copman PRELIM

Operations

the part of an organization that is responsible for producing goods and/or services

Operations Management (OM)

- management of systems and processes that create goods and provide services

- business function responsible for planning, coordination, and controlling the resources needed to produce products and services for a company

Goods

physical items inclusive of raw materials, parts, sub-assemblies, and final products

Services

activities that provide a combination of time, location, form, and psychological value

Basic Functional Areas on Organization

- securing financial resources at reasonable prices

- assessing consumer needs and wants

- producing goods and providing services

Role of Operations Management

transform inputs into outputs

Inputs

- raw materials

- man power

- money

Outputs

products (goods) and services

OM's Transformation Role

increase product value at each stage

Value Added

the difference between the cost of inputs and the value of price of output

Efficiency

performing activities well for least possible cost

Manufacturers

- tangible product

- product is inventoried

- low customer contact

- longer response time

- capital intensive

- consistent output

- high mechanization generates more product

Services

- intangible product

- product cannot be inventoried

- high customer contact

- short response time

- labor intensive

- greater variability of inputs

- slow and awkward input

Similarities for Service vs Manufacturers

- use technology

- have quality, productivity, and response issues

- must forecast demand

- can have capacity, layout, and location issues

- have customers, suppliers, scheduling, and staffing issues

Scope of OM

1. product and service design

2. process selection

3. selection and management technology

4. design of work system

5. location planning

6. facilities planning

7. quality improvement of the goods and services of the organization

System Design

involves decisions that relate to

- system capacity

- geographic location

- facilities arrangement of departments

- placement of equipment within physical structures

- product and service planning

- acquisition of equipment

System Operation

involves management of

- personnel

- inventory planning and control

- scheduling

- project management

- quality assurance

strategic decisions

System design are typically ...

tactical and operational decisions

Systems operation are generally ...

Strategic Decision Making

process of charting a coursed base on long term goals and long-term vision

Tactical decisions

medium term, less complex decisions made by middle managers focuse on specific day-to-day issues

Purchasing

Procurement of stocks

Industrial Engineering

scheduling, performance standards, work methods, quality control, and material handling

Distribution

Shipping of goods to warehouses, retail outlet, or customers

Maintenance

Responsible for upkeep and repair of equipment

Models

an abstraction of reality, a simplified representation of something, a key tool used by all decision makers

Models are sometimes classified as

- physical

- mathematical

- schematic

Physical

look like their real-life counterparts

Schematic

more abstract than their physical counterparts, have less resemblance to the physical reality

(pictures, drawings, blueprint, graphs, charts)

Mathematical

- most abstract, do not look at all like the real counterparts

- considered as most important models for calculators and computers

(diagrams, scatter plots, numbers, formulas, symbols)

Quantitative Approach

an attempt to obtain a mathematically optimal solution to managerial problems

Performance Metrics

used to manage and control the operation

Analysis of Trade Offs

trade off decisions

System Approach

emphasize interrelationship among the subsystem

System

a set of interrelated parts that must work together

Ethics

managers must consider how their decisions affect the stakeholders of the organization

Industrial revolution

began in 1770's in England to spread to the rest of Europe and US during 19th century

Craft production

- earliest day of manufacturing

- highly skilled workers using simple and flexible tools

Scientific Management

- began in 1990

- based on observation, measurement, analysis, and improvement of work methods and economic incentives

Frederick Winslow Taylor

- Father of Scientific Management

- methods emphasizing maximizing output

Frank Gilbreth

industrial engineer who developed principles of motion economy that applied to incredibly small portion of the task

Henry Gantt

recognized the value of non-monetary rewards to motivate workers

Gantt Chart

a widely used system for scheduling developed by Henry Gantt

Harrington Emerson

applied Taylor's ideas organization structure and encouraged the use of experts to improve organizational efficiency

Henry Ford

great industrialist employed scientific management techniques in his factories

Ford's Contributions

- mass production

- interchangeable parts

- division of labor

Mass Production

low skilled wokers used specialized machinery to produce high volumes of standardized goods

Interchangeable Parts

parts of a product made to such precision that they do not have to be custom-fitted

Division Labor

breaking up of production process into small tasks, so that each worker performs a small portion of overall job

Human Relations Movement

- began in 1930s

- emphasized importance of human element in job design

Lilian Gilbreth

- psychologist and Frank Gilbreth's wife

- focused on human factor in work

Competitiveness

how effecitvely an organization meets the wants & needs of customers relative to others that offer similar goods/services

price, delivery time, and product/serivce differentiation

business orgs compete through some contbution of ...

