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What is operations management?
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All Flashcards in Topic 5.1
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5.1.120 cards
What is operations management?
How a business turns inputs into outputs — the transformation process.
Inputs → process → outputs
Key difference: goods are ___; services are ___
Goods = tangible (see, touch, store). Services = intangible (experienced, not held).
Tangible vs intangible
What does 'adding value' mean?
Making the output worth more than the cost of inputs — this is how businesses make profit.
Output value > input cost
Operations = turning ___ into ___
Inputs into outputs (the transformation process).
Inputs → outputs
Name the three stages of the transformation process
Inputs (materials, labour, capital) → Process (manufacturing, assembling) → Outputs (finished goods/services).
In → Do → Out
Adding value = output worth more than ___
The cost of inputs — the gap is profit potential.
Input cost
Goods can be stored; services are ___
Consumed immediately — you can't stockpile a haircut.
Consumed now
Value added formula?
Value added = Selling price − Cost of inputs.
Selling price minus costs
Operations applies to both ___ and ___
Goods (tangible) and services (intangible).
Goods + services
Goods are standardised; services often ___
Vary each time — each haircut or flight experience is slightly different.
Vary each time
Name three ways to add value
Better design/features, branding/packaging, convenience, quality/reliability, speed of delivery.
Design, brand, convenience, quality, speed
Give an example of the transformation process
Bakery: flour, eggs, sugar (inputs) → mixing and baking (process) → cakes and bread (outputs).
Bakery example
Name three benefits of good operations management
Reduces waste/costs, improves quality, meets customer demand on time, gives competitive edge.
Waste, quality, demand, edge
Many businesses provide a mix of ___
Both goods AND services — e.g. a restaurant provides food (good) and table service (service).
Both together
Good operations → lower costs, better quality, meet ___
Customer demand on time — giving competitive advantage.
Customer demand
Coffee beans cost $2, latte sells for $5. Value added?
$5 − $2 = $3 value added through the barista's skill, hot water, milk and branding.
$3
Quick: Inputs = materials, labour, ___
Capital (money and equipment).
Capital
The bigger the gap between input cost and selling price, the more ___
Profit potential — adding value is the core of business profitability.
Profit potential
Goods can be quality-checked before sale; services are ___
Harder to quality-check in advance — you can't inspect a service before it's delivered.
Hard to pre-check
Operations management applies to ___ AND ___
Both manufacturing businesses AND service businesses — not just factories.
Manufacturing + services
5.1.220 cards
What is the primary sector?
Businesses that extract raw materials from the earth — farming, fishing, mining, forestry, oil drilling.
Extract raw materials
What is sectoral shift?
As countries develop, importance shifts from primary → secondary → tertiary sectors.
Primary → Secondary → Tertiary
Primary sector operations focus on ___
Natural resources, location near raw materials, seasonal factors.
Resources + location + seasons
Primary = extracting. Secondary = manufacturing. Tertiary = ___
Providing services.
Services
What is the secondary sector?
Businesses that process/manufacture raw materials into finished goods — factories, construction, food processing.
Manufacturing + processing
Countries develop: primary → secondary → ___
Tertiary — the services sector dominates developed economies.
Tertiary
Developing countries rely heavily on which sector?
Primary — extracting raw materials and agriculture.
Primary
Secondary sector operations focus on ___
Production methods, economies of scale, machinery investment.
Methods + scale + machinery
The sector affects operations decisions like ___
Location, resources needed, and quality focus.
Location + resources + quality
As countries industrialise, which sector grows?
Secondary — manufacturing and processing industries expand.
Secondary
Tertiary sector operations focus on ___
Customer experience, staff training, convenient location.
Experience + training + location
What is the tertiary sector?
Businesses that provide services — retail, banking, education, healthcare, tourism.
Provide services
Chain example: farmer → bread factory → supermarket?
Primary (farmer) → Secondary (factory) → Tertiary (supermarket).
P → S → T
Some businesses operate across ___ sectors
Multiple — e.g. a coffee company that grows (primary), roasts (secondary) and sells (tertiary).
Multiple sectors
Quick: Farming = ___ sector
Primary — extracting raw materials from the earth.
Primary
Knowing the sector helps you answer exam questions because ___
It guides which operations factors matter most for that specific business.
Guides your answer
Quick: A bank = ___ sector
Tertiary — providing financial services.
Tertiary
A factory's operations differ from a hotel's because ___
Factory (secondary) focuses on production efficiency; hotel (tertiary) focuses on customer experience.
Production vs experience
Sectoral shift is like climbing ___
Stairs — countries move up from primary → secondary → tertiary as they develop.
Stairs analogy
Which sector is biggest in developed economies?
Tertiary (services) — developed countries are service-dominated.
Tertiary
Topic 5.1 study notes
Full notes & explanations for Introduction to operations management
BM exam skills
Paper structures, command terms & tips
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