MNGT352 Advanced Modern Management

Theory X

Theory X

A management theory developed by Douglas McGregor in the 1960s. It assumes that employees are inherently lazy, dislike work, and need to be closely supervised and controlled. Managers who follow this theory tend to use a more authoritarian and directive leadership style. They believe that employees are motivated primarily by external rewards and punishments. This theory is based on a negative view of human nature.

Theory Y

A management theory developed by Douglas McGregor. It suggests that employees are intrinsically motivated, responsible, and capable of self-direction. Employees seek fulfilment in their work and can be creative and innovative. Managers who adopt this theory believe in empowering their employees, providing them with autonomy, and involving them in decision-making processes. It promotes a positive and participative management style, fostering a collaborative and productive work environment.

Pareto’s Law

The 80/20 rule, states that roughly 80% of the effects come from 20% of the causes. It is named after Italian economist Vilfredo Pareto, who observed that 80% of the land in Italy was owned by 20% of the population. This principle has been applied to various fields, such as business, economics, and time management, to identify and prioritize the most significant factors or inputs.

The Bullwhip Effect

The phenomenon where small fluctuations in consumer demand can result in larger and more exaggerated fluctuations in demand further up the supply chain. This effect can lead to inefficiencies, such as excess inventory or stockouts, as each participant in the supply chain tries to anticipate and react to these fluctuations.

Process Mapping

A visual tool used to analyze and improve processes. It helps identify steps, inputs, outputs, and decision points. It provides a clear overview of the process flow, highlighting potential bottlenecks and areas for improvement.

Little's Law

A fundamental principle in queueing theory that states a mathematical relationship between cycle time, throughput time and the amount of WIP inventory:

Throughput Time = WIP x Cycle Time

Dependent Demand

The demand for a component is tied to the final product. It is based on their relationship and supply chain management. (e.g. Plastic Bottles to milk)

Independent Demand

The demand for finished goods directly consumed by customers. It is not influenced by other products in the supply chain. It can be unpredictable and depends on factors like consumer preferences, market conditions, and seasonal trends. Forecasting and inventory management techniques are used to meet customer demand.

4Vs of Operational Management

1. Visibility: Refers to the ability to track and monitor the various processes and activities within an organization. It involves having clear visibility into the status, progress, and performance of operations.

2. Volume: Refers to the quantity or scale of production or service delivery. It involves managing the capacity and throughput of operations to meet demand efficiently.

3. Variation: Refers to the degree of variability or unpredictability in demand, processes, or inputs. It involves managing and reducing variations to ensure consistent and reliable operations.

4. Variety: Refers to the range or diversity of products, services, or processes within an organization. It involves managing the complexity and customization of operations to meet diverse customer needs.

Efficiency

Actual Output / Effective Capacity

Utilisation

Actual Output/ Design Capacity

Grass Roots Forecasting

A method of forecasting that involves gathering information and insights from individuals or groups at the grassroots level. It is a bottom-up approach that relies on the knowledge and expertise of people directly involved in a particular field or industry. This method can be used to predict trends, identify potential opportunities or risks, and make informed decisions based on local knowledge and experiences.

Simple Moving Average Forecasting

SMA = (Sum of the last n data points) / n

Where:

• SMA is the Simple Moving Average

• n is the number of data points used in the calculation

Weighted Moving Average Forecasting

WMA = W1X(t-1) + W2X(t-2) + WnX(t-n)

B2B

Type of business transaction where products or services are exchanged between two businesses rather than between a business and a consumer.

Economic Order Quantity

The EOQ helps businesses strike a balance between carrying too much inventory (resulting in high holding costs) and carrying too little inventory (resulting in stockouts and potential lost sales). By calculating the EOQ, businesses can optimize their inventory levels and reduce costs.

EOQ = √2(ordering Cost)(Demand)/(Holding Cost)

Diseconomies of Scale

When a company grows too large, it may experience diseconomies of scale. This means that as the size increases, the cost per unit also increases. It can happen due to inefficiencies, communication problems, and coordination difficulties.

Supply Chain Management

A total system approach to managing the entire flow of information, materials, and services from raw material supplies through factories and warehouses to the end customer.

Outsourcing

The practice of hiring external companies or individuals to perform specific tasks or services instead of using in-house resources. It is done to reduce costs, increase efficiency, and focus on core competencies.

Vertical Integration

A strategy where a company controls multiple stages of the production and distribution process, from raw materials to the final product or service.