MSIS 301
Which of the following would not be an operations function in a commercial bank? teller scheduling maintenance check clearing collection auditing
auditing
Competitive Advantage
The creation of a unique advantage over competitors. implies the creation of a system that has a unique advantage over competitors
What are the primary functions of all organizations?
Marketing, Production/operations, finance/accounting
OM jobs
80% of all jobs are in the service sector
types of forcasting
Econmic , technological and demand
OM tolls help people do what? What does this do?
1. Do a better job in managing, 2. reduce costs, 3. improve customer satisfaction Using Ops Management tolls to do this can lead to organization/business increased profit and contribution to society Apply Knowledge to better manage ops can also reduce costs even without any drastic cost cutting measures.
Why go Global?
1. Reduce costs (labor, taxes, tariffs) 2. improve supply chain 3. provide better goods and services 4. understand markets 5. learn to improve operations 6, attract and retain global talent
Which of the following is an example of competing on the basis of differentiation? A firm's products are introduced into the market faster than its competitors' products are. A firm manufactures its product with less raw material waste than its competitors do. A firm's distribution network routinely delivers its product on time. A firm advertises more than its competitors do. A firm offers more reliable products than its competitors do.
A firm offers more reliable products than its competitors do.
Mean Absolute Percent Error (MAPE)
A problem with MAD and MSE is that their values depend on the magnitude of the item being forecast. To avoid this we use MAPE which is the average of the the absolute difference between the forcasted and actual values, expressed as a % of the actual values. This is the easiest measure to interpret as it is not dependent on issues such as the magnitude of the input data
Gradual movement in time-series data over time is called random variation exponential variation a cycle seasonal variation a trend
A trend
Which of the following tasks within an Airline Company are related to Operations? Advertising International Monetary Exchange Accounts Payable Sales Crew Scheduling
Crew Scheduling
Examples of operations
Employee scheduling, manufacturing, product design. They do not include any finance/accounting or marketing
8 Exciting New Trends in OM
Ethics, Global Focus, Rapid product devl, environ. sensitive production, mass customization, empowered employees, supply-chain partnering, just-in-time performance
A product will always be in the same stage of its product life cycle regardless of the country. T/F
F
Because Hard Rock Cafes are themed restaurants, operations managers focus their layout design efforts on attractiveness while paying little attention to efficiency T/F
F
10 strategic OM Decisions (differentiaion, low cost, response can be achieved when managers make effective decisions in 10 areas of om)
Good and service design-defines much of the transformation process. Cost, quality and human resource decisions are often determined by design decisions. Designs usually determine the lower limits of cost and the upper limits of quality Quality- Customers quality expectations must be determined and policies and procedures established to identify and acheive that quality Process and capacity design-process options are available for products and services, process decisions commit management to specific tech, quality, human resource use and maintenance Location selection- facility location decisions for both manufacturing and service organizations may determine the firm's ultimate sucesss. Errors made at this juncture may overwhelm other efficiencies Layout design- material flows, capacity needs, personnel levels, tech decisions and inventory requriements influence layout design human resources and job design- people are an integral and expensive part of the total system design. The quality of work life provided, the talent and skills required and their costs must be determined supply-chain management- these decisions determine what is to be made and what is to be purchased. Consideration is also given to quality, delivery, and innovation, all at a satisfactory price. Mutual trust between buyer and supplier is neccessary for effective purchasing inventory- iventory decisions can be optimized only when customer satisfaction, suppliers, production schedules and human resource planning are considered scheduling- feasible and efficient schedules of production must be developed, the demands on human resources and facilities must be determined and controlled maintenance-decisions must be made regarding desired levels of reliability and stability, and systems must be established to maintain the reliability and stability
Which is not true regarding differences between goods and services? Services are generally produced and consumed simultaneously; tangible goods are not. Goods tend to have higher customer interaction than services. Services tend to be more knowledge-based than goods. Services tend to have a more inconsistent product definition than goods. None of the above is true.
Goods tend to have higher customer interaction than services.
examples of non operations
Marketing and Finance/Accounting, which support the "main" thing that the business does, but the main thing that a business does is the focus of Ops Management.
Ethics
Op Managers roles of buying from suppliers, transforming resources into finshed goods, and delivering to customers places them at critical junctures where they must frequently make ethical decisions
Rapid Product Develp.
Rapid international communication of news, entertainment and lifestyles is dramatically chopping away at the life span of products. Op managers are responding with managment structures, technology, parterships that are more responsive and effective
Differences between goods/services (7)
Services are usually intangible Services are often produced and consumed simultaneously(no stored inventory) Services are often unique Services have high customer interaction Services have inconsistent product definition Services are often knowledge based Services are frequently dispersed
What is operations management?
