Operations Management Chapter 1

Assignable

(Nonrandom variation)- can be eliminated- tool wear, equipment that need adjustment, defective materials, human factors, and problems with measuring devices -Reduces/eliminated by analysis and corrective measures

schematical (model)

-#1 preferred representation of model -Graphs/Pie/Bar Charts/Blue Prints -More Flexible - Easy to change/make -More useful -hard to understand -92-94% Prefer Graphics -4-5% prefer numbers 2% prefer words of, relating to, or in the form of a scheme or diagram; a structural or procedural diagram, especially of an electrical or mechanical system

Inputs

-resources (labour, energy, raw materials, machinery/technology); transformed / transforming

BPM (Business Processes Management)

3 Categories ______ Upper Management - Strategy Operational Processes - Core Processes =Value Stream Supporting Processes - ACCT, HR, IT, Improves existing processes and optimizes assets through managing the entire life cycle

systems

A __________ approach keeping the organization's objectives in mind throughout the performance of all activities; requires communication networking and coordination among all parts of the organization

Pareto Phenomenon

A few factors account for a high percentage of the occurrence of some event(s).

Flow Shop

A form of manufacturing organization in which machines and operators handle a standard, usually uninterrupted, material flow. The operators generally perform the same operations for each production run. A flow shop is often referred to as a mass production shop or is said to have a continuous manufacturing layout. The plant layout (arrangement of machines, benches, assembly lines, etc.) is designed to facilitate a product "flow." Some process industries (chemicals, oil, paint, etc.) are extreme examples of flow shops. Each product, though variable in material specifications, uses the same flow pattern through the shop. Production is set at a given rate, and the products are generally manufactured in bulk. Syn: flow line, flow manufacturing, flow plant.

Supply Chain

A sequence of activities and organizations involved in producing and delivering a good or service.

System

A set of interrelated parts that must work together.

Standard Deviation

A statistical measure of how far away each value is, on average, from the mean.

Cartesian coordinates

A system of quantification for two dimensions developed by the French mathematician Rene Descartes. , specifies each point uniquely in a plane by a pair of numerical coordinates, which are the signed distances from the point to two fixed perpendicular directed lines, measured in the same unit of length., numbers that indicate the location of a point relative to a fixed reference point (the origin), being its shortest (perpendicular) distances from two fixed axes (or three planes defined by three fixed axes) that intersect at right angles at the origin. X,Y,Z

Model

An abstraction of reality: a simplified representation of something.

Mathematical (model)

An equation or a graph that describes, at least approximately, the relationship between two variables. Mathematical model allows you to make reasonable guesses for values between and sometimes beyond the data points -Numbers are more accurate - Easiest to manipulate -Important for Computers/Calculator Input

E-Commerce

Consumer-to-Business transactions.

Transformation Process

Converts inputs into outputs with the intent of adding value to the customer and making a profit. -Storing -Transporting -Repairing

production

Creation of goods and services , - Processes and methods employed in transformation of tangible inputs (raw materials, semi-finished goods, or subassemblies) and intangible inputs (ideas, information, know how) into goods or services.

Linear Programming

Dantzig (Optimum allocation of scarce resources) 1940 Linear programming is a technique that identifies the minimum or maximum value of some quantity. This quantity is modeled with an objective function. Limits on the variables in the function are constraints, written as linear inequalities. - solved the unsolvable problem

Differences (in Services and Products)

Degree of Customer Contact (moment of truth) Labor Content of the Job (services higher) Uniformity of Inputs (service more variability/Manf more control) Measurement of Productivity (service diff/manf easier) Quality Assurance (less opport to avoid exposure in service) Inventory (you cannot store a service) Wages (service variable/manf well paid and less variation) Ability to Patent (products/serv easier to be copied)

Issues (for today's business)

Economic Conditions Innovating Quality Problems Risk Management Competing in a Global Economy Environmental Concerns Ethical Conduct

Queuing Techniques

Erlang - Waiting Lines 1920 created models to describe the Copenhagen telephone exchange.[1] The ideas have since seen applications including telecommunication, traffic engineering, computing[2] and the design of factories, shops, offices and hospitals.[3][4] Mathematical approach to the analysis of waiting lines

Similarities (in Service and Products)

Forecasting Capacity Planning Matching Supply and Demand^ Process Management Monitoring & Controlling (Costs & Productivity) Supply Chain Management Location Planning -Inv Management -Quality Control -Scheduling

tradeoff

Giving up one thing in return for another in the decision-making process.

Q Optimum

Intersection of social value and supply curve. Inventory - what to order

JIT (Just in time)

Inventory management philosophy that focuses on purchasing raw materials just in time for production and completing finished goods just in time for delivery to customers. - No Inventory -Eliminates 25% of costs lean Management Practice Do not use in the US: cultural issue, all companies are affected if one company boycotts

Value Added

Is the difference between a product's price and the total cost of the inputs that went into making it. It is the extra worth created in the production process -The greater the value added, the greater the effectiveness -More funds available -psychological branding = Branding

Management Process

Key Elements in the ______ ________ Plan Organize Staff Lead Control

Deming

Known for Quality Control -said it was a manager resp, that once it hit the floor the ee's could not control it. Well known for his four-step cycle to improve quality: Plan, Do, Check, Act (PDCA). He also developed 14 activities for implementing quality.

