1. 1.4. Objectives of Operations Management
Objectives of operations management can be categorized into
customer service and resource utilization.
The first objective of operating systems is to utilize resources for
the satisfaction of customer wants.
Therefore, customer service is a key objective of operations
management. The operating system must provide something to a
specification, which can satisfy the customer in terms of cost and
Thus, providing the ‘right thing at a right price at the right time’
can satisfy primary objective.
Another major objective of operating systems is to utilize
resources for the satisfaction of customer wants effectively.
2. Objectives of Operations Management
Customer service must be provided with the achievement of
effective operations through efficient use of resources.
Inefficient use of resources or inadequate customer service
leads to commercial failure of an operating system.
Operations management is concerned essentially with the
utilization of resources, i.e. obtaining maximum effect from
resources or minimizing their loss, under utilization or waste.
Operations management is concerned with the achievement
of both satisfactory customer service and resource utilization.
An improvement in one will often give rise to deterioration in
Often both cannot be maximized, and hence a satisfactory
performance must be achieved on both objectives.
3. Objectives of Operations Management…
All the activities of operations management must be tackled
with these two objectives in mind, and because of this
conflict, operations managers’ will face many of the problems.
Hence, operations managers must attempt to balance these
1.5. Operations Decision Making
Operations decision may be specific day-to-day decisions or
decisions made for the whole company that are long term in
Long-term decisions that set the direction for the entire
organization are called strategic decisions.
They are broad in scope and set the tone for other, more
4. Operations Decision Making
They address questions such as: What are the unique features
of our product? What market do we plan to compete in?
What do we believe will be the demand for our product?
Short-term decisions that focus on specific departments and
tasks are called tactical decisions.
Tactical decisions focus on more specific day-to-day issues,
such as the quantities and timing of specific resources.
Strategic decisions are made first and determine the direction
of tactical decisions, which are made more frequently and
Therefore, we have to start with strategic decisions and then
move on to tactical decisions.
5. 1.6. Productivity Measurement
Productivity is the value of outputs (goods and services)
produced divided by the values of the input resources used or
the ratio of outputs (goods and services) to inputs (e.g. labor
In other words, productivity is a measure of how efficiently
inputs are being converted into outputs. It measures how well
resources are used.
The more efficiently a company uses its resources, the more
productive it is.
Productivity = output/input
We can use this equation to measure the productivity of one
worker or many, as well as the productivity of a machine, a
department, the whole firm, or even a nation.
The possibilities are shown below:
Total productivity measure = output produced/all inputs used
Partial productivity measure = output/single input
Multifactor productivity measures = output/group of inputs