Final

Stockout

An inventory shortage (lost sale)

Operations (The Functions of an Organization)

Distribution and Warehousing, Industrial Engineering, Maintenance, Personnel/Human Resources, Purchasing & Quality Assurance, and Management Information Systems

Ease-of-use and user instructions

Increase the likelihood that a product will be used for its intended purpose and in such a way that it will continue to function properly and safely

Quality of Design

Intention of designers to include or exclude features in a product or service

Product/Process Excellence

Involves product design quality and monitoring the process for continuous improvement Poka-Yokes are devices that prevent defects from being produced

Influence of Japanese Manufacturers People

J. Edwards Demming Taiichi Ohno and Toyoda Sakichi

Quality in Goods (Bullet points)

Performance Features Reliability Durability Conformance Serviceability Aesthetics Perceived quality

Continuous Improvement

Philosophy that seeks to make never-ending improvements to the process of converting inputs into outputs Kaizen - Japanese word for continuous improvement

___________ are adding many new workers in low-skill, entry-level positions

Services

The Product Process Matrix

How goods are made depends on the quantity and level of customization The less flexible a process, the higher the standardization & volume

Cyclical Patterns

Long term, repeating up and down movements usually driven by the economy

Finance

Manages: cash flow, current assets and capital investments

Marketing

Manages: customer demands Generates: sales for goods and services

Operations

Manages: people, equipment, technology, materials, and information To product: goods and/or services

Basic Structure and Roles of the Business Organization

Marketing, Operations, Finance (all under CEO)

Services

are activities that provide some combination of time, location, form or psychological value.

Work-In-Process-Goods

are partially completed products that are still in the production process

Goods

are physical items that include raw materials, parts, subassemblies, and final products.

Finished Goods

are the final product, available for sale, distribution or storage.

Concurrent Engineering

brings all interested parties together early in the design process to deal with issues associated with design, marketing, manufacturing, quality, supply, etc. Manufacturing can identify production capabilities, capacities, materials, and design alternatives to assist in efficient manufacturability.

Value Chain

is a set of activities that a firm operating in a specific industry performs in order to deliver a valuable product or service for the market.

The Transformation Process

is any activity or group of activities that takes one or more inputs, transforms and adds value to them, and provides outputs for customers or clients.

Independent Demand

items demanded by external customers

Dependent Demand

items used to produce final products

Product/Process Design

standard parts, modular design, quality, setup time reduction, production flexibility, etc.

Transformational Processes - Storage

to hold, store, protect

Transformational Processes - Locational

transportation or locational change

Transformational Processes - Informational

unbiased, informed, learning

EFQM Excellence Award

§A non-prescriptive frame work based on nine criteria that recognizes that there are many approaches to achieving sustainable excellence. Under European Quality Award (EQA)

Strategy

§A plan for achieving organizational goals §Serves as a roadmap for reaching the organizational destinations

Competency-based Strategies

§Activity / Process based success §Focus on developing core competencies, rather than achieving specific marketing or financial goals

Environmental Scanning

-Environmental Scanning is necessary to identify SWOT -Internal Factors -Strengths and Weaknesses -External Factors -Opportunities and Threats - Michael E. Porter identifed this approach with the Five Forces Model

Muda (Waste)

Anything in the manufacturing process that does not add value from the customer's perspective.

Facility Design

Design a facilities layout & process flow of work that allows for Linked operations Balanced workstation capacities Flow efficiency Small lot sizes Reduced setup/changeover time

Jidoka (Autonomation)

Design equipment to partially automate the manufacturing process (partial automation is typically much less expensive than full automation) and to automatically stop when defects are detected.

Poka-Yoke (Error Proofing)

Design error detection and prevention into production processes with the goal of achieving zero defects.

Quality in Services (Bullet points)

Reliability Tangibles Responsiveness Credibility / Assurance Courtesy / Empathy

Forecasting

The study of historical data to discover their underlying tendencies and patterns and the use of this knowledge to project the data into future time periods.

Supply Chain Management

a sequence of activities and organizations involved in producing and delivering a good or service Suppliers' suppliers Direct suppliers Producer Distributor Final Customers

Forecast

a statement about the future value of a variable of interest •We make forecasts about such things as weather, demand, and resource availability •Forecasts are an important element in making informed decisions

Model

an abstraction of reality; a simplification of something. Common features: - They are simplifications of real-life phenomena - They omit unimportant details of the real-life systems they mimic so that attention can be focused on the most important aspects of the real-life system

Four most common performance metrics in operations

cost, quality, flexibility, and speed

Cost of failure

costs associated with the failure of a defective product

Employee turnover is ______ in services, especially in low-skill jobs

high

Input variability tends to be __________ in many service environments than in manufacturing

higher

Transformational Processes - Physical

involves goods or physical objects

Transformational Processes - Physiological

involving the physical, anatomy

1.Jobs in services are often ________ structured than in manufacturing

less

Manufacturing planning and control

level loading, small lots, pull systems, visual systems, close vendor relationships, reduced transaction processing

In many services, worker skill levels are ______ compared to those of manufacturing employees

low

Transformational Processes - Psychological

mental, psychological

Quality Issues

need to be worked out to protect both the customer & vendor. Some of these include: •Quality levels (AQL, LTPD, etc) •Working relationship between customer & vendor Quality Control personnel •Suppliers encouraged to use Statistical Process Control during the manufacturing process •Acceptance Sampling prior to shipping may be reduced/eliminated depending on customer satisfaction with SPC results •Conflict resolution guidelines

Contractual Issues

need to be worked out to protect both the customer & vendor. Some of these include: •Long term contracts with minimal paperwork establishing the purchase quantities with the ability to ship variable quantities through out the term. •Accuracy requirements in both shipment quantities & quality standards •Cost issues (who pays for storage costs on un-released materials, re-tooling, containers, etc.). While it may seem that some of these issues flow from customer down through the supplier network, the nature of the relationship (private label vendor) may allow for negotiation.

