Key Concepts from Operations Management Lecture

Quality Function Deployment (QFD)

  • Definition: A method to guide the design and creation of goods by integrating the voice of the customer into the marketing and design processes.

  • Purpose: Ensures that customer needs and expectations are prioritized in product development.

Loss Function Equation

  • L(x) = K(x - 1)^2

    • Description: This formula quantifies the monetary value of the loss associated with deviating from the target.

    • Variables:

    • L(x) = monetary loss

    • C_X = actual value of the dimension

    • K = constant translating deviation into dollars

Reliability in Manufacturing

  • Reliability: Probability that a manufactured good, piece of equipment, or system performs its intended function for its stated period of time.

Design for Manufacturing (DFM)

  • Definition: The process of designing to enable efficient production at the highest level of quality.

  • Goals:

    • Simplify the product to reduce complexity and cost

    • Improve productivity and quality

Design for Environment (DFE)

  • Definition: The explicit consideration of environmental concerns during the design of goods.

  • Objectives:

    • Incorporate recycling and disassembly processes in product design.

Project Management Concepts

Crashing a Project

  • Definition: Refers to reducing the total time to complete a project to meet a revised due date.

    • Crash time: Shortest realistic timeline for activity completion.

    • Crash cost: Total additional cost incurred by completing an activity in crash time rather than normal time.

  • Formula for Crash Cost per unit of time:
    \text{Crash Cost per unit of time} = \frac{\text{Crash Cost} - \text{Normal Cost}}{\text{Normal time} - \text{Crash time}}

Project Planning and Control

  • Project Plan: Provides the necessary information for determining the types and numbers of resources required for implementing business operations.

  • Project Control: Assesses project performance against goals and objectives, making adjustments as necessary.

Work Breakdown Structure (WBS)

  • Definition: A hierarchical tree of end items to be accomplished by the project team.

  • Components:

    • Nodes: Represent activities (illustrated as circles/boxes).

    • Arcs: Define the precedence relationships (illustrated as arrows).

Critical Path Method

  • Definition: The critical path is the sequence of activities that takes the longest to complete, defining the total project completion time.

Process Mapping and Automation

  • Process Mapping: Identifying essential tasks and opportunities for automation, applicable to both physical and information tasks.

Supply Chain and Data Reliance

  • Supply chains rely on transaction data and the Internet of Things (IoT) devices.

Analytics and Decision-Making

Types of Analytics

  • Diagnostic Analytics: Compares actual outcomes to expected outcomes to identify root causes and improve processes.

  • Prescriptive Analytics: Combines historical data with real-time inputs to recommend actions.

Advanced Analytics

  • Description: Enables computers to make autonomous decisions.

Network Types

Centralized Networks

  • Pros: More efficient and easier to manage.

  • Cons: Can be a single point of failure.

Distributed Networks

  • Pros: More resilient.

  • Cons: Harder to manage and secure.

Scalability in Business

  • Definition: A measure of the contribution margin (revenue minus variable costs) required to deliver a good or service as the business grows.

  • High Scalability: Ability to serve more customers at zero additional cost (low incremental costs).

  • Low Scalability: Additional customers require high incremental variable costs, making it less cost-efficient.

Total Cost Equation

\text{Total Cost} = \text{Fixed Cost (FC)} + \text{Unit Cost (c)} \times \text{Quantity (Q)}

Artificial Intelligence (AI) in Business

  • AI: Software algorithms that replicate tasks historically requiring human intelligence.

CAD/CAE/CAM

  • CAD (Computer-aided Design) / CAE (Computer-aided Engineering): Enables engineers to design, analyze, test, and simulate products before physical existence.

  • CAM (Computer-aided Manufacturing): Involves computer control of the manufacturing process.

Customer Relationship Management (CRM)

  • Definition: A business strategy designed to learn more about customers' wants, needs, and behaviors to build stronger relationships and enhance revenues.

    • Application: Segment markets based on behavioral characteristics and demographics.

Competitive Priorities in Operations

  • Organizations can compete on:

    • Cost

    • Quality

    • Time

    • Flexibility

    • Innovation

  • Effects of Quality Improvement: Often leads to increased market share and reduced time to market, enhancing production quality and efficiency.

Mass Customization

  • Definition: The ability to produce goods and services tailored to customers’ specific demands at any volume and time.

Strategic Planning

Levels of Strategy

  • Corporate Strategy: Plan for the acquisition and allocation of resources among various businesses.

  • Business Strategy: Defines focus for Strategic Business Units (SBUs).

  • Functional Strategy: Describes means by which business strategies are accomplished, focusing on operations, marketing, finance, etc.

Supply Chain Overview

  • Definition: The sequence of processes from supplier to consumer, incorporating the physical flow of materials and information.

Value Chain and Supply Chain

  • Value Chain: Describes the flow of materials, goods, services, and financial transactions from suppliers to customers.

  • Supply Chain: Subset of the value chain focusing on the physical flow of materials and supportive information and financial flows.

Total Value Proposition

  • Definition: Represents the total benefit achieved from a product or service respective to its perceived value against the cost.

Inventory Management

  • Description: Involves managing raw materials, work-in-process, and finished goods to respond to demand.

Customer Satisfaction Measures

  • Importance: Indicates customer ratings of features and correlates those ratings with their behaviors and future buying tendencies.

  • Measures of Quality:

    • Goods quality: Reflects physical performance and characteristics.

    • Service quality: Relates to consistently meeting or exceeding customer expectations.

Flexibility in Operations

  • Flexibility Types:

    • Volume Flexibility: Ability to adapt production volumes quickly.

    • Design Flexibility: Develop a variety of customized products to meet diverse customer needs.

  • Innovation: Process of creating unique and new goods or services to gain competitive advantage.

Operations Management

  • Definition: The science and art of ensuring that goods and services are efficiently created and delivered to customers.

  • Focus: Daily management of processes that affect value provided to stakeholders.

Products and Services Distinction

  • Goods: Physical items that can be seen or touched, categorized into durable (lasting over 3 years) and nondurable (lasting less than 3 years).

  • Services: Activities that do not produce tangible products but provide value to customers.