PART B: OPERATION MANAGEMENT

INTRODUCTION TO THE OM

- Learning objectives (slide)

- What is OM (Slide
+ create goods and provide service
- Example of operation
+ bank office operation in bank: service
+ retail operation: service (using goods to delivery service)
+ kitchen unit manufacturing operation: goods
+ take out/restaurant operation
- Food and drink: tangible
- Operation management is the management of system or processes that create goods and/or
provide services (to provide the best product – to gain competitiveness)
- OM affects:
+ companies’ ability to compete
+ nation’s ability to compete internationally
- The organization: 3 basic functions
+ marketing: generate demand, knowing customer’s demand, bring their needs to the operation
+ operations: based on info from mkt => creating goods and/or services
+ finance: control cash flow, capital and budget running, pay bills, collect money
- Why take the feedback during value added process? (tu tim hieu)
- Tangible products = goods >< intangible products: service

Chap 2: (Operating)

Productivity

- Contribute to the country economy

- Total measure productivity = all outputs / all inputs (labour + material + energy) => convert
different units to money unit
 Unit: $
- Productivity growth: increase in productivity

Example 5:

Compute the miltifactor productivity for an 8 hour day in which the usable output was 300 units,
produced by three workers who used 600 pounds of material, workers have an hourly wage of $20 and
material cost is $1 per pound. Overhead is 1.5 times labor cost

Group assignment

You are going to open a new business line. Your potential customers are pupils or students from
primary schools to universities.
▪ Design and construct a prototype of a school bag/ backpack to meet one of your potential customers’
needs and wants, using Product and Service Design
Activities and Product Development Process.
Remember:
Customer’s experience is the first!
▪ Set up the quality goals and cost of the product (Costs
of material are provided in advance)
▪ Evaluate the prototype and do market test

- Game coaching/mentor program

- Vacuum (dyson)
- Online tailor

Chap 4:

Chapter outline

- Midterm: approaches that are useful for evaluating capacity alternatives

Capacity planning:

- The basic question in capacity handling are:

+ what kind of capacity is needed? (determine what to produce)
+ how much is needed?
+ when is it needed? (when they need to delivery the stock to the customer)

Importance of capacity decisions

1. Understand the importance of producing the products and meet customers demands
- Estimate over/under capacity

Capacity

- Design capacity
Maximum putput rate or service capacity an operation, process,...

Efficiency and utilization

- Efficiency = Actual output / Effective capacity

- Utilization = Actual output / design capacity
- How to increase the actual output – the number of products: change the employee,

What is a capacity buffer/cushion?

The capacity cushion is the amount of reserve capacity built into your farm business to handle sudden
increases in demand or temporary losses of production capacity. As a general guide, the average
utilization rate should not be too close to 100% over a long-term period.
In the context of manufacturing, a buffer refers to a strategically placed inventory or resource stockpile
that acts as a cushion to absorb variations in production or demand. Buffers are used to prevent
disruptions in the manufacturing process and ensure a smoother flow of materials, components, or
work-in-process (WIP) items.

- Safety stock (dự trữ an toàn): for unexpected demand problem

-

Bottle neck and impact on capacity