Chapter 1 Operations and Productivity 1. What is operations management? a. Production is the creation of goods and services. b. Operations Management (OM): Activities that relate to the creation of goods and services through the transformation of inputs to outputs. (For both tangible and intangible activities in an organization) 2. Organizing to Produce Goods and Services c. All organizations must perform three functions: i. Marketing: generates the demand, or at least takes the order for a product or service (nothing happens until there is a sale) ii. Production/operations: creates the product. iii. Finance/accounting: tracks how well the organization is doing, pays the bills, and collects money. 3. Why study OM? d. OM is one of the three major functions of any organization, and it is integrally related to all the other business functions. All organizations market, finance, and produce, and it is important to know how the OM activity functions. Therefore, we study how people organize themselves for productive enterprise. e. We study OM because we want to know how goods and services are produced. The production function is the segment of our society that creates the products and services we use. f. We study OM to understand what operations managers do. g. We study OM because it is such a closely part of an organization. A large percentage of the revenue of most firms is spent in the OM function. OM provides a major opportunity for an organization to improve its profitability and enhance its service to society. 4. What operations managers do h. All good managers perform the basic functions of the management process. iv. Management Process: The application of planning, organizing, staffing, leading, and controlling to the achievement of objectives.