Great Course-Critical Biz Skills-Operations Flashcards
What is product extension? what is the difference between product extension to new products?
Product extension is adaption of already successful products i.e. new flavor of certain drinks, while new products take new demonstration and testing.
Transaction cost analysis: Oliver Williamson from UC Berkeley won nobel prize for transaction cost economics.
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What are the key cost components of producing in house?
property, plant, equipments, labor, raw materials, utilities, tax, depreciation, cost of safety measures
what are the key outsourcing problems (contract manufacturing)?
transaction costs, oversight authority, quality defects which lead to recall, labor abuses
what are the key manufacturing strategies?
large manufacturers usually use mix of below strategies to meet different customer needs.
- ship-to-stock (full anticipatory) : build and distribute products in advance of demand. since customers anticipate the availability of products on shelves when they arrive at the stores. but this strategy can lead to write off if the product are not sold off.
- make-to-stock: buy materials and make products in advance but don’t distribute until customer orders are received. company usually holds inventory centrally for all distribution locations but this gather all uncertainty of demand in one location. if customers are scattered, the transportation cost are high and customers’ waiting time are long.
- assemble to order/mass customization: materials are procured in advance but products are semi-finished. this strategy will work when the big part of the products are generic and it only takes a bit twist to customize on final touch until sold.
- make-to-order: raw materials are on hand but not assembled until customer order is received. producer has more flexibility in customization.
- buy-to-order: raw materials are not purchased until customer order is received. aircraft, satellites, defense equipments, which takes joint designs with customers.
