Question # 1(a)

Define scope and significance of operation management.

The management of conversion or transformation process which accepts inputs

and delivers usable goods and services is what is called “operations
management.” The inputs may be in the form of, capital, material,
labor, technology, information, machines etc.

The process takes place in an effective and efficient manner through operations
planning, design, management and control. Earlier it was called, production or
manufacturing management. Since operation is a general term in a productive
environment whose output may be goods or services, the term operations
management has become more appropriate.

The aim of a good operational management would be

 High level of productivity

 Competitive cost and quality
 Timely delivery
 Producing goods as per the requirements of the consumer, that is customer
oriented.
 Flexibility and responsiveness in the production of goods and services

Production or operation in the three important sectors of an economy, namely,

agriculture, industry and service, creates national wealth and serves as an index
for the growth of that economy.

One has to understand the link between operations management and other
functional areas to appreciate its scope. The goals of theoperations strategy has
to necessarily be in tandem with the overall corporate strategy to accomplish the
goals of a firm.

Scope of Operations Management

From marketing department, cues regarding customer preference and market

segmentation in terms of product, price and volume are supplied to the
production department, based on which the production planning is concluded.
From Research and development comes the product design and process
technology.

Human resource is an integral part of production process and also a crucial input.
Man power planning by the human resource department plays a major role in
recruiting, selecting, training, evaluating and empowering labor force.

The broad scope of Operations Management demands from the operational

managers to utilize all inputs and resources in such a way which yields maximum
output and reduces the cost of production without compromising with the
quality.

Question # 1(b)

Explain environmental concerns of operations

Recently, corporations have been confronted with a number of global

environmental challenges such as global warming, acid rain, depletion of
natural resources, waste management, green consumerism and pollution
prevention. There is growing pressure to deliver products and services which
are environmentally compatible. A number of corporations such as Du Pont,
3M, AT&T, Xerox and Procter & Gamble are, therefore, integrating various
environmental policies and programmes into their operations strategy and
specific decisions concerning operations such as product design/planning,
process technology selection, and quality management. Introduces the
concepts of environmental management (EM) and argues that firms which do
not recognize the implications of environmental problems on the operations
function will not succeed in the competitive market. Various environmental
management practices (such as implementing aggressive pollution‐prevention
programmes, initiating environment‐related performance measures and
developing green products and process technologies) provide opportunities to
strengthen a firm′s distinctive competence in terms of operations objectives
such as highest quality, lowest cost, best dependability, and greatest
flexibility. Thus, EM gives a competitive advantage and develops new links
between operations strategy and the corporate strategy (e.g. cost leadership
and product differentiation).

Question # 1(c)

Describe the dimensions that how operations management is considered

multidisciplinary function.

Operations management is a multi-disciplinary field that focuses on managing all

aspects of an organization's operations. The typical company carries out various
functions as a part of its operation. The dividing of a company's activities into
functional categories occurs very early on, even in a company formed and
operated by a single individual. Most companies make a product of some kind or
produce a salable service. They must also carry out a sales and marketing
function, an accounting function, and an administrative function to manage
employees and the business as a whole. Operations management focuses on the
function of providing the product or service. Their job is to assure the production
of a quality good and/or service. They apply ideas and technologies to increase
productivity and reduce costs, improve flexibility to meet rapidly changing
customer needs, assure a safe workplace for all employees, and when possible
assist in assuring high-quality customer service.

For the most part, the title "Operations Manager" is used in companies that
produce a tangible good—manufacturers on the whole. In service-oriented
businesses, the person responsible for the operations manager role is often called
by another name, one that addresses the service being offered. Examples include
project manager, consultant, lawyer, accountant, office manager, datacenter
manager, etc.

Question # 2

Describe the role of production system design. Keeping operations

management in mind explain how the productivity of an organization
is managed efficiently and effectively.

Production system design is one of the core activities of production management.

