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Course Introduction
MGMT2026 PRODUCTION AND
OPERATIONS MANAGEMENT (POM)
• This course provides students with an introduction to the
core activity of Production and Operations Management
(POM) in organisations and associated principles, methods
and applications.
• The course builds from other management courses
including Introduction to Management, Business Strategy
and Policy, Quantitative Methods, Human Resource
Management, Marketing (among others).
• Lectures and tutorial assignments (for each week) are
available on Elearning, with additional readings.
• Please prepare for tutorials by downloading and printing
tutorial assignments for each week.
A COURSE INTRODUCTION & INTRODUCTION
TO POM
Professor Dwayne Devonish
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COURSE OBJECTIVES
KEY TEXT/READING(S) FOR COURSE
ON COMPLETION OF THIS COURSE, STUDENTS
SHOULD BE ABLE TO:
• Display an understanding of the strategic importance
of POM in contemporary business environments.
• Explain the role and function of POM in manufacturing
and service organisations.
• Utilise various quantitative techniques for operations
management decision making.
• Critically assess the various managerial techniques,
work conditions, and challenges associated with POM
in different sectors and organisations.
• Operations Management (11th/12th ed.)
William Stevenson
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• ANY RELEVANT OPERATIONS MANAGEMENT
BOOK AND READINGS
• USE THE INTERNET AS A KEY RESOURCE
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Productions and Operations
Management: Definition
ASSESSMENT FOR MGMT2026
• Productions and operations management (or simply
operations management) “is the management of systems
and processes that create goods and services” (Stevenson,
2012, p.4).
• Operations management involves the activity of managing
the key resources which produce and deliver products and
services (Slack et al., 2010).
• The operations function is the part of a business
organisation that is responsible for the production of goods
(products) and services.
• A good is a physical item (e.g. Laptop) and a service is a
specific value‐based activity provided by a business for a
customer or end user (involves some combination of time,
location, form or psychological value).
• The course assessment is divided into several components:
Assessments:
Multiple‐choice midsemester online quiz/exam (25%) – covers the
first four lectures. Available on Elearning page on 21st October
2021: 9am to 9pm. Quiz time = 1 hr 15 mins. 30 items.
Group project (25%) ‐ Due 29th November 2021 (to be submitted
on Elearning – 10 pm latest)
• Final Assessment Paper (50%):
semester.
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Will be discussed later in the
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POM FUNCTION
Business Operations Overlap
Organisations have three core functions:
Finance function deals with management and allocation of
financial resources; Marketing function deals with customer
needs and wants, and selling and promoting goods and
services. Operations function provides goods and services,
supported by both functions.
Operations
Organization
Marketing
Finance
Operations
Finance
Marketing
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Organizational Charts
Organizational Charts
Manufacturing
Airline
Operations
Finance/ accounting
Ground support
equipment
Maintenance
Ground Operations
Facility
maintenance
Catering
Flight Operations
Crew scheduling
Flying
Communications
Dispatching
Management science
Accounting
Payables
Receivables
General Ledger
Finance
Cash control
International
exchange
Marketing
Traffic
administration
Reservations
Schedules
Tariffs (pricing)
Sales
Advertising
Operations
Finance/ accounting
Marketing
Facilities
Disbursements/
credits
Receivables
Payables
General ledger
Funds Management
Money market
International
exchange
Capital requirements
Stock issue
Bond issue
and recall
Sales
promotion
Advertising
Sales
Market
research
Construction; maintenance
Production and inventory control
Scheduling; materials control
Quality assurance and control
Supply chain management
Manufacturing
Tooling; fabrication; assembly
Design
Product development and design
Detailed product specifications
Industrial engineering
Efficient use of machines, space,
and personnel
Process analysis
Development and installation of
production tools and equipment
Figure 1.1(B)
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Figure 1.1(C)
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All operations create products and services by changing
inputs to outputs using
‘input-transformation-output process’
Operations Interfaces
Industrial
Engineering
Maintenance
Distribution
Purchasing
Operations
Public
Relations
Legal
Personnel
Accounting
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MIS
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Examples of Operations (Input-Transformation-Output)
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Food Processor Example
Processing
Outputs
Raw Vegetables
Metal Sheets
Water
Energy
Labor
Building
Equipment
Cleaning
Making cans
Cutting
Cooking
Packing
Labeling
Canned
vegetables
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Hospital Process Example
Inputs
Doctors, nurses
Hospital
Medical Supplies
Equipment
Laboratories
Processing
Examination
Surgery
Monitoring
Medication
Therapy
Production of Goods vs. Delivery of Services
• Production of goods – tangible outputs/products
• Delivery of services – an act
• Service industries include:
Outputs
Healthy
patients
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– Government
– Wholesale/retail
– Financial services
– Healthcare
– Personal services
– Business services
– Education
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Characteristics of Service
Characteristics of Goods
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Inputs
Tangible product
Intangible product
Consistent product
definition
Produced and consumed at
same time
Production usually
separate from
consumption
Often unique
High customer interaction
Can be inventoried
Inconsistent product
definition
Low customer
interaction
Often knowledge‐based
Frequently dispersed
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Manufacturing vs Service
Key Differences between Manufacturing and Services
1. Customer contact: Level of interaction between
business and customer
2. Uniformity of inputs: Level of variability in the inputs
for generating product or service
3. Labour content of jobs: Level of labour involvement
in generating product or service
4. Uniformity of output: Level of variability in the actual
outputs of the business
5. Measurement of productivity: Methods used to
assess and measure productivity in the business
6. Quality assurance: Methods used to assess and
improve quality of product/service
7. Amount of inventory: Stock or store of goods
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Characteristic
Service
Tangible
Customer contact
Low
High
Uniformity of input
High
Low
Labour content
Low
High
Uniformity of output
High
Low
Measurement of productivity
Easy
Difficult
Opportunity to correct
quality problems
High
Low
Intangible
High
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Five Levels of Product‐Service
Continuum
What does an operations manager
actually do?