Transformational Processes - Exchange

offering one thing for another (barter)

Service performance can be adversely affected by many factors ________ of the manager's control (e.g., employee and customer attitudes)

outside

Qualitative Forecasting

•permit the inclusion of soft information such as: •Human factors •Personal opinions •Hunches & Intution •These factors are difficult, or impossible, to quantify

Breakdown Maintenance

•quickly repair machines that have failed

Quantitative Forecasting

•techniques involve either the projection of historical data or the development of associative methods that attempt to use causal variables to make a forecast These techniques rely onharddat

Consistency (SQ)

•the ability to provide the same level of good quality repeatedly

Convenience (SQ)

•the availability and accessibility of the service

Tangible (SQ)

•the physical appearance of facilities, equipment, personnel, and communication materials

Time (SQ)

•the speed with which the service is delivered

Durability (PQ)

•the useful life of the product

Courtesy (SQ)

•the way customers are treated by employees

Responsiveness (SQ)

•willingness to help customers in unusual situations and to deal with problems

Trend Component

Parabolic, Exponential, Linear, and Growth

Operations

- The actual "doing" part of the process

Goals

- Provide detail and the scope of the mission - Goals can be viewed as organizational destinations

Visible Quality Failures

§Auto recalls §Toys §Produce §Dog food §Pharmaceuticals

What JIT requires

- Product Design . Process Design . Employee participation . Industrial engineering/basics . Continuing improvement . Total quality control . Small lot sizes . Vendor relations

Competing On Time / Speed

- "First Mover" or "First to Customer" - First to customer example - Amazon Corp: - Limited Inventory 1 - day delivery - Strategies that focus on the reduction of time needed to accomplish tasks

Operation Performance Metrics

- Productivity §A measure of the effective use of resources, usually expressed as the ratio of output to input - Productivity measures are useful for §Tracking an operating unit's performance over time §Judging the performance of an entire industry or country

Perceived Quality (PQ)

• indirect evaluation of quality

W. Edwards Deming

- 14 points; special vs. common causes of variation (1950 - 1970's) - Advocated Statistical Process Control (SPC) §Methods which signal shifts in a process that will likely lead to products and/or services not meeting customer requirements. §Emphasized an overall organizational approach to managing quality. §Demonstrated that quality products are less costly than poor quality products. §Identified 14 points critical for improving quality. Highest award for industrial excellence in Japan

Lead Six Sigma

- A balanced approach to process improvement that integrates principles from lean operation and statistical tools for variation reduction from six sigma to achieve speed and quality §An approach that is equally applicable to products and services

Strategy

- A plan for achieving organizational goals - Serves as a roadmap for reaching the organizational destinations

Strategies

- A plan for achieving organizational goals - Serves as a roadmap for reaching the organizational destinations - Organizational strategies - Overall strategies that relate to the entire organization - Support the achievement of organizational goals and mission - Functional level strategies - Strategies that relate to each of the functional areas and that support achievement of the organizational strategy

Strategy

- A plan for achieving organizational goals - Serves as a roadmap for reaching the organizational destinations

Competency-based Strategies

- Activity / Process based success - Focus on developing core competencies, rather than achieving specific marketing or financial goals - Inductive Strategy - Identify the competency and build the organization around it - Activity driven - Based on specific characteristics within firm - Constantly evolving to remain competitive

The Balanced Scorecard Approach (Kaplan & Norton)

- Aligns business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals - A top-down management system that organizations can use to clarify their vision and strategy and transform them into action - Develop objectives - Develop metrics and targets for each objective - Develop initiatives to achieve objectives - Identify links among the various perspectives §Finance §Customer §Internal business processes §Learning and growth §Monitor results - Brings the Mission & Vision alive by linking activities and metrics to the strategic goals of the organization

Managing and Measuring Productivity

- Balanced Scorecard - Management measurement tool to assess the whole organization §Productivity §What is it §How is it measured §Why is it important §Factors effecting productivity

Performance Metrics in Operations

- Can be a core competence - Use to determine the positioning of the firm - Four most common metrics: - Cost / Quality / Flexibility / Speed - Each metric delivers some form of value to the consumer

Order winners

- Characteristics of an organization's goods or services that cause it to be perceived as better than the competition

Order qualifiers

- Characteristics that customers perceive as minimum standards of acceptability for a product or service to be considered as a potential for purchase

Competing On Quality

- Consumer Driven - Finding the consumer's Value Set - Branding and Customer Loyalty - Creating Value - Focus of retaining / expanding market share - Requires Consistency - Continuous Improvement - A Company Philosophy

William Shewart

- Control charts; variance reduction (early 1900's) - Statistican at Bell Laboratories §Developed statistical control process methods to distinguish between random and nonrandom variation in industrial processes to keep processes under control. §Developed the "plan-do-check-act" (PDCA) cycle that emphasizes the need for continuous improvement. §Strongly influenced Deming and Juran (both worked under him).

Competing On Cost

- Eliminate all waste - Reduce Human Error - Increase Employee Input - Rigorous Pursuit of Efficiency -automation -eliminate redundancy -increased training & development -Using the loss leader strategy in retail

Benefits of Good Quality

- Enhanced Reputation for Quality - Ability to command premium prices - Increased Market Share - Greater Customer Loyalty - Lower Liability Costs - Fewer Production or Service Problems - Lower Production Costs - Higher Profits

Why Productivity Matters

- High productivity is linked to higher standards of living §As an economy replaces manufacturing jobs with lower productivity service jobs, it is more difficult to maintain high standards of living - Higher productivity relative to the competition leads to competitive advantage in the marketplace §Pricing and profit effects - For an industry, high relative productivity makes it less likely it will be supplanted by foreign industry §"Creative Destruction" (Joseph Schlumpeter) - Economic Innovation

Competitiveness

- How effectively an organization meets the wants and needs of customers relative to others that offer similar goods or services - Organizations compete through some combination of their marketing and operations functions •What do customers want? •How can these customer needs best be satisfied?

Marketing's Influence

- Identifying consumer wants and/or needs - Pricing - Advertising and promotion - Branding and Brand Loyalty

Consequences of Poor Quality

- Loss of customers/business - Liability/Negligence - Low Productivity/Inefficiency - Higher Costs/Longer Production Times

MRP Comparison (Push)

- Lot size or batch production - Extensive shop floor control - More complex - Relies on computer system to trigger production and order inventory - Inventories related to batch or lot sizes

What is JIT?

- Management philosophy (produce only what is needed when it is needed) - Pull system - is a manufacturing philosophy involving an integrated set of procedures/activities designed to achieve a high volume of production using minimal inventories(raw materials, work-in-process, and finished goods).

Operations Strategy

- Operations strategy Metrics: The Complete List - The approach, consistent with organization strategy, that is used to guide the operations function.

