Introduction to Operations Management: formula sheet

Key formulas

Transformation model

Inputs → Transformation process → Outputs (with feedback)

Use this as the base diagram in any definition answer.

Productivity

Productivity = Output ÷ Input

The efficiency measure linked to OM objectives. Output and input must be in comparable units.

Objectives of OM (the five rights)

Right quality, right quantity, right time, right cost, right place

A memory aid. Textbooks vary slightly in wording, so explain each point in your own words.

Core difference in output

Manufacturing = tangible goods; Service = intangible performance

Start every comparison answer with this line.

Key service characteristics

Intangibility + Inseparability (simultaneity) + Perishability + Heterogeneity + Customer participation

Know each term and give one example. Some books group them under slightly different names, so define the term you use.

Comparison points

Output | Inventory | Customer contact | Quality measurement | Demand pattern | Capacity | Location | Labour intensity

Use these as rows when you write a comparison in the exam.

Three levels of operations decisions

Strategic (long-term) → Tactical (medium-term) → Operational (short-term)

Each level sets the limits for the one below it. Strategic choices fix capacity and location. Tactical plans work within them. Operational schedules work within the plans.

Three areas of operations manager's responsibility

Design + Planning + Control

Design builds the system, planning decides how to use it, and control checks results against plans and corrects deviations.

Test to classify a decision

Time horizon + Investment size + Reversibility + Management level

Long, large, hard to reverse and top-level means strategic. Short, small, easily changed and supervisor-level means operational.

Intermittent vs continuous grouping

Intermittent = Job + Batch; Continuous = Mass + Process (continuous)

Use this to answer 'continuous vs intermittent' questions.

Volume-variety rule

Low volume + high variety → Job; Medium volume + medium variety → Batch; High volume + low variety → Mass; Very high volume + standard product → Continuous

A guide for suitability, not an absolute rule.

Layout match

Job → process (functional) layout; Batch → process or mixed layout; Mass → product (line) layout; Continuous → product layout

Typical pairing; state it as 'generally'.

Fit rule

Customer needs → Business strategy → Competitive priorities → Operations decisions

Use this chain to structure any answer. Each level must support the one above it.

Five competitive priorities

Cost, Quality, Speed (delivery), Flexibility, Innovation

Some books split speed into fast delivery and dependable delivery, and flexibility into product and volume flexibility. State the grouping you use.

Order winner vs order qualifier

Order winner = wins the order; Order qualifier = needed to be considered

Define both in one line each. Do not use them as synonyms.

Trade-off principle

Gain on one priority often means giving up some of another

This is a general tendency, not an absolute law. Techniques such as lean and automation can improve several priorities together.

Quick revision

• Operations management plans, organises and controls the process that converts inputs into goods or services.
• Core model: inputs, transformation process, outputs, with feedback for control.
• Services are typically intangible, perishable and produced and consumed together; goods can be stored.
• Customer contact and participation are usually higher in services than in manufacturing.
• Operations decisions are strategic, tactical or operational depending on their time horizon and impact.
• Job production suits low volume and high variety; mass or continuous production suits high volume and low variety.
• Batch production sits between job and mass production in volume and variety.
• Competitive priorities include cost, quality, delivery, and flexibility.
• Operations strategy must fit the overall business strategy and the needs of target customers.
• Firms often cannot be best at every priority, so they choose trade-offs.
• Recent trends include greater use of technology, automation and data, with a focus on efficiency and sustainability.
• In answers, define first, list points, then add a short example.

Common mistakes

• Treating operations management as only factory production. Fix: State that OM covers goods and services, and give one service example such as a bank or hospital.
• Mixing up objectives with scope. Fix: Objectives are what OM aims to achieve (quality, cost, time). Scope is the decision areas it covers (design, layout, scheduling, maintenance).
• Saying services have no inputs or no process. Fix: State that services also convert inputs such as staff time, information and equipment into an output. Only the output is intangible.
• Claiming service quality cannot be measured at all. Fix: Say it is harder to measure and relies on customer perception, using measures such as waiting time, error rate and satisfaction.
• Calling plant location or capacity expansion a tactical decision. Fix: Remember that location, capacity and technology are long-term and hard to reverse, so they are strategic.
• Treating job scheduling and aggregate planning as the same level. Fix: Aggregate planning covers months and total output, so it is tactical. Detailed job scheduling covers days and individual jobs, so it is operational.
• Treating batch and mass production as the same. Fix: Batch makes limited lots and switches products; mass makes one standard product continuously on a dedicated line.
• Calling mass production 'intermittent'. Fix: Intermittent means job and batch only. Mass and continuous belong to the continuous family.
• Defining operations strategy as the same thing as business strategy. Fix: Say operations strategy is a functional strategy that supports the business strategy. Business strategy sets where to compete; operations strategy sets how operations will help win.
• Listing the five priorities with no explanation or example. Fix: Give one line of meaning and one example for each priority, and show how each links to operations decisions.

Exam tips

• Start every theory answer with a definition that includes inputs, transformation and outputs. It is a quick source of marks.
• Keep separate headings for nature, objectives and scope. Examiners check that you have answered the exact part asked.
• Use one manufacturing and one service example to show breadth.
• For MCQs, read the stem for keywords: 'decisions covered' points to scope, 'aim' points to objectives. There is no negative marking, so attempt all.
• Practise a labelled input-process-output sketch. It takes under a minute and strengthens the answer.
• Always give a point-by-point comparison, not two separate paragraphs. It earns more step marks.
• Use one Indian example on each side, such as a car plant and a bank branch, to show application.
• For MCQs, look for the key words: stored, tangible, customer present, simultaneous. They point straight to the answer.