Set of activities that creates value in the form of goods and services by transforming inputs into outputs. A discipline that applies to restaurants like Hard Rock as well to factories like Ford. The techniques apply throughout the world to all productive enterprises. Operations are at the center of what every organization and business does
Connections in forecasting
Short range forcasting uses different methodolgies than long range forecasting including mathematical techniques such as moving averages, expoential smoothing and trade extrapolation It gets more diffucult to create accurate forecasts with longer time horizons. Medium and long range forecasting tends to use more comprehensive and often less technical methodologies. Financial, economic and tech forcasts are often used
Forecasting Time Horizons
Short range- has a time span of up to 1 year but is generally less than 3 months. It is used for planning purchasing, job scheduling, workforce levels, job assignments and production levels Medium range- generally spans from 3 months to 3 years. It is useful in sales planning, production planning and budgeting, cash budgeting, and analyisis of various operating plans long range- gernerally 3 yeras or more in time span, long range forecasts are used in planning for new products, capital expenditures, facility location or expansion, and research and development
A naive forecast for September sales of a product would be equal to the sales in August T/F
T
All organizations, including service firms such as banks and hospitals, have a production function T/F
T
Experience differentiation is an extension of product differentiation, accomplished by using people's five senses to create an experience rather than simply providing a service. T/F
T
Global Focus
The rapid decline in communcation and trasportation cots has made markets global. Resources in the form of capital, materials, talent and labor are now also global. As a result, countries throughout the world are contributing to globilzation as they vie for economic growth. Op managers are rapidly responding with creative designs, efficient production and quality goods
Productivity
The ratio of outputs (goods/services) divided by one or more inputs (labor capital or management) The op managers job is to enhance this ratio
Quantitative Methods/Approaches
Used when situation is "stable" and historical data exists(existing products/current technology) Involves mathematical techniques (forecasting sales of X product)
Empowered Employees
There is more competence in the workplace. Op managers are responding by moving more decision making to individual workers
Which of the following statements about organizational missions is false? They reflect a company's purpose. They are formulated after strategies are known. They indicate what a company intends to contribute to society. They provide guidance for functional area missions. They define a company's reason for existence.
They are formulated after strategies are known.
Mean Absolute Deviation (MAD)
This is the first measure of the overall forecast error for a model. Take the sum of the absolute values of individual forecast errors (deviation) and dividing by the number of periods of data.
Why Study OM?
To understand: How do people organize themselves to be productive? How do people produce the goods/services? How do people manage other people?
Forecasting (seven steps posed as questions)
Why are we forecasting?- use of the forecast What are we forecasting?- items to be forecasted Whats the time horizon? What model should we use? What data do we need? What is the forecast? How do we validate the forecast?
NAFTA
a free trade agreement between Canada, Mexico and the US. They seek to phase out all trade and tarrif barries between these nations
key success factors (KSFs)
activites that are neccessary for a firm to achieve its goals. they can be so significant that a firm must get them right to survive in the industry. Ex. mcdonalds must have play area, good drive thru and fast kitchen to survive. They are important but not sufficient for a competitve advantage
The Ten Critical Decisions of Operations Management include maintenance process and capacity design layout strategy managing quality all of the above
all of the above
feedback loop
an effective feedback loop evaluates performace against a strategy or standard. It also evaluates customer satisfaction and sends signals to managers controlling the inputs and transformation process
Strategy
an organization's action plan to achieve the mission. Each area has a strategy for achieving its mission and for helping the firm reach the overall mission. Strategies exploit opportunites and strenghts, nuetralize threats and avoid weaknesses.
Mission
an organization's purpose, what it will contribute to society. Mission statements provide boundaries and focus for organizations and the concept for which the firm can rally. The mission states the rationale for the organizations existence and a well defined mission helps to develop strategy
Cycles
are like seasonal variations in data but occur every several years, not weeks or months. Cycles include a wide variety of factors that can cause an economy to fluctuate thus it is difficult to forecast.
Implications of quality
company reputation-quality will show up in perceptiions of a firm or its products product liability-being liable for faulty/non quality products legally global implications- to compete on a global scale quality must meet global standards
Productivity can be improved by increasing inputs and outputs in the same proportion decreasing outputs while holding inputs steady increasing inputs while holding outputs steady decreasing inputs while holding outputs steady none of the above
decreasing inputs while holding outputs steady
3 strategic approaches to competitive advantage
differentiation-distinguishing the offerings of an organization in a way that the customer perceives as adding value . Going beyond both physical characteristics and service attributes to encompass everything about the product or service that influences the value that the customers derive from it low cost leadership-entails achieving maximum value as defined by your customer. It requires examining each of the 10 OM decisions in an effort to drive down costs while meeting customer expectations of value. A low cost strategy does not imply low value or low quality response-including the entire range of values related to timely product development and delivery as well as reliable scheduling and flexible performance. Flexible response is the ability to match changes in a marketplace where design innovations and volumes fluctuate substantially also includes reliability and quickness
Operation has tools but it comes..
down to the PEOPLE
Efficient production of goods/services requires..
effective applications of the concepts, tools and techniques of OM
Moving Average
forecast uses a number of historical actual data values to generate a forecast. They are useful if we can assume that market demands will stay fairly steady over time.