Armand Feigenbaum

- Quality is a total field; the customer defines quality (1950's) §Proposed the concept of "total quality control," making quality everyone's responsibility and a strategic initiative. -Stressed interdepartmental communication. -Emphasized careful measurement and report of quality costs

Joseph Juran

- Quality is fitness-for-use; quality trilogy (1950 - 1970's) §Emphasized the importance of producing quality products §The Juran Trilogy: quality planning, control, and improvement. §Defined product quality as "fitness for use" as viewed by the customer in: §Quality of design §Quality of conformance §Availability §Safety §Field use -Categorized the cost of quality as: §Cost of prevention §Cost of detection/appraisal §Cost of failure

JIT Comparison (Pull)

- Repetitive production - Minimal shop floor control - Simpler - Relies on visual or audible signals to trigger production and inventory (e.g. auto carpets) - Lower inventories related to need "at the time"

Mission Statement

- States the purpose of the organization - The mission statement should answer the question of "What business are we in?"

Tactics

- The methods and actions taken to accomplish strategies - The "how to" part of the process

Goals

- The mission statement serves as the basis for organizational goals - Provide detail and the scope of the mission - Goals serve and can be viewed as organizational destinations - is the basis for organizational strategies

Mission

- The reason for an organization's existence

Responsibility for Quality

- Top Management - Design - Procurement - Production/Operations - Quality Assurance - Packaging and Shipping - Marketing and Sales - Customer Service

Strategy Formulation

- Usually Deductive - General direction to specific response - Top down driven - Traditional methods based on Financial & Accounting - Stockholder value

What JIT Does

- attacks waste, exposes problems and bottlenecks, achieves streamlined production - Eliminate disruptions in productions caused by (caused by poor quality, equipment breakdowns, schedule changes, late deliveries) - Makes the manufacturing delivery system flexible or more robust (allowing it to handle a variety of products and changes in the level of output while still maintaining balance and throughput speed) - Eliminates waste - Reduces setup and delivery times

Competing On Flexibility

-"Mass Customization" - the ability to create a wide variety of products that use many common and mass produced items. - Adapt to changes in volume and product/service offerings - Employee Flexibility -"The Flat Organization Structure" - Eliminate Bureaucracy - Agile manufacturing is "the ability of a company to thrive in a competitive environment of continuous and unanticipated change." - Involves the blending of several core competencies: - Cost - Quality - Reliability -Flexibility

Six Sigma

-A business process for improving quality, reducing costs, and increasing customer satisfaction 3.4 defects per million

ISO 14000

-A set of international standards for assessing a company's environmental performance

MALCOLM BALDRIGE NATIONAL QUALITY AWARD (MBNQA)

-Background -Established in 1987 to recognize total quality management in American industry. -Purpose -Stimulate U.S. companies to improve quality and productivity. -Establish guidelines and criteria to evaluate quality. -Recognize those firms that improve their quality. -Provide guidance in how to achieve quality.

BENEFITS OF THE BALDRIGE QUALITY CRITERIA

-Baldrige guidelines can be used to: -Help define and design a total quality system. -Evaluate ongoing internal relationships among department, divisions, and functional units within an organization. -Assess and assist outside suppliers of goods and services to a company. -Assess customer satisfaction.

Productivity in Mike's Bikes

-Basic economics views output as a combination of capital (K) and labor (L). -In Mike's Bikes, Plant Size is the amount of automation (K) you desire to employ for your capacity needs. It has a fixed cost and the variable expenses are preventive maintenance, quality systems, set up time and the SCU output is constant -The employee size is (L) and you need to be aware that investments in training will improve productivity along with higher salaries from 350 to 625 SCUs per year -Salaries and Training also improve productivity because training educates the employee and higher salaries reduce turnover

Safety Stock

-Buffer added to on hand inventory during lead time to cover unforseen events

Kaoru Ishikawa

-Cause-and-effect diagrams; quality circles (1950 - 1980's) §Developed problem-solving tools such as the cause-and-effect (fishbone) diagram. §Called the father of quality circles.

Benchmarking Process

-Clarify what you want to accomplish. -Gather and normalize your data. -Compare with a target / peer group. -Identify apparent "best practices." -Select which changes to try. -Track your progress.

Negative Factors of Inventory

-Cost »Holding items that do not appreciate in value -Becomes Obsolete »New models make current inventory obsolete -Takes up Floor Space »Cost of space and administration of inventory

Holding/Carrying Cost (Cc)

-Cost associated with investing in inventory and maintaining the physical investment in storage -Costs include taxes, capital, insurance, handling, storage, shrinkage, obsolescence and deterioration.

Fixed Order Quantity System: Basic Assumptions of EOQ Model

-Demand is known with certainty -Demand is relatively constant over time -No shortages are allowed -Lead time for the receipt of orders is constant -The order quantity is received all at once

Stockout Cost (Cs)

-Economic consequence of an internal or external shortage

ISO 20022

-Electronic banking standard that allows that banks - as well as numerous intermediaries, such as credit card companies, payment processors, lenders - so their transaction can go through

US Employment Today

-Goods-producing industries (manufacturing, construction, fishing, forestry, mining, and agriculture) account for 20 percent of the jobs in the U.S. economy. -Service-providing industries account for 80 percent of the jobs in the U.S. economy. -One-half of those jobs in goods-producing industries involve service processes such as human resource management, accounting, and financial. -Therefore, more than 90 percent of the jobs in the U.S. economy involve designing and managing service-, information- or entertainment-intensive processes.

Quality Circles

-Groups of workers who meet to discuss ways of improving products or processes -Less structured and more informal than teams involved in continuous improvement -Quality circle teams have historically had relatively little authority to make any but the most minor changes

Reverse Logistics

-Handles all returns and each has a different path -Four types of customer returns »commercial returns »product recalls »repairable returns end-of-life returns

Problems with moving average models

-Increasing the number of data points in the equation (n) smooths the forecast but makes it less responsive to changes -Does not forecast trends well -Requires very stable historical data (i.e., period-to-period values are similar)

The Deming Prize

-Initiated by Japan in 1951 to recognize the importance of high quality products. -Name after W. Edwards Deming -Categories of the Deming Prize: -The Deming Prize for Individuals -The Deming Application Prize -The Quality Control Award for Operations/ Business Units

Functions of Inventory

-Inventory exists because of the difficulty in synchronizing supply and demand -Time Factor -The process in creation, transformation and delivery of the final product -Discountinuity Factor -Separates the demand functions of retailing, distributing, warehousing, manufacturing and purchasing

Positive Factors of Inventory

-Meet demand & Smooth Production »Handles anticipated & unanticipated demand -Decoupling of Production / Distribution »Inventory buffers timing and delivery -Hedge against price increases »Buy now or pay later -Price Discounts Increased order size can drive down pric

Make America Great... Again

-President Trump has promised to bring "millions" of manufacturing jobs back to the US. -How? §Worked with Carrier to save 1,000 jobs from going to Mexico §Meeting with auto manufacturers to develop a plan to bring assembly plants back to the US §Propose a boarder tax for products made outside of the US -Will this strategy continue to work?