It translates the intended production strategy into a set of decisions. It establishes
the structure that will manage different activities, and creates appropriate
conditions for control and improvement. The design of production systems must
begin at early product design stages, when the way the product is manufactured
and the production system is organized should be established. The design of a
production system must focus not only on site production itself but also on
suppliers and consumers. In operational terms, the concern is to devise the layout
and the material and information flows in order to create favourable conditions
for a high performance production system. Despite its importance, very little
attention is usually given to production system design in the construction
industry.

Differently from low cost house-building, in those complex projects the client
requirements are not well defined at the beginning of the project. This requires
the production system design to be carried out in several stages. The main
contributions of the paper are the scope of decisions involved, the role played by
production system design in production management, and the requirements that
are necessary for performing this task effectively in this type of project. The
results indicated that production system design can potentially improve the
performance of production systems, and improve the understanding of the
impacts of costumer requirements and design changes. Some tools, such as
prototyping, were used for reducing uncertainty, and making some decisions
more transparent.

Productivity

Productivity is doing the right things in the right way. Once you ensure employees
are being effective and efficient, you will see a rise in productivity. You should
start measuring this productivity on a daily, weekly and monthly basis. You can
use metrics such as number of units produced, sales or customer-satisfaction
surveys. With effectiveness and efficiency in place, you will be able to establish
some baseline measures of the productivity of your company.

Increased Productivity

With the basics in place, you can increase productivity incentives. These can take
the form of increased commissions on sales above your present levels, bonuses
for reaching higher production quotas and pay raises for sustained productivity
increases. With incentives in place, employees will find their own ways to become
more effective and efficient, and thus increase productivity.

Question # 3

Explain the relation of TQM and customer loyalty.

Total Quality management refers to a continuous effort of management along

with the employees of a particular organization to improve the quality of products
and services. TQM practices of product design, and TQM practices of customer
focus becomes more positive. For the purpose of customer satisfaction
enhancement and business excellence, the role of TQM practices such as product
design and customer focus are undeniable and essential. Customer satisfaction,
which one of its foundations is a good customer related performance is one of the
high valued objectives of the TQM implementation. Specific organizational
practices and employees’ perceptions of quality management principles can be
linked together and they would finally lead to customer satisfaction. Customer
satisfaction, in turn can cause the business excellence for the organizations. In
order to improve the customer satisfaction, some methods have been identified
and among these methods, some of the most common ones are:

(1) developing relationship with customers

(2) offering a greater service

(3) keeping close with the customers

(4) respond to the changes in the customer expectations

(5) support networks development

(6) commitment to the customers

(7) implementation of an efficient complaint handling process

In addition, as many researchers have previously shown, job satisfaction of

employees, along with other job related factors could improve customer
satisfaction and business excellence.

Question # 4

JIT inventory system is cost effective, Describe this concept in detail.

JIT systems control work flow by bringing in materials and sending out goods on
demand—ideally, just enough to provide what consumers want and no more.
With JIT, the ultimate goal would be zero inventory. Companies typically hold
inventory in three locations: raw materials; work-in-process inventory of partially
worked materials or sub-assemblies for workstations to complete; and finished
goods to be shipped out to customers. However, a company ties up resources in
both materials and product that sits in multiple storage areas, not to mention the
utilities and space costs incurred in keeping the product from perishing.

By minimizing inventory, JIT frees up resources to employ elsewhere in the

company. A retail store using JIT can remodel the warehouse space into more
retail sales floor space without expanding the physical store. A manufacturer gets
more space to produce goods. Both companies free the workforce to focus on
primary tasks, from making goods to interacting with customers rather than
stocking merchandise. Manufacturers can train employees to work at different
stages of the assembly line or at different workstations, to meet shifts in demand.
A better-trained, more flexible workforce focusing on quality production can
mean faster set-up or customization of workstations and lower defect rates,
which lower costs and increase customer satisfaction.