Quantitative Forecasts and 5 methods
forecasts that employ mathematical modeling to forecast demand. use a variety of mathematical models that rely on historical data and/or associative variables to forecast demand 1. naive approach 2. moving averages 3. exponential smoothing 4. trend projection 5. linear regression
Qualitative Forecasts and 4 methods
forecasts that incorporate such factors as the decision makers intuition, emotions, personal experiences and value systems. Jury of executive opinion-forecasting that uses the opinion of a small group of high-level managers to forma group estimate of demand delphi method- forecasting that uses a group process that allows experts to make forecasts sales force composite- based on salespersons estimates of expected sales consumer market survey- solicits input from customers or potential customers regarding future purchasing plans
In the US we have moved from blank to blank
goods to services
Mass customization
in a world where consumers are increasingly aware of innovation and options, pressure is put on firms to respond. Op managers are responding with creative prod designs and flexiable production processes. The goal is to produce customized products whenever, wherever
multifactor productivty
includes all inputs to measure productivity. Also known as total factor productivity. Units are expressed like (.25 tiles per dollar). This provides a better picture of the increase because it includes all the costs connected with the increase in output
potential problems with moving avg
increasing n smooths the forecast but makes it less sensitive to changes do not forecast trends well require extensive historical data
Just in time performance
inventory requires financial resources and impedes response to rapid changes in the marketplace. These forces push op managers to cut inventories from raw materials to finished goods
what happens when you increase periods for MA?
it smooths out fluctuatitions but it makes the method less sensitive to real changes in the data
The total of all outputs produced by the transformation process divided by the total of the inputs is defined only for manufacturing firms multifactor productivity utilization greater in manufacturing than in services none of the above
multifactor productivity
Environ. sensitive produc
op managers continuing to battle to improve productivity is increasingly concerned with designing products and processes that are ecologically sustainable. That means desiging products and packaging to minimize resource use, and are envorn friendly
Cost of quality (COQ) 4
prevention costs- costs associated with reducing the potential for defective parts or servies (Training, quality improvement programs) Apprasial costs- costs related to evaluating products, processes, parts and services (testing, labs, inspectors) Internal Failure- costs tat result from production of defective parts or services before delivery to customers (rework, scrap, downtime) External costs- costs that occur after delivery or defective parts/service (rework, returned goods, liabliites, costs to society)
The two general approaches to forecasting are qualitative and quantitative historical and associative judgmental and associative mathematical and statistical judgmental and qualitative
qualitative and quantitative
Cyclical Component
repeating up and down movements affected by buisness cycle, political and economic factors multiple years duration often casual or associative relationships
Seasonal Components
seasonal variations in data are up and down movements in a time series that relate to recurring events such as weather or holidays. Demand changes based on what is going on. Occurs within a single year
Mean Square Error (MSE)
second way of measuring overall forecast error. It is the average of the squared differences between the foretasted and the actual values. An issue with this is that it tens to accentuate large deviations due to the squared term. If we use MSE as the measure for forecast error it indicates that we prefer to have several smaller deviations rather than even one large deviation
core competencies
set of unique skills, talents, and capabilities that a firm does at a world class standard. they allow a firm to set itself apart and develop a competitive advantage. Orgs. that prosper identify their core competencies and nurture them, Ex mcdonalds core competency is consistency and quality
Supply-Chain partnering
shorter product life cycles, demanding customers, and fast changes in tech require supply chain partners to be more in tune with the needs of end users. Op managers are outsourcing and building long term partnerships with critical players in the supply chain
Linear-regression analysis
straight line mathmatical model to describe the functional relationships between independent and dependent variables. The most common quantitative associative forcasting model. Could be used when a company wants to develop the best statistical relationship between PC sales and the independent variables (advertising budge, prices, competitor prices, nations economy)
Mission statements
tell an organization where it is going
The strategy
tells the organization how to get there
Quality
the ability of a product or service to meet customer needs. An op managers objectie is to build a total quality management system that identitifes and satifies customer's needs
Single factor productivity
the use of just one resource input to measure productivity. Units are expressed like (.25 tiles per labor-hour )
weighted moving average
weights can be used to place more emphasis on recent values. This makes the forecasting more responsive to changes because more recent periods may be more heavily weighted.
