Operation Management Study Material Notes

lOMoARcPSD|9137902
Operation Management Study Material Notes
Operations Management (The University of Warwick)
StuDocu is not sponsored or endorsed by any college or university

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)
lOMoARcPSD|9137902
Operation Management 5/23/16 9:14 PM
INTRODUCTION
Operation Management: The design, control and coordination of
resources and processes to provide customer and stakeholder value
1.1 What is an operation?

Every service or product you consumed today- operation mangers were
involved
From everyday coffee shop to car factories, all of them are operations.
1.2 The input – process – output model of operations
Input: materials, information, people

Output: Product or services
Examples:
1. Coffee
• Input: order, materials( water, coffee beans, milk..)
• Transforming resources and processes: People (barista), coffee
machines
• Output: coffee
• Control and coordination: relatively simple as there are few
variable that needs to be controlled
2. Car factories
• input: information (order from the dealer, to control parts
supply..), parts
• output: cars

lOMoARcPSD|9137902
• Transforming Resources and processes: plant, people (workers)

• Control and coordination: difficult as there are more than 5000
parts per car (usually) and those have to be monitored
1.3 The four Vs of operations

Main characteristics of an Operation: Four Vs
Four Vs are..
1. Volume
• How many output they produce
• Low volume means:
o Low repetition
o Each member of staff performs more tasks
o Less systematisation
o Higher unit costs
• High Volume means:
o High repeatability
o Specialisation
o Systematisation
o Capital intensive
o Low unit costs
2. Variety
• How many choices that the consumers have
• High Variety means:
o Flexible
o Complex
o Match customer needs
o Unable to make it in advance; high unit costs
• Low variety means:
o Well defined
o Routine
o Standardised
o Regular
o Low unit costs
3. Variation
• How the demand changes/ how does the demand vary
• High Variation (not consumed steadily/ Seasonal) means:
o Changing capacity
o Anticipation

lOMoARcPSD|9137902
o Flexibility
o In touch with demand
o High unit costs
• Low Variation means:
o Stable
o Routine
o Predictable
o High utilisation
o Low unit costs
4. Visibility
• How much can the customers see in the making of the output
• High visibility means:
o Short tolerance to waiting
o Satisfaction governed by customer perception
o Customer experience management critical
o Received variety is high
o High unit costs
• Low visibility means:
o Time lag between production and consumption
o Standardised
o Low contact skills
o High staff utilisation
o Centralisation
o Low unit costs
These four characteristics have wider implications that affect:
• Cost
• Efficiency
• Human resources
• ..and more
1.4 Operations performance objectives

lOMoARcPSD|9137902
5 performance objectives:
1. Quality (doing it right)
• Importance of quality
o Reduces costs
o Increases dependability
o Increased customer satisfaction
o Lead to a price premium
• 2 types of quality
o Specification ( will be specific to the customer)
o Conformance (will be identical to the other products)
2. Speed (doing it fast)
• Importance of speed
o Reduces inventories
o Reduces risks caused by demand variability
o Create competitive advantage
3. Dependability (doing it on time, doing what you said you are going to
do)
• Importance of dependability
o Saves time
o Saves money

lOMoARcPSD|9137902
o Gives stability
4. Flexibility ( doing different things)
• Importance of flexibility
o Speeds up response
o Saves time
o Maintains dependability
• Different types of flexibility
o Product/ service flexibility
o Mix flexibility ( the range of product)
o Volume flexibility
o Delivery flexibility
5. Cost (doing it cheaply)
• Importance of cost
o How vas majority of operations are measured
o Competition can be about price ( how cheap they can
provide the product)
o Firms exists to make profit- margin
• Influenced by other four performance objectives
Trade-off between the performance objectives

lOMoARcPSD|9137902
5/23/16 9:14 PM
2.1 Process Types
Project Process (e.g. large scale constructions, airport terminals)