Philip Crosby

-Quality is free; zero defects (1980's) §Wrote a book and preached that "Quality is Free." §"Quality is not a gift, but it is free because the 'unquality' of things are what cost money" §Believed that an organization can reduce overall costs by improving the overall quality of its processes.

Service Sector Productivity

-Service sector productivity is difficult to measure and manage because It involves intellectual activities It has a high degree of variability -A useful measure related to productivity is process yield Where products are involved ratio of output of good product to the quantity of raw material input. Where services are involved, process yield measurement is often dependent on the particular process: ratio of cars rented to cars available for a given day ratio of student acceptances to the total number of students approved for admission.

ISO 9000

-Set of international standards on quality management and quality assurance, critical to international business

Inventory

-Stock of items held to meet future demand -Inventory management answers two questions -How much to order -When to order

Taiichi Ohio and Shigeo Shingo

-TPS / Continuous improvement (1950 - 1990's ) §Kaizen - Continuous Improvement §You cannot eliminate variation and error, only strive to reduce it §Developed the Toyota Production System which is based on kaizen and several other statistical methods (many from Deming)

Genichi Taguchi

-Taguchi loss function (1950 - 1990's) §Emphasized the minimization of variation. §Quality is measured as the amount of loss to society from waste or failure §Extended Juran's concept of external failure. §The philosophy behind Six Sigma

The Solution

-Today's factory worker needs a new skill set that is not labor intensive (vocational). -Workers must have knowledge of technology (programming, systems design, etc.) -The speed of technology is outpacing the job market skill set -Certifications are becoming an important part of developing our workforce -Each of you should take a programming course and have extensive knowledge of Excel and some understanding of data analytics / statistics

Uncertainty Factor

-Unforseen events that modify the original plans of the organization

Fixed-order-quanity system (continuous)

-constant amount ordered when inventory declines to predetermined level

Supplies

-items consumed in the normal functioning of an organization

Raw Materials

-items purchased from suppliers to be used as inputs into the production process.

Fixed-time-period system (Periodic)

-order placed for variable amount after fixed passage of time

Strategy Formulation

1) Define primary task 2) Assess core competency (distinctive competence) 3) Determine order winners & order qualifies 4) Position the firm

Strategy Formulation Steps

1. Define primary task §How are we to compete in our industry 2. Assess core competency (distinctive competence) §What makes us unique and competitive? 3. Determine order winners & order qualifiers §What is important and what is the determining factor 4. Position the firm §What market(s) appeal to our core competency?

Improving Productivity

1.Develop productivity measures for all operations 2.Determine critical (bottleneck) operations 3.Develop methods for productivity improvements 4.Establish reasonable goals 5.Make it clear that management supports and encourages productivity improvement 6.Measure and publicize improvements Don't confuse productivity with efficiency (without adding effectiveness) - Productivity = Efficiency + Effectiveness

Why some organizations fail

1.Neglecting operations strategy 2.Failing to take advantage of strengths and opportunities and/or failing to recognize competitive threats 3.Too much emphasis on short-term financial performance at the expense of R&D 4.Too much emphasis in product and service design and not enough on process design and improvement 5.Neglecting investments in capital and human resources 6.Failing to establish good internal communications and cooperation 7.Failing to consider customer wants and needs

Businesses Compete Using Operations

1.Product and service design 2.Cost 3.Location 4.Quality 5.Quick response 6.Flexibility 7.Inventory management 8.Supply chain management 9.Service 10.Knowledge

Features Common to All Forecasts

1.Techniques assume some underlying causal system that existed in the past will persist into the future 2.Forecasts are not perfect 3.Aggregate forecasts (groups of items) are more accurate than those for individual items 4.Accuracy decreases as the forecasting horizon increases The purpose of a forecast is not to correctly predict a future event, but to minimize the amount of error that surrounds the outcome

Things to Remember

1.The way work is organized has significant implications for the entire organization 2.Pay attention to variability and reduce it whenever you can 3."Homework is on the Highway to Happiness" - be prepared for your future 4.How managers relate to their subordinates will have a tremendous impact on the success / failure of an organization 5.Quality and Price are the two prominent factors in a consumer's buying decision. Strive to integrate quality in everything you do and always look to minimize your costs 6.Pay careful attention to technology - weigh the opportunities to the risks. Remember that change can be very difficult for those who do not control it 7.Balance your capacity by making sure your demand never exceeds your supply - in business and personal endeavors 8.Never underestimate your competitors 9.Most decisions involve tradeoffs - be well verse on the effect of any outcome 10.Make ethics a part of your professional and personal life. Your integrity is yours.

_______ of those jobs in goods-producing industries involve service processes such as human resource management, accounting, and financial.

1/2

Long Range

2 - 5 years New Product/Process Level Market & Consumer Trends Industry forecasts Facility Location Long term capacity planning Process management Technology Adoption

Medium Range

2 months - 2 years Group Level Staff Planning Production planning Master production scheduling Purchasing (material and equipment) Distribution

Goods-producing industries (manufacturing, construction, fishing, forestry, mining, and agriculture) account for ______ percent of the jobs in the U.S. economy.

20%

Service-providing industries account for _____ percent of the jobs in the U.S. economy.

80%

Therefore, more than _____ percent of the jobs in the U.S. economy involve designing and managing service-, information- or entertainment-intensive processes.

90%

Quantitative Methods

A decision making approach that frequently seeks to obtain a mathematically optimal solution Linear programming (MGMT 355) Queuing techniques Inventory models Project models Forecasting techniques Statistical models

Heijunka (Level Loading)

A form of production scheduling that purposely manufactures in much smaller batches by sequencing (mixing) product variants within the same process.

