The service industry in the United States is providing an increasingly important portion of the gross national product. This means that the concepts and principles of "production" have been advantageously adapted to non-manufacturing activities as banking, health care and tourism.

The production function will become increasingly a global challenge. Car engines produced in Japan and Germany are now installed in American cars. Moreover, major car manufacturers in the United States have made arrangements to produce cars in Japan and market them under their own names in the United States and elsewhere. In short, then, productivity, and the concern for measuring it, will continue to be a challenge for managers operating in an increasingly competitive global market.

Operations management systems playing a pivotal part in the fulfillment services are expected to become more productive through the application of operations research, a variety of other tools and information technology. Productivity is a major concern of managers. It implies measurement, an essential step in the control process. The productivity measurement of skill workers is generally easier than that of knowledge workers such as managers.

Yet managerial productivity is very important, especially for service industry operating in a competitive environment. Production management refers to those activities necessary to manufacture products; it may also include purchasing, warehousing, transportation and other operations. Operations management has a similar meaning, referring to activities necessary to produce and deliver a service as well as a physical product.

The operations management systems model indicates inputs, the transformation process, outputs and the feedback system. Various tools and techniques make operations more productive. In order to operate the system, the managing of organizing, staffing and leading must be effectively carried out. Controlling requires an information system that is often supported by computers. Operations research is the application of the scientific method to the study of alternatives in a problem situation, to obtain a quantitative basis for arriving at the best solution.

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