Business Process Management

Managing processes to meet demand (Output=Demand) Dealing with process variability (variety offered, structural variation in demand, random, assignable) -Process Design -Process Execution -Process Monitoring

Operations Management

Managing systems and processes that create goods or provide services. Defined as the planning, organizing, executing, and controlling of an organization's total production system through optimal use of the factors that contribute to the planning and control subsystems, and in the process suggesting effective improvement for the total production system.

Feedback

Measuring various points in the transformation process and comparing it to previously establishes standards (CONTROL) to determine if corrective action is needed, to ensure desired (QUALITY) outputs

Statistical

Models Mathematical models that assist managers with planning & controlling factors such as inventory, product mixes & sole forecasts.

Tools (for decision making)

Models (Physical/Schematic/Mathematical) Quantitative Analysis Analysis of Trade offs Establish Priorities Systems Approach

Project

Models 1950s PERT (Program evaluation control tech) CPM (critical path method) Used for Planning, coordinating, and controlling large scale projects.

Outsourcing

Obtaining a product or service from outside the organization.

Job Shop

Open Shop - Anyone Can order (Function) 1) An organization in which similar equipment is organized by function. Each job follows a distinct routing through the shop. 2) A type of manufacturing process used to produce items to each customer's specifications. Production operations are designed to handle a wide range of product designs and are performed at fixed plant locations using general-purpose equipment. Syn: jobbing. See: intermittent production, project manufacturing.

Interchangeable Parts

Parts of a product made to such precision that they do not have to be custom fitted.

Harris

Person Inventory Model Helps managers decide on the timing and quantity for ordering supplies to maintain an optimal inventory, how much end-product to keep on hand (Wal-Mart is the leader), EOQ - Fixed Order Size, Variable Order Interval

Variations

Process Variation and Demand Variability Additional Costs Delays & Shortages Poor Quality Inefficient work systems Poor reputation & unhappy customers

Six Sigma

Process analysis and Improvement A process for: reducing costs, improving quality, and increasing customer satisfaction., A comprehensive and flexible system for achieving, sustaining, and maximizing business success; uniquely driven by close understanding of customer needs, disciplined use of facts, data, and statistical analysis, and diligent attention to managing, improving, and reinventing business processes.

push (system)

Produces finished goods inventory in advance of customer demand using a forecast of sales. Example is a traditional automobile factory and distribution system. We make it

Watts

Steam Engine 1770

Agility

Strategy The ability of an organization to respond quickly to demands or opportunities. -Volume -Change services

Craft (Production)

System in which highly skilled workers use simple, flexible tools to produce small quantities of customized goods.

Mass Production

System in which low-skilled workers use specialized machinery to produce high volumes of standardized goods.

Lean Production (system)

System that uses minimal amounts of resources to produce a high volume of high-quality goods with some variety. -Space -Inventory -Workers -Highly Skilled workforce & Flexible Equipment

Forecasting

Technique used in planning and scheduling

Mean

The Average

Technology

The application of scientific discoveries to the development and improvement of goods and services.

Division of Labor

The breaking up of a production process into small tasks, so that each worker performs a small portion of the overall job. People became specialist

Value-Added

The difference between the cost of inputs and the value or price of outputs.

Operation Management

The management of systems or processes that create good and/or provide services. Total System approach to add value Increase efficiency and productivity

Lead Time

The time between ordering a good or service and receiving it.

Operations Function

To add value consists of all activities *directly* related to producing goods or providing services. inputs>transformation>output = ^Value

Process Management

Two major aspects of _________ _______ 1- Managing a Process to meet a Demand 2- process Variation, design and development of the workflow and connectivity of the transformation requirements needed to ensure that an organization's products/services are efficiently produced and effectively delivered to the market place

E-Business

Use of the Internet to transact business.

Shewhart

Walter Statistical Quality Control, Walter Shewhart (1924) combined his knowledge of statistics with the need for quality control and provided the foundations for statistical sampling in quality control.

Structural

____________ Variation in Demand These are generally predictable. They are important for capacity planning., -trends -seasonal variations,

Break even analysis

a method of determining what sales volume must be reached before total revenue equals total costs Total Cost = QTY(variable costs)+Fixed Costs Y = 3(x)+500 -Slope of revenue per unit should be greater than the cost per unit -Slope = value added

pull (system)

activities in the operating processes are initated by actual customer demands, and not by forecasted demands. We ask for it, then it is made (can be specified)

multifactor (productivity)

an overall measure of performance that indicates how much labor, capital, materials, and energy it takes to produce an output; outputs/(labor+capital+materials+energy)

TQM (total quality management)

business processes that drastically imprve the bottom line of a business by designing every day's business activities in ways that result in minimizing waste and resources while increasing quality and customer satisfaction

Bessemer

high quality Steel

managing a process to meet a demand

ideally, the capacity of a process will be such that its output matches demand. excess capacity is wasteful and costly, unhappy customer and lost revenue if there is too little OH. - Accurate Forecast of Demand -Able to translate forecasts into capacity requirements -Having a process/system in place capable of meeting expected demands

Random

natural variation in the output of a process, created by countless minor factors

critical decisions

ten ___ ____of operations management design of goods and services, managing quality, process and capacity design, location strategy, layout strategy, human resources and job design, supply-chain management, inventory, scheduling, maintenance

Variety

the greater the __________________, the greater the variation in production or service requirements

Physical (model)

toy car Simplified version of reality does not function properly easy to understand and touch but not useful