Ops MGT Ch 3 & 20

Sales Forecast

Demand Prediction for a new product/service

Flow Rate

MIN {Demand, Process Capacity}

Tertiary Needs

Needs that are at the bottom of the needs hierarchy. This says nothing about their importance

Primary Needs

Needs that are at the top of the needs hierarchy. Note that this implies that they are more aggregated. This says nothing about importance

Secondary Needs

Needs that are at the top of the needs hierarchy. This implies they are less aggregated than primary needs. Says nothing about importance

Delighters

Needs that will lead to customer satisfaction when fulfilled but will not lead to dissatisfaction when not fulfilled. Frequently associated with latent needs

Contextual Observation

Observing the user in the context in which he/she would be most likely to use the new product or service. The emphasis is on observation and discussion with the user and can take multiple hours, during which time the developer takes notes and photos

Concept Selection

Prioritization of the concepts generated so far in the development

The Impersonator

created using mostly parts or system elements from an existing product/service

User Action-Based Decomposition

decomposition of a product or service into the activities the user goes through when using the product

In the case of a demand-constrained process.....

even the bottleneck would not be working at 100%

Buffer Inventory

flow units waiting in the process without being worked on and is depicted as a triangle

Non-bottleneck Resource

has some extra capacity relative to the bottleneck

Resources

help the flow units move from being a unit of input to becoming a unit of output

horizon 1

innovations tend to be refinements of existing technologies and solutions that we serve to our existing customers

Linear Satisfiers

needs that will lead to customer satisfaction when fulfilled and dissatisfaction when not fulfilled. Utility grows more or less linearly in the extent to which customer needs are met. Also called performance needs.

Performance Needs:

needs that will lead to customer satisfaction when fulfilled and dissatisfaction when note fulfilled. Utility grows more or less linearly in the extent to which customer needs are met. Also called linear satisfiers

Must-Haves

needs that will not really drive customer satisfaction upward when fulfilled by could drive customer satisfaction substantially downward when not fulfilled

The Fake Door

offering something you don't yet have

Interviews

one or multiple team members, discuss user needs with one customer at a time

Upstream

parts of the unit that at the beginning of Process

Low Fidelity Prototype

really rough representations of the final solution... this makes them imperfect and noisy predictor of how well customer need will be fulfilled. Advantage: Fast and Cheap to make

The One-Night Stand

testing something for a very limited time only.

Capacity- Constrained

the case in which demand exceeds supply and the flow rate is equal to process capacity

User Needs

the drivers of customer utilities

Product Awareness

the faction of the relevant population that is aware of the new product/service

Attribute-Based Decompostition

we focus on a subset of attributes of a new product/service and try to generate a concept that performs well on these attributes, even at the risk of performing poorly on others

Sales Forecast=

(Market Size)*(Awareness probability)*(Purchase Probability)

Time through an empty machine paced process

# of stations * Cycle Time ; the time it takes the first flow unit to flow through an empty process; a process that has no inventory

Purchase Probability=

(Cdefinite*Fraction "definitely buy*)+(Cprobably*Faction "defintely buy")

It takes a color printer 10 seconds to print a large poster. What is the capacity of the printer expressed in posted per hour?

1/10 poster/second OR 360 posters/hour

A call center has one operator who answers incoming calls. It takes the operator 6 minutes to answer one call. What is the capacity of the call center expressed in calls per hour?

1/6 calls per minute OR 10 calls/ hour

Cycle Time

1/Flow Rate ; the time between completing two consecutive flow units. Expressed in units of time/unit

Kano Model

A frame work that distinguishes between 3 types of needs: performance needs, delighters, and must haves ; first described by Noriaki Kano a Japanese design professor

Value Curve

A graphic depiction of a new product's relative performance across the key attributes, comparing it with existing offerings in the market

Process Flow Diagram

A graphical way to describe the process. It uses boxes to depict resources, arrows to depict flows, and triangles to depict inventory location

Incremental Innovation

A horizon 1 innovation; uses existing technology and serves existing customers

Radical Innovation

A horizon 3 innovation, oftentimes serves new markets and/or employs new technology

Innovation

A match between customer needs (foundation of demand) and solutions in the form of physical goods/services (supply) that create value. <- HAS to create Value

Double Diamond

A metaphor describing the design thinking approach

Focus Group

A moderated group discussion of 4 to 8 customers that typically lasts for about 2 hours

Purchase Probability

A prediction on the likelihood with which a given consumer would purchase the product/service