Kanban (Pull System)

A method of regulating the flow of goods both within the factory and with outside suppliers and customers. Based on automatic replenishment through signal cards that indicate when more goods are needed.

Kaizen (Continuous Improvement)

A strategy where employees work together proactively to achieve regular, incremental improvements in the manufacturing process.

Mathematical Models

A way to measure and understand variability - Do not look at all like their real-life counterparts

Industrial Revolution People

Adam Smith Eli Whitney James Watt

Employee Involvement

All employees assume responsibility for inspecting the quality of their work

Assembly Line- Henry Ford

Avid inventor and engineer Founded two failed companies Detroit Motor Company Henry Ford Company Created the Ford Motor Company in 1903 1st car - Model A sold 700 units 1908 Ford introduces the Model T Sold 16.5 million Model Ts (1908-27) Invented the assembly line in 1913 which cut the price of the Model T in half Production time went from 12.5 hours to 90 minutes per car

The Baldrige Competition

Benefits 1.Winners achieve financial success 2.Winners share their knowledge 3.The process motivates employees 4.The process requires obtaining data 5.The process provides feedback Award Categories 1.Education 2.Healthcare 3.Manufacturing 4.Nonprofit/Government 5.Service 6.Small Business

Finance (The Functions of an Organization)

Budgeting, Financing via bonds, loans and/or stocks, Economic analysis of investment proposals, provision of funds, and Accounting

Quality and the supply chain

Business leaders are increasingly recognizing the importance of their supply chains in achieving their quality goals §Requires: §Measuring customer perceptions of quality §Identifying problem areas §Correcting these problems Supply chain quality management can benefit from a collaborative relationship with suppliers §Helping suppliers with quality assurance efforts §Information sharing on quality-related matters

8 types of waste

Defects, Overproduction, Waiting, Non-Utilized Talent, Transportation, Inventory, Motion, and Extra-Processing

Customer Focus (on "Fitness for Use"

Design Quality - Specific characteristics of a product that determine its value in the marketplace Conformance Quality - The degree to which a product meets its design specifications

Speed - The First Move Matrix

Calm Waters - Low tech, low moving markets. Staples and necessities Market Leads - Market demand for innovation and allows for 2nd movers to profit Technology Leads - Hyper-competitive markets where both innovation and differentiation are important Rough Waters - Products ahead of their time are often supplanted by later entrants who are able to better package the technology to the market pace The advantage gained by the initial ("first-moving") significant occupant of a market segment. It may be also referred to as Technological Leadership. This advantage may stem from the fact that the first entrant can gain control of resources that followers may not be able to match.

Factors Affecting Productivity

Capital, Technology, Methods, Quality, Management

Schematic Models

Computerized concepts - Look less like their real-life counterparts than physical models

Human Resources

Considerations need to be given to respect for personnel issues of . Pay . Management issues (feeling threatened of losing control) . People issues (getting along with each other) . Continuous Improvement . Total employee involvement . Empowerment .. ability to make changes in their work environment .. spot quality problems .. halt production when necessary .. generate ideas for improvement .. analyze problems .. learn multi-function tasks

Cost of Prevention

Costs associated with the development of programs to prevent defectives from occurring in the first place

Cost of detection/appraisal

Costs associated with the test and inspection of subassemblies and products after they have been made

Joseph Schlumpeter

Creative Destruction Economic Innovation

_______ is generally much higher in services compared to manufacturing

Customer Contact

Key Issues for Operations Managers Today

Economic conditions (Global and Domestic) Innovation / Technology (How can we do more with less) Quality / Consistency (We can't eliminate variability) Green Manufacturing (Improve sustainable solutions) Risk management (the uncertainty of business cycles, politics and world economics) Competing in a global economy (wages, skills, technology, politics, local laws, customs, etc.)

The Balanced Scorecard

Financial, Customer, Internal Business Process, and Learning and Growth

Michael Porter

Five Forces Model

Manufacturing Strategies for Minimizing Waste

Focused Factories, Group Technology Layouts, and Cellular Layouts

Strategy Formulation

Effective strategy formulation requires taking into account - Determining and Leveraging Core competencies - Environmental scanning - SWOT - Successful strategy formulation also requires taking into account - order qualifiers - order winners

Human Relations Movement People

Elton Mayo Lillian Gilbreth Douglas McGregor

Everyone in the organization has some responsibility for quality, but certain areas of the organization are involved in activities that make them key areas of responsibility.

Everyone

Decision Models and Management Science People

F. W. Harris William Shewhart George Dantzig

Optimization Models & Management Science

F.W. Harris - mathematical model for inventory management, 1915 Walter Shewhart - known as the father of statistical procedures for sampling and quality control, 1930s (J. Edwards Deming worked for Shewart and learned SPC) George Dantzig - linear programming, 1947

Costs of Quality

Failure Costs, Internal Failure Costs, and External Failure Costs

Failure Costs

Feigenbaum 65-70% Juran/Gryna Internal: 25-40% External: 20-40% /100%

Detection/appraisal costs ratio

Feigenbaum 20-25% Juran/Gryna 10-50%

Prevention cost ratio

Feigenbaum 5-10% Juran/Gryna 0.5-5%

The Functions of an Organization

Finance, Operations, and Marketing

Ordering Cost or Setup Cost (Co)

For ordering cost it represents the costs in ordering and receiving an order from a vendor (shipping & nhandling). Setup costs repalce ording cost when an item is made in-house and not ordered. Costs include setting up and calibrating the machines and systems needed to make a production run of the item.

Fordism - Ford's Assembly Line

Ford's take on the assembly line No special training required. There are jobs that almost anyone can do. Provided employment to immigrants. The $5 day Until the assembly line, auto workers were paid about $1.50 per day The creation of the middle-class worker A massive influx of people from the south Detroit population doubles to 500,000 Ford was the #1 selling automobile company until 1927 "Any customer can have a car painted any color that he wants so long as it is black."

Scientific Management - Original Contributors

Frank Gilbreth - father of motion studies (Cheaper by the Dozen) Henry Gantt - developed the Gantt chart scheduling system and recognized the value of non-monetary rewards for motivating employees

When using forecast information...

