What is operations management?
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Question
What is operations management?
Answer
How a business turns inputs into outputs — the transformation process.
💡 Hint
Inputs → process → outputs
Question
Key difference: goods are ___; services are ___
Answer
Goods = tangible (see, touch, store). Services = intangible (experienced, not held).
💡 Hint
Tangible vs intangible
Question
What does 'adding value' mean?
Answer
Making the output worth more than the cost of inputs — this is how businesses make profit.
💡 Hint
Output value > input cost
Question
Operations = turning ___ into ___
Answer
Inputs into outputs (the transformation process).
💡 Hint
Inputs → outputs
Question
Value added formula?
Answer
Value added = Selling price − Cost of inputs.
💡 Hint
Selling price minus costs
Question
Goods can be stored; services are ___
Answer
Consumed immediately — you can't stockpile a haircut.
💡 Hint
Consumed now
Question
Name the three stages of the transformation process
Answer
Inputs (materials, labour, capital) → Process (manufacturing, assembling) → Outputs (finished goods/services).
💡 Hint
In → Do → Out
Question
Adding value = output worth more than ___
Answer
The cost of inputs — the gap is profit potential.
💡 Hint
Input cost
Question
Name three ways to add value
Answer
Better design/features, branding/packaging, convenience, quality/reliability, speed of delivery.
💡 Hint
Design, brand, convenience, quality, speed
Question
Operations applies to both ___ and ___
Answer
Goods (tangible) and services (intangible).
💡 Hint
Goods + services
Question
Goods are standardised; services often ___
Answer
Vary each time — each haircut or flight experience is slightly different.
💡 Hint
Vary each time
Question
Give an example of the transformation process
Answer
Bakery: flour, eggs, sugar (inputs) → mixing and baking (process) → cakes and bread (outputs).
💡 Hint
Bakery example
Question
Many businesses provide a mix of ___
Answer
Both goods AND services — e.g. a restaurant provides food (good) and table service (service).
💡 Hint
Both together
Question
Coffee beans cost $2, latte sells for $5. Value added?
Answer
$5 − $2 = $3 value added through the barista's skill, hot water, milk and branding.
💡 Hint
$3
Question
Good operations → lower costs, better quality, meet ___
Answer
Customer demand on time — giving competitive advantage.
💡 Hint
Customer demand
Question
Name three benefits of good operations management
Answer
Reduces waste/costs, improves quality, meets customer demand on time, gives competitive edge.
💡 Hint
Waste, quality, demand, edge
Question
Quick: Inputs = materials, labour, ___
Answer
Capital (money and equipment).
💡 Hint
Capital
Question
The bigger the gap between input cost and selling price, the more ___
Answer
Profit potential — adding value is the core of business profitability.
💡 Hint
Profit potential
Question
Operations management applies to ___ AND ___
Answer
Both manufacturing businesses AND service businesses — not just factories.
💡 Hint
Manufacturing + services
Question
Goods can be quality-checked before sale; services are ___
Answer
Harder to quality-check in advance — you can't inspect a service before it's delivered.
💡 Hint
Hard to pre-check
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Full study notes for What is operations management?
Topic 5.1 hub
Introduction to operations management
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