Chapter 1 – The Operations Function
1-1
Chapter 1
The Operations Function
Teaching Notes
This chapter is aimed at providing an overall framework for the textbook, the field of
operations management (OM), and a brief introduction of supply chain management. The
chapter provides a framework that serves as a beneficial way of organizing students’
understanding of major operations and supply chain management decisions: process, quality,
capacity, inventory and supply chain. The cross-functional view of operations management is
also introduced in this chapter to provide relevance for the course. When operations
management is related to marketing and finance, as a major business function, the students more
readily understand the role of operations and supply chain in business.
In teaching this chapter, we highlight the five decision areas in OM and supply chain and
the importance of cross-functional decision making. We also spend some time discussing the
importance of both services and manufacturing, and how business operations are managed within
larger, multi-organization supply chains. We introduce the concept of contingencies and explain
that the textbook includes information of when particular OM activities are ‘best practices’ and
when they are not. We also define analytics and explain how analytics is used in operations and
supply chain management decisions. Finally, we illustrate major OM and supply chain decisions
using the Pizza U.S.A. example, as well as in other types of businesses. Students may find the
typical jobs in OM and supply chain from Monster.com (in a Chapter 1 Operations Leader box).
Answers to Questions
1. Operations and supply chain management is ubiquitous, that is, present in every
organization. Daily, we come in contact with various goods and services produced by the
2. Operations management is a broader term than production management, encompassing
3. The difference between operations and supply chain management is operations
management focuses on decisions to manage the transformation process that converts
1-2
Copyright © 2017 McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of
McGraw-Hill Education.
along the entire chain of sourcing, production, and distribution. The supply chain links
the operations of many different organizations in order to satisfy customer needs.
4. The key decisions made by sourcing managers relate to the sourcing function which
sources inputs into the transformation process of the organization from other for-profit
5. Responsibilities differ among operations, marketing and finance managers. A marketing
manager identifies demand for goods or services and develops the market, whereas the
6. Operations, marketing, and finance are primary functions of the organization. Human
resources, information systems, and accounting are supporting functions that provide
7. a. The purpose of a college library is to make information available to students and
faculty for research and studying. The output is the bundle of services provided
along with facilitating goods: Internet, books, microfilms, catalogs and indices.
Process — facility layout considering book stacks, reference rooms, computer
Chapter 1 – The Operations Function
1-3
b. The purpose of a hotel is to attract and satisfy conventioneers and overnight
guests. The output is the bundle of services and goods provided: overnight
accommodations, maid service, room service, television, pool, bar, coffee shop.
Inventory — goods to meet requirements for room upkeep (towels, sheets, etc.),
convention catering (glasses, dishes, food), restaurant and bar.
Supply chain – decisions about sourcing the various materials and services used
by the hotel. Logistics is about moving materials and services to the hotel and
then return and recycling of goods.
c. The purpose of a small manufacturing firm is to provide customers with a quality
product at a reasonable price. The output consists of not only the physical good
Inventory — raw material inputs, work-in-process, and finished goods, used to
smooth production and meet customer needs.
8. a. Operation — college library
Inputs — librarians, staff, library facilities and equipment, energy, capital.
Chapter 1 – The Operations Function
Transformation process — organizing information, arranging materials for access,
interacting with library users.
9. The decision-making view of operations management categorizes and defines decision
making for the operations function and the associated supply chain according to a given
framework. The framework used here, which conforms quite closely to the assignment
of management responsibilities within operations and supply chain includes the decision
10. Answers will depend on the specific sources obtained by students.
11. Answers will vary depending on the specific WSJ issue or Internet site.
1-5
12. Work of any type typically represents a process and many processes have similarities.
From an operations perspective, these processes are designed to convert inputs into
outputs and follow a sequence of repeatable steps.
a. Acquisition of another company: When acquiring another company, the sequence of
steps includes finding firms suitable for acquisition, investigating the firm in detail
c. Marketing research for a new product: Market research may be conducted in a
variety of ways, but it provides a prospective customer with a product concept (either
physically or conceptually) and assesses the likelihood of market acceptance based
upon customer responses to a variety of questions. Market research can employ
various instruments such as field or phone interviews, field testing, focus groups,