operations management midterm

an effective operations strategy…

1. Aligns with and delivers on the firm's value proposition

   1. It is externally consistent

2. Develops operational capabilities that align with and reinforce one another

   1. It is internally consistent

3. Evolves overtime

value dimensions

low cost OR quality, time OR flexibility, more sutainable OR useful innovation

order qualifier

minimum level of value required from a set of criteria for a firm to do business

order winner

dimension of value that differentiates one firm from another

value proposition

the constellation of value dimensions that matter to a customer, with some of those dimensions qualifying the product or service for consideration, and at least one dimension distinguishing it from competition

• essentially a promise to a customer

operations management determines….

…how, and how well, a firm delivers on its value proposition to consumers

strategy maps

• tell us abt relative positioning

• tell us what the firm offers

operational maps

reveal what the firm does to deliver its value proposition

operational capabilities

unique and superior abilities based upon the firm’s routines, skills and processes that enable the firm to meet customer expectations and are difficult imitate

• must be intentionally designed and built into a firm’s operating system

• cost, quality, time, flexibility

process structure

the manner in which activities are linked from beginning to end

project (software development)

low volume and highest variety, flex, cost

job shop (beauty shop)

relatively low volume and high variety, flex, cost

batch (local bakery)

medium in volume and variety, flex, cost

repetitive process (cell phone assembly)

relatively high volume and low variety, cost, flexibility,

continuous process (oil refinery)

high volume and low variety, flexibility, cost

mass customization

relatively high volume and high variety, flexibility, cost

engineer to order (ETO)

unique, customized products

• Project, job shop

make to order (MTO)

similar design, customized during production

• Job shop, batch

assemble to order (ATO)

produced from standard components and modules

• Repetitive, mass customization

Make to stock (MTS)

goods made and held in inventory in advance of customer orders

• Repetitive, continuous

cycle time

• average time for completion of a unit at a production/service stage

Time/unit

capacity

average number of units processed over a time interval

• Units/time

process capacity

minimum capacity across all stages OR capacity of the stage with the longest cycle time

bottleneck

stage with the lowest capacity OR stage with the longest cycle time

• There can be multiple _______

utilization (bottlenecks)

how much percentage of time is each stage working?

minimum throughput time (TPT)

assuming an empty system, start-to-finish time of a process

λ

Random, average arrival rate of customers

μ

Random, average service rate of customers

littles law

The average number of customers in the system = the average time spent in the system * the average rate of arrival

• ** make sure to use W and L with or without p but you cannot mix and match