From the Perspective of a Reactive approach •View forecasts as probable future demand •React to meet that demand From the Perspective of a Proactive approach •Seeks to actively influence demand •Advertising •Pricing •Product/service modifications •Generally requires either an explanatory model or a subjective assessment of the influence on demand

Supply Chains as Trees

Getting products and services from start to finish requires a network of coordinated efforts A tree can represent a supply chain the main branches represent the main suppliers (1st tier) the smaller branches are the suppliers suppliers (2nd tier) The complexity of coordination and timing in today's world is a challenge. The mantra is Getting the right part/product, At the right place, In the right quantity, At the right time

Scientific Management People

Henry Ford Fredrick Taylor Henry Gantt

Toyota Production system (TPS)

If you are going to do TPS you must do it all the way. You also need to change the way you think. You need to change how you look at things. Taiichi Ohno

Manufacturing Inventory Flow Cycle

Know

Elements of TQM

Leadership, Employee Involvement, and Product/Process Excellence Continuous Improvement Customer Focus (on "Fitness for Use")

Forecast Metrics

Mean Absolute Deviation (MAD) •Measures the accuracy of the forecast as compared to the actual data using the historical (past) observations. •The difference of the forecast from the actual (Ft - Dt) represent error (e) •The error can be used to measure accuracy •Like a bullseye target, the center is the actual data point and are forecasts are the arrows. We can measure the distance from each arrow to the center. Mean Squared Error (MSE) •By squaring the error term, we can exaggerate the differences •Off by 5 units becomes 25, and off by 10 becomes 100 •This method rewards consistency my averaging these values. •The smaller the average the fewer large differences when comparing different forecasting methods

Set-up Strategies For Eliminating Waste

Minimize product change set-up waste Presetting operational settings Using quick fasteners & quick change tools Using locator pins Preventing misalignments Making movements easier Multi-functional machines Scheduling product flow to minimize changeover (e.g. ice cream)

Hierarchical Planning

Mission Goals Organizational Strategies Functional Strategies Tactics

Rise of Scientific Management

Movement was led by efficiency engineer, Frederick Winslow Taylor Fredrick Taylor believed in a "science of management" based on observation, measurement, analysis and improvement of work methods, and economic incentives "The right person for the right job" Management is responsible for planning, carefully selecting and training workers, finding the best way to perform each job, achieving cooperate between management and workers, and separating management activities from work activities Emphasis was on maximizing output

What are the types of waste?

Muda, Muri, and Mura

Process variation - Random variation

Natural variation that is present in all processes. Generally, it cannot be influenced by managers.

Short Range

Now - 2 months Item Level Inventory management Final assembly scheduling Work force scheduling Master production scheduling

Traditional vs. Agile Structures

Organizing People Culture and Process Tools and Technology Infrastructure

Simplification of Design

Original design Revised design Final design

Industrial Revolution

Pre-Industrial Revolution Craft production - System in which highly skilled workers use simple, flexible tools to produce small quantities of customized goods. The craftsman, along with an apprentice, performed all tasks Some key elements of the industrial revolution Began in England in the 1770s Division of labor - Adam Smith, 1776 Application of the "rotative" steam engine, 1780s - James Watt Cotton Gin and Interchangeable parts - Eli Whitney, 1792 Management theory and practice did not advance appreciably during this period

Service Level

Probability that the inventory available during lead time will meet demand (fill rate)

Goods-service Continuum

Products are typically neither purely service- or purely goods-based.

Physical Models

Prototypes - Look like their real-life counterparts

Ethical Issues in Operations

Quality The environment The community Hiring and firing workers Closing facilities Financial statements Worker safety Workers rights Product safety

Customer satisfaction is not equal to customer loyalty

Quality needs to be incorporated throughout the entire supply chain, not just the organization itself

Influence of Japanese Manufacturers

Refined and developed management practices that increased productivity Credited with fueling the "quality revolution" & Just-in-Time or JIT production J Edwards Demming - The Father of Quality and namesake of the DemmingAward presented by the JUSE. Taiichi Ohno and Toyoda Sakichi - The Forbearers Toyota Manufacturing System or TPS (Just-in-Time)

Marketing (The Functions of an Organization)

Selling and Promoting, Market Research for new and existing products/services, Analyzing competitors' offerings, and Communicating realistic "lead times" to customers

What JIT Requires - Less Resources

Small lot production requires Less space Less capital investment Less inventory Moves processes closer together Makes quality problems easier to detect Makes processes more dependent on each other

Job Design Strategies For Eliminating Waste

Specialization Multi-functional workers Behavioral Approaches to Job Design Teams Methods Analysis Motion Study Working conditions Incentive pay plans

Ethics and Quality

Substandard Work •Defective products •Substandard service •Poor designs •Shoddy workmanship •Substandard parts and materials •Having knowledge of this and failing to correct and report it in a timely manner is unethical.

Porter's Five-Forces Model

Suppliers, New entrants, Buyers, and Substitutes

Environmental Concerns

Sustainability (Green Manufacturing) Using resources in ways that do not harm ecological systems that support human existence Sustainability measures often go beyond traditional environmental and economic measures to include measures that incorporate social criteria in decision making Product and service design Consumer education programs Disaster preparation and response Supply chain waste management (recycling and disposal) Outsourcing decisions

After-the-Sale Service

Taking care of issues and problems that arise after the sale

Performance (PQ)

• main characteristics of the product

Mass Customization

The Challenge - How can we make unique products in the same time we can make standardized goods?

Quality Management

The ability of a product or service to consistently meet or exceed customer expectations

What is an Agile Organization?

The agile organization is dawning as the new dominant organizational paradigm.

Quality of Conformance

The degree to which goods or services conform to the intent of the designers

What is value?

The difference between what someone is willing to pay for an item minus the cost of producing it. To have value the worth of an activity or item must exceed the cost.

Process Variation - Variety of goods or services being offered

The greater the variety of goods and services offered, the greater the variation in production or service requirements.

The Service Process Matrix

The higher the degree of face-to-face interaction (labor intensity) the personalization (customization) increases at the cost of efficiency

Human Relations Movement

The human relations movement emphasized the importance of the human element in job design Elton Mayo - Hawthorne studies on worker motivation, 1930 Lillian Gilbreth - Worker fatigue, human element of productivity and motivation Douglas McGregor - Theory X and Theory Y, 1960s

What is Operations Management?

The management of systems or processes that create goods and/or provide services

Scope of Operations Management

The operations function includes many interrelated activities such as: Forecasting Capacity planning Facilities and layout Scheduling Managing inventories Assuring quality Motivating employees Deciding where to locate facilities

Takt Time (Cycle Time)

The pace of production (e.g. manufacturing one piece every 34 seconds) that aligns production with customer demand. Calculated as Planned Production Time / Customer Demand.

