Lecture 1: Introduction to

Operations Management

Instructor: Nooshin Salari

Office: RJC 225
Email: Salarin@mcmaster.ca
 About Me

Nooshin Salari

➢PhD in Operation Research (University of Toronto)

Research expertise: Data analytics, data-driven optimization, supply chain

management

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 Class Overview

Lectures on Wednesdays at RJC 214

Office hour: Thursdays By Appointment

• Course website: Avenue to Learn

• Lecture notes/slides, assignments, project, grades, …
• lecture slides will be posted before class

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Evaluation Scheme

Grading Breakdown:
▪ Assignment 1 10%
▪ Assignment 2 10%
▪ Assignment 3 10%
▪ GRIT Week 5%
▪ Group Project 25%
▪ Participation 5%
▪ Final Exam 35%

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Assignments & Final Exam

• Assignments:
✓ These are 3 individual assignments.
✓ Only electronic submissions will be accepted.
✓ Late submissions will not be accepted
• Final exam is open book timed exams. No electronic devices (e.g., cell phones,
laptops, tablets) are allowed during the exam.

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 Textbook
Operations Management: Sustainability and Supply Chain Management, Fourth
Canadian Edition. Jay Heizer, Barry Render, Check Munson, Paul Griffin

1. Lecture contents prioritize over textbook!!

2. The book serves as a reference
3. Exam will test only the materials covered by the lectures
4. Lectures may cover some topics not in the textbook

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Class Participation

• Class participation is an important component of this course and is distinct from

class attendance.
• Participation is evaluated based on your engagement in quizzes, class discussions,
and other interactive activities.
• It's not just about being present in class but actively contributing to the learning
experience!

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Student Performance and Class Attendance Analysis

Class Average Average for High Attendance Average for Low Attendance
Students Students
82% 85% 77%

Students with higher attendance tend to achieve higher marks.

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Question?

• What are the three primary functions that every business relies on to succeed?

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Note!
• Every business is managed through three major functions: finance, marketing, and operations
management

• Think of a restaurant. Finance handles the budget, marketing attracts customers, and operations
ensures the food is made, served, and enjoyed efficiently.
• Which of these three functions do you think has the most impact on customer satisfaction?

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Introduction to Operations Management

• Questions:
• What is Operation Management (OM)?

• Why study it?

• Where are the OM jobs?

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What is Operations?
• Operations refers to the series of activities involved in creating products
or delivering services
• Every service or product you have used today is created by
operations.

Examples:
• Manufacturing of IKEA furniture
• A restaurant managing kitchen workflows and waitstaff schedules
to ensure timely and quality meal service to customers.

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What is an Operations Management?
• Companies and organizations need to ensure that their
product or service is of good quality and useful to their
clients before offering it.

• How can they ensure that the products and services

rendered meet client expectations?
➢Through operations management.

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Operations
Value Added

Transformation/ Outputs:
Inputs:
Materials Conversion Goods,
Services
Information Activities

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Operations
Printing a photo at Walmart:
Computer connected Printer
Cell phone
to the printer

Input process Output

The Transformation Model

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Example: Restaurant Kitchen Operations

Input:
• Ingredients (e.g., vegetables, meat, spices)
• Staff (chefs, kitchen assistants)
• Equipment (e.g., stoves, knives, ovens)
• Recipes
Transformation:
• The chefs and kitchen staff prepare and cook the ingredients according to the recipes,
applying techniques such as chopping, boiling, grilling, etc.
Output:
• A finished dish (e.g., a plate of pasta, steak, or salad) that is served to the customer.

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Types of Input

• Three types of resource that may be transformed in operations are:

• Materials – the physical inputs to the process

• Information that is being processed or used in the process

• People or Customers – the people who are transformed in some way.

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Types of Transforming Resources:

• The two types of transforming resource are:

1) staff – the people involved directly in the transformation process or supporting it

2) facilities – land, buildings, machines and equipment.