• Unique, complex, highly customised
• Well- defined start and finish
• Coordination btw different competences required
• Resources organised especially for each project
Jobbing Process (e.g. tailor, woodworker)
• Very low quantities (one or few)
• Usually smaller item than the project processes
• Specially made products with high variation and low repetition
• Each product shares the resources of the production system
• Wide competence is needed ( as it is produced by individuals or
limited number of people)
Batch Process (e.g. bakery)
• Large volumes and lower variety
• Products are produced in “batches (as constraints often exists in
the part of the production)”; fairly repetitive
• Wider range of volume and variety levels
• Standard product, but can also be special manufacturing
Mass Production (e.g. manufacturing of electronic goods, cars)
• High volumes
• Narrow variety in the fundamental product design

lOMoARcPSD|9137902
• Repetitive
• Lower and often more focused competence in those adding value
( tasks are divided into individual labour)
• Often called “line”
Continuous Process (e.g. chemical mills, plants that produce paper)
• Extremely high volumes and lower variety – often only one
product
• Capital-intensive and fully automated
• Expensive and difficult to start and stop the process ( as they
require energy)
The Product / Process Matrix
More process flexibility than necessary leads to high cost

è as it requires more resources
Less Process flexibility than necessary leads to high cost
è suggest that the operation is operating in a wrong kind of plant

lOMoARcPSD|9137902
The process types in services
Professional services
• relatively broad sets of competences; can apply to different
situations (e.g. investment banking, management consultancy)
Service shop
• Relatively high volume , but with some variety
Mass service
• non-customised and standard, usually delivered electronically
2.2 Layout Types

Important to have an appropriate layout as bad layout may lead to
inefficiency, customer dissatisfaction, queues
Fixed-position layout (e.g. manufacture of aircraft, hospitals)

• The transforming resources are moved to the transformed
resources since they often:
o Are too large to be moved
o Are too delicate to be moved
o Object to being moved
• Often called construction site

lOMoARcPSD|9137902
• Product/ service is stationary. Resources (e.g. equipment,

labour, machinery, etc.) comes to it
• Pros and Cons
o Pros
§ Very high variety and mix flexibility
§ Product/ customer not moved
§ High variety of tasks for staff
o Cons
§ Very high unit costs
§ Scheduling space and activities can be difficult (due
to restricted access)
§ High variety of tasks
§ Challenges in coordination in processes
• Used in projects, some professional and jobbing processes
Process Layout / Functional Layout (e.g. the tube, an hotel)
• Similar processes are located together
• Meet demands from the transforming resources (processes)
• Transformed resource gets moved around while transforming
resources stay stationary
• Prodcut or customers take different routes, according to needs,
through groups of similar processes
• Pros and Cons
o Pros
§ High variety and mix flexibility; can accommodate
wide range of needs
§ Relatively robust in case of disruptions
§ Easy to supervise; as predetermined process routes
exists
o Cons
§ Low utilisation (because of needs to accommodate
different needs)
§ Often results in high levels of work in process/
queuing (in services)
§ Complex flow; can be difficult to navigate
• Used in batch processes, service shops, some professional and
jobbing processes
Product layout

lOMoARcPSD|9137902
• Transforming resources are arranged to accommodate

information or customer
• Often called a “line”
• All products have the same flow through the operation
• Products or customers flow along a prearranged route through a
fixed series of activities
• Pros and cons
o Pros
§ Low unit cost for high volume
§ Opportunities for specialisation of equipment
§ Ease of movement
o Cons
§ Can have low mix flexibility
§ Not very robust ( one part of the process breaks
down and the whole process breaks down as well)
§ Work can be repetitive
• Used in some mass processes and services and continuous
processes
Cell Layout (e.g. university; classes can be thought of a cell, hospitals)
• Families of resources are transformed in the same place
• After transformation in one cell, the resources can be transferred
to the next cell
• Cells can be organised in different ways
o Product (i.e. fixed set of stages)
o Process (i.e. variety of different routes through fixed
processes)
• Products or customers take different routes through cells of
“complete” processes
• Pros and cons
o Pros
§ Good variety and mix compromise
§ Fast throughput
§ Group work can result in good motivation
o Cons
§ Can be costly to rearrange existing layout
§ Can require more equipment
§ Lower utilisation

lOMoARcPSD|9137902
• Used in batch processes, service shops, some mass processes

and services
• Types of cells
(indirect resources e.g. spaces, light, heat, etc.)

lOMoARcPSD|9137902
Layout in terms of flow
Layout types in perspective of fixed and variable costs:

lOMoARcPSD|9137902
Long and thin VS Short and fat
• Long and short describes the number of stages

