Ops Management Study Guide Flashcards
Operations management
systemic design, direction, and control for processes that transform inputs into series and products for internals well as external, customers
Process
activity or group of activities that takes one or more inputs, transforms them, provides
Supply chain
interrelated series of processes within and across firms that produces a service or product a service or product to the satisfaction of customers
Supply chain management
synchronization of a firm’s process with those of its suppliers and customers to match the flow of materials, services, and information with customer demand
COO
chief operations officer
Landmark event for operations
assembly line for model T
Inputs
combo of Human Resources, capital, purchased materials/services, land, and energy
Outputs
services or tangible products
Customers in processes
external customers: end users or intermediary buying firms finished services/products
internal customers: one or more employees/processes that rely on inputs from other employees /processes to perform their work
Every process relies on suppliers
external suppliers: provide resources, services, products for firm’s short-term and long-term needs
internal suppliers: supply important or materials to a firm’s processes
Nested processes
concept of a process within a process
Major types of processes
- service: intangible, perishable output, high customer contact, cannot be inventoried, labor intensive
- manufacturing: physical, durable output, low customer contact, capital intensive, quality easily measured
Types of processes in supply chain
core processes: set of activities that delivers value to external customers
support processes: provides vital resources and input to the core processes
Four core processes
- supplier relationship process: facilitates timely and efficient flow of these items into the firm
- new service/product development process: designs/develops new series or products from inputs received from external customer
- order fulfillment process: includes activities required to produce and deliver service or product to external customer
- customer relationship process: facilitates the placement of orders by customers, aka customer relationship management
Supply chain processes
business processes have external customers or suppliers
Operations strategy
operations implements firm’s corporate strategy and helps to build customer-driven firm
Corporate strategy
- environmental scanning; managers monitor trends in the environmental for potential opportunities/threats
- developing core competencies: unique resources/strengths that an organization’s management considers when formulating strategy (workforce, facilities, market/financial know-how, systems and technology)
- developing core processes
- developing global strategies: strategic alliances (an agreement with another firm in which each firm maintaining its autonomy) and locating abroad (can enter global markets by locating operations in a foreign country)
Market analysis
divides firm’s customers into market segments and then identifies needs of each segment: market segmentation, needs assessment
Competitive priorities
critical dimensions that a process or supply chain must posses
Competitive capabilities
cost, quality, time, and flexibility dimensions that a process or supply chain actually possesses
Productivity
output/input
Additive manufacturing
technologies that 3D objects by adding layers of material such as plastic, metal, or concrete
Two key principles
- each part of an organization, not just the operations function, must design, and operate processes that are part of a supply chain and deal with quality, technology, and staffing issues
- each function of an organization has its own identity and yet is connected with operations
Basic steps to decision making
- recognize and clearly define the problem
- collect the info needed to analyze possible alternatives
- choose and implement the most feasible alternative
Four formal procedures
break-even analysis, preference matrix, decision theory, decision tree
Break-even analysis
use of break-even quantity; it can be used to compare processes by finding the volume of which two different processes have equal total costs
volume at which total revenue = total costs
Break-even divided into two costs
variable cost (Q) and fixed cost (cQ)
Total cost = F + cQ
Total revenue = pQ
Break-even quantity point Q = F/p-c
Set two cost functions to equal each other to solve for Q: Fb+cbQ = Fm+CmQ -> Q = Fm-Fb/Cb-Cm
Preference matrix
table that allows the manager to rate an alternative according to several performance criteria
Decision theory
general approach to decision making when the outcomes associated with alternatives are often in doubt -> payoff table: shows the amount of each occurs
Process strategy
pattern of decisions made in managing processes so that they will achieve their competitive priorities
Process analysis
documentation and detailed understanding of how work is performed and how it can be redesigned
Process structure
process type relative to the kinds of resources needed, how resources are partitioned between them, and their key characteristics
Layout
physical arrangement of operations (or departments) relative to each other
Customer involvement
ways in which customers become part of the process and the extent of their participation
Resource flexibility
ease with which employees and equipment can handle a wide variety of products, output, levels, duties, and functions
Capital intensity
the mix of equipment and human skills in a process