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Exercises

• Describe the operations for the followings:

Operation at Input Transformation Output

Air Canada

Hospital

Macbook Pro

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Solution

• Describe the operations for the followings:

Operation Input Transformation Output
Air Canada customer credit card information check-in transported passengers
aircrafts flight operations
Hospital Patients, Health workforce (doctors,…) Diagnosis, Treatment, Care Treated patients
Beds, Equipment, Medicines resource allocation Medical reports
Public health contributions
Macbook Pro Raw materials, Components, Software, Design and Engineering, Finished laptops
Labor, Machinery Assembly, Software, Product manuals and
Installation, Quality Control accessories
and Testing, Packaging

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 What is Operations Management?

• What is “Operations”
• The set of activities that creates value in the form of goods and services by
transforming inputs into outputs
• Without Operations: No goods or services to sell.

• What is “Operations Management”

• Management of “Operations”
• It is concerned with planning and execution of the transforming activities
• How much coffee beans to buy?
• How many employees to schedule for each shift
•…

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Success Story - Dell Computers

• Pre-1994: Dell was a second-rate computer maker.

• Transformation:
✓Innovative operations management practices.
✓Customization and rapid delivery.
✓Achievements: Customized products within 36 hours, 10–15% cost savings.
• Outcome: Industry leadership and operational benchmark.

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Failure Case - Kozmo.com

• Background: Founded in 1997 as a Web-based delivery company.

• Challenges: Over-expansion.
✓Poor inventory and delivery management.
✓Financial losses.
• Outcome: Ceased operations in 2001.
• Lesson: Poor operations management can lead to failure

• What do you think it could have done differently to avoid failure?

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Goods vs Services

• A good is a physical product that you can see, touch, or possibly consume.
• Examples of goods include oranges, flowers, televisions, soap, airplanes, fish,
furniture, coal.

• A service is an action performed to satisfy a requirement. It does not directly

produce a physical product.
• Example: Therapy sessions, babysitting, surgery, house cleaning, haircuts, and
legal advice.

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Question

• Is it possible for a product to combine both services and physical goods?

• Most goods and services are a mixture of tangible and intangible components.
Example: Consulting services often include tangible reports.
• Many goods include service elements such as: Financing (e.g., automobiles).
After-sale training and maintenance (e.g., office machinery).
• Example of a rare pure service: Counseling.

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The Growth of the Service Sector

• Agriculture dominated until 1900; services

became dominant in the 1920s.
• Manufacturing employment peaked at 32% in
1950.
• Manufacturing worker productivity is now
20x higher than in 1950.
• Technological advancements shifted focus
from agriculture and manufacturing to
services, now the largest economic sector.
• Can you think of examples where
technological advancements have reshaped
industries recently?

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Discussion Questions

• List five different organizations that offer both manufacturing and service
operations

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Note!

• In small companies, OM decisions may focus on single products or locations,

making them simpler but equally vital.
• In large companies, OM decisions become more intricate:
➢Managing diverse product lines, multiple locations, and complex supply chains.
➢Coordinating domestic and international suppliers and operations.
• Effective OM ensures smooth operations and aligns daily activities with long-term
strategic goals.

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Adding Value and Ensuring Efficiency in Operations

• Value Added: The net increase between the final product value and the value of
inputs.
• Importance: The greater the value added, the more productive the business.
• For instance, in a bakery, the value added is the difference between the cost of raw
materials like flour and sugar and the price customers are willing to pay for the
finished cake

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Successful Operations Management

• For operations management to be successful, it must add value during the

transformation process.
• The greater the value added, the more productive a business is.
• Ways to add value?

• An obvious way to add value is to reduce the cost of activities in the

transformation process.
• Activities that do not add value are considered a waste; these include certain jobs,
equipment, and processes. In addition to value added, operations must be efficient.

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Successful Operations Management

• Apple and Samsung manufacture smartphones, but they differ in the number of
employees working on production and the total output of smartphones per day.
Apple:
➢Employees: 500
➢Total smartphones produced: 5,000 smartphones per day
Samsung:
➢Employees: 600
➢Total smartphones produced: 6,600 smartphones per day

Which one performs better?

