BUSI 403 Exam 1 Review Session 1 Introduction Cyberpunk 2077 2012 announcement 2018 preorder Supposed to be the biggest video game Botched product launch lack of operations Boeing Dream Liner Took orders in 2004 Failed test flight Failed because with such diversified sources of parts it was hard to control quality expensive and there was potential for non compatible parts Delays expected All from the same place can be risky Cost efficient to diversify sources Operations Management All businesses make a salable product Product made by transforming inputs to outputs Final product is the output The transformation is value added Operations manages the transformation process Obtaining input resources converting to output product delivering the product to Sourcing and procurement are processes that help businesses find and acquire goods customers and services Sourcing is the process of finding suppliers procurement is the process of negotiating contracts and making purchases 3 Main Functions of a Firm 1 Marketing Manages customer demand generates sales 2 Operations Manages people technology equipment materials and information to produce deliver goods and services 3 Finance Manages cash flows investments and current assets Key Points in Operations 1 Operations Can Provide a Competitive Edge a Dell vs HP Dell s Make to Order system b Zara vs Gap Zara has fast fashion that follows trends 2 Operations Impact Performance a Toys R Us Christmas 1999 i Could not make scheduled deliveries of its online orders before Christmas ii Example of bad Forecasting Inventory planning Capacity planning b Southwest 3 Recessions Force Companies to Refocus on Operations a Starbucks Profit Soared in 2009 Despite Decreasing Revenue i The Seattle based chain posted earnings of 150 million for the quarter ended Sept 27 up from 5 4 million a year earlier Revenue fell 3 7 to 2 42 billion ii Chief Executive Howard Schultz said in a conference call that a more disciplined focus on operations helped the company increase earnings and that it is seeing improvements in its surveys of customer satisfaction 4 Company Leadership is key for good operations a Apple s Keith Block Manufacturing vs Service Examples Manufacturing Apparel Pharmaceutical Computers Furniture Service Banks Colleges Hospitals Advertising Overview of Session 1 outputs business functions Operations Management is about the management of processes that transforms inputs to Operations is one of the three major business functions and it interacts heavily with other Operations impacts performance period Manufacturing organizations have tangible products and low degree of customer contact whereas service organizations have intangible products and high degree of customer contact