OBA 335 Midterm

Operations

The set of organized activities that utilize the organization’s resources to transform input to create and deliver product or service output, in order to satisfy customer needs and create value

Process

Structured group of activites that altogether transform inputs into outputs that satisfy the needs of internal and external customers

Design

Construction of a manufacturing system that implements processes and meets financial and production rate goals

Direction

Break down overall financial and production goals into quarterly/monthly.weekly production plan

Control

Daily execution of processes to fulfill the production plan to meet the production goals

Support Processes

Provides vital resource and inputs to the core processes

Competitive Capabilities

The firms capacity of productive use of its resource to undertake value adding activities

Competitive Priorities

The critical dimensions of competetive capabilitie necessary for satisfying needs of customers

Low-Cost Operations

Delivering a service or product at the lowest possible cost

Top Quality

Delivering an outstanding service or product

Consistent Quality

Producing services or products that meet design specifications on a consistent basis

Delivery Speed

Quickly filling customers orders

On-time delivery

Meeting delivery times as promised

Development Speed

Quickly introducing a new service or a product

Customization

Satisfying unique needs of each customer by changing services or products designs

Variety

Handling a wide assortment of services or products efficiently

Volume Flexibility 

Accelerating or decelerating the rate of production of service or products quickly to handle large fluctuations in demand

Order Winner

A criterion that customers use to differentiate the services/products of a firm from those of competitors

Order Qualifiers

A criterion that features a “minimum level” required for the frim to stay in business

Two areas of operation decisions

Process and Supply Chain Decisions

Productivity

Value of Output/Value of Input

Capital Intensity

Measures the mix of equipment vs. human skills in a process

Higher capital intensity

More equipment workers and less humans

Flexible equipment/worker

General/multiple purpose, multi-skilled, and can perform multiple types of tasks

Specialized equipment/worker

Dedicated to only one type of task

Process Divergence

Tasks in process are customizable

Flow Flexibility

Different orders, customers, materials, and information can move through different sequences of tasks

Batch process

1. Each batch is a number of same items

2. Each item is produced with a distinct sequence of tasks

3. Production are organized in batches

Line Process

1. Physically arranging resource in a “line”

2. Line process uses specialized machines and workers to achieve high speed and high efficiency

3. Good for standardized products that don’t need customization

Design-to-Order Strategy

1. Design and produce product after receiving an order

2. No inventory for parts, subassemblies, final assembly

3. Job Process structure choice

Make-to-Order Strategy

1. Design pre-exists. Product parts, sub assemblies, and final assembly after order arrives

2. No inventory for parts, subassemblies, final assembly

3. For products with standard basic design, high customization and low volume

4. job process or small-batch process

Make-to-Stock Strategy

1. Design, produce parts, subassemblies, and final assemblies based on demand forecast before orders arrive

2. Create and hold inventory for parts, subassemblies, and final assembly

3. For standardized products with high volume

4. Line process

Assemble-to-Order-Strategy

1. Pre-product parts/subassemblies before order arrives

2. Assembles final products after orders arrive

3. Hold inventory for parts and subassemblies but not for final assembly

4. Applicable to products with moderate levels of customization

5. Job process or small batch process for final assembly and line process for subassemblies and components

Process Chart

Documents activities, their time consumption, and resource used

Processing Time of a Task

Time needed to complete the task for one job by a workstation

Capacity Rate

The maximum output per unit of time that is reasonable

Capacity Rate Equation

1(job)/processing time

Throughput Time

The elapsed time for a job to travel through the whole process

Throughput Rate

Average # of jobs actually completed per unit of time

Cycle Time

Average time between two units of output

cycle time equation

1/throughput rate

Blocking

When upstream workstation completes a job, but downstream workstation is busy, upstream workstation is unable to release the completed job

Starving

when downstream workstation becomes available for a new job, but upstream workstation is not ready to release a job, downstream workstation is forced to be idle

Capacity Constraints

Limiting factors of an organization’s ability to meet its output goal

Theory of Constraints

A systematic approach for actively managing constraints in an organization

Bottleneck

Capacity-constrained resource whose capacity limits the organization’s ability to meet product volume, product mix, or fluctuating demand 

Capacity Rate of a Line Process =

Capacity Rate of bottleneck workstation

Batch Process Utilization

Workload/Available Production Time

Bottleneck in a Batch Process

The resource with highest utilization among all resources used in the process

Bottleneck Method for Product Mix

Prioritizes the products by the contribution margin per minute of time required on the bottleneck resource

Customer Contact

The extent to which the customer is present, is actively involved, and receives personal attention during the service process

Service System

Physical implementation of service process

Service facility

Personnel and equipment designated for serving customers and processing jobs

Waiting Line

A storage for holding customers waiting to be served

Priority Rule

The order by which the customers in the waiting line are served by a service facility

Channel

Linkage of one or more service facilities in a sequence to complete a service

Server Utilization

Percentage of time that server is busy