Test 1 Flashcards
3 Basic Functions of Organizations
- Marketing
- Operations
- Finance
Operations
The part of the business organization that is responsible for producing goods/services
Operations Management
The management of systems/processes that create goods/services
Value Added Formula
Value Added = (value/price of output) - cost of input
Feedback
Measurements taken at various points in the transformation process
Control
The comparison of feedback against previously established standards to determine if corrective action needs to taken
Sources of Variation
- variety of goods/services being offered
- structural variation in demand
- random variation
- assignable variation
Variety of goods/services being offered
leads to greater variation in production requirements
Structural variation in demand
predictable (holiday seasons)
important for capacity planning
random variation
natural, unpredictable variation
assignable variation
variation that has identifiable sources (incorrect work methods, equipment)
can be reduced or eliminated by corrective action
Products Package
combination of goods and services
Differences between Goods and Services
It’s long. Go look it up. First Powerpoint. Slide 11
Scope of OM
-forecasting capacity planning -facilities and layout -scheduling -inventory -quality assurance -motivating employees -deciding where to locate facilities
Role of OM Manager
Guide the system by decision making
- design decisions
- operation decisions
System Design
strategic decisions; long term commitment of resources; determine the parameters of system operation
- capacity
- facility location/layout
- product planning
- acquisition and placement of product
System Operation
tactical decisions
- personal management
- inventory management
- scheduling
- project management
- quality assurance
Modeling
an abstraction of reality
Types of Models
- Physical
- look like real life counterparts - Schematic
- graphs, charts, blueprints - Mathematical
Benefits of Models
- easier to use
- less expensive
- provide standardized format for analyzing
- requires users to organize (and quantify) data
- increase understanding of problem
- what if questions
Limitations of Models
- important variables may be missed
- quantitative information is more important that qualitative
- models may be applied incorrectly and results misinterpreted
- non-qualified users may use it wrong
Historical Evolution of OM
- Industrial Revolution
- Scientific Management
- Decision Models and Management Science
- Influence of Japanese Manufacturers
Industrial Revolution
18th Century
substituting machine power for human power
Scientific Management
Early 20th Century
based on economic incentives & observation, measurement, analysis, and improvement of work methods
Decision Models
Mid 20th Century
operations research in warfare
Japanese Manufacturers
late 20th
credited for quality revolution
lean operations/ just in time productions
Key Issues for OM Managers Today
- Economic Conditions
- Innovating
- Quality
- Management Technology
- Internet business
- Supply chain
- Risk Management
- Revenue Management
- Competing in global marketplace
- Environment
- Ethics
Essence of Organization
goods and services it provides
Research and Development
organized efforts to increase scientific knowledge or product innovation
Basic Research
learning more about a subject without being close to commercial application
Applied Research
achieving commercial applications
Development
converts applied research results to useful commercial applications
Key Questions for an Organization
- Is there demand?
- Can we do it?
- manufacurability and serviceability
- Level of Quality?
- Does it make sense economically?
Manufacturability
the capability of an organization to produce an item at an acceptable profit
Serviceability
the capability of an organization to provide a service at an acceptable profit
Phases in Product Development
- Feasibility analysis
- Product specifications
- Process Specifications
- Prototype development
- Design Review
- Market Test
- Product Introduction
- Followup Evaluation
Reliability
The ability of a product, part, or system to perform its intended function under a prescribed set of conditions
-enhanced by utilizing redundancy (backups)
Rule 1 (Reliability)
All work
Rule 2 (Reliability)
1 works OR 1 fails AND 2 works
Improving Reliability
- component design
- redundancy/ backups
- production techniques
- testing
- preventative maintenance procedures
- user education
Product Life Cycle
Introduction –> Growth –> Maturity –> Decline
Introduction (PLC)
high cost, low demand
possible quality issues
Growth (PLC)
lower cost
higher demand
better quality
Maturity
low cost
high productivity
standardization
high reliability
Decline
Should it be discontinued?
