Answered: Provides an overview of the differences…

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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Provides an overview of the differences between production of goods and service operations.

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Step 1

The difference are mainly with respect to the following:

Layout design - services mainly follow the process layout and project layout whereas products usually follow the product layout.
Inventory management - in case of products multiple echelons of inventory need to be maintained at multiple stages in the production, in case of services the requirements for inventory management is often not that complex or stringent.
Purchasing - in case of products the major portion of the product cost is subsumed by the raw material and semi-finished goods that need to provisioned (in house or outsourcing based), hence purchasing decisions are very critical to optimise cost via bulk discounts. In case of services raw material will not form major portion of the cost hence purchasing decisions are not that complex.

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