OMIS 338 Exam 1

Basic concepts for the tools of process design

cross over charts, flow diagrams, time-function mapping, process charts, service blueprinting

Mass Customization

fast low cost customized order (high-volume, high-variety). Characteristics: -Need to satisfy increasingly unique customer desires -Uses rapid, low-cost production of goods and service -Combines the flexibility of a process focus with the efficiency of a product focus

Repetitive

organized as assembly lines (modular). Characteristics: -Facilities often organized as assembly lines -Characterized by modules with parts and assemblies made previously -Modules may be combined for many output options -Less flexibility than process-focused facilities but more efficient

Product Focus

organized by product (high-volume, low-variety, continuous process). Characteristics: -Facilities are organized by product -High volume but low variety of products -Long, continuous production runs enable efficient processes -Typically high fixed cost but low variable cost -Generally less skilled labor

Understand what is meant by a transformation process and its relationship to inputs and outputs

(Chapter 1 diagram in powerpoint)

Understand how to perform calculations for the center of gravity method. You need to know the formula.

(Chapter 8 Powerpoint example)

Understand how to perform calculations for the factor-rating method. You need to know the formula.

(Chapter 8 Powerpoint example)

Know the inputs and outputs and inventory for Aggregate Production Planning

(Diagram on slide 6 chapter 13)

Understand the 4 different approaches to capacity expansion

(Examples in powerpoint notes) Ch 7

Breakeven analysis

-Technique for evaluating process and equipment alternatives -Requires estimation of fixed costs, variable costs, and revenue -Objective is to find the point in dollars and units at which total cost equals revenue

What questions does capacity planning address?

-The throughput, or the number of units a facility can hold, receive, store or produce in a period of time -Determines fixed costs of the operations -Determines if customer demand will be satisfied -Over the three time horizons

Bottleneck

A bottleneck is a limiting factor or constraint

Numerical bottleneck analysis.

A bottleneck process has the lowest effective capacity in a system because it is the slowest process (takes the longest time)

The Operations Plan

An action plan for delivering goods and services To achieve business strategy Examples: Strategic Fit Operations Drivers Operational Strategy Operations Process Design Operations Location Plan Organization, Quality, IT Plans

Do simple numerical calculation on breakeven point. You need to know the formula.

Break Even Point in units = (Fixed Costs / (Price per Unit - Variable Cost per Unit))

What are some of the typical operational questions made when writing a business plan?

Business Feasibility Study: Ask the right questions. What is your goal? Are there any significant legal limitations? Does a market exist? What are the critical success factors? Identify critical risks? Can you and your team deliver the product/service? Will the venture meet financial goals? What is your action plan for preparing the BP?

Understand how the role of capacity planning changes as the time horizon is reduced

Chapter 7 Supplement Diagram (Powerpoint)

Chase Strategy

Chase strategy (hiring and Layoff) Match output rates to demand forecast for each period Vary workforce levels or vary production rate Tension in workforce job certainty - creates moral issue No delinquencies or backorders Favored by many service organizations

continuous flow

Continuous-flow manufacturing, or Repetitive-Flow Manufacturing, is an approach to discrete manufacturing that contrasts with batch production. The main disadvantage is that with so much machinery it is very difficult to alter the production process

Managing Demand

Demand exceeds capacity Curtail demand by raising prices, scheduling longer lead times for deliveries Long-term solution is to increase capacity Capacity exceeds demand Stimulate market thru marketing Product/feature changes with process re-design

Demand vs. Capacity Management

Demand management Appointment, reservations, First Come First Serve (FCFS) rule Capacity management Full time, temporary, part-time staff

Design

Design capacity is the maximum theoretical output of a system Normally expressed as a rate

Effective capacity

Effective capacity is the capacity a firm expects to achieve for given current operating constraints Often lower than design capacity

Efficiency

Efficiency is the percent of effective capacity actually achieved Efficiency = Actual output/Effective capacity

Three methods of solving the location problem

Factor-rating method Locational breakeven analysis Center-of-gravity method

job shop

Job shops are typically small manufacturing systems that handle job production, that is, custom/bespoke or semi-custom/bespoke manufacturing processes such as small to medium-size customer orders or batch jobs. Job shops typically move on to different jobs (possibly with different customers) when each job is completed.