Good process strategy for a service characteristics
customer contact: extent to which customer is present, is actively involved
Customer contact matrix
Three elements: 1. degree of customer contact 2. customization 3. process characteristics
What does the vertical dimension of the customer-contact matrix deal with
- process divergence (extent to which the process is highly customized with considerable latitude as to how its tasks are performed 2. flow (flexible flow: information moves in diverse ways, with the path of one customer or job often crisscrossing the path that the next one takes, line flow: information moves linearly from one operation to the next, according to a fixed sequence)
Three process structures of a manager
front office: process with high customer contact where the service provider interacts directly with the internal or external customer
hybrid office: process with moderate levels of customer contact and standard services with some options available
back office: process with low customer contact and little service customization
Product-process matrix elements
- volume 2. product customization 3. process characteristics
Process choice
way of structuring the process by organizing resources around the process or organizing them around the products
Four process choice of a manager
- job process: process with the flexibility needed to produce a wide variety of products in significant quantities, with considerable divergence in the steps performed
- batch process; process that differs from the job process with respect to volume, variety, and quantity
- line process: process that lies between the batch and continuous processes on the continuum; volumes are high and products are standardized, which allows resources to be organized around particular products
Continuous-flow process
Extreme end of high-volume standardized production and rigid line flows, with production not staring and stopping for long time intervals
Design-to-order strategy
involves designing new products that do not currently exist, and then - manufacturing them to meet unique customer specifications
Make-to-order strategy
strategy used by manufacturers that make products to customer specifications in low volumes
Assemble-to-order
strategy for producing a wide variety of products from relatively few subassemblies and-components after the customer orders are received
Postponement
strategy of delaying final activities in the provision of a product until the orders are received
Mass customization
strategy that uses highly divergent processes to generate a wide variety of customized products at reasonably low costs
Make-to-stock strategy
strategy that involves holding items in stock for immediate delivery, thereby minimizing customer delivery times
Mass production
a term sometimes used in the popular press for a line process that uses the make-to-stock strategy
Three major process strategy decisions
Customer involvement: reflects the ways in which customers become part of the process and the extent of their participation
Advantages: increase net value to customer, better quality, greater flexibility, lower cost
Disadvantages: can make process less efficient, managing customer demands becomes more challenging if the customer is physically present
Flexible workforce
workforce whose members are capable of doing many tasks, either at their own workstations or as they move from one workstation to another
Automation
a system, process, or piece of equipment that is self-acting and self-regulating
Two types of fixed automation
- fixed: produces one type of part or product in a fixed sequence of simple operations
- flexible: manufacturing process that can be changes easily to handle various products
Economies of scope
economies that reflect the ability to produce multiple products more cheaply in combination than separately
Decision patterns for service processes
- process structure: customer is present, actively involved, and receives personal attention
- customer involvement: customer contact is high, customers are more likely to become part of the processes
- resource flexibility: high process divergence and flexible process flows fits with more flexibility from the process’s resources
- capital intensity: volume is high, automation and capital intensity are more likely
Plants within plants
different operations within a facility with individualized competitive priorities, processes, and workforces under the same roof
Decision patterns for manufacturing processes
- process structure: high volumes, combined with a standard product, make a line flow possible
- customer involvement: not a factor in most manufacturing processes, except for choices made on product variety and customization
- resource flexibility: volumes are high and process divergence is low
- capital intensity: high volume justify the large fixed cost of an efficient operation
Focused factories
result of a firm’s splitting large plants that produced all the company’s products into several specialized smaller plants
Complementary philosophies for process design and change
- process reengineering: rethinking and radical redesign of processes to improve performance dramatically in terms of cost, quality, service, and speed
- process improvement: systematic study of the activities and flows of each process to improve it
Six Sigma Process Improvement Model
define, measure, analyze, improve, control
green belt: employees who have achieved the first level of training in six sigmas
black belt: employees who have reached highest level of training in six sigmas
