Operations Management

Operations and productivity

Operations management turns inputs into outputs (goods/services) efficiently. Key measures:

$$\text{Productivity} = \frac{\text{output}}{\text{input}} \qquad \text{Capacity utilisation} = \frac{\text{actual output}}{\text{maximum possible output}} \times 100$$

High productivity lowers unit costs; high capacity utilisation spreads fixed costs but full capacity leaves no slack for new orders.