1. What is Operations Management (OM)?
Answer:
Operations Management is the administration of business practices to create the highest
level of efficiency possible within an organization. It involves planning, organizing, and
supervising production, manufacturing, or service delivery.
Rationale:
OM is foundational to understanding how goods and services are produced. It transforms
inputs (labor, materials, capital) into outputs (products, services), making it central to
organizational value creation.
2. What are the three primary functions in most organizations?
Answer:
The three primary functions are: (1) Marketing, (2) Operations/Production, and (3)
Finance/Accounting.
Rationale:
These three functions are interdependent. Marketing generates demand, operations
fulfills it, and finance provides and tracks the monetary resources. OM interacts with
both other functions constantly.
3. What is the transformation process in operations?
Answer:
The transformation process converts inputs (land, labor, capital, management, materials,
energy) into outputs (goods and services) while adding value.
Rationale:
This input-process-output model is the core of operations. The 'transformation' can be
physical (manufacturing), locational (transportation), exchange (retail), storage
(warehousing), physiological (healthcare), or informational (data processing).
4. What distinguishes goods from services in operations management?
,Answer:
Goods are tangible, can be inventoried, have low customer interaction, long lead times,
and quality is measurable. Services are intangible, cannot be inventoried, have high
customer interaction, short lead times, and quality is harder to measure.
Rationale:
This distinction affects key OM decisions. Service operations must handle variability
differently than manufacturing because services are produced and consumed
simultaneously, requiring different capacity and scheduling approaches.
5. What is productivity and how is it calculated?
Answer:
Productivity = Output / Input. It measures efficiency of production. Single-factor
productivity uses one input; multifactor productivity uses multiple inputs combined.
Rationale:
Productivity is a critical OM metric. Higher productivity means more output per unit of
input. Multifactor productivity (also called total factor productivity) provides a more
comprehensive view than single-factor measures.
6. What are the 10 strategic OM decisions?
Answer:
The 10 decisions are: (1) Design of goods and services, (2) Quality management, (3)
Process and capacity design, (4) Location strategy, (5) Layout strategy, (6) Human
resources and job design, (7) Supply chain management, (8) Inventory management, (9)
Scheduling, (10) Maintenance.
Rationale:
These 10 decisions form the framework for OM. Each decision area must align with the
overall business strategy, and tradeoffs exist among them. They apply to both
manufacturing and service operations.
7. What is the difference between efficiency and effectiveness in OM?
Answer:
Efficiency means doing things right (minimizing waste/cost per unit). Effectiveness
means doing the right things (achieving goals, meeting customer needs).
Rationale:
,An operation can be efficient but not effective (e.g., producing low-cost products nobody
wants) or effective but not efficient (meeting needs at high cost). OM strives to achieve
both.
8. What is a mission statement in OM context?
Answer:
A mission statement defines the purpose of the organization, what it will contribute to
society, and what its customers can expect. It guides the overall strategy including
operations.
Rationale:
Mission drives strategy. In OM, the mission influences which competitive priorities to
emphasize (cost, quality, speed, flexibility) and shapes the 10 strategic decisions.
9. What are competitive priorities in operations?
Answer:
Competitive priorities are cost, quality, delivery speed, delivery reliability, flexibility,
and innovation. They define what the operation must excel at to support the business
strategy.
Rationale:
Tradeoffs exist among these priorities. An operation emphasizing low cost may sacrifice
flexibility. Understanding which priorities align with customer needs is critical to
designing effective operations.
10. What is an order winner versus an order qualifier?
Answer:
An order qualifier is a minimum criterion that must be met to be considered by
customers. An order winner is what actually causes a customer to choose one company
over another.
Rationale:
Order qualifiers get you in the game; order winners close the sale. OM must ensure
qualifiers are met and then focus resources on order-winning criteria that differentiate
the firm.
11. What is operations strategy?
, Answer:
Operations strategy is the set of decisions that shape the long-term capabilities of the
operation and their contribution to overall strategy through the reconciliation of market
requirements with operations resources.
Rationale:
Operations strategy translates business strategy into specific operations decisions. It
involves choosing which competitive priorities to pursue and building corresponding
capabilities.
12. What is the difference between a product-focused and a process-focused
strategy?
Answer:
Product-focused (continuous): high volume, low variety, organized around products.
Process-focused (job shop): low volume, high variety, organized around
processes/departments.
Rationale:
This is a fundamental layout and process design decision. Product-focused operations
(e.g., assembly lines) are efficient for standard products. Process-focused operations
offer flexibility for custom work.
13. Define 'core competencies' in the context of OM.
Answer:
Core competencies are the set of unique skills, knowledge, and capabilities that give a
firm competitive advantage and are difficult for competitors to replicate.
Rationale:
OM should build and leverage core competencies. Decisions about what to make vs. buy
(vertical integration) often hinge on whether an activity is a core competency worth
internalizing.
14. What is the significance of the Product Life Cycle (PLC) for OM?
Answer:
The PLC (Introduction, Growth, Maturity, Decline) affects OM decisions. Introduction:
flexible processes. Growth: more standardization. Maturity: cost efficiency. Decline: cost
cutting or exit.