What is Operations?

The part of a business organization that is responsible for producing goods or services

Core Competencies

The special attributes or abilities that give an organization a competitive edge

Mass Customization

The use of common parts to develop and product family where the last 20% of the process creates product differentiation

Averaging Methods

These Techniques work best when a series tends to vary about an average •Averaging techniques smooth variations in the data •They can handle step changes or gradual changes in the level of a series •Techniques 1.Moving average 2.Weighted moving average 3.Exponential smoothing SHORT TERM

Process Variation - Structural variation in demand

These are generally predictable. They are important for capacity planning.

Economy Factor

To take advantage of cost-reducing activities

Leadership

Top management vision, planning and support

Strategy Formulation

Usually Deductive -General direction to specific response -Top-down driven -Determines the role / activities of the operation -Traditional methods based on Financial & Accounting measures -Stockholder value Effective strategy formulation requires taking into account: Determining and Leveraging Core competencies Environmental scanning SWOT

Process variation - Assignable (systematic) variation

Variation that has identifiable sources. This type of variation can be reduced, or eliminated, by analysis and corrective action.

Why are variations bad?

Variations can be disruptive to operations and supply chain processes. They may result in additional costs, delays and shortages, poor quality, and inefficient work systems.

External failure costs

producing defective products that are delivered to the customer

Internal failure costs

producing defective products that are identified before shipment

Standardization of product design

refers to the absence of variety in products/services

Personnel/Organizational elements

regard workers as assets, cross trained workers, continual improvement, cost accounting, leadership and project management

Seasonal Patterns

repeating regular patterns of up or down depending on time of year or period

Kaplan & Norton

§Aligns business activities to the vision and strategy of the organization, improve internal and external communications, and monitor organization performance against strategic goals A top-downmanagement systemthat organizations can use to clarify their vision and strategy and transform them into action

Total Quality Managment (TQM)

§An approach for integrating quality at all levels of an organization §Organization-wide initiative encompassing all functional areas and levels within the organization. §Focuses on producing high quality goods and services.

Assessing Service Quality

§Audit service to identify strengths and weaknesses Look for discrepancies between: §Customer expectations and management perception of those expectations §Management perceptions customer expectations and service-quality specifications §Service quality and service actually delivered §Customers' expectations of the service provider and their perceptions of provider delivery

Inductive Strategy

§Identify the competency and build the organization around it §Activity driven §Based on specific characteristics within firm §Constantly evolving to remain competitive

Quality is a never-ending journey

§It is important that most organizational members understand and buy into this idea

Operations Strategy

§Operations strategy Metrics: The Complete List §The approach, consistent with organization strategy, that is used to guide the operations function.

Organizational strategies

§Overall strategies that relate to the entire organization §Support the achievement of organizational goals and mission

European Foundation for Quality Managment (EFQM)

§Stimulate and assist European organizations in quality improvement activities. §Support managers in the adoption of TQM. Under European Quality Award (EQA)

Functional level strategies

§Strategies that relate to each of the functional areas and that support achievement of the organizational strategy

Quality is a strategic imperative

§for organizations §Customers are very concerned with the quality of goods and services they receive

Reliability (PQ)

• consistency of performance

Forecasting Horizon

•(length of time) will vary by industry and business. Most manufacturing related businesses require a much longer forecasting horizon because of "lead times" for raw materials, staffing, etc. •Other businesses may not require long lead times and therefore would require a shorter forecasting horizon. •Do you think a food service business would require a long or a short forecasting horizon?

Visual System of Operations

•A card or other device that communicates demand for work or materials from the preceding work station ... sometimes referred to as a kanban system •Work can not move from one station to the next unless authorized by the kanban card •Work is actually "pulled" through the process in this system in containers of parts/subassemblies from one station to the next ... a "push" system moves work from one work station to the next as it is produced whether the next station is ready or not.

Continuous Improvement

•A concept that recognizes that quality improvement is a journey with no end and that there is a need for continually looking for new approaches for improving quality

Trend Component

•A consistent pattern or movement of the forecast

Seasonal Component

•A marked increase (decrease) that occurs on a regular basis

Irregular (Random) Component

•Activities that influence future events and are not accounted for in the forecast. •Also considered the error term of the forecast model

Prevention Costs

•All TQ training, TQ planning, customer assessment, process control, and quality improvement costs to prevent defects from occurring

External Failure Costs

•All costs incurred to fix problems that are detected after the product/service is delivered to the customer

Issues to Consider with the Trend Method

•Always plot the line to verify that a linear relationship is appropriate •The forecast line should be reasonably close to the data and parallel •The data may be time-dependent (autocorrelated) •If they are •use analysis of time series •use time as an independent variable in a multiple regression analysis •A small correlation in R2 may indicate that other variables are important •Often there are many factors besides sales over time that can explain changes in the forecast

Cyclical Component

•An up and down movement of the data over time

Internal Failure Costs

•Costs incurred to fix problems that are detected before the product/service is delivered to the customer.

Appraisal Costs

•Costs of activities designed to ensure quality or uncover defects such as inspection

Expectations and Perceptions

•Customers' prior expectations (generalized and specific service experiences) and their perception of service performance affect their satisfaction with a service. •Satisfaction = (Perception of Performance) - (Expectation)

Managerial Issues

•Defining quality from the customer's perspective. •Constant increases in the level of quality of today's goods and services. •Difficulties encountered in managing service quality. •Identifying quality dimensions that are most important to customers. •Avoiding the costs of poor quality products and services. •The shift from producers' markets to consumers' markets as markets become globalized. •Customer loyalty that is increasingly based on quality.

Two important aspects of forecasts

•Expected level of demand - The level of demand may be a function of some structural variationsuch as trend or seasonal variation •Accuracy - Related to the potential size of forecast error

Forecast Accuracy and Control

•Forecasters want to minimize forecast errors •It is nearly impossible to correctly forecast real-world variable values on a regular basis •So, it is important to provide an indication of the extent to which the forecast might deviate from the value of the variable that actually occurs •Forecast accuracy should be an important forecasting technique selection criterion •Error = Actual - Forecast If errors fall beyond acceptable bounds, corrective action may be necessary

Direct Customer Contact

•Horizon: Intermediate •Method: Sales force input based on contact with customer. The sales force should be knowledgeable about future customer plans (such as promotional events) that could influence demand •Risk: Sales force may not be honest about demand

Customer Surveys

•Horizon: Intermediate, long range, new product introduction •Method: Solicit customer input by using a designed survey •Risk: May not get useful or accurate information ... will customer really do what they say?

