Operations management is the study of the production process.
It can be defined as:
The way organisations use inputs and manage business processes efficiently to satisfy customers.
This means they have to produce goods and services of the right
The aim in all cases is to add value to the inputs that are bought in by the business so that the resulting output can be sold at a profit.
Remember that the production inputs (or resources) can be grouped in to four categories.
It can be defined as:
The way organisations use inputs and manage business processes efficiently to satisfy customers.
This means they have to produce goods and services of the right
- quality
- quantity
- in the most cost effective way
- at the time needed
The aim in all cases is to add value to the inputs that are bought in by the business so that the resulting output can be sold at a profit.
Remember that the production inputs (or resources) can be grouped in to four categories.
Production and Productivity
Production is the process of using inputs to create outputs
Production can usually be increased by increasing inputs.
If the productivity of a business increases, we say it has become more efficient
↑ efficiency = ↓ costs = ↑ profit (It is that simple)
We have already described labour productivity = output per worker.
A business is also very interested in capital productivity.
The formula:
Productivity= Output in given time period / Quantity (or value)of capital
Production is the process of using inputs to create outputs
Production can usually be increased by increasing inputs.
- Productivity is the ratio of output per unit of input.
If the productivity of a business increases, we say it has become more efficient
↑ efficiency = ↓ costs = ↑ profit (It is that simple)
We have already described labour productivity = output per worker.
A business is also very interested in capital productivity.
The formula:
Productivity= Output in given time period / Quantity (or value)of capital
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