Page 589 - Introduction to Business

CHAPTER 16 Managing Business Operations 563

an efficient way to produce large volumes of products at low cost. This popularity
later extended to other industries in the United States and the rest of the world.
Between World War I and World War II, the human relations movement emerged,
emphasizing the importance of the human element in job design. Notable in this
movement was the work from 1927 to 1932 of Elton Mayo at the Hawthorne, Illi-
nois, plant of the Western Electric Company. His studies, known as the Hawthorne
studies, revealed that in addition to the physical and technical aspects of work,
worker motivation is a critical factor for improving productivity. These types of
results led to the creation in business organizations of personnel management and
human resources departments.
The lessons learned with the logistics and operational problems in World War II,
such as deploying enormous quantities of manpower, supplies, planes, ships, and
other resources in an extremely challenging environment, led to the development
and utilization of complex mathematical techniques and tools known as operations
research or management science. Some of these techniques have been used suc-
cessfully to manage operations and have brought scientific rigor to operations
management by replacing intuitive decision-making for large complex problems
with a systematic approach that identifies the best alternative through quantitative
and qualitative analysis.
In the late 1950s and 1960s, scholars began to write textbooks dealing with oper-
ations management, and operations became a legitimate functional area within
business organizations. In the 1980s research demonstrated the importance of
using operations as a key strategic ingredient for achieving competitive advantage. 3
During the 1970s and 1980s, several Japanese companies started the “quality revo-
lution” and time-based management, hence enlarging the competitive dimensions
from cost to cost, quality, and time.
reality Do you think that some kind of operations management was used
CH ECK during the construction of the Egyptian pyramids? Do you think that
operations management was used in the design of Microsoft products
such as Excel and Word? Give concrete examples.

What Do Operations Managers Do?

LEARNING OBJECTIVE 5
Discuss what operations managers do.
Operations managers make decisions regarding the design, planning, and control of
the production system. Design decisions are the decisions related to creating the design decisions Decisions related to
products and the production system itself. For example, creating the products and the
production system itself
• What products should the company offer?
• How should the products be produced?
• What should be the capacity of the production system?
• Where should the production system be located?
• What should be the layout of the production system?
Planning decisions are the decisions related to preparing the production sys- planning decisions Decisions related to
tem for production. For example, preparing the production system for
production
• How should the production rate be determined?
• What are the materials required for a given production plan?
• How should suppliers be selected?
• What are appropriate inventory levels?

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