• Fat and thin describe the amount of work at each stage

lOMoARcPSD|9137902
• Advantages of Long- Thin processes

o Controlled flow
o Simple materials handling ( no need to transport during
stages)
o Lower capital requirement ( no duplication required)
o Greater efficiency
o Higher space utilisation as no duplication is required
• Advantages of short-fat processes
o Higher mix flexibility
o Higher volume flexibility
o Greater robustness ( less likely to be disrupted)
o Less monotonous
o Higher ownership (one person is responsible for
everything)
2.3 Push VS Pull

Push system
• Material is moved to the next stage as soon as it has been
processed
• If the working time of the each processes is different, the work
can pile up at stages

lOMoARcPSD|9137902
• Only works if the work is completely balanced across the all

system
• There is no balancing loss as there is no idle time ( people on
each stage work in their own paces)
• Can provide greater flexibility but has less efficiency
Pull system
• At any point of time, there will be only one workload at a station
• Only works when there is a work balancing
• Work balancing in pull systems
o In a long-thin process, the work only moves as fast as the
slowest process
o Calculating balancing loss
Total work time = time required per stage x total stage

• More efficient but has limited flexibility and work must be
balanced
2.4 Statistical Process Control Part 1
What is SPC?
• Looks at the process behaviour and it’s variation with the aim of
understanding whether the production process behaves normally
• Four main aspects of SPC
o Controlling a process
o Understanding the causes of variation
o Process Capability
o Drawing a control chart
Process Control Basics
• Required in every operation
• Enables measuring whether a process is under control (i.e.
behaving normally)
• The origin and focus of process control
o Some aspects of the performance of a process is often
measured over time
o Process control exists to help to determine whether some
abnormalities are just random variation or the result of
some change in process that should be investigated

lOMoARcPSD|9137902
o Aims to provide “guide lines” or “control limits” to

determine this problem
Process Control Charting
• Charts something measured overtime
• Natural variation in many processes can be described by a
normal distribution
• Probability of measurement point’s deviation from the average is

predictable in a normal distribution
• Understanding the normal distribution describing random
variation means that the specification range can be drawn, based
on the distribution

lOMoARcPSD|9137902
• Lower control limit and upper control limit decided through this
o Only 1 in 400 observation sits outside the control limits,
unless it is an unusual event
Statistical Process Control Part 2
Causes of Variability
• Special Causes
o not belonging to the normal operation of the process
o e.g. material variation, poor maintenance, staff
performance
o Must be controlled all the time and always should be
investigated
o A particular cause can always be identified
• Random Causes
o considered to be normal, or the result of process
characteristic itself
o e.g. order forgotten, testing error
o set limits to process precision
o stems from the characteristic of the process itself
o limits the ability to perform well
o can be handled through changing the process itself

lOMoARcPSD|9137902
• Understanding these causes of variation is required for taking

action to improve productivity
Difference in accuracy and precision
• Accuracy: how close the actual result is to the desired result

• Precision: how close are all the results
• Precision is more important as inaccuracy can be easily fixed
through adjusting the mean
Process Capability
• Measures how well the process is serving the ultimate purpose it
is designed for
• Refers to whether the process is capable of producing (99.7% of
the time) according to specification
• When Cp (Process capability) > 1, it is a capable process
o Diagram of operation with capable process

lOMoARcPSD|9137902
§ Natural variation of process is within or equal to the

specification range
o Both accurate and precise
• When Cp < 1, it is an incapable process
o Diagram of operation with incapable process
o unable to produce according to the specification

Calculating Process Capability
• Natural variation of process = 6 x standard deviation
• Specification Range = Upper control limit – Lower control limit
• Cp = Process Capability
= Specification range / Natural Variation
Control Chart
• Is a very practical and visual way to control any production

process through simple methods
How to draw a control chart
i. Start with at lease 20 readings collected in time sequence
ii. Plot the data and work out the MR (Moving Range)
o MR = Difference between two consecutive process outputs
o MR is always a positive number
iii. Calculate and plot the mean on the chart

lOMoARcPSD|9137902
iv. Calculate the standard deviation

o SD helps to understand the process variation
v. Use the standard deviation to calculate the upper and lower
control limits and plot those on the chart
o UCL = Mean + (3 x SD)
o LCL = Mean – (3 x SD)
vi. Continue to add data and interpret behaviour using your
computed limits
Interpreting Data
• Rule 1: A point is outside the UCL or LCL
o Cause for this always needs to be investigated

o Very likely that a special cause caused this deviation
• Rule 2: There is a run of 7 points or more in one direction, or a
run of 7 or more points above/ below the mean

lOMoARcPSD|9137902
o The process have been changed

èTherefore new mean and control limits should be
calculated
• Rule 3: There is an unusual trend or a cyclical pattern
o The data is not normal therefore SPC can not be applied

