Introduction to Management

Chapter Summary

Production is a process or procedure developed to transform a set of input elements into a specified set of output elements in the form of finished products or services, whereas productivity is an efficiency concept that gauges the ratio of outputs relative to inputs in a productive process.

Productivity is one of the major concerns of managers as high productivity is essential to survive in a competitive environment. Productivity is of two types - total productivity and partial productivity. The problems in measuring productivity, especially that of the knowledge workers were also discussed in the chapter.

Operations management is the application of concepts, procedures and technologies by managers to improve the process of transformation of resource inputs into outputs. The effectiveness and efficiency of an organization depends on how effectively and efficiently operations are managed. The tools of operations research are of special interest to managers of production and operations, as they help the managers increase efficiency and profitability of the organization.

Operations research and linear programming are two mathematical approaches used for optimizing operations. The application of operations research techniques to complex problems of an organization take into account the total system that influences the decision-making process. The data is presented in a quantified form to the extent possible, and this helps managers to arrive at the best means of achieving the goals.

The operations research procedure comprises six steps - formulating the problem, constructing a mathematical model, deriving a solution from the model, testing the model, providing controls for the model and the solution, and putting the solution into effect. Linear programming is a technique for selecting an optimum combination of factors from a series of inter-related alternatives, each subjected to certain limitations, in order to achieve a desired goal.
Maintaining inventory helps organizations deal with uncertainties in market supply and prevent stockouts during periods of peak demand. Different types of inventory control used in organizations are EOQ, JIT and Kanban. Distribution logistics is a logistics system that helps in optimizing inventory procurement as well as product distribution.

Though operations research offers many advantages, it has its own limitations. The high magnitude of computation and the inability to accommodate qualitative factors prevent OR from being applied in many management decisions. Other techniques that help to improve productivity are time-event networks, value engineering, work simplification, quality circles and total quality management.

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