Know several of the more important factors considered at each level: region (based on BMW example)

Labor Lower wages in South Carolina (SC) Government incentives $135 million in state & local tax breaks Free-trade zone from airport to plant No duties on imported components or on exported cars

Level Strategy

Level strategy (Constant work force) Daily production is uniform Less tension in workforce due to job stability Use inventory or idle time as buffer Stable production leads to better quality and productivity Customer delinquencies and backorders during periods of high demand

What are the 3 main purposes of a strategic business plan?

Management tool Fund-raising tool Communication tool

Goods *note* OM addresses the transformation of both goods and services

Manufacturers produce tangible product, merchandise or possessions that satisfy people's wants.

Know several of the more important factors considered at each level: country (based on BMW example)

Market location U.S. is world's largest luxury car market Growing (baby boomers) Labor Lower manufacturing labor costs $35/hr. (U.S.) vs. $45 (Germany) Higher labor productivity 11 holidays (U.S.) vs. 31 (Germany) Other Lower shipping cost ($2,500/car lower) New plant & equipment would increase productivity (lower cost/car $2,000-$3000)

How productivity relates to the transformation process

Measure of process improvement

Know several of the more important factors considered at each level: site (based on BMW example)

Opened for production: July 11, 1994 BMW Manufacturing employs over 8,000 people to produce the X3, X4, X5 and X6 The 1,150-acre, 4-million sq-ft campus generates its own power on site To date, BMW has invested well over $7 B Total production capacity of 450,000 cars per year North American Suppliers: 270 South Carolina Suppliers: 40 The Body Shop is 100% automated Total time is about 3 minutes for the engine mounting process.

Process-focused

Organized work into departments by similar skills, activities, and technologies (low-volume, high-variety, intermittent processes). Characteristics: -Facilities are organized around specific activities or processes -General purpose equipment and skilled personnel -High degree of product flexibility -Low volume but high variety of products -Typically high costs and low equipment utilization -Product flows may vary considerably making planning and scheduling a challenge

Three basic process strategies

Process-focused, repetitive, and product focus

How to solve basic productivity problems

Productivity = Output Produced/Input Produced

A student fills up 10 gallons of gas in her/his hybrid car that was driven 500 miles since the last fill-up. What is the mileage productivity of the car?

Productivity = Output Produced/Input Produced = 500 miles/ 10 gallons = 50 mpg

Understand how productivity is defined

Represents output relative to input Business efficiency is achieved through productivity improvements

Services *note* OM addresses the transformation of both goods and services

Services - Economic activities that typically produce an intangible product (such as education, entertainment, lodging, government, financial, and health services)

time-function mapping

Shows flows and time frame

flow diagrams

Shows the movement of materials

Be able to understand strategies for aggregate demand planning practices.

Strategic Options to be considered: -Use inventories to absorb changes in demand? -Vary the size of the workforce to accommodate changes? -Use part-timers, or overtime or idle time to absorb fluctuations? -Use subcontractors and maintain a stable workforce? -Change prices or other factors to influence demand?

Understand how to perform locational break-even analysis. You need to know the formula.

Total Cost = Fixed cost + (Variable Cost x Volume)

process charts

Uses symbols to show key activities

Utilization

Utilization is the percent of design capacity actually achieved Utilization = Actual output/Design capacity

Value-Stream Mapping (VSM)

Where value is added in the entire production process, including the supply chain

assembly line

a series of workers and machines in a factory by which a succession of identical items is progressively assembled. Disadvantages of assembly line production are based on the worker's point of view. Because little training is generally required, wages may not be very competitive.

service blueprinting

focuses on customer/provider interaction

cross over charts

similar to break even analysis