Principles of Business Management - Chapter 9: Operations Management

Flashcards covering core vocabulary, systems, formulas, and operational definitions from Chapter 9 of Principles of Business Management (5th Edition).

Operations Management (OM)

The management of conversion (transformation) processes that involve creativity, design, productivity, and adding value within an organisation.

Operation

A process in which inputs are transformed into outputs, or any new task that involves a transformation such as setting up facilities, maintenance, or creating unique items.

Organisational Agility

The ability of an organisation to be nimble and react quickly, allowing operations to respond with minimal disruption when reconfiguring business processes.

Effectiveness

Doing the right things to create the most value for the company.

Efficiency

Doing something at the lowest possible cost.

Productivity

A common measure of how well inputs are being used by a business or country, calculated as $\text{Productivity} = \text{Outputs} \times \text{Inputs}^{-1}$ or $\text{Productivity} = \text{Output income} \times \text{Input expenses}^{-1}$.

Lead Time

Also referred to as throughput time, it is the general time required for the actual manufacturing process.

Queue Time

The period for which a job stays in a queue at a work centre before being processed.

Set-up Time

The time needed to prepare equipment for processing a new job.

Processing Time

The actual time required to process a job.

Waiting Time

The empty time between completing the processing of a job and transporting it to the next work centre.

Transportation Time

The time needed to move a job from one work centre to another.

Inspection Time

The time required to verify whether a completed job meets quality standards.

Assignable Variation

Process variation resulting from mistakes, incorrect methods, defective inputs, or old equipment.

Random Variation

The natural variability present to some extent in all processes, even those that are stable and under control.

Operations Strategies

The total patterns of decisions and actions that form the roles, objectives, and activities of each part of an operation so that they align with overall business strategies.

Product Designs

Plans created specifically for goods or services.

Operations Designs

Plans formulated for how goods or services will be produced.

Categories of Operations Systems

The conventional classification of operations systems into continuous/repetitive, batch/job, and project operations systems based on product type, layout, product flow, materials handling, inventory, and labor requirements.

Capacity Planning

The process of planning for necessary resources over a specific timeframe, split into long-term fixed capacity planning and short-to-medium-term variable capacity planning.

Loading

The process of allocating specific amounts of work to particular work centres.

Sequencing

Deciding on the specific order in which work tasks will be executed.

Scheduling

Determining how many jobs are to be done and setting the times at which they should be completed.

Monitoring

Checking and verifying that operational activities are proceeding according to plan.

Demand Time (D)

The total length of time a customer must wait to receive a product or service.

Production Time (P)

The entire throughput time required for an operation.

Re-order Point (ROP)

The specific level of stock at which an order must be placed for renewal, calculated using the formula $\text{ROP} = D(\text{LT}) + \text{SS}$.

Periodic Inventory System

An inventory ordering variation commonly used by retailers and restaurants where stock is reordered on a set daily or weekly schedule.

Material Requirements Planning (MRP)

A push system that assists operations managers in planning when to place material orders and the quantity required.

Economic Order Quantity (EOQ)

A formula-based order quantity for each cycle that keeps overall inventory costs to a minimum.

Total Quality Management (TQM)

A holistic, organisation-wide approach to quality management covering quality inputs, processes, and outputs.

Quality

The degree to which a product satisfies client needs, conforms to specifications, is fit for purpose, and meets expected dimensions.

Statistical Process Control (SPC)

A quality management tool used to evaluate whether manufacturing or service delivery processes are under control or out of control.

Run-to-breakdown Maintenance

A reactive maintenance strategy of repairing equipment only after it experiences a failure.

Condition-based Maintenance

A maintenance strategy where equipment is serviced when visual or operational signs suggest it is likely to break.

Preventive Maintenance

A proactive maintenance strategy of regularly servicing equipment to avoid operational breakdowns.

Project

A temporary endeavor undertaken to create a unique product or service.

Gantt Chart

A simple, time-based visual chart commonly used for scheduling activities in smaller projects.

Critical Path

The longest sequential route of activities from the start to the completion of a project network diagram.

Enterprise Resource Planning (ERP)

An integrated software approach that maps all business processes to coordinate and control all company resources, preventing organizational silos.

Quadruple Helix Model of Innovation

An innovation model for Industry 4.0 that incorporates triple management theory, triple helix ecosystems, epochal society, and leaders upscaling agility.