Three major techniques for effectively define and measuring processes
- flowcharts: traces flow of information, customers, equipment, or materials through various steps of a process 2. work measurement technique 3. process charts
Service blueprint
special flowchart of a service process that shows which steps have high customer contact
Leaning curve
line that displays the relationship between processing time and the cumulative quantity of a product or service produced
Process chart
organized way of documenting all the activities performed by a person or group of people, at a workstation, with a customer, or on materials
Pareto chart
bar chart on which factors are plotted along the horizontal axis in decreasing order of frequency
Process simulation
act of reproducing the behavior of a process, using a model that describes each step
Capacity
maximum rate of output of a process or a system
Long-term capacity plans
deals with investments in new facilities and equipment at the organizational level to require top management participation
Utilization
degree to which equipment, space, or the workforce is currently being used
average output rate/maximum capacity x 100%
Economies of scale
concept that states that the average unit cost of a service or good can be reduced by increasing its output rate
Diseconomies of scale
occurs when the average cost per unit increases as the facility size increases
Three dimensions of capacity strategy
sizing capacity cushions: amount of reserve capacity a process uses to handle sudden increases in demand or temporary losses of production capacity, measures amount by which average utilization falls below 100 percent
Timing and sizing expansion: when to adjust capacity levels and by how much? expansionist strategy: stays ahead of demand, minimizes chance of sales lost to insufficient capacity wait-and-see strategy: lags behind demand, expand in smaller increments by renovating existing facilities
linking capacity and other decisions: should be closely linked to processes and supply chains throughout organizations
Four-step procedure for capacity decisions
- estimate future capacity requirements
- identify gaps by comparing requirements when available capacity
- develop alternative plans for reducing the gaps
- evaluate each alternative, both qualitatively and quantitatively, make final choice
Planning horizon
set of consecutive time periods considered for planning purposes
Capacity requirement
what s process’s capacity should be for some future time period to meet the demand of customers, given the firm’s desired capacity cushion
Setup time
time required to change a process or an operation from making one service or product to making another
Capacity gap
positive or negative difference between projected demand and current capacity
Base case
act of doin nothing and losing orders from any demand that exceeds current capacity, or incur costs because capacity is too large
Three tools to deal more formally with demand uncertainty and variability
waiting-line models, simulation (identifies process’s bottlenecks and appropriate capacity patterns), and decision trees
Waiting line
one or more “customers” waiting for service
Structure of waiting-line problems
- input, or customer population, that generates potential customers
- waiting line of customers
3.. service facility, consisting of a person, a machine, or both, necessary to perform the service for the customer - priority rule
Preemptive discipline
rule that allows a customer of higher priority to interrupt the service of another customer
What should managers be concerned about for waiting lines
line length, number of customers in system, waiting time in line, total time in system, service facility utilization
Interarrival times
time between customer arrivals
What areas can management improve service systems
arrival rates, number of service facilities, number of phases, number of servers per facility, server efficiency, priority rule, and line arrangement
Constraint
any factor that limits the performance of a system and restrict its output. restrict the permissible choices for the decision variables
Three kinds of constraints
physical, market, managerial
Bottleneck
capacity constraint resource whose available capacity limits the organization’s ability to meet the product volume, product mix, or demand fluctuation required by the marketplace
Theory of constraints
systematic management approach that focuses on actively managing those constraints that impede a firm’s progress toward its goal
Application of TOC
- identify system bottlenecks
- exploit the bottlenecks
- subordinate all the other decisions to step 2
- elevate the bottlenecks
- do not let inertia set in
Throughput time
total elapsed time from the start to the finish of a job or a customer being processed at one or more work centers
Drum-buffer-rope
planning and control system that regulates the flow of work-in-process materials at the bottleneck or the capacity constrained resource in a productive system
Line balancing
assignment of work to stations in a line process so as to achieve the desired output rate with the smallest number os workstations
Cycle time
maximum time allowed for work on a unit at each station
theoretical minimum
benchmark or goal for the smallest number of stations possible, where the total time required to assemble each unit is divided by the cycle time
Four considerations for managers for a given cycle time
pacing, behavioral factors, number of models produced, and different cycle times
The five p’s of inputs
people, plants, parts, processes, planning and control systems