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Performance Measure: Productivity

• Productivity is how efficiently inputs, like business processes, result in outputs of

goods and services.
• The measure of productivity is defined as a total output per one unit of a total
input.
• The operations team is in place to ensure the company is running at peak
• How do you measure productivity?
Output
Productivity = Input

• The more efficiently a company uses its resources, the more productive it is.

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1) Single-factor productivity measurement

• Single-Factor Productivity is a measure of output against specific input.

• Its significance lies in its focus on utilization of one resource.
• Example:
𝑂𝑢𝑡𝑝𝑢𝑡
• Labor productivity:
𝐼𝑛𝑝𝑢𝑡 𝑚𝑎𝑛 ℎ𝑜𝑢𝑟,𝑜𝑟 𝑙𝑎𝑏𝑜𝑟 𝑖𝑛𝑝𝑢𝑡

• Material productivity: ratio of output to materials input

• Machine productivity: ratio of machine units of output per machine hour, output
per unit machine.

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1) Single-factor productivity measurement

• If we produce only one product, the numerator can be either the total units of the
product or the total $ value of the product.
• If we produce several products, the numerator is the total $ value of all products.

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Example

• If a factory produces 500 units of a product in 100 labor hours, the labor
productivity is 5 units per hour

• If a bakery produces 1,000 loaves of bread using 200 kilograms of flour, the
material productivity is 5 loaves per kilogram of flour.

• If a machine produces 300 units in 10 machine hours, the machine productivity is

30 units per hour

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Example-Single-factor productivity

• Suppose a person is employed for 40 hours a week in a toy factory. In

a given week, the worker produces 120 dolls. The productivity of the
worker in that week is …..

120
• Labour productivity: = 3 dolls per hour
40

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Example

• Bluegill has just purchased a new sanding machine that processes 17 chairs in 8
hours. What is the productivity of the sanding machine?

# 𝑜𝑓 𝑐ℎ𝑎𝑖𝑟𝑠 17 𝑐ℎ𝑎𝑖𝑟𝑠 𝑐ℎ𝑎𝑖𝑟𝑠

𝑀𝑎𝑐ℎ𝑖𝑛𝑒 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 = = = 2.125
𝑃𝑟𝑜𝑐𝑒𝑠𝑠𝑖𝑛𝑔 𝑡𝑖𝑚𝑒 8 ℎ𝑜𝑢𝑟𝑠 ℎ𝑜𝑢𝑟

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Example

• Apple and Samsung manufacture smartphones, but they differ in the number of
employees working on production and the total output of smartphones per day.
Apple:
➢Employees: 500
➢Total smartphones produced: 5,000 smartphones per day
Samsung:
➢Employees: 600
➢Total smartphones produced: 6,600 smartphones per day

Which one performs better?

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Solution

• Productivity of Apple:

5000 𝑠𝑚𝑎𝑟𝑡 𝑝ℎ𝑜𝑛𝑒𝑠

= 10 𝑠𝑚𝑎𝑟𝑡 𝑝ℎ𝑜𝑛𝑒𝑠 𝑝𝑒𝑟 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒
500 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠
• Productivity of Samsung:

6600 𝑠𝑚𝑎𝑟𝑡 𝑝ℎ𝑜𝑛𝑒𝑠

= 11 𝑠𝑚𝑎𝑟𝑡 𝑝ℎ𝑜𝑛𝑒𝑠 𝑝𝑒𝑟 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒
600 𝑒𝑚𝑝𝑙𝑜𝑦𝑒𝑒𝑠

• Samsung has slightly higher productivity, producing 11 smartphones per employee, while Apple
produces 10 smartphones per employee.

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2) Multi factor productivity

• Multifactor productivity assesses the overall efficiency of all inputs used in

production. It combines multiple input factors, such as labor, capital, and
materials, to evaluate how well these combined inputs are utilized to produce
output.

• Can you think of scenarios where focusing only on labor productivity might miss
the bigger picture?
• What difficulties might arise when trying to measure and combine inputs like
labor and capital in a meaningful way?

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2) Multi factor productivity

• Multifactor Productivity: Output per combined units of multiple inputs (e.g.,

labor, capital, materials).

