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Introduction to Operations Management

Operations Management

William J. Stevenson

8th edition

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Introduction to Operations Management

CHAPTER

1

Introduction to 
 Operations Management

McGraw-Hill/Irwin

Operations Management, Eighth Edition, by William J. Stevenson Copyright © 2005 by The McGraw-Hill Companies, Inc. All rights reserved.

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Introduction to Operations Management

Operations Management
Figure 1.1

The management of systems or processes 
 that create goods and/or provide services

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Introduction to Operations Management

Value-Added
Figure 1.2

The difference between the cost of inputs 
 and the value or price of outputs.

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Introduction to Operations Management

Goods-service Continuum
Figure 1.3

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Introduction to Operations Management

Food Processor
Table 1.2

Inputs
Raw Vegetables Metal Sheets Water Energy Labor Building Equipment

Processing
Cleaning Making cans Cutting Cooking Packing Labeling

Outputs
Canned 
 vegetables

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Introduction to Operations Management

Hospital Process
Table 1.2

Inputs
Doctors, nurses Hospital Medical Supplies Equipment Laboratories

Processing
Examination Surgery Monitoring Medication Therapy

Outputs
Healthy 
 patients

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Introduction to Operations Management

Manufacturing or Service?

Tangible

Act

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Introduction to Operations Management

Production of Goods vs. Delivery of Services Production of goods – tangible output • Delivery of services – an act • Service job categories


Government • Wholesale/retail • Financial services • Healthcare • Personal services • Business services • Education


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Key Differences
1. Customer contact 2. Uniformity of input 3. Labor content of jobs 4. Uniformity of output 5. Measurement of

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