Chapter 5 Flashcards
Operations management
Definition
The planning, directing and controlling of the transformation of inputs and outputs that meet the needs of the organisations customers 
The administration of business practices to create the highest level of efficiency possible within an organization.
Process management
Definition
combining transformed inputs (e.g. materials) with transforming inputs (e.g. labour) in a transformation process to produce an output (e.g. products, or services)
Process design
Definition
The method by which individual specialists seek to understand business activities, and ensure that they are as efficient and effective as possible
The four Vs of process
Volume - the process will be affected by the number of inputs and outputs
Variety – the process will be affected by the number of different inputs and outputs
Variation – the process of the affected by when outputs are required (e.g. peak times for a train company).
Visibility – the process will be affected by the customers can view it or not
Value chain
Michael Porter
A value chain refers to the full lifecycle of a product or process, including material sourcing, production, consumption and disposal/recycling processes.
Regardless of a business specialises in low-cost, high-volume or high-cost, low-volume all activities within the business must align with this. 
Value chain
Support activities
Firm infrastructure
Technology development
Human resource management
Procurement
Value chain
Primary activities
Inbound, Logistics
Operations
Outbound logistics
Marketing and sales
Service
Value network
Definition
Supplier - us - customer
Recognition that success of one is influence by another
All businesses in a value network should be consistent with the value chain
Capacity, planning, and control.
Overcapacity – too many resources available for the level of demand – costly and inefficient.
Undercapacity dash, not enough resources available to meet, demand – delays and fulfilment and loss of goodwill
Capacity planning implications for
Costs - if undercapacity then resources are wasted
Revenue - if demand exceeds production, capacity revenue, and custom a goodwill has lost
Quality - if production has been rushed, quality will suffer
Capacity strategies
Level capacity strategy – maintain a constant level of production
Chase demand strategy – match production to forecast, demand
Demand management strategy – manipulate demand levels to match capacity levels (e.g. incentivising, demand)
Manufacturing resource planning (MRP II)
A method for the effective planning of all resources of a manufacturing company. Key functions include
– identifying firm, orders, and forecasting future orders taking into consideration materials, capacity and current stock levels
Benefits of manufacturing resource planning
Reduce stockholding
Improved ability to meet orders (happy customers)
Reliable quotations of delivery times
Improve facilities, utilisation
Better supply relationships 
Optimise product technology (OPT)
Eliminates bottlenecks by using several computer base methods for scheduling production requirements.
Enterprise resource planning (ERP)
Integrate all departments and functions of an organisation in a computer system, able to meet the needs of all organisational users 