Delphi Method

•Horizon: Intermediate, long range, new product introduction •Method: Used to generate a forecast from a group of experts within the organization but with different perspectives. A facilitator shares each individual's forecast with the rest of the group, but does this anonymously. On the basis of the others' forecasts, each individualmodifies his or her forecast. This process is repeated several times. The purpose is to arrive at a forecast with reasonable consensus. •Risk: Expensive to gather a diverse group to one location. Also, "All hail to the chief" syndrome - People do not voice opinions at face-to-face meetings solely on the basis of their factual knowledge and its applicability to the matters at hand

Executive Opinions

•Horizon: Long range, new product introduction •Method: High level managers usually meet collectively to develop forecast projections •Risk: Dominant personalities may influence other's input

Service Recovery

•How quickly a firm rectifies a service mistake has a strong effect on establishing customer loyalty and creating customer satisfaction.

Obstacles to Conversion

•Management - Not committed to overseeing all the details for change •Workers - may not want more responsibility or stress •Suppliers - why should we?, other customers don't require this, can not get their management to commit, smaller quantities may not be feasible

Service Guarantee

•Provide customer feedback on service operations •Effective guarantees •Unconditional •Easy to understand •Meaningful •Easy and painless to invoke •Easy and quick to collect on

Short-Term Forecast Methods

•Quantitative methods model historical demand variation patterns (random, trend, seasonal or cyclical). Once past history has been explained by a model, extrapolations can be made about the future. Some simplistic techniques are •Time Series Models (Short - Range) . Moving average . Weighted moving average . Adjusted Exponential smoothing These techniques are best used when demand is fairly stable with no trend or seasonal pattern

Frequent Deliveries

•Reduced & highly reliable lead times •Flexibility & smaller lot sizes •Frequency & reliability of delivery •Reliability (variability) of delivery •Consistently high quality •Willingness to work together •Commitment ("pig not a chicken") •Future development •Product improvements •Exchange of Information (forecasts, sales)

JIT Benefits

•Reduced Inventory •Improved quality •Lower costs •Reduced space requirements •Shorter lead-time •Increased productivity •Greater flexibility •Improved vendor relations •Simplified scheduling & control •Increased capacity •Better utilization of personnel •More product variety •Increased equipment utilization •Reduced paperwork •Valid production priorities •Work force participation

Method 2: Weighted Moving Average

•Similar to the moving average method •Allows weights (percentages) be put on each observation •Useful when the most recent periods have the most influence on the forecast

Additional Factors

•Simplicity - You can build amazingly complex models, but they usually are not accurate for future forecast unless the data follows the exact same pattern •Cost - The cost of building, testing and assessing various models is not always time well spent •Accuracy - The smaller the error the better chance the model has in predicting future periods •Availability of historical data Availability of forecasting software •Time needed to gather and analyze data and prepare a forecast •Forecast horizon

Uniform Production

•Smooth production requirements •Smooth demand across planning horizon •Use mixed-model assembly to steady component production •Use visual system to manage product movement •Can handle up to 10% change in demand

Technical Quality versus Functional Quality

•Technical quality—the core element of the good or service. •Functional quality—customer perception of how the good functions or the service is delivered.

Operations Strategy

•The better (more accurate) forecasts are, the more likely an organization will be able to take advantage of future opportunities and reduce potential risks •A worthwhile strategy is to work to improve short-term forecasts •Accurate up-to-date information can have a significant effect on forecast accuracy: •Prices •Demand •Other important variables •Reduce the time horizon forecasts have to cover •Sharing forecasts or demand data through the supply chain can improve forecast quality

Six Sigma - Reducing Defects

•To reduce process variation to the point where only 3.4 defects per million are produced by a process that involves a high volume of manufactured units or service transactions on a continuous basis. •Provide a framework and methodologies to analyze and evaluate business processes and reduce waste.

Summary of Monitoring the Forecast

•Tracking forecast errors and analyzing them can provide useful insight into whether forecasts are performing satisfactorily •Sources of forecast errors •The model may be inadequate •Irregular variations may have occurred •The forecasting technique has been incorrectly applied •Random variation

Method 4: Trend Estimation

•Trend models rely on a pattern that can be modeled using regression •The trend can either be straight (linear) •Or it can be curved (non-linear) •Linear Trend models use simple linear regression (one X variable & Y) •This method is better suited for non-stable data (rising, moving, up, down, etc.)

Naïve Forecast

•Uses a single previous value of a time series as the basis for a forecast •The forecast for the next time period is equal to the previous time period's value •Can be used with •a stable time series •seasonal variations •trend SHORT TERM

Method 1: Moving Average Method

•Uses the average of a specified time period to predict the next forecast. •Uses the most recent data to determine the forecast •Called a moving average because it always used the most recent data for the next period's forecast

Method 3: Exponential Smoothing

•While the moving and weighted averages use linear weighting, exponential smoothing uses non-linear weighting where the weight of the entire dataset is used for each successive forecast •The most recent demand period is weighted by alpha (a) •The most recent forecast is weighted by 1 - alpha (1 - a ) •Using both the actual data point and the forecast value is a way to create a moving average that extends from the first forecast to the last •The formula only needs one value, alpha (a) which can be any value from 0 to 1.

Vendor Requirements

•Willingness to locate near customer •Use of smaller side loaded trucks •Shipments of mixed loads •Consolidation of warehouses with other suppliers •Use of standardized containers •Make deliveries according to a precise delivery schedule •Become a certified supplier •Accept payments on a regular interval rather than upon delivery

Reliability (SQ)

•ability to perform a service dependably, consistently, and accurately

Aesthetics (PQ)

•appearance, feel, smell, taste

Failure Costs

•costs incurred by defective parts/products or faulty services.

Special Features (PQ)

•extra characteristics

Serviceability (PQ)

•handling of complaints or repairs

Conformance (PQ)

•how well the product conforms to design specifications

Assurance (SQ)

•knowledge exhibited by personnel and their ability to convey trust and confidence

Preventative Maintenance

•periodic inspection & maintenance aimed at keeping machines operational and in "tip-top" shape