Product Concept

A preliminary articulation of a solution for a given set of user needs: WHAT are the needs that this particular concept fulfills really well HOW are we going to fulfill these needs

Machine-Paced

A process in which all steps are connected through a conveyor belt and all of the steps must work at the same rate even if some of them have more capacity than others

Iterative Process

A process in which one of several of the activities are repeated one or multiple times : indicated by arrows looping back from the activities in the figure

Worker-Paced System

A process line in which each resource is free to work at its own pace; if the first resource finishes before the next one is ready to accept the flow unit, then the first resource puts the completed flow unit in the inventory between the two resources

The Product Development Process

A process that takes an opportunity as its input and translates this into a new product or service. The process includes needs identification, the generation of product concepts, an empirical validation of the concepts, and a business analysis, involving a sales forecast

Concept Generation

A product development team generates a large and diverse set of product concepts in the hope that one or several of these concepts will be the foundation for our new product/service

Lean Startup

A product-development process that rapidly iterates with real customers using very simple and inexpensive prototypes. Also known as pretotyping

Minimum Viable Product: MVP

A prototype of a new product or service that allows the team to collect the maximum amount of learning about customer preferences with the least amount of effort

Prototype

A representation of the final product or service that allows the product development team to predict how well a particular product concept might fulfill the customer needs

Process Analysis

A rigorous framework for understanding the detailed operations of a business. It Determines how many flow units can be processed per unit of time ( The process capacity) and how busy the resources of the process are (utilization)

Throughput

A synonym for flow rate; the number of flow units flowing through the process per unit of time

Selection Matrix

A table that compares product concepts. The rows in the selection matrix are the concepts, with the columns being the 3 dimensions of comparison: need fulfillment, feasibility, and wow factor

Decompostition

Breaking up a problem into smaller, manageable subproblems and solving these subproblems first.. Based on the idea of divide & conquer

Time to make Q units

Cycle Time * Q

Utilization

Flow Rate/ Capacity ; Can be defined at the level of entire process or an individual resource

3 Methods of gathering customer needs

Interviews, Contextual Observation, and Focus Groups

The Fake Back-End

Like Amazon FBA: the customer doesn't notice that you're offering something you don't have yet

Bottleneck

Resource with the lowest capacity in a process. It is not possible to get more customers through the process than what we have capacity for

Demand Constrained

The case in which process capacity exceeds demand and thus the flow rate is equal to the demand rate

Fidelity

The extent to which a prototype approximates the actual user experience

Most Common Forms of MVP:

The fake door, The fake back-end, the impersonator, the one-night stand

Process Capacity

The maximum flow rate a process can provide per unit of time. Determines the maximum supply of the process. The process capacity is the smallest capacity of all resources in the process

Capacity

The maximum number of flow units that can flow through that resource per unit of time. = 1/Processing Time

Market Size

The number of customers who are in the market that we aim to serve

Demand Rate

The number of flow units that customers want per unit of time

Hierarchy of Needs

The organization of user needs into primary, secondary, and tertiary needs

Downstream

The parts of the process that are at the end of the process flow

Opportunity Idenification

The process of generating opportunities. Oftentimes located in specific organizational units-- such as R&D

Processing Time

The time is takes a resource to complete one flow unit

Time that is required to produce a given quantity X starting with an empty system

Time through an empty process * [(X-1)*Cycle Time] ; the time it takes a process with no inventory to produce a given quantity

Utility=

U(Consumption Utility, Price, Convenience)

What is critical for improving the process?

Understanding the location of the bottleneck

Slack Capacity

Utilization levels that are strictly less than 100%

Innovation Horizon

a measure of the novelty of an innovation, with horizon 1 being less novel than horizon 2, which in turn is less novel than horizon 3

Purchase Intent Survey

a survey that communicates the product concept with the customer and then asks the customer how likely he/she is to purchase the product

Service Blueprint

a user interaction-based decomposition that breaks up the flow of activities required to serve the customer. Also distinguishes which activities are carried out "on stage" (which means during the interaction of us with the customer) and which activities we do without the involvement of the customer

High Fidelity Prototype

almost perfect representations and therefore give us a very accurate prediction about real customer response. Very expensive to make and we typically can not afford to create a high-fidelity prototype for every concept we consider

Design Thinking

an approach to product development consisting of contextual observation, problem definition, concept generation, and rapid validation

Opportunity

an idea- it is a new product or service at the embryonic state