1. identifying consumer wants/needs

2. price & quality

3. advertising and promotions

Marketing influences competitiveness in several ways

1. neglecting operations strategy

2. failing to take advantage

3. putting too much emphasis on short-term financial performance

4. too much emphasis on product & service design

5. neglecting investments in capital and human resources

6. failing to establish good internal communications

7. failing to consider customer wants & needs

why some organizations fail?

Mission

reason for existence for an org

Goals

provide detail and scope of mission

Strategies

plans for achieving org goals

provide focus for decision making

Tactics

methods and actions taken to accomplish strategies

specific actions/short term steps to implement strategies

destinations

Goals are like __________

roadmaps

Strategies are the ___________ for reaching the destinations

Functional Strategies

broad plans

Core or Distinctive Competencies

special attributes or abilities that give an organization a competitive edge

- economic conditions

- political conditions

- legal environment

- technology

- competition

- markets

Key External factors in environmental scanning

- human resources

- facilities and equipment

- financial resourcse

- customers

- products and services

- technology

- suppliers

- other (patents, labor relations, etc)

key Internal factors in environmental scanning

Order qualifiers

characteristics of a company's product/service that customers perceive as minimum standards of acceptability to be considered as a potential purchasae

Order winners

characteristics of a company's product/service that cause it to be perceived as better than the competition

Quality-based, time-based

types of strategies

Quality based strategies

focuses on maintaining/improving quality of an orgs products/services

Time based strategies

focuses on reduction of time needed to accomplish tasks

Productivity

measure of effective use of resources, usualy expressed as ratio of output:input

- planning workforce requirements

- scheduling equipment

- financial analysis

productivity ratios are used for

(current period productivity - previos period productivity) / productivity growth

measuring productivity growth

- capital/labor

- quality

- technology

- management

factors affecting productivity

1. identify core/distinctive competencies

2. conduct environmental scanning

3. analyze SWOT

4. prioritize order qualifiers and order winners

how to formulate a strategy

Outputs/inputs

financial analysis of productivity

- single operations

- organizational unit

- entire organization

- the country

levels of measuring productivity

Forecast

a basic input in decision process of operations management bcs they provide info on future demand

an estimate about future value of a variable such as demand

1. expected level of demand

2. degree of accuracy

2 important aspects of forecasts

Expected Level of Demand

can be a function of trend/seasonal variation

Degree of Accuracy

ability of forecasters to correclty model demand, random variation, and unforeseen events

- what existed in the past will continue to exist in the future

- forecasts are not perfect

- forecasts for grups tend to be more accurate vs indiv items

- forecast accuracy decreases as time horizon increases

common features to all forecasts

- timely

- reliable

- accurate

- meaningful

- written

- easy to use

elements of a good forecast

1. determine purpose

2. establish time horizon

3. select forecasting technique

4. gather & analyze data

5. make forecast

6. monitor forecast

steps in foercasting process

qualitative, quantitative

approaches to forecasting

Qualitative

consist mainly of subjective inputs which often defy precise numerical description

Quantitative

involves projection of numerical data or development of associative models that attempt to utilize casual variables

- judgemental

- time series

- associative models

types of forecasts

Judgemental

uses subjective inputs such as opinions from consumer surveys, sales staf, managers, exec, and experts

qualitative

A judgemental forecast is __________

- Consumer surveys

- Delphi method

- Executive opinions

- Sales forece opinions

CDES

Time series

uses historical data that project patterns identified in recent time-series observations

quantitative

A time series forecast is __________

Associative models

uses explanatory variables to predict future demand

- naive

- simple moving average

- weighted moving average

- exponential smoothing

techniques for averaging forecasts

Naive

forecast for any period that equals the previous period's actual value

assumes demand in next period is same as demand in most recent period

Moving average

technique that averages a number of recent actual values, updated as new values become available

Weighted average

more recent values in a series are given more weight in computing a forecast

Exponential smoothing

a weighted averaging method based on previous forecast plus a percentage of forecast error

Simple moving average

technique that averages a number of recent actual values, updated as new values become available