KEY TERMS Production Organization: Organization that produces tangible goods that can be mass-produced and stored for later consumption. Service Organization: Organization that produces intangible goods that require consumer participation and cannot be stored. Operation Management: Complex management activity that includes planning production, organizing resources, directing operations and personal and monitoring system performance. Productivity: Measure of how well an operations system functions and indicators of the efficiency and competitiveness of a single firm of department.

Human Capital: An organizations investment in the training and development of its members. Competitive Priorities: Four major criteria, including pricing, quality level, quality reliability and flexibility on which products and services are evaluated. Designing Operation system Design for manufacture (DFM): Technique that involves streaming the design of products to simplify assembly. Computer-aided design (CAD): Design and drafting performed interactively on a computer. Bill of materials: Listing of the type and number of parts needed to produce a given product.

Capacity planning: Operations decision concerned with the quantity of goods or services to be produced. CAD/CAM Integrated approach in which the software used in designing products is also used to write a computer program to control the machinery. CIM: Integrated approach that combines CAD/CAM with the use of robots and computerized inventory management techniques. Operation Planning and Control Decisions Inventory: Supply of raw materials, work in progress and finished goods in organization maintains to meet its operational needs. Materials-requirements planning (MRP):

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Operation planning system in which end products are analyzed to determine the materials needed to produce them. Materials-resource planning (MRP II): Operational planning system that extends MRP by comparing needs to known resource and calculates unit costs, can also be used with other computer programs to handle order entry and other operations tasks. Just-in-time (JIT) inventory system: Inventory system in which production quantities are ideally equal to delivery quantities with materials purchased and finished goods delivered just in time to be used; also known as kanban.


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