operations management (copy)

operations management

operations management

getting the right goods/services in the right quantities at the right quality level in a cost-efficient manner

capacity utilization

refers to extent to which an organization operates at its maximum level

pros of high capacity utilization

• financially important as it spreads out costs over large level of output (economies of scale)

• lower fixed costs allowing for higher profit margins

• effective, makes most use of resources

cons of capacity utilization

• potential breakdown of machinery

• lower standards of customer service

• stressed workers

pros of JIT

• reduced storage costs

• reduces wastages if inventory is perishable

• reduce break-even level

cons of JIT

• cannot account for drastic increase in demands

• reliance on dependable suppliers

• cannot take advantage of economies of scale

lean production

streamlining operations/processes to reduce waster and achieve greater efficiency

Kaizen

small but continuous improvements to achieve efficiency

Kanban

a card based system which attaches tags to each aspect of production process

Andon

an audio visual control indicating status of production

crisis management

response of an organization's to a crisis situation

factors of effective crisis management

• transparency: stakeholders kept informed of whats happening to assure them that safety is the priority

• speed: senior managers need to act quickly

• control: situation should be put under control as soon as possible

contingency planning

being proactive to changes by planning in the case of unwanted events

pros of contingency planning

• cost: minimizes negative reactions to reduce costs

• time: saves time

• risk: accounted for

• safety: alleviates staff's concerns

cons of contingency planning

• costs: may not even happen

• time: uses up valuable time

quantitative factors influencing location decisions: (4)

• cost of labour

• proximity to market/raw materials

• government incentives/limitations

• cost of land

qualitative factors influencing location decisions: (4)

• feasibility of e-commerce

• local knowledge

• political stability

• infrastructure (transportation/communication networks)

R&D

extensive research into new productions and development of prototypes

pros of R&D

• continuously advances products

• competitive edge

• helps prolong product life cycle

• ensures products are made for taste of consumers

cons of R&D

• costly

• high failure rate

• budget concerns

product innovation

new creations or development of existing products

process innovation

a change in the way a product is manufactured or distributed

positioning innovation

reposition the perception of brand

paradigm innovation

changes nature of certain market

mass production

manufacturing of large numbers of identical products

job production

customizing individual product to meet specific requirements

batch production

producing limited number of identical product

flow production

continuous production of identical products

cellular manufacturing

poduction whereby sets of tasks are completed by teams

adaptive creativity

altering or modifying something that already exists

innovative creativity

creating something new

JIT

stock control system where stocks are delivered as needed

Quality control

quality of product checked or tested at the end of production ti make sure they meet quality standards

quality assurance

employees at every stage of production assuring that the quality is maintained

methods of managing quality

• quality circles

• Benchmarking

• total quality management

quality circles

small groups of people that meet and share responsibility to examine issues related to quality

Benchmarking

business comparing products, operations and processes to others within same industry. market leaders used as a point of reference for targets

historical benchmarking: comparing to past

inter-frim benchmarking: comparing to other firms

total quality management

requires whole company to commit to achieving quality standards. assures that quality is core focus in all functional areas

importance of lean production on TQM

• reduces waste which saves cost

• boosts quality of products

supply chain proccess

a sequence of activities that start with extracting raw materials, to production, to distributors and to hand of consumers

just incase production

a production technique where more stock is stored just incase there is a sudden increase in demand

whats the x and y axis on a stock control chart

y: stock level

x: time (months)

what is stock control chart based on

• Lead time: time frame/lag from when they place the order until it arrives

• Buffer stock: minimum stock level that a firm wishes to hold just incase there is a change in demand

• Reorder level: level of inventory when firm is required to reorder stock. ensures stock is delivered in before it runs out

• Reorder quantity: amount of new stock ordered for production usage

productivity rate

measures efficiency of worker by measuring average output per worker

cost to buy

price x quantity

helps in outsourcing decision by calculating total expenses

cost to make

fixed costs +(AVC X Quantity ‘contribution’)

total cost of producing good or service in house and not using 3rd party supplier