• Where Total Input can be a weighted sum of various input factors, such as labor,
capital, and materials (in $):

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Example

• Bluegill Furniture is a small furniture shop that focuses on making kitchen chairs.
The weekly dollar value of its output, including finished goods and work in
progress, is $14,280. The value of inputs, such as labor, materials, and capital, is
approximately $16,528. Compute the total productivity measure for Bluegill
Furniture.

𝑜𝑢𝑡𝑝𝑢𝑡 $14280
𝑇𝑜𝑡𝑎𝑙 𝑃𝑟𝑜𝑑𝑢𝑐𝑡𝑖𝑣𝑖𝑡𝑦 = = = 0.864
𝑖𝑛𝑝𝑢𝑡 $16528

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Example
• Long Beach Bank employs three loan officers, each working eight hours per day.
Each officer processes an average of five loans per day. The bank’s payroll cost
for the officers is $820 per day, and there is a daily overhead expense of $500.
• Compute the labor productivity.
➢Labor productivity: Two approaches: 1) Input is measured in labor hour, 2) Input
is measured in $:

𝑜𝑢𝑡𝑝𝑢𝑡 3 𝑜𝑓𝑓𝑖𝑐𝑒𝑟𝑠 × 5 𝑙𝑜𝑎𝑛𝑠/𝑑𝑎𝑦

= = 0.018 𝑙𝑜𝑎𝑛𝑠/$
𝑖𝑛𝑝𝑢𝑡 $ $820
• Compute the multifactor productivity, using loans per dollar cost as the measure.

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Example

• GreenTech Solutions has a team of 5 consultants, each working 7 hours a day,

with a total payroll cost of $1,050 per day. Additionally, the company incurs
overhead expenses of $300 per day. On average, they complete 10 consulting
projects each day. Calculate Multifactor Productivity concerning labor and
overhead costs?
• What is the total output? 10 projects per day.
• Labor Costs: Total payroll cost per day = $1,050
• Total overhead cost per day = $300
• Total Input=Labor Costs+Overhead Expenses =1,050+300=1,350

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Computing Productivity

𝑂𝑢𝑡𝑝𝑢𝑡 𝑝𝑟𝑜𝑑𝑢𝑐𝑒𝑠
• Total Productivity Measure:
𝐴𝑙𝑙 𝑖𝑛𝑝𝑢𝑡 𝑢𝑠𝑒𝑑

𝑂𝑢𝑡𝑝𝑢𝑡 𝑂𝑢𝑡𝑝𝑢𝑡
• Single factor productivity: or ,…
𝑙𝑎𝑏𝑜𝑟 𝑚𝑎𝑐ℎ𝑖𝑛𝑒

𝑂𝑢𝑡𝑝𝑢𝑡 𝑂𝑢𝑡𝑝𝑢𝑡
• Multifactor Productivity Measure: , or , or
𝑂𝑢𝑡𝑝𝑢𝑡 𝑙𝑎𝑏𝑜𝑟+𝑚𝑎𝑐ℎ𝑖𝑛𝑒𝑠 𝑙𝑎𝑏𝑜𝑟+𝑚𝑎𝑡𝑒𝑟𝑖𝑎𝑙
,…
𝑙𝑎𝑏𝑜𝑟+𝑐𝑎𝑝𝑖𝑡𝑎𝑙+𝑒𝑛𝑒𝑟𝑔𝑦

• The choice of productivity measure depends primarily on the purpose of the

measurement. If the purpose is to track improvements in labor productivity, then
labor becomes the obvious input measure.
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Productivity and Production

• The operation manager's job is to enhance and improve this ratio of outputs to
inputs. Improving productivity means improving efficiency.

• This improvement can be achieved in two ways, reducing inputs while keeping
output constant or increasing output while keeping input constant.

• High production simply means more goods or services are being produced, but it
doesn’t necessarily mean the organization is productive

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Example: Productivity growth during the global recession

• Figure below shows the growth rate in productivity for select countries for 2008, a
year of global recession. Only five countries exhibited positive growth rates, led
by Korea and the United States with increases of 1.2%.