Kotler and Keller distinguished the following five product levels:
Pure material goods ‐ offer is made only by tangible goods (product) that
isn’t accompanied by any service ‐ e.g. soap, toothpaste, salt
Predominant material goods with accompanying services ‐ offer
consists primarily of a product that is accompanied by a minor service (or
retail services) ‐ e.g. car accompanies services
Hybrid ‐ offer is made equally by products and services ‐ e.g. high‐end
restaurant offers not only excellent food but also perfect service, music,
bar and other facilities
Predominant service with accompanying goods ‐ the essence of offer is
a service, accompanied by minor goods ‐ e.g. basis of air transport is a
service (transportation) accompanied by food, beverage, newspaper and
magazines, film screenings, etc.
Pure service ‐ offer is made only by services ‐ e.g. psychotherapy,
massages, babysitting
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• The operations manager is directly responsible for
the creation of goods and services in the business.
• Hence, all activities related to the creation of these
goods and services fall under the responsibility of
this manager.
• Two functional areas of operations management are:
System design
System operation
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System Operation Decisions
System Design Decisions
• System Design
– Capacity planning
– Facility location
– Facility layout
– Product and service planning
– Acquisition and placement of equipment
• These are typically strategic decisions that:
• usually require long‐term commitment
resources
• determine parameters of system operation
Instructor Slides
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Manufacturing
Output
• System Operation
• These are generally tactical and operational
decisions:
– Management of personnel
– Inventory management and control
– Scheduling
– Project management
– Quality assurance
• Operations managers spend more time on system
operation decision than any other decision area
• They still have a vital stake in system design
of
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Instructor Slides
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The Critical Decisions
The Critical Decisions
Design of goods and services
Process and capacity design
What good or service should we offer?
How should we design these products and
services?
What process and what capacity will these
processes (or products) require?
What equipment and technology is
necessary for these processes?
Managing quality
How do we define quality?
Who is responsible for quality?
Location strategy
Where should we put the facility?
On what criteria should we base the location
decision?
Table 1.2 (cont.)
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Table 1.2 (cont.)
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The Critical Decisions
The Critical Decisions
Layout strategy
Supply chain management
How should we arrange the facility?
How large must the facility be to meet our
plan?
Should we make or buy this component?
Who are our suppliers and who can integrate
into our e‐commerce program?
Human resources and job design
Inventory, material requirements planning,
and JIT
How do we provide a reasonable work
environment?
How much can we expect our employees to
produce?
How much inventory of each item should we
have?
When do we re‐order?
Table 1.2 (cont.)
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Table 1.2 (cont.)
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Where are the OM Jobs?
The Critical Decisions
Intermediate and short–term scheduling
Are we better off keeping people on the
payroll during slowdowns?
Which jobs do we perform next?
Maintenance
Who is responsible for maintenance?
When do we do maintenance?
Table 1.2 (cont.)
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Responsibilities of Operations Manager
Where are the OM Jobs?
Planning
Technology/methods
Facilities/space utilization
Strategic issues
Response time
People/team development
Customer service
Quality
Cost reduction
Inventory reduction
Productivity improvement
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–
–
–
–
–
–
–
– Degree of centralization
– Process selection
Staffing
– Hiring/laying off
– Use of Overtime
Directing
– Incentive plans
– Issuance of work orders
– Job assignments
Controlling/Improving
–
–
–
–
Inventory
Quality
Costs
Productivity
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Key Decisions of Operations Managers
Historical Evolution of Operations Management
• What
• Industrial revolution (1770’s)
• Scientific management (1911)
What resources/what amounts
• When
– Mass production
– Interchangeable parts
– Division of labor
Needed/scheduled/ordered
• Where
Work to be done
• How
• Human relations movement (1920‐60)
• Decision models (1915, 1960‐70’s)
• Influence of Japanese manufacturers
Designed
• Who
To do the work
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Operations and Supply Chains are linked in business
organisations.
Trends in Business
• Major trends
– The Internet, e‐commerce, e‐business
– Management technology
– Globalization
– Management of supply chains*
– Agility
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Organizing
Capacity
Location
Products & services
Make or buy
Layout
Projects
Scheduling
Simple Product Supply Chain
Suppliers’
Suppliers
Direct
Suppliers
Producer
Distributor
Final
Consumer
Supply Chain: A sequence of activities
and organizations involved in producing
and delivering a good or service.
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A Supply Chain for Bread
Stage of Production
Value
Added
Elements of Supply Chain Management
Value of
Product
Farmer produces and harvests wheat
$0.15
$0.15
Wheat transported to mill
$0.08
$0.23
Mill produces flour
$0.15
$0.38
Flour transported to baker
$0.08
$0.46
Baker produces bread
$0.54
$1.00
Bread transported to grocery store
$0.08
$1.08
Grocery store displays and sells bread
$0.21
$1.29
Total Value-Added
$1.29
• Customers – what products/services do customers want
• Forecasting – predicting timing and volume of customer demand
• Design – incorporating customer wants, manufacturability, and
time to market
• Capacity planning – matching supply and demand
• Processing – controlling quality, scheduling work
• Inventory – meeting demand requirements while managing costs
• Purchasing – evaluating potential suppliers, supporting the needs
of operations on purchased goods and services
• Suppliers – monitoring supplier quality, on‐time delivery, and
flexibility; maintaining supplier relations
• Location – determining the location of facilities
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Slides
• Instructor
Logistics
– deciding how to best move information and materials
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