2.

6
Operations Study
 The Organization and Management course provides decision areas to guide the
learner-entrepreneurs.
 The decision area include the design of goods and services, quality management,
process strategy, location strategies, layout strategies, human resource, supply
chain management, inventory management, scheduling, and maintenance.
 It is important to identify some critical areas that should be included in the
operations study, as follows:
• Product or service description
• Supplier-partner description and
• Cost of product and service
Product or Service Description

 The product or service description involves the design of the good and/or service
and its quality standards.
 It is essential for the enterprise groups, however, to ensure that their goods and
services comply with established standards. For example, product and purchase for
merchandising operations should be inspected for trademarks, business names, and
registrations, and/or quality marks
 The product or service description in the operations study is different from the
description in the marketing study. The operations study description focuses on the
providers or sources of the inputs, while the marketing study description involves
the user of the output.
 Flow charts are required for the enterprise projects to ensure compliance with
quality standard.
Product or Service Description

Some questions that may be answered would include the following:

 Does the product have a shelf life or best-before feature?
 Is there a product liability?
 Does the product comply with established quality standards?
 How long would each service unit delivery undertake?
 What are the steps involved in the service delivery?
 Flow Chart Samples

A. Food Service
a. Pre-opening Flowchart – 1 hour (2.6.1 Flowchart)
file:///C:/Users/Lenovo/Documents/Liceo%20Lessons/BES_ABM/Flow%20Charts/2.6.1%20Flowchart.pdf
b. Order Flowchart – 3 to 5 minutes per order (2.6.2 Flowchart)
file:///C:/Users/Lenovo/Documents/Liceo%20Lessons/BES_ABM/Flow%20Charts/2.6.2%20Flowchart.pdf
c. After Closing Flowchart – 1 hour (2.6.3 Flowchart) file:///C
:/Users/Lenovo/Documents/Liceo%20Lessons/BES_ABM/Flow%20Charts/2.6.3%20Flowchart.pdf
 Flow Chart Samples

B. Repair Service
a. Pre-opening Flowchart – 45 minutes (2.6.4 Flowchart)
file:///C:/Users/Lenovo/Documents/Liceo%20Lessons/BES_ABM/Flow%20Charts/2.6.4%20Flowchart.pdf

b. Repair Service Flowchart – 30 to 45 minutes per order (2.6.5 Flowchart)

file:///C:/Users/Lenovo/Documents/Liceo%20Lessons/BES_ABM/Flow%20Charts/2.6.5%20Flowchart.pdf

c. After Closing Flowchart – 40 minutes (2.6.6 Flowchart)

file:///C:/Users/Lenovo/Documents/Liceo%20Lessons/BES_ABM/Flow%20Charts/2.6.6%20Flowchart.pdf
Supplier-Partner Description

The supplier-partner description will include the process, supply chain, and inventory
management tasks for the owner-proprietor, and operations teams.
Some questions that would be critical for cost considerations of both service and
merchandising projects would be:
1. Does the supplier-partner offer affordable prices?
2. Does the supplier-partner offer delivery services?
3. Does the supplier offer goods on a consignment basis?
4. Doe the supplier replace defective products that are returned?
5. What is the lead time for delivery of the purchased goods?
Supplier-Partner Description

6. Is there a minimum volume for discounted purchase goods?

7. Is there a setup cost for tools or equipment?
8. What is the setup time for the tools and equipment?
9. Is there a required layout for the service delivery?
10. What is the area required for the recommended layout?
11. What facilities are required for the service delivery?
Supplier-Partner Description

 Whenever possible or applicable, the learner-entrepreneurs may

opt to get a supplier agreement with the chosen supplier-partner.
 For service enterprise, supplier sources may include skilled
laborers, such as watch or gadget repair technicians, beauticians,
or even cooks or chefs. It is recommended that qualifications of
these skilled employees are checked. For example, training
certificates, and/or government-issued permits or licenses may be
required
Cost of Product or Service

The cost of a product or service would include expenses for the following:
 Rental or shop outlet
 Renovation or construction of facilities
 Salaries and wages
 Utilities expense
 Transportation expense
 Communication expense
 Purchase of materials
 Purchase off supplies
 Purchase and/or rental of
 Machinery, tools, and equipment
 Furniture and furnishings
Cost of Product or Service

It may be helpful to classify the direct and indirect

expenses incurred for the projects. The information may be
relevant for the pricing decisions of the marketing team.
Simulation Activity 7: Operations
Study
1. The enterprise groups meet to discuss and complete the operations study content
– product or service description, supplier-partner description, and cost of sales
computations.
2. The operations study team divide the work assignments, as given by the owner-
proprietor
3. The operations and marketing teams discuss and agree on the cost of the items,
with the agreement of the finance and administration team and the owner-
proprietor
4. The aforementioned components are in the Simulation Activity 7: Operations
Study checklist of this textbook