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 Example (Cont.)

•Korea and the United States achieved

productivity increases through
contrasting approaches.
•Korea: Small increases in both output and
the inputs required for production.
•United States: The recession led to a
decrease in both output and input.
However, the more severe cut in input (e.g.,
labor hours) resulted in a slight productivity
increase.

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Limits of Productivity Statistics

• Focus on Output, Not Sales:

➢Emphasis is placed on the quantity produced, not sold.
➢Unsold products can lead to inventory build-up, which may accelerate a
company’s decline rather than improvement.
Effectively managed operations play a crucial role in ensuring that increased
productivity translates into real gains, such as higher sales, profitability, and
customer satisfaction.

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The Importance of Mission and Strategy

• Key Concept: Effective operations management requires:

• A mission to define where the organization is heading.
• A strategy to outline how the organization will achieve its mission.

• What is a Mission?
➢The mission defines an organization's purpose—what it aims to contribute to
society.

• With the mission established, strategy and its implementation can begin.
• Strategy is an organization’s action plan to achieve the mission.

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Examples for mission statement

Nike: "To bring inspiration Amazon: To be Earth's most Tesla: "To accelerate the world's
and innovation to every athlete customer-centric company transition to sustainable energy."
in the world."

businessinsider.com

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Mission and Strategy: A Step-by-Step Process

1. Define the Mission:

1. Establish a clear purpose and organizational focus.

2. Develop the Strategy:

• Identify strengths, weaknesses, opportunities, and threats (SWOT analysis)
• Outline actionable plans to achieve mission goals.
3. Implement the Strategy:
1. Translate the strategy into operational plans for each department or function.
2. Continuously evaluate and adjust as needed.

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SWOT Analysis
• Identify strengths, weaknesses, opportunities, and threats (SWOT analysis)
• Internal Insights:
1. Strengths: Highlight areas of excellence, such as operational efficiency,
strong brand reputation, or skilled workforce.
2. Weaknesses: Identify internal limitations like outdated technology, high costs,
or skill gaps that need improvement.
• External Insights
1. Opportunities: Recognize growth areas, such as new markets, technological
advancements, or industry trends.
2. Threats: Assess risks like new competitors, regulatory changes, or supply
chain disruptions that could impact performance.

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 SWOT Analysis

Maximize opportunities in the

external environment.
Minimize threats posed by external
factors.
Leverage Strengths, and
Address Weaknesses
SWOT Example
• A group of 4 people want to start a business in a film industry.
Developing and Refining Strategy

• Create a strategy that maximizes strengths, minimizes weaknesses, and capitalizes

on opportunities while mitigating threats.
• The strategy is dynamic and subject to ongoing evaluation to ensure:
✓Customer value is consistently delivered.
✓The strategy remains competitive and relevant in the marketplace.

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Class activity

• Create a mission and strategy for a hypothetical business (e.g., a local restaurant or
an e-commerce platform).

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Business Strategy & Functional Strategies

• Functional level strategies are designed to answer how functional departments can
support the defined business strategies of an organization.

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Components of Operations Strategy

• Once a business strategy has been developed, an operations strategy must be

formulated.
• Key Decisions:
• Location, size, and type of facilities.
• Worker skills and talents required.
• Technology use and special processes.
• Equipment needs and quality control methods.

• Objective: Ensure all operations decisions align with the company's business
strategy.

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Example: FedEx

• Business Strategy: Compete on time and dependability in expedited delivery

services.
• Operations Strategy:
✓Acquired its own fleet of airplanes to ensure speed of delivery.
✓Invested in bar-code tracking technology to provide dependable delivery
tracking.
• Result: FedEx's operations strategy aligns perfectly with its business goals,
ensuring long-term success.

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Example of misalignment • Kodak’s mission was to
between the mission and preserve memories, and they
operations strategy were a leader in
photographic film.
• However, their operations
strategy remained focused
on traditional film
manufacturing, even as the
world shifted toward digital
photography.

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What Are Competitive Priorities?

