Instructions provided:

1. Students should start filling up benches from the first row. Students should not move to back
benches when seats in the front are empty.
2. Attendance would be taken only once. No excuses will be entertained if anyone fails to
respond during the roll call.
3. Laptops should be carried to the class during every session of the course.

Important information regarding evaluation:

1. Two quizzes will be conducted (15 marks each) – one towards the Mid-Term and one towards
the End-Term. Both the quizzes will be considered which will account for 30% of the
evaluation.
2. Some assignments will be given in class which have to be submitted in the class hours itself.
There will be no carry home assignments. This will account for 10% of the evaluation.
3. The class will be divided into groups by the faculty and a topic will be given on which the
groups will have to conduct secondary research (primarily) and prepare a report on it. Groups
will also have to present their respective topics in class. Groups will be called at random to
present. Half an hour will be provided for presentation followed by 5-10 of discussion. Groups
will be judged on how well they interpret the topic. There will be no negative points for
plagiarism but references should be provided wherever applicable. This will account for 15%
of the evaluation.
4. End Term will constitute 35% of the evaluation.
5. Class Participation:
For every session, two Class Reports (CR1 and CR2) need to be prepared by two students and
mailed to the faculty maximum one day (morning) before the next class. CR1 will consist of
everything shared by the faculty in class. It can be a ‘Word’ or ‘PDF’ file will the naming
convention “OM_Section_CR1_SessionNo_RollNo”. This will also be shared to the students so
that students missing the session do not miss out on the topic covered. Also, this will be used
by the faculty to keep a track of the topics covered in class.
CR2 will be an excel file consisting of the names, roll numbers, questions asked or questions
answered by the students during the session. The relevancy of the questions or answers lies
in the faculty’s discretion. The naming convention should be
“OM_Section_CR2_SessionNo_RollNo”. This sheet will solely contribute to the 10% of
evaluation with regard to class participation.
The Class Representative (CR) needs to provide the list of the students who would be
preparing the class reports in the upcoming sessions to the faculty.

OVERVIEW OF OPERATIONS MANAGEMENT

What is the objective of Operations Management?

The objective of OM has gradually changed throughout the years. During the 1950’s, the
market used to be “monopolistic”. In a monopolistic market, demand is much greater in
comparision to supply. Due to this reason, even though there was competition, everyone had
enough scope to operate. Customers were forced to buy products even if the quality was
compromised. Gradually, competitors entered the market to match the supply to the demand.
This resulted in a “competitive” market. In the competitive market, supply was much greater
in comparison to demand.
Then, Operations Management came into the picture whose sole objective was to maintain
the operations such that the cost of production was the lowest so that customers can be
satisfied by making goods and services available to them at low cost without compromising
on quality. Companies wanted to reduce cost of production do that they would be able to
reduce the prices of goods and services that they offer to the customer. This was because
price is the primary decision making factor for consumers. Companies wanted to exploit this
by introducing various offers.
Example:
1. Reliance Jio gave many introductory offers to gain customers.
2. Honda had come up with a hybrid car in 2003 in a test market which could run on battery
as well as fuel. The car was in second tier of luxury segment having a very high price. The
cost of the car was around 14 lakhs. 500 of such cars were imported and priced at 21 lakhs.
Only 300 out of those were sold in a long time span of 18 months. Then, the price was
decreased to 15 lakhs which resulted in the remaining cars being sold out in 2 days.
Hence, it can be said that when customers get an opportunity to buy a similar product at a
lower price, they immediately switch.

The two things that customers value are:

1. Cost
2. Responsiveness: This consists of “quality” and “availability”. In order to increase the
availability, the amount of stock can be increase. But increase in stock also comes with
associated costs. So, the company should increase availability to the extent to which it can
afford without losing money.

Operation Management consists of designing, operating and improving the processes that
create and deliver products and services.

Value Adding System

Processes that add value are manufacturing, storing, transferring etc. The inputs in the value
adding system are resources like workers, managers, equipment, materials, energy and other
facilities. The output consists of the goods and services produced. Internal and external
customers give feedback which is incorporated in the design part. Feedback from output can
be used to improve products and services.

Service industry is not confined to IT. It also includes other industries like hospitality, health
care, legal services etc.

Difference between products and services

Everything has a product component as well as a service component. For example, if we

consider a Coke can, the product component is the Coke itself and the filling up of the can by
a person is the service component.

The most important difference between the both is that a product is “inventory able” whereas
a service is not. Other than that, it can be said that products are often automated whereas
services are rarely automated, services are consumed as soon as they are produced whereas
products are not and involvement of man-power is much more in services in comparison to
products.

Often, companies involve customers in providing a service in order to reduce costs. For
example, in a shopping mall, customers have to fill in their own shopping cart. There is no
designated person appointed to do that.

Difference between Service sector and Product sector

If the revenue stream from service segment is higher, then the sector is classified as a Service
sector. Similarly, if the revenue stream from the product segment is higher, then the sector is
classified as a Product sector.

How do consumers evaluate goods and services?

 If the goods content is high, search attributes are high

 If the service content is high, consumers tend to go by word of mouth
 If the content of goods and services is somewhere in the middle, consumers tend to
go by their personal experience

Varieties of Value Adding Processes

1. Physical: This includes processes that change the product mechanically or chemically.
Example: Manufacturing processes, Plastic surgery (in services)
2. Locational: This includes processes like transportation.
3. Exchange: This includes processes like retailing.
4. Storage/Distribution: This includes processes like warehousing.
5. Physiological: This includes processes related to health care.
6. Informational: This includes processes like telecommunication.

Why OM?

Operations constitute of (60-80) % of the expenses incurred by the company. So, it is

necessary to understand its management in order to regulate the cost.

How has OM evolved?

 In the pre-industrial revolution period, there was no Operations Management. Any

kind of production was centred on a community. There was no worry about cost and
competition.
 Post industrial revolution, things were produced in high volume. So, cost of
manufacturing fell and products became cheaper. But, demand did not increase. So,
manufacturers had to sell the products in other areas.
Economies of scale – Savings in cost as a result of increased level of production
 Taylor coined the term “Scientific Management” which states that given fixed set of
tools and methods, there is only one way which will give optimum output.
 Hawthorne’s group experiment suggested that when external factors like heat, noise
etc. are controlled, productivity increases up to a certain level.
 Human relations and behaviour can be used to increase productivity. People can be
motivated by providing them with incentives.