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30 Cards in this Set

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what is operations management?
activities that relate to the creation of goods and services through the transformation of inputs and outputs
what is production?
creation of goods and services
what is a service?
an intangible good or product
to create goods and services all organization must perform what 3 functions?
marketing, production/operations, finance/accounting
generates the demand, or at least takes the order for a product or service (nothing happens until there is a sale)
creates the product
tracks how well the organization is doing, pays the bills, and collects the money
management process consists of...
planning, organizing, staffing, leading, & controlling to the achievement of objectives
what are services?
economic activities that typically produce an intangible product (such as education, entertainment, lodging, government, financial, & health services)
services are....
usually intangible, often produced & consumed simultaneously, often unique, have high customer interaction, have inconsistent product definition, often knowledge based, and frequently dispersed.
what is the US service sector?
the segment of the economy that includes trade, financial, lodging, education, legal, medical, & other professional occupations
challenges to OM..
ethics, global focus, rapid product development, environmentally sensitive production, mass customization, empowered employees, supply-chain partnering, just-in-time performance
what is productivity?
the ratio of outputs (goods and services) divided by one or more inputs (such as labor, capital, or management)
improvement in productivity can be achieved in two ways:
1- reducing inputs while keeping output constant 2- increasing output while keeping inputs constant
inputs are labor, capital & management, which are integrated into a production system
outputs are goods and services, including such diverse items such as guns, butter, education...
production is
the making of goods and services
only through increases in productivity can
the standard of living improve
If returns to labor, capital, or management are increased without increased productivity prices rise.
On the other hand, downward pressure is placed on prices when productivity increases, because more is being produced with the same resources.
Since 1869 the U.S. has been able to increase productivity at an average rate of almost 2.5% per year.
Such growth has doubled U.S. wealth every 30 years.
measurement of productivity
units produced/input used
units produced/labor-hours used
single-factor productivity
the use of just one resource input to measure productivity
Multifactor productivity
a broader view of productivity that is calculated by combining the input units
multifactor productivity measurement
output/(labor + material + energy + capital + miscellaneous)
productivity increases are dependent on three productivity variables:
Labor (contributes about 10% of the annual increase), capital (contributes about 38% of the annual increase) & management (contributes about 52% of the annual increase)
Improvement in the contribution of labor to productivity is hte result of a healthier, better-educated, and better-nourished labor force.
3 key variables for improved labor productivity are:
basic education approprate for an effective labor force, diet of the labor force, social overhead that makes lavor available (such as transportation and sanitation)
Capital investment provides tools for human beings
inflation and taxes increase the cost of capital, making capital investment increasingly expensive
when the capital invested per employee drops, we can expect a drop in productivity
management is a factor of production and economic resource.
management is responsible for ensuring that labor and capital are effectively used to increase productivity.
management accounts for over half of the annual increase in productivity
knowledge societies are
those in which much of the labor force has migrated from manual work to technical and information-processing tasks requiring ongoing education
productivity of the service sector has proven difficult to improve because service sector work is:
typically labor intensive (counseling, teaching), frequently focused on unique individual attributes or desires (investment advice), often an intellectual task performed by professionals (medical diagnosis), often difficult to mechanize and automate (haircut), often difficult to evaluate for quality (performance of a law firm)
ten critical decisions in OM;
1 designs of goods & services (what good or service should we offer? 2 managing quality (how do we define quality) 3 process and capacity design (what process and what capacity will these products require) 4 location strategy (on what criteria should we base the location decision?)
5 layout strategy (how large must the facility be to meet our plan) 6 human resources and job design (how do we provide a reasonable work environment) 7 supply-chain management (who should be our suppliers and how can we integrate them into our strategy) 8 inventory, material requirements planning, and JIT (just in time) (how much inventory of each item should we have & when do we reorder) 9 intermediate and short-term scheduling (are we better off keeping people on the payroll during slowdowns) 10 maintenance (who is responsible for maintenance and how do we build reliability into our processes)