• Rule 4: There is an unusual distribution
o Means that the process have changed.

o Therefore, would need to calculate new mean and control
limits

lOMoARcPSD|9137902
5/23/16 9:14 PM
3.1 Capacity Management

What is capacity management?
• Capacity: scale of an operation (in terms of building, machinery,

technology, etc.)
• Capacity management is concerned with managing the
relationship between capacity and demand
• Overall, is a collection of planning and control activities which
reconcile supply and demand
• Is about matching capacity with demand
3 different perspectives of capacity demand
• Strategic Capacity Planning (long term)
• Aggregate Capacity Planning (medium term)
• Tactical Capacity or Demand Adjustments (short term)
3 steps of devising strategy for capacity management

lOMoARcPSD|9137902
Measuring Capacity
• Divided into two categories
o Input measure of capacity
o Output measure of capacity
• Measured either by the availability of the resources or the output
produced
Dependent and Independent demand
• Dependent demand
o e.g. tire factory: for every automobile that are planned to
be made, four tire would be needed
• Independent demand
o e.g. tire fitting service
§ Demand for tires is governed by:
ú Type of car arriving
ú The fluctuations in the number of cars arriving
ú How many tires need replacing
§ Hence, demand for tires is largely governed by
random factors
Causes of Seasonality (Fluctuations in demand)
• Climatic

lOMoARcPSD|9137902
• Festive
• Behavioural
• Political
• Financial
• Social
Capacity Management Strategies
As demand is going to change due to seasonality, capacity needs to be

managed.

lOMoARcPSD|9137902
• Level capacity
o Capacity is kept at the same level regardless of the
demand fluctuation
o Appropriate for capital intensive business where assets or
facility utilisation is a priority (not suitable for perishable
products
o Pros and Cons
§ Pros
ú High utilisation
ú Stable employment patterns
ú Low unit cost
§ Cons
ú High inventories
ú Danger of over/under production
• Chase demand
o Capacity is continuously altered to match the demand
fluctuation ( done through varying levels of staff, working
hours, equipment, etc.)
o Appropriate for operations which cannot store their output
such as customer processing operations (not suitable for
non-perishable goods)
o Pros and Cons
§ Pros
ú Flexible operation
ú Less over/under production
ú Less wastage in terms of unused resources
§ Cons
ú Reduced quality control
ú Difficult to plan and control
• Demand management
o Demand is altered to match the capacity
e.g. 2 for 1, sale promotions, price changes etc.
o Operation which respond highly to seasonal demand or
demand which fluctuates on a predictable basis in the
shorter term
e.g. Icecream, turkey production
o Pros and Cons
§ Pros

lOMoARcPSD|9137902
ú Improved planning
ú Improved utilisation
§ Cons
ú Loss of business
ú Discounts may devalue product/services
3.2 Economic Order Quantities and Batch Quantities
Used to determine how much to order and when
• Big and infrequent orders?
• Little and often orders?
• The more we order, the less it costs

• The more we hold on to it, the more it costs
o Stock holding price: about 25% p.a. per price of the item
Economic Order Quantity
Economic Batch Quantity

lOMoARcPSD|9137902
3.3 Lean Improvement (part 1)