• Competitive priorities are the operational strengths that allow a company to

succeed in the marketplace.
• Porter's Generic Competitive Strategies (ways of competing): Defines three
primary ways organizations can achieve a competitive advantage in their market.

• Cost Leadership: Compete by offering the lowest price in the market while
maintaining acceptable quality.
• Differentiation: Compete by offering unique products or services that provide
value to customers.
• Focus: Target a specific market niche to serve the unique needs of a particular
group.
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Example: Cost leadership
• Achieving the lowest production and operational costs
in the industry to offer products or services at lower
prices than competitors.

• Ryanair: Focuses on minimizing costs to offer

extremely low ticket prices.

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Example: Differentiation

• Tesla:
• Differentiates with electric vehicles that combine performance, design, and
advanced technology.
• Known for its innovation in battery technology and self-driving features.

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Example: Differentiation
• SafeSkin Corporation: The leader in the latex exam glove
market due to its focus on differentiation.
1. Addressing Customer Needs: Responded to doctors’
complaints about allergic reactions by developing
hypoallergenic gloves.
2. Continuous Innovation:
1. Added texture to gloves to enhance functionality.
2. Introduced synthetic disposable gloves for those allergic
to latex.
3. Proactive Market Leadership: Always stayed ahead of
competitors by anticipating customer needs and innovating
solutions.

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Focus

• The company first selects a segment or group of segments in an industry and then
tailors its strategy to serve those segments best to the exclusion of others.
• Compete by targeting a specific niche market, focusing either on cost leadership or
differentiation.

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Competitive Advantage

• Remember that Cost Focus means

emphasizing cost-minimization within a
focused market,
• Differentiation Focus means pursuing
strategic differentiation within a focused
market.

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Example: Differentiation Focus

• Example: Rolls-Royce (Automotive

Division)
• Targets ultra-luxury car buyers with
custom-built, high-quality vehicles.
• Provides tailored design choices and
personalized customer experiences.
• Focuses on a narrow customer segment.

• Result: Rolls-Royce establishes itself as

a leader in the luxury automotive niche.

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Example: Differentiation Focus
• Lululemon: Fitness enthusiasts and yoga practitioners looking for
high-quality, stylish athletic wear.

• Specialized Products: Focuses on premium athletic wear designed

for yoga and active lifestyles.

• Unique Brand Identity: Combines functionality, comfort, and

style to resonate with its target market.

• High-Quality Materials: Uses proprietary fabrics and designs that

appeal to customers seeking performance and durability.

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Example: Cost Focus
• IKEA Target Market: Cost-conscious customers
looking for affordable, stylish, and functional
furniture.
Reduces production, storage, and transportation
costs by allowing customers to assemble furniture
themselves.
Efficient Store Design: Large self-service
warehouses where customers pick up their
products, lowering labor costs.
• Strategic Locations: Operates in urban and
suburban areas to attract cost-sensitive customers
seeking convenience.

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70
Stuck in the Middle

• A company is considered "stuck in the middle" if it fails to fully achieve any of the
three generic strategies: cost leadership, differentiation, or focus.
• Lacking a clear competitive advantage, such a company is at a disadvantage
compared to competitors who are successfully pursuing one of these strategies.
• Such a company has no competitive advantage regardless of the industry it is in

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Example: Stuck in the Middle
• Example: Sears
• Why Stuck in the Middle?
Sears struggled to position itself effectively in the
retail market. It neither competed effectively on
price with cost leaders like Walmart nor offered the
differentiation and premium experience of stores
like Nordstrom.
• Result: Customers migrated to competitors with
clearer value propositions, leading to declining
sales and eventual bankruptcy.

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Example: Stuck in the Middle

• Why Stuck in the Middle?

BlackBerry failed to keep up with Apple and
Samsung, which offered highly
differentiated smartphones, while also
losing out to lower-cost Android
manufacturers. It couldn’t sustain its
competitive edge in either differentiation or
cost leadership.
• Result:
BlackBerry lost market share and became
irrelevant in the consumer smartphone
market.

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Important Note!

