We study OM because we want to know how goods and services are

produce.
We study OM to understand what operations managers
We study OM because it is such a costly part of an organization
Operations management is concerned with converting materials and labor
into goods and services as efficiently as possible to maximize the profit of an
organization.

PLANNING Activities that establishes a course of action and guide future

decision-making is planning. The operations manager defines the objectives for
the operations subsystem of the organization, and the policies, and procedures
for achieving the objectives. This stage includes clarifying the role and focus of
operations in the organizations overall strategy. It also involves product planning,
facility designing and using the conversion process.

ORGANIZING Activities that establishes a structure of tasks and authority.

Operation managers establish a structure of roles and the flow of information
within the operations subsystem. They determine the activities required to
achieve the goals and assign authority and responsibility for carrying them out.

CONTROLLING Activities that assure the actual performance in accordance with

planned performance. To ensure that the plans for the operations subsystems
are accomplished, the operations manager must exercise control by measuring
actual outputs and comparing them to planned operations management.
Controlling costs, quality, and schedules are the important functions here.

Staffing - Management. 1. Staffing is the process of filling positions/postsin

the organization with adequate and qualifiedpersonnel .Staffing is the
process of acquiring, deploying,and retaining a workforce of sufficient
quantityand quality to create positive impacts on theorganizations
effectiveness.

Leadership is the action of leading people in an organization towards

achieving goals. Leaders do this by influencing employee behaviors in several
ways. A leader sets a clear vision for the organization, motivates employees,
guides employees through the work process and builds morale.
 The areas are:

1. Goods and services: This includes looking for ways to implement consistency in costs,
quality, and resources across all business divisions.

2. Quality Management: Be clear on the customers demands and then meet those
expectations. Use market research to determine customer needs and batch quality
assurance testing on products and services in production.

3. Process and Capacity Design: Design strategies which support all production goals
including technology and resources. A value stream map can help determine what
processes are necessary and how to keep them running efficiently.

4. Location: In developing a location strategy consider supply chain and how the location
will receive supplies, the movement of goods and services internally and to customers,
and the role of marketing and public relations in the location choice.

5. Layout Design and Strategy: Consider the placement of desks, workstations, and how
materials are delivered and used.

6. Human Resources and Job Design: Implement continuous improvement programs

with regular reviews, provide continuous training for employees, and institute employee
satisfaction programs to achieve success in this area.

7. Supply Chain Management: Determine the best strategies to streamline, be cost

effective, and to develop trusted partners.

8. Inventory: Different markets mean different challenges when it comes to inventory but
all need to strategize and plan their inventory control. Weather, supply shortages, and
labor all influence how an organization maintains its inventory.

9. Scheduling: Consider both production and people. Ask questions such as how much
product is required to be produced for the customer in the required time? How many
 people and how many machines are required to do the job effectively and efficiently?
This differs among industries and business departments. For example, emergency
rooms need to maintain different schedules than a hospitals corporate office.

10. Maintenance: This includes maintaining people and machines, as well as, process.
What do you need to do to maintain quality and keep resources reliable and stable?

Characteristics of goods
Consistent product - It involves knowing the true needs, wants,
expectations and requirements of your target customers.

A Mission Statement defines the company's business, its objectives

and its approach to reach those objectives. A Vision Statement
describes the desired future position of the company. Elements
ofMission and Vision Statements are often combined to provide a
statement of the company's purposes, goals and values.

Strategy formulation is the process by which an organization chooses the most

appropriate courses of action to achieve its defined goals.

BUDGET

is a statement of allocation of financial resources to achieve an organizations objectives for a

specific time of period
estimate of income

Why is it important to have a budget?

Since budgeting allows you to create a spending plan for your money, it ensures
that you will always have enough money for the things you need and the things that
are important to you. Following a budget or spending plan will also keep you out of
debt or help you work your way out of debt if you are currently in debt.
Production sched

How many unit needed to meet sales predictions

Materials purchase sched

What materials is needed to meet production sched

The Budgeting Process:

The budgeting process usually begins when managers receive top
managements forecasts and marketing project objectives for the
coming year, along-with a time-table stating when budgets must
be completed. The forecasts and objectives provided by the top
management represent guidelines within which departments
budgets are prepared.

Usually, the work on budgeting begins with the task of estimating

sales because the total activity of a firm depends on the sales.
Preparation of sales estimate demands assessment of the existing
market situation and projection of ones ideas as to what would be
the market position in the ensuing period for which the budget is
proposed. Several internal as well as external factors are taken
into consideration.
The sales estimate prepared by the marketing manager is then
submitted to the budget committee for consideration. The budget
committee comprising of the top management carefully considers
the forecast in the light of the past results and the estimates of the
future as recommended by economists and statisticians and
wherever necessary recommends for changes in estimate or if
necessary asks for complete restudy and revision.

Upon the recommendation of the budget committee, the

President of the organization accords his approval to the sales
estimate which then becomes sales budget of the organization.
The sales budget is accompanied by budget covering selling and
distribution expenses. The two budgets together give the net sales
revenue expected to arrive in the coming year.

After the preparation of the sales budget and selling and

distribution cost budget, Production Budget of the firm is
prepared. The production budget is based on the production
forecasts which are made after taking into consideration sales
budget, the maximum and minimum stock of finished goods to be
maintained, the plant capacity and availability of various factors
of production.

When targeted production for the budget period has been

decided, the production budget (expressed in quantities to be
produced) can be converted into a Production Cost Budget.
Production Cost budget is composed of Materials Cost Budget,
Labour Cost Budget and Overheads Budgets.

Materials cost budget shows expected cost of materials required

for budgeted production and sales purpose. Determination of
material cost involves quantities to be used and the rate per unit.
The task of determining the quantities required is that of the
production engineering department while the purchasing
department has the responsibility of deciding the rate.

Labour Cost Budget prognosticates the direct labour cost expected

to be spent on carrying into effect the targeted production.
Preparation of this budget requires information regarding the
time required to do one unit of work and the wages to be paid for
it.

Overheads Budget is a statement of expected overheads

(comprising fixed and variable overheads) which the firm will
have to incur during the budget period. This budget is prepared
on the basis of overhead forecasts of all the departments of the
firm.

Once materials cost budget, labour cost budget and overheads

budget are prepared, a full production cost budget can be drawn.
This budget is generally presented in the form of a cost sheet.
In order to achieve competitive edge over its rivals on sustainable
basis, an organization will have to develop new products or new
processes for producing existing products at minimum cost. Thus,
the organization has to incur expenditure on research and
development effort.