Standardization
absence of variety
Advantages of Standardization
- Fewer parts needs
- Reduced training costs and time
- More routine procedures
- Orders fillable from inventory
- Opportunities for long production runs and automation
Disadvantages of Standardization
- High cost of design changes increases resistance to improvements
- Less consumer appeal
Mass Customization
A strategy of producing basically standardized goods or services, but incorporating a degree of customization in the final product or service
Delayed Differentiation
A type of mass customization
The process of producing, but not quite completing, a product or service until customer preferences are known
-ex cars
Modular Design
A form of standardization in which component parts are grouped into modules that are easily replaced or interchanged
Designing Products for Production
- concurrent engineering
- computer assisted design
- production requirements
- component commonality
Concurrent Engineering
Bringing design and manufacturing engineers together early in the design phase to combine consumer wants and manufacturing capabilities
Computer Aided Design (CAD)
- Increases designers’ productivity.
- Directly provides information to manufacturing (dimensions, material - BOM).
- Perform analysis: engineering ,cost.
- Shortens time-to-market
Production Requirements
Designers paying attention to production capabilities
Design for Manufacturing (DFM)
The designing of products that are compatible with an organization’s abilities
Design for Assembly (DFA)
Design that focuses on reducing the number of parts in a product and on assembly methods and sequence.
Component Commonality
When products have a high degree of similarity in features and components so a part can be used in multiple products
Quality Function Deployment
An approach that integrates the “voice of the customer” into both product and service development
Service Design
Begins with a choice of service strategy, which determines the nature and focus of the service, and the target market
-Key Issues: variation and customer contact
Competitiveness
How effectively an organization meets the wants and needs of customers relative to others.
What do organizations compete over?
Price
Quality
Response-time
Variety
Mission
The reason for an organization’s existence. Serves as the basis for organizational goals.
Goals
Provide detail and scope of the mission.
Serves as the basis for organizational strategies.
Strategy
A plan for achieving organizational goals.
Types of strategies organizations have
Organizational strategies - relate to entire organization
Functional level strategies - relates to functional areas and support the org. strategy
Example of strategies
Low Price Specialization Variety Newness Service Sustainability Quality Responsiveness
What aspects are taken into account when formulating strategies?
- Core competencies
- Environmental Scanning: SWOT
- Order Qualifiers & Winners
Core Competencies
Special attributes or abilities that give an org. a competitive edge.
Need to be aligned with strategies.
What is environmental scanning necessary to identify.?
Internal Factors
External Factors
Key Internal Factors
HR Facilities and Equip Fin Resources Cust. Products and services Tech Suppliers Dist. ch., company images
Key External Factors
Econ Conditions Political conditions Legal environ. Tech Competition Markets
Order Qualifiers
Characteristics that customers perceives as min standards of acceptability for a good or service to be considered for purchase.
Order Winners
Characteristics of an org’s goods or services that cause it to be better perceived than competition.
Operation Strategy
The approach that is used to guide the operations function. Would take into account of the realities of the operation’s strenght and weaknesses
Tactics
the methods and actions taken to accomplish strategies
Operations
The actual doing part of the process
Productivity
A measure of the effective use of resources.
What is productivity useful for?
Tracking an operating unit’s performance over time.
Why does productivity matter?
Higher prod. than competition leads to competitive advantge.
Higher Productiv linked to higher standards of living.
Productivity Equation
Productivity = outputs/inputs
Partial Measures
= Output/(single input)
=Output/(Labor or machine or capital or energy)
Multi-factor Measures
=output/multiple inputs
=Output/(Labor+Machine or Labor+Capital+Energy)
Total Measure
=Output/total inputs
= Goods or services produced/all inputs used to produce them
Why is the service sector difficult to measure and manage?
Involves intellectual activities
Has high variability
Factors Affecting Productivity
Methods Quality Management Capital Tech
How to improve productivity
- Develop productivity measures for all operations
- Find critical bottlenecks
- Create methods to improve productivity
- Establish reasonable goals
- Make it clear management supports and encourages productivity improvement
- Measure and publicize improvements
- Efficiency doesn’t equal productivity.
