Operations & Supply Chain Management – Exam Prep

Service Process & Design

• Service package = bundle of Supporting facility, Facilitating goods, Information, Explicit services, Implicit services.
• Customer-contact ↑ ➔ sales opportunity ↑, production efficiency ↓.
• Service blueprint: flowchart with “line of visibility”; basis for fail-safing (poka-yokes). Three T’s = Task, Treatment, Tangibles.
• Capacity is dominant: too much = \uparrow cost, too little = lost demand.
• Web-platform businesses (e.g., Uber, Airbnb) match independent groups via digital interface.

Waiting Line Models

• Key variables: arrival rate \lambda, service rate \mu.
• Simple (M/M/1) system formulas
Utilization \rho=\frac{\lambda}{\mu}
Avg. in line Lq=\frac{\lambda^2}{\mu(\mu-\lambda)} Avg. in system Ls=Lq+\rho Wait in line Wq=\frac{Lq}{\lambda} Wait in system Ws=W_q+\frac{1}{\mu}.
• Constant-service (M/D/1) gives lower waits; same formulas with deterministic service modifications.
• Queue management: segment, inform, divert attention, train staff, encourage off-peak visits.

Quality Management & Six Sigma

• TQM goals: (1) careful design, (2) consistent conformance.
• Design quality vs Conformance quality; “quality at the source”.
• Costs of quality: Prevention < Appraisal < Internal failure < External failure.
• Six Sigma goal: 3.4 defects / 10^6 opportunities; metric \text{DPMO}=\frac{\text{defects} \times 1{,}000{,}000}{\text{opportunities/unit} \times \text{units}}.
• DMAIC cycle; core analytical tools: Flowchart, Run chart, Pareto, Checksheet, Cause-&-effect, Opportunity flow, Control chart, FMEA (RPN), DOE.
• Variation: Common vs Assignable; \bar x=\tfrac{\sum xi}{n},\; \sigma=\sqrt{\tfrac{\sum (xi-\bar x)^2}{n}}. Spec limits set acceptability.

Inventory Management

• Motives: independence, demand variability, schedule flexibility, delivery uncertainty, economies.
• Costs: Holding, Ordering, Setup, Shortage.
• Demand: Independent vs Dependent.
• Single-period model balances over-/under-stock.
• Fixed-order-quantity (EOQ) model:
Q_{opt}=\sqrt{\frac{2DS}{H}}
Reorder point R=dL (average demand d during lead time L).
Total annual cost TC=DC+\frac{D}{Q}S+\frac{Q}{2}H.
• Fixed-time-period model: review every T, order up to target; larger average inventory.
• Inventory turnover IT=\frac{D}{(Q/2)+SS}; Weeks of supply =\frac{\text{Avg. inv. value}\times52}{\text{COGS}}.
• ABC classification: A-high \ value, C-low.

Global Sourcing & Procurement

• Strategic sourcing focuses on long-term supplier relations; specificity determines buying process (catalog vs RFP).
• Bullwhip effect: small retail changes amplify upstream; cured by continuous replenishment.
• Supply-chain uncertainty matrix: Functional vs Innovative products; Stable vs Evolving processes → Efficient, Risk-hedging, Responsive, Agile chains.
• Outsourcing drivers: Financial, Improvement, Organizational.
• Total Cost of Ownership (TCO) aggregates purchase, use, disposal costs.

Logistics & Location Decisions

• Transportation: Truck (flexible), Rail (cheap/slow), Water (high capacity/slow), Air (fast/expensive), Pipeline (liquids/gases), Hand delivery (last mile).
• Warehousing: Cross-docking, Hub-and-spoke.
• Location factors: customer proximity, business climate, costs, infrastructure, labor, trade blocs, risk.
• Factor-rating method: weight \times score → highest composite wins.
• Centroid method for single facility:
xc=\frac{\sum d{ix}vi}{\sum vi},\; yc=\frac{\sum d{iy}vi}{\sum vi}.