Companies like to use JIT as it is seen as a more cost efficient method of holding
stock. Its purpose is to minimise the amount of goods you hold at any one time,
and this has numerous advantages: Less space needed: With a faster turnaround
of stock, you don’t need as much warehouse or storage space to store goods. This
reduces the amount of storage an organisation needs to rent or buy, freeing up
funds for other parts of the business. Waste reduction: A faster turnaround of
stock prevents goods becoming damaged or obsolete while sitting in storage,
reducing waste. This again saves money by preventing investment in unnecessary
stock, and reducing the need to replace old stock. Smaller investments: JIT
inventory management is ideal for smaller companies that don’t have the funds
available to purchase huge amounts of stock at once. Ordering stock as and when
it’s needed helps to maintain a healthy cash flow. All of these advantages will save
the company money.

Case Study

Toyota uses just-in-time inventory controls as part of its business model. Toyota
sends off orders for parts only when it receives new orders from customers. The
company started this method in the 1970s, and it took more than 15 years to
perfect. Several elements of just-in-time manufacturing need to occur for Toyota
to succeed. The company must have steady production, high-quality
workmanship, no machine breakdowns at the plant, reliable suppliers and quick
ways to assemble machines that put together vehicles.

Toyota's just-in-time concept almost came to a crashing halt in February 1997. A

fire at a brake parts plant owned by Aisin decimated its capacity to produce a P-
valve for Toyota vehicles. The company was the sole supplier of the part, and the
fact that the plant was shut down for weeks could have devastated Toyota's
supply line. The auto manufacturer ran out of P-valve parts after just one day.
Production lines shut down for just two days until a supplier of Aisin was able to
start manufacturing the necessary valves. Other suppliers for Toyota also had to
shut down because the auto manufacturer didn't need other parts to complete
any cars on the assembly line. The fire cost Toyota nearly $15 billion in revenue
and 70,000 cars due to its two-day shutdown, but it could have been much worse.

Question # 5
Define and discuss the following concepts in detail.

Judgmental Forecasting

Opinion capture technique

Forecasting using judgement is very common in practice. There are many cases
where judgmental forecasting is the only option, such as when there is a
complete lack of historical data, or when a new product is being launched, or
when a new competitor enters the market, or during completely new and unique
market conditions. For example, in December 2012 the Australian government
was the first in the world to pass legislation that banned the use of company
logos on cigarette packets, and required all cigarette packets to be a dark green
color. Judgement must be applied in order to forecast the effect of such a drastic
policy as there are no historical precedents.

There are also situations where the data are incomplete or only become available
after some delay. For example central banks include judgement when forecasting
the current level of economic activity, a procedure known as nowcasting, as GDP
only becomes available on a quarterly basis.

What has been learned from research in this area 1 is that the accuracy of
judgmental forecasting improves when the forecaster has (i) important domain
knowledge, and (ii) more timely up-to-date information. A judgmental approach
can be quick to adjust to such changes, information or events.
Over the years the acceptance of judgmental forecasting as a science has
increased and so has the recognition for its need. More importantly the quality of
judgmental forecasts has also improved as a direct result of recognising that
improvements in judgmental forecasting can be achieved by implementing well-
structured and systematic approaches. It is important to recognise that
judgmental forecasting is subjective and comes with limitations. However,
implementing systematic and well-structured approaches can confine these
limitations and markedly improve forecast accuracy.

There are three general settings where judgmental forecasting is used: (i) there
are no available data so that statistical methods are not applicable and
judgmental forecasting is the only feasible approach; (ii) data are available,
statistical forecasts are generated and these are then adjusted using judgement;
and (iii) data are available and statistical and judgmental forecasts are
independently generated and then combined. We should clarify that when data
are available, applying statistical methods (such as those discussed in other
chapters of this book), is preferable and should, at the very least, be used as a
starting point. Statistical forecasts are in general superior to generating forecasts
using only judgement and this is commonly observed in the literature.