• A company may still achieve profits if:

• It operates in a highly attractive industry.
• Competitors are also "stuck in the middle.”

❖Is it possible to be both cost leader and differentiator?

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The Global Perspective in Operations Strategy

• The Global Perspective in Operations Strategy refers to how companies adapt

their operations to succeed in a globalized marketplace
• This approach recognizes that businesses operate in a connected world where
competition, resources, and markets go beyond borders.
• It considers factors like international markets, supply chains, competition, and
cultural diversity, and how they influence strategic decisions.

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 The Global Perspective in Operations Strategy

Apple Inc- Market Expansion: customizes its marketing

strategies and products to meet the needs of different regions, e.g.
dual-SIM iPhones for markets like India and China.
Toyota- Local Adaptation: Toyota adapts car designs and
features to local market preferences, such as smaller cars for
crowded urban areas in Europe.

Amazon- Global Distribution Network: operates fulfillment

centers worldwide, ensuring fast delivery across regions.
Coca-Cola- Local Production: maintains a consistent global
brand while producing beverages locally to meet regional tastes
(e.g., sweeter formulations in some countries).

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 Why Study Operations Management?

In operations management (or simply OM) we design,

study and improve the activities that create value in
the form of goods or services

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Operations Management and Patient
Wait Time Improvement

• The time patients spend in the waiting

room is a leading measure of patient
satisfaction.
• Challenge: Long wait times can
negatively impact satisfaction and
patient experience.

• Can you think of ways healthcare

facilities could reduce wait times to
improve patient satisfaction?

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Decision-Making in OM

• Strategic Decisions:
• Long-term decisions that shape the
organization’s future.
• Examples: Product design, process
innovation, and facility location.

• Tactical Decisions:
• Short-term and routine decisions to
manage day-to-day operations.
• Examples: Worker scheduling,
inventory control, and production
planning.

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Where are the OM jobs?

• Healthcare: Managing patient flow,

optimizing resource allocation (beds,
staff, equipment), improving healthcare
delivery processes, etc.

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Where are the OM jobs?

• Manufacturing & Production:

optimizing manufacturing processes,
managing quality control, improving
efficiency, reducing costs, and
managing inventory.

81
Where are the
OM jobs?
Logistics & Supply Chain: Managing
procurement, warehousing, and
distribution of goods, etc.

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Where are
the OM jobs?
• Retail & E-Commerce:
Enhancing in-store
operations, efficient
supply chains, inventory
control, improving
customer experience

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Highlights

• The role of operations management is to transform organizational inputs—human

resources, facilities, materials, technology, and information—into a company’s
finished goods or services.
• Organizations can be divided into manufacturing and service operations, which
differ in the tangibility of the product and the degree of customer contact.
• Operations management is responsible for a wide range of decisions, ranging from
strategic decisions, such as designing the unique features of a product and process,
to tactical decisions, such as planning worker schedules.
• Operations managers need to work closely with all other business functions in a
team format.

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After class

• Reading:
• Chapters 1 & 2

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Questions

• Which company is a prime example of a cost focus strategy?

A. Apple
B. Rolex
C. Flair Airlines
D. Starbucks

Correct answer: C

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• Which of the following best represents SafeSkin Corporation’s strategy?

A. Cost leadership by producing affordable gloves

B. Differentiation through innovative and reliable glove designs
C. Cost focus by serving a niche market with basic gloves
D. Differentiation focus by providing unique gloves to doctors

Correct answer: B

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• Which statement best distinguishes operational efficiency from strategy, according to
Michael Porter?

A. Operational efficiency involves doing the right tasks, while strategy is about doing tasks
efficiently.
B. Operational efficiency and strategy are interchangeable.
C. Strategy is short-term, while operational efficiency focuses on long-term goals.
D. Strategy defines what race to run, while operational efficiency determines how well the
race is run.

Correct answer: D

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• A company is considered "stuck in the middle" when it:

A. Successfully balances cost leadership and differentiation

B. Fails to achieve any of the three generic strategies
C. Operates in a highly competitive market
D. Focuses only on product quality

Correct answer: B

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