Operations Management

What is the equation for the indifference point?

B Fixed Cost - L Fixed Cost / B Variable Cost - L Variable Cost

What are examples of constraints?

Materialshttps://fleming.desire2learn.com/d2l/lp/documents/aLm4SOpIcheeLMxPtt6U729952/3/6 Machines Management Money

Activity-On-Node

Network diagramming notation that places activities in the nodes and arrows to signify precedence relationships.

Productivity =

Output/Input

Outsourcing

Processes or activities that are completed by suppliers.

Intermittent Operations

Processes used to produce a variety of products with different processing requirements in lower volumes.

What are the Continuum of Process Types

Projects Batch Processes Line Processes Continuous Processes

What is the indifference point?

The point at which the cost of insourcing vs. outsourcing are equal. The equation to calculate both is: TC = F + (VC) Q to make vs. to buy The variables alter between the total cost to make (insource) vs. the total cost to buy (outsource).

The Role of Warehouses

Warehouses include plant, regional, and local warehouses. They can be owned or operated by the supplier or wholesaler, or they can be public warehouses. A further classification is general warehouse or distribution warehouse.

Inputs

What is put in, or operated on by any process or system such as human resources, facilities and processes, materials, technology, and information.

Internal Functions

Vary by industry & firm, but might include: Processing, Purchasing, Production Planning & Control, Quality Assurance, Shipping.

Batch Process

A type of process used to produce a small quantity of products in groups or batches based on customer orders or specifications.

Repetitive (Continuous) Operations

A Process used to produce one or a few standardized products in high volume.

What is the critical path method?

A network planning technique, that determines critical activities that cannot be delayed, used to determine a project's planned completion date and identify the project's critical path.

Mission

A statement defining what businesses an organization is in, who its customers are, and how its core beliefs shape its business.

Breakeven Analysis

A technique used to compute the amount of goods that a company would have to sell to cover its costs. The break even point is where a company's revenue is equal to their costs for creating a good or service.

Crashing A Project

A term for reducing the completion time of a project.

Continuous Process

A type of process that operates continually to produce a high of a fully standardized product.

Projects Process

A type of process used to make a one-at-a-time product exactly to customer specifications.

Line Process

A type of process used to produce a large volume of a standardized product.

Which business functions support the three major business functions?

Accounting, Purchasing, Human Resources and Engineering

Constraints

Any element or factor that prevents a system from achieving a higher level of performance with respect to its goal.

How does one manage constraints?

By either determining the overall goal, finding the constraint, optimize the flow through the constraint, see if there is now another constraint.

Supply Chain Management

Coordinates and manages all the activities of the supply chain.

What are the four categories of competitive priorities?

Cost Quality Time Flexibility

Fixed Costs

Costs that a company incurs regardless of how much it produces.

Variable Costs

Costs that vary directly with the amount of units produced.

Operation's Place in the Organization

Every business is managed through three major functions. Finance, Marketing and Operations. The vice presidents of each of the functions report directly to the president or CEO of the company.

The Design of Operations Strategies - Structure

Decisions related to the design of the production process, s.a. facilities, technology, and flow of goods and services through the facility.

The Design of Operations Strategies - Infrastructure

Decisions related to the planning and control systems of the operation, s.a. planning & control systems, skills and pay of workers.

Business Strategy

Defines the long-range plan for the company based off of its mission statement.

Operations Strategy

Develops a plan for the the operations function to support the business strategy. The plan is made so that a business can make the best use of its resources. It specifies the design and use of resources to support the business strategy.

Why must we focus on one competitive priority above-all?

Emphasis must be placed onto the specific priorities that directly support the business strategy as some priorities are in conflict with others.

Precedence Relationships

Establishes the sequencing of activities to ensure that all necessary activities are completed before a subsequent activity is begun.

Equation for Total Cost

Fixed Cost + (Variable Cost) Quantity of Units Sold F + (VC) Q

What are examples of a Trade-off?

High quality of parts usually results in a company not being able to offer the final product at the lowest price. This is an example of quality vs. price.

How to use the indifference point?

If the required quantity is less than the indifference point, go with the process that has the lower fixed cost. If the required quantity is more than the indifference point, go with the process that has the higher fixed cost.

Bullwhip Effect

Inaccurate or distorted demand information created in the supply chain.

What does operations management involve?

Managing people, equipment, technology, information, and many other resources.

Equation for Break Even Point

QBE = Fixed Cost / Selling Price - Variable Cost F / SP - VC

Equation for Total Revenue

Selling Price Per Unit (Quantity of Units Sold) SP(Q)

Critical Path

The longest sequential path through the network diagram.

Trade-off

The need to focus more on one competitive priority than on others.

Value Added

The net increase created during the transformation of inputs into final outputs.

What is the main focus when creating an Operations Strategy?

Specific capabilities that give the company a competitive edge. These capabilities are called Competitive Capabilities. By excelling in one of these capabilities, a company can become a winner in its market.

Slack

The amount of time an activity can be delayed without affecting the project's planned completion time. Slack is equal to the activities late finish minus its early finish (or late start minus early start).

Operations Management

The business function that is responsible for planning, coordinating and controlling the resources needed to produce a company's goods and services.

Precedence

The condition of being considered more important than someone or something else; priority in importance, order, or rank.

Outputs

The goods and services a company produces.

Examples of Operations Strategies

The location, size, & type of facilities The worker skills required The processes to be used How quality will be controlled

External Distributers

They transport finished products to the appropriate locations for eventual sale to customers.

The Role of Operations Management

To transform organizational inputs into outputs.