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  • Operations Management

    Management of the process that transforms resources into products

    Operations Managers

    -People that manage the process that transforms inputs into outputs
    -Responsible for production planning, production control, and quality control

    Production Planning

    -Responsibility of operations manager
    -Managers determine how goods will be produced, where production will take place, and how manufacturing facilities will be laid out

    Production Control

    -Responsibility of operations manager
    -Managers must continually schedule and monitor the activities that make up that process. They must solicit and respond to feedback and make adjustments where needed. At this stage, they also oversee the purchasing of raw materials and the handling of inventories.

    Quality Control

    -Responsibility of operations manager
    -The operations manager is directly involved in efforts to ensure that goods are produced according to specifications and that quality standards are maintained

    Make-To-Order Method

    Products are made to customer specification

    Mass Production (Make-To-Stock) Method

    High volumes of products are made of low costs and held in inventory in anticipation of future demand

    Mass Customization Method

    Fairly high volumes of customized products are made at fairly low prices


    Max number of goods that a facility can produce over a given time under normal working conditions


    Arrangement in a facility of equipment, machinery, and people to make production process as efficient as possible

    Process Layout

    -Groups together workers or departments that perform similar tasks.
    -Goods in process (goods not yet finished) move from one workstation to another. At each position, workers use specialized equipment to perform a particular step in the production process

    Product Layout

    Layout in which products are produced by people, equipment, or departments are arranged in an assembly line

    Cellular Layout

    Layout in which teams of workers perform all the tasks involved in building a component, group of related components, or finished products

    Fixed-Position Layout

    Used to make large items (ships, buildings) that stay in one place while workers and equipment go to the product

    Materials Management

    All decisions pertained to the purchase of inputs, the inventory of components and finished products, and the scheduling of production processes

    Purchasing (Procurement)

    Process of acquiring the materials and services to be used in production

    E-Purchasing (E-Procurement)

    Companies use the Internet with suppliers

    Electronic Data Interchange (EDI)

    Computerized exchange of business transaction documents

    Inventory Control

    Management of inventory to ensure that a company has enough inventory to keep operations running smoothly but not so much that money is being wasted in holding it

    Just-In-Time Production (JIT)

    System for reducing inventories and costs by suppliers to deliver materials just in time to go into the production process. -Parts and materials don't sit unused for long periods, and the costs of "holding" inventory are significantly cut.

    Materials Requirement Planning (MRP)

    Relies on a computerized program both to calculate the quantity of materials needed for production and to determine when they should be ordered/made

    Manufacturing Resource Planning (MRP 2)

    Goes beyond material planning to help monitor resources in all areas of the company. Can coordinate the production schedule with HR managers' forecasts for needed labor

    Master Production Schedule (MPS)

    Timetable that specifies which and how many products will be produced and when

    Gantt Chart

    Easy-to-use graphical tool that helps operations managers determine the status of projects

    PERT Chart

    Used to diagram the activities required to produce a good, specify the time required to perform each activity in the process, and organize activities in the most efficient sequence

    Computer-Aided Design (CAD)

    System using computer technology to create models representing the design of a product

    Computer-Aided Manufacturing (CAM)

    Software system determines the steps needed to produce the component and instructs the machines that do the work

    Computer-Integrated Manufacturing (CIM)

    System in which the capabilities of a CAD/CAM system are integrated with other computer-based functions

    Industrial Robots

    Computer-controlled machine used to perform repetitive tasks that are also hard or dangerous for human workers to perform

    Flexible Manufacturing System (FMS)

    System in which computer-controlled equipment is programmed to handle materials used in manufacturing


    Ability of a product to satisfy all customers' needs

    Total Quality Management (TQM)

    -All the steps taken by a company to ensure its products satisfy customers' needs
    -Focuses on 3 tasks: customer satisfaction, employee involvement, continuous improvement

    Quality Circles

    Employees who perform similar jobs and work as teams to identify quality, efficiency, and other work-related problems; to propose solutions; and to work with management in implementing their recommendations

    Continuous Improvements

    Company's commitment to making constant improvements in the design, production, and delivery of its goods and services

    Statistical Process Controls

    Technique for monitoring production quality by testing sample outputs to ensure that they meet specifications


    Practice of comparing a company's own performance with that of a company that excels in the same activity

    ISO 9000

    Set of international quality standards established by the International Organization for Standardization

    ISO 14000

    Set of international standards for environmental management established by the International Organization of Standardization

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