Business Essentials, 12/e

Creating Value Through Operations

1. Objective 7-2 Identify the three kinds of utility created by operations and the characteristics that distinguish service operations from goods production.

To understand a firm’s production processes, we need to know what kinds of benefits its production provides, both for itself and for its customers. Production provides businesses with economic results: profits, wages, and goods purchased from other companies. At the same time, it adds customer value by providing utility—the ability of a product to satisfy a want or need—in terms of form, time, and place:

• Production makes products available: By converting raw materials and human skills into finished goods and services, production creates form utility, as ...