve a myriad of decisions are developed. These decisions include how much
material or how many parts to order, when material or parts should be ordered, how many workers to
hire, and how these workers should be scheduled on jobs and machines. Decisions must also be made
to ensure the amount of inventory available at each stage of the production process is sufficient
to avoid unnecessary delays, and the amount of final inventory is sufficient to meet customer
demand. For service operations, the number of servers required to serve customers in a timely
manner must be established. Production planning represents a major area of decision making in
operations management and includes the topics of capacity and aggregate production planning,
inventory management, material requirements planning, scheduling, just-in-time systems, service
improvement, and project planning.
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1-19. What activities are involved in the operations function? Which activities are related to your
major? What would you be especially interested in learning in this course?