Key principle of lean synchronisation
• Moving towards the elimination of all waste in order to develop
an operation that is faster, more dependable, produces higher
quality products and services, and above all, operates at low cost
Three perspective of Lean
• Lean as a philosophy
o Eliminate waste
o Involve everyone ( involving customers, suppliers, partners
and even competitors)
o Continuous improvement
• Lean as a set of techniques for managing operations
o Improving basic working practices
o Improving design for manufacture
o Operation focus
o Small, simple machines
o Arranging the flow layout
o Set-up time reduction
o Total people involvement
• Lean as a method of planning and control
o Pull scheduling
o Kanban control
o Levelled scheduling
o Mixed modelling
o Synchronisation
Lean Synchronisation

lOMoARcPSD|9137902
• Traditional approach
o ‘factory mind-set’- if you can make it, you can sell it
o Each stage in the process will place it’s output into an
inventory, which then buffers the process
§ Each part is protected by disruption
§ However, the time taken would be much greater due
to the time spent on the inventory
o Pros and cons
§ Pros
ú If one stage breaks down, the next stage is still
able to operate; thus achieving high capacity
ú Isolation of stage means planning and
controlling each individual stage sperately –

lOMoARcPSD|9137902
hence allows room for errors as inventories act

as a buffer
§ Cons
ú High inventory – require more capcity
ú Slow processes
ú Costly planning and control mechanisms
ú Not an efficient approach
• Lean approach
o No inventory existing between the stages
o Works on the basis of pool principles
§ Productions are made to order
Four underlying elements of lean
• Starting point of the lean production: customer

• Customers pull the items through the process
• The information will go from customer to the manufactures
o this will then cause items to flow in synchronisation
• synchronisation will result in changes in behaviours
o employees are able to productively spot wastes

lOMoARcPSD|9137902
• Therefore, result in the waste elimination
Lean Improvement Part 2

Causes of waste
Mura, inconsistent resources leads to overburdening resources, in other
words, Muri, which then leads to non- value adding activities.
è overarching relationship between the causes of waste
• Mura
o Means lack of consistency or unevenness that results in
periodic overloading of staff or equipment
• Muri
o Means absurd or unreasonable
o Based on the idea that unnecessary or unreasonable
requirements put on a process will result in poor outcomes
• Muda
o Activities in a process that are wasteful because they do
not add value to the operation or the customer.
7 types of waste
Waste activities consume time, resources, and space, but do not
contribute to satisfying customer needs.
• Over-production
o Make more that is required by the customer or make it
earlier than required
• Waiting time

lOMoARcPSD|9137902
o Any delay between when one process ends and the next
process begins
• Transport
o Movement of work between departments or offices that
does not add to the value of the product or service
§ e.g. multiple approvals across different departments
• (over) Processing
o Adding more value to a service or product than customers
will not pay for
• Inventory
o More materials or information on hand than is currently
required
• Motion
o Needless movement of people
§ Transport refers to the movement of work, whereas
motion refers to the movement of the workers
§ e.g. running to a printer on a different floor for a
printout
• Defects
o Any aspect of the product/ service that does not conform
customer needs
§ e.g. incorrect customer details captured in the
system
Lean Improvement part 3

How does lean eliminate waste?
• Identify the causes and types of waste by understanding the
customer perspective
• Eliminate waste through:
o Streamlined flow using (e.g. value stream mapping)
o Matching supply and demand (e.g. pull system)
o Minimising variability (e.g. level delivery schedule)
o Flexible processes
è can be viewed through 5s
The 5 S’s – Lean management

lOMoARcPSD|9137902
• Sort (seri)
o Eliminate all unnecessary items
§ Unnecessary refers to those things that are not
needed for current work
• Straighten (seiton)
o Arrange items so that they can be found quickly by
anybody, anywhere, anytime
o Items should be easy to find, easy to use, and easy to put
away
o Use tools such as: colour coding, signboards, labelling
• Shine (sieso)
o Everything is clean, neat, tidy and ready to use
o Use tools such as: five minute shine, clean and inspection
checklist
• Standardise (seiketsu)
o Prevent setbacks in the first three pillars (sort, straighten,
and shine)
o Tools: best practice documentation and sharing, checklist
and job cycle charts
• Sustain (shitsuke)
o To make 5S a habit in the day-to-day activities
o Tools: visual management board showing 5s audit,
slogans, handbooks

lOMoARcPSD|9137902
Lean Improvement Part 4

Tools used in the lean management
• Value stream mapping
o Focuses on value adding activities and distinguishes
between value-adding and non-value-adding activities

lOMoARcPSD|9137902
5/23/16 9:14 PM
Supply Network Design

Supply Network Design decisions
1. Network configuration
2. Location
3. Capacity
1. Network configuration entails:
• Downstream/ Upstream
o Suppliers will always be upstream from its customers
§ The product is produced down in the supply chain
and moved upstream towards the customers
o Customers will always be downstream from its suppliers
§ Information (in form of demand) comes downstream
from customers to all the way down to the suppliers
• Disintermediation
o Refers to cutting out the ‘middle men’
§ Cutting out first tier supplier to connect directly to
second tier supplier
§ Cutting out first tier customer to connect directly
with the second tier customer
• Outsourcing and offshoring
o Out sourcing: Used to denote the start of relationships

within the companies within the supply chain

lOMoARcPSD|9137902
o Outsourcing does not mean the same thing as offshoring

§ Outsourcing determines the ownership of the
operation by the company
§ Offshoring determines the location of the operations
(either domestic or international)
• Vertical integration
The extent to which organisation own the network they operate
in
o Direction of vertical integration: refers to whether the
organisation wants to own the operations on supply or
demand side
§ Upstream direction: owns the supply side of the
operation
§ Downstream direction: owns the demand side of the
operation
2. Location Decisions (follows up after network configuration)
• Supply side and demand side factors in location decisions
o Supply side factors (vary to influence costs)
§ Labour costs
§ Land costs
§ Energy costs
§ Transportation costs

lOMoARcPSD|9137902
Community factors (e.g. culture, skills of the local

§
workforce)
o Demand side factors (vary to influence service/ revenue)
§ Labour skills
§ Suitability of the site
§ Image
§ Convenience for customers
3. Capacity
• Capacity decisions
o usually faced by companies that anticipate change of
demand in the future
o When the company belives that their demand is going to
fall/ rise in the near future, they need to adjust their
capacity
• The balance of capacity
o Capacity can either lead or lag demand
§ depends on the type of market that the company

operates in
§ Capacity leads demand: company chooses to operate
in much higher capacity than the actual demand
(e.g. luxury services: high-end restaurants, airline
first class lounge..)
ú Usually chosen by companies that have
customer service as their main operation
stragetgy

lOMoARcPSD|9137902
§ Capacity lags demand: company chooses to operate

in much lower capacity than the actual demand
(e.g. Lower segment)
ú Usually chosen by companies that have cost-
saving as their main operation stragety
o Inventory can be used to smooth out the peaks (difference

between capacity and demand)
§ makes sure that the company is not producing extra

capacities or not operating in under capacity
o Spare capacity can be used to supply other operations

lOMoARcPSD|9137902
o Capacity is associated with economies of scale
Innovation and Design

1. Innovation

lOMoARcPSD|9137902
• Different types of innovation: 4Ps of innovation
o Product (service) innovation

§ Innovation at the product level
§ Usually underpinned by technological advances
§ e.g. Ostrich Pillows, cubic watermelons
o Process innovation
§ How to curate and deliver the offerings
§ e.g. lean healthcare system
o Position innovation
§ Taking an existing product and putting it into a new
market
§ e.g. Redbull- European entrepreneur brought in
energy drink ingredients from Thailand to Europe
o Paradigm innovation
§ How we frame what we offer to the customers

lOMoARcPSD|9137902
§ Usually encompasses product , process, position

innovation
§ e.g. Xerox printers- offering of document
management; leasing the printers and customers
only paying for the number of pages printed, Ikea-
bringing in new concept of large furniture shopping
2. Design
• 3 main aspects of design
o Concept: the understanding of the nature, use, and value
of the service or product
o Package: the group of ‘component’ products and services
that provide those benefits defined in the concept
o Process: the way in which the component products and
services will be created and delivered
• Product and process design are interrelated
o Product and services should be designed in a way that they
can be produced effectively
è therefore, product design have an impact on the
process design, and vice versa
o Innovation of product means innovation in the process as
well ( new creation of a product requires new process of
producing the product)
o Processes should be designed to produce all products and
services that operation is likely to be introduced to
• Product/ service design activity is a process

