You are on page 1of 5

Operations Management is: The management of systems or processes that create goods and provide services Operations Management

affects: companies ability to compete Value Added Process- The operations function involves the conversion of inputs into outputs Value-added is the difference between the cost of inputs and the value or price of outputs. Product packages are a combination of goods and services. Decision making: Models- physical, schematic, mathematical Quantitative approaches- Linear programming, Queuing techniques, inventory models, project and stat model Analysis of trade offs- level of customer service vs increased cost of holding inventory System approach- the whole is greater than the sum of the parts Ethics Pareto Phenomenon- a few factors account for a high percentage of the occurrence of some events 80/20 rule- 80% of problems are caused by 20% of activities. Supply Chain- a sequence of activities and organizations involved in producing and delivering a good or service Product liability Uniform Commercial Code- products carry an implication of merchantability and fitness. Standardization- Extent to which there is an absence of variety in a product services or process. Mass Customization- a strategy of producing standardized goods or services but incorporating some degree of customization Delayed differentiation- Producing but not quite completing a product or service until customer preference or specifications is known. Modular Design- is a form of standardization in which component parts are subdivided into modules that are easily replaced or interchanged. Easier diagnosis and remedy for failures. Reliability: The ability of a product, part, or system to perform its intended function under a prescribed set of conditions Failure: Situation in which a product, part, or system does not perform as intended Normal operating conditions: The set of conditions under which an items reliability is specified

Robust Design: Design that results in products or services that can function over a broad range of conditions. Taguchi Approach Robust Design Design a robust product - Insensitive to environmental factors either in manufacturing or in use. Central feature is Parameter Design. Determines: factors that are controllable and those not controllable Virtual teams- Uses combined efforts of a team of designers working in different countries Reverse engineering is the dismantling and inspecting of a competitors product to discover pro duct improvements. Basic Research advances knowledge about a subject without near-term expectations of commercial applications. Applied Research achieves commercial applications. Development converts results of applied research into commercial applications. Manufacturability is the ease of fabrication and/or assembly Concurrent engineering is the bringing together of engineering design and manufacturing personnel early in the design phase. Computer-Aided Design (CAD) is product design using computer graphics provides possibility of engineering and cost analysis on proposed designs. Remanufacturing: Refurbishing used products by replacing worn-out or defective components. Remanufactured products can be sold for 50% of the cost of a new product. Quality Function Deployment-An approach that integrates the voice of the customer into the product and service development process. Service- Something that is done to or for a customer Service delivery system-The facilities, processes, and skills needed to provide a service Product bundle-The combination of goods and services provided to a customer Service package-The physical resources needed to perform the service Service blueprinting- A method used in service design to describe and analyze a proposed service FORECAST: A statement about the future value of a variable of interest such as demand. Forecasting is used to make informed decisions. Types of Forecast: Judgmental - uses subjective inputs

Time series - uses historical data assuming the future will be like the past Associative models uses explanatory variables to predict the future Time series forecast: Trend - long-term movement in data Seasonality - short-term regular variations in data Cycle wavelike variations of more than one years duration Irregular variations - caused by unusual circumstances Random variations - caused by chance Uses for Nave Forecast: Stable time series data Seasonal variations Data with trends F(t) = A(t-n) F(t) = A(t-1) + (A(t-1) A(t-2)) F(t) = A(t-1)

Moving average A technique that averages a number of recent actual values, updated as new values become available. Ft = MAn=At-n + A t-2 + A t-1 / n Weighted moving average More recent values in a series are given more weight in computing the forecast. Ft = WMAn= W nA t-n + W n-1 A t-2 + W1 A t-1 / n Exponential Smoothing Ft = F t-1 + (A t-1 F t-1) A-F is the error term, is the % feedback

Premise -The most recent observations might have the highest predictive value.

Linear Trend Equation Ft = Forecast for period t

Ft = a + bt

t = Specified number of time periods a = Value of Ft at t = b = Slope of the line b =n (ty) - t y

n t 2 - ( t) 2 a = y - bt n Seasonal variations - Regularly repeating movements in series values that can be tied to recurring events. Seasonal relative - Percentage of average or trend Centered moving average - A moving average positioned at the center of the data that were used to compute it. Associative Forcasting Predictor variables - used to predict values of variable interest Regression - technique for fitting a line to a set of points Least squares line - minimizes sum of squared deviations around the line Error - difference between actual value and predicted value Mean Absolute Deviation (MAD) - Average absolute error MAD= |Actual-forecast| n Mean Squared Error (MSE) - Average of squared error MSE= (Actual Forecast) ^2 n-1 Mean Absolute Percent Error (MAPE) - Average absolute percent error MAPE= ( Actual- Forecast / Actual x 100) n Control chart - A visual tool for monitoring forecast errors Tracking signal - Ratio of cumulative error to MAD Tracking signal = (Actual-forecast) MAD

Supply Chain: the sequence of organizations - their facilities, functions, and activities - that are involved in producing and delivering a product or service. Sometimes referred to as value chain. Purchasing-Receiving-Storage-Operations-Storage-Distributing Supplier-Storage-Mfg.-Storage-Dist.-Retailer-Customer

Two types of decisions in supply chain management Strategic design and policy Operational day-today activities

Logistics-Refers to the movement of materials and information within a facility and to incoming and outgoing shipments of goods and materials in a supply chain Distribution requirements planning (DRP) system for inventory management and distribution planning Processing returned goods=Sorting, examining, restocking, repairing,reconditioning, recycling, disposing Gatekeeping screening goods to prevent incorrect acceptance of goods Avoidance finding ways to minimize the number of items that are returned RFID eliminates need for manual counting and bar code scanning. Similar to bar codes but uses radio frequency to transmit product information to receiver Collaborative Planning, Forecasting, and Replenishment-information sharing among trading partners Inventory velocity- The rate at which inventory (material) goes through the supply chain Information velocity -The rate at which information is communicated in a supply chain Bullwhip effect -Inventories are progressively larger moving backward through the supply chain Cross-docking-Goods arriving at a warehouse from a supplier are unloaded from the suppliers truck and loaded onto outbound trucks, Avoids warehouse storage Delayed differentiation-Production of standard components and subassemblies, which are held until late in the process to add differentiating features Disintermediation-Reducing steps in a supply chain by cutting out one or more intermediaries Purchasing is responsible for obtaining the materials, parts, and supplies and services needed to produce a product or provide a service. Purchasing cycle: Series of steps that begin with a request for purchase and end with notification of shipment received in satisfactory condition. Value analysis-Examination of the function of purchased parts and materials in an effort to reduce cost and/or improve performance Centralized purchasing Purchasing is handled by one special department Decentralized purchasing-Individual departments or separate locations handle their own purchasing requirements Vendor analysis: Evaluating the sources of supply in terms of price, quality, reputation, and service