Rationale:
Answer:
Operations Management is the administration of business practices to create the highest
level of efficiency possible within an organization. It involves planning, organizing, and
supervising production, manufacturing, or service delivery.
Rationale:
OM is foundational to understanding how goods and services are produced. It transforms
inputs (labor, materials, capital) into outputs (products, services), making it central to
organizational value creation.
2. What are the three primary functions in most organizations?
Answer:
The three primary functions are: (1) Marketing, (2) Operations/Production, and (3)
Finance/Accounting.
Rationale:
These three functions are interdependent. Marketing generates demand, operations
fulfills it, and finance provides and tracks the monetary resources. OM interacts with
both other functions constantly.
3. What is the transformation process in operations?
Answer:
The transformation process converts inputs (land, labor, capital, management, materials,
energy) into outputs (goods and services) while adding value.
Rationale:
This input-process-output model is the core of operations. The 'transformation' can be
physical (manufacturing), locational (transportation), exchange (retail), storage
(warehousing), physiological (healthcare), or informational (data processing).
4. What distinguishes goods from services in operations management?
,Answer:
Goods are tangible, can be inventoried, have low customer interaction, long lead times,
and quality is measurable. Services are intangible, cannot be inventoried, have high
customer interaction, short lead times, and quality is harder to measure.
Rationale:
This distinction affects key OM decisions. Service operations must handle variability
differently than manufacturing because services are produced and consumed
simultaneously, requiring different capacity and scheduling approaches.
5. What is productivity and how is it calculated?
Answer:
Productivity = Output / Input. It measures efficiency of production. Single-factor
productivity uses one input; multifactor productivity uses multiple inputs combined.
Rationale:
Productivity is a critical OM metric. Higher productivity means more output per unit of
input. Multifactor productivity (also called total factor productivity) provides a more
comprehensive view than single-factor measures.
6. What are the 10 strategic OM decisions?
Answer:
The 10 decisions are: (1) Design of goods and services, (2) Quality management, (3)
Process and capacity design, (4) Location strategy, (5) Layout strategy, (6) Human
resources and job design, (7) Supply chain management, (8) Inventory management, (9)
Scheduling, (10) Maintenance.
Rationale:
These 10 decisions form the framework for OM. Each decision area must align with the
overall business strategy, and tradeoffs exist among them. They apply to both
manufacturing and service operations.
7. What is the difference between efficiency and effectiveness in OM?
Answer:
Efficiency means doing things right (minimizing waste/cost per unit). Effectiveness
means doing the right things (achieving goals, meeting customer needs).
Rationale:
,An operation can be efficient but not effective (e.g., producing low-cost products nobody
wants) or effective but not efficient (meeting needs at high cost). OM strives to achieve
both.
8. What is a mission statement in OM context?
Answer:
A mission statement defines the purpose of the organization, what it will contribute to
society, and what its customers can expect. It guides the overall strategy including
operations.
Rationale:
Mission drives strategy. In OM, the mission influences which competitive priorities to
emphasize (cost, quality, speed, flexibility) and shapes the 10 strategic decisions.
9. What are competitive priorities in operations?
Answer:
Competitive priorities are cost, quality, delivery speed, delivery reliability, flexibility,
and innovation. They define what the operation must excel at to support the business
strategy.
Rationale:
Tradeoffs exist among these priorities. An operation emphasizing low cost may sacrifice
flexibility. Understanding which priorities align with customer needs is critical to
designing effective operations.
10. What is an order winner versus an order qualifier?
Answer:
An order qualifier is a minimum criterion that must be met to be considered by
customers. An order winner is what actually causes a customer to choose one company
over another.
Rationale:
Order qualifiers get you in the game; order winners close the sale. OM must ensure
qualifiers are met and then focus resources on order-winning criteria that differentiate
the firm.
11. What is operations strategy?
, Answer:
Operations strategy is the set of decisions that shape the long-term capabilities of the
operation and their contribution to overall strategy through the reconciliation of market
requirements with operations resources.
Rationale:
Operations strategy translates business strategy into specific operations decisions. It
involves choosing which competitive priorities to pursue and building corresponding
capabilities.
12. What is the difference between a product-focused and a process-focused
strategy?
Answer:
Product-focused (continuous): high volume, low variety, organized around products.
Process-focused (job shop): low volume, high variety, organized around
processes/departments.
Rationale:
This is a fundamental layout and process design decision. Product-focused operations
(e.g., assembly lines) are efficient for standard products. Process-focused operations
offer flexibility for custom work.
13. Define 'core competencies' in the context of OM.
Answer:
Core competencies are the set of unique skills, knowledge, and capabilities that give a
firm competitive advantage and are difficult for competitors to replicate.
Rationale:
OM should build and leverage core competencies. Decisions about what to make vs. buy
(vertical integration) often hinge on whether an activity is a core competency worth
internalizing.
14. What is the significance of the Product Life Cycle (PLC) for OM?
Answer:
The PLC (Introduction, Growth, Maturity, Decline) affects OM decisions. Introduction:
flexible processes. Growth: more standardization. Maturity: cost efficiency. Decline: cost
cutting or exit.
Rationale:
