Production and Operations Management Systems Chapter 1: Introduction

Distinction Between Goods and Services

• Goods are tangibles that can be produced before their actual use.
• Goods can be inventoried.
• Services are intangibles that cannot be inventoried.
• Services are provided at the time when customers need them.
• Services usually require sustained personal contact.
• Goods have minimal personal customer contact.
• Backorders for goods are frequent; sometimes for services.
• Fill or kill (the order) applies to many services.

Distinction Between Goods and Services (continued)

• The methodology of P/OM was first developed by and for manufacturing,
• It has now been extended to services with great success.
• Service industries involve an increasing percent of the workforce.
• Thus, more attention needs to be directed toward achieving coherent and efficient operations for services.
• The service industries include: hospitals, banks, restaurants, airlines, hotels, tourism, cruises, educational institutions, departmental stores, government agencies, knowledge management, and so on.
• In the current era, the distinction between managing goods and services organizations is diminishing, and there is a common body of knowledge that can be used to manage both types of organizations effectively and efficiently.