lOMoARcPSD|9137902
• Importance of Design
o Aesthetics: focuses on materials, colour, shape, size and
proportion
o Functionality: form follows function
è how the product is designed is decided by the function
of the product
o Usability: ease of use and learnability of a human-made
object
(e.g. Ignition method of cars; from levers to keys to a start
up button)
• New Product Development process (NPD process)
o Design and innovation usually intercepts here
o Aimed at bringing a new product to the market
o Main phases of NPD process
§ Idea generation
§ Idea screening: eliminate unsound concepts prior to
devoting resources to them
§ Concept development and testing : develop the
marketing and engineering details (feature
specification)
o Design approach creates innovation at the end of this
process
• A model of NPD: Stage- Gate model

lOMoARcPSD|9137902
Divided up into 6 stages

o Discovery
Needs for ideas to be formed; comes from internal or
external sources
Go through ‘the design funnel’ and only few design idea

gets actually processed on to the next stage

lOMoARcPSD|9137902
o Scoping
This stage examines:

§ Feasibility of design option ( can we do it?)
considers:
ú Skills ( quality of resources)
ú Organisational capacity ( quantity of resources)
ú Sufficiency of financial resources to
cope/realise with this option
§ Acceptability of design ( do we want to do it?)
considers:
ú Satisfaction of the performance criteria that the
design is trying to achieve
ú Whether the customers will want it
ú Satisfactory financial return
§ Vulnerability of design ( do we want to take the
risk?) considers:
ú Full consequences of adopting the option
ú All the dangers in the adopting the option
o Build Business case
§ Specify the components of the package
§ Define the process to create the package
§ Understanding what the revenue income will be
o Development
§ Manufacturing, building capacity
o Testing and innovation
o Launch

lOMoARcPSD|9137902
• Problems/ limitation that the Stage-Gate model faces

o Lack of flexibility and a poor reaction to market changes
o Inhibit companies from achieving radical innovation
o Presence of a multitude of stakeholder throughout the
process may cause a lack of continuity, hence resulting in
loss of intent or momentum
• Different approaches to Design and Innovation
o Technological innovation/ Technological push: driven by
new technology
o Open innovation: involves various stakeholders in the
design process
o Design-driven: driven by aesthetics, functionality and
usability
o Disruptive (radical) innovation: changes the meaning of
competition and disrupts the industry
• Examples of Design and innovation
o Airbnb
§ Not structured process followed, but trial-and-error
§ Design-driven and disruptive service innovation
ú Design- driven: focuses on usability and
functionality
ú Airbnb radically innovated the meaning of
home rentals and travel accommodation
industry by introducing a new means of trading
and swapping place

Operation Management Study Material Notes

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Operation Management Study Material Notes

Uploaded by

Copyright:

Available Formats

lOMoARcPSD|9137902

Operation Management Study Material Notes

Operations Management (The University of Warwick)

StuDocu is not sponsored or endorsed by any college or university

Operation Management 5/23/16 9:14 PM

1.1 What is an operation?

1.2 The input – process – output model of operations

Input: materials, information, people

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

• Transforming Resources and processes: plant, people (workers)

1.3 The four Vs of operations

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

1.4 Operations performance objectives

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

Trade-off between the performance objectives

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

2.1 Process Types

Project Process (e.g. large scale constructions, airport terminals)

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

The Product / Process Matrix

More process flexibility than necessary leads to high cost

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

The process types in services

2.2 Layout Types

Fixed-position layout (e.g. manufacture of aircraft, hospitals)

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

• Product/ service is stationary. Resources (e.g. equipment,

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

• Transforming resources are arranged to accommodate

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

• Used in batch processes, service shops, some mass processes

(indirect resources e.g. spaces, light, heat, etc.)

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

Layout in terms of flow

Layout types in perspective of fixed and variable costs:

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

Long and thin VS Short and fat

• Long and short describes the number of stages

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

• Advantages of Long- Thin processes

2.3 Push VS Pull

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

• Only works if the work is completely balanced across the all

Total work time = time required per stage x total stage

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

o Aims to provide “guide lines” or “control limits” to

• Probability of measurement point’s deviation from the average is

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

• Understanding these causes of variation is required for taking

• Accuracy: how close the actual result is to the desired result

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

§ Natural variation of process is within or equal to the

o unable to produce according to the specification

• Is a very practical and visual way to control any production

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

iv. Calculate the standard deviation

o Cause for this always needs to be investigated

Downloaded by Toni Agapay (ayhen_agapay@yahoo.com)

o The process have been changed

o The data is not normal therefore SPC can not be applied

o Means that the process have changed.