MAN 341

1. MAN 341 Review I

2. Operations Management • Operations Management is: The management of systems or processes that create goods and/or provide services • Operations Management affects: • Companies’ ability to compete (productivity) • Nation’s ability to compete internationally (GNP)

3. Goods-service Continuum Figure 1.3 Goods Service Surgery, teaching Song writing, software development Computer repair, restaurant meal Automobile Repair, fast food Home remodeling, retail sales Automobile assembly, steel making

4. Historical Evolution of Operations Management Table 1.7 • Industrial revolution (1770’s) • Scientific management (1911) • Mass production • Interchangeable parts • Division of labor • Human relations movement (1920-60) • Decision models (1915, 1960-70’s) • Influence of Japanese manufacturers

5. Strategy • Mission • The reason for existence for an organization • Mission Statement • States the purpose of an organization • Goals • Provide detail and scope of mission • Strategies • Plans for achieving organizational goals • Tactics • The methods and actions taken to accomplish strategies • Operations

6. Examples of Operations Strategies Price Low Cost U.S. first-class postage Motel-6, Red Roof Inns Quality High-performance design or high quality Consistent quality Sony TV Lexus, Cadillac Pepsi, Kodak, Motorola Time Express Mail, Fedex, One-hour photo, UPS Rapid deliveryOn-time delivery Flexibility Variety Volume Burger King Supermarkets Service Superior customer service Disneyland Nordstroms Location Convenience Banks, ATMs Table 2.2

7. Productivity Outputs Productiv ity = Inputs • Partial measures • output/(single input) • Multi-factor measures • output/(multiple inputs) • Total measure • output/(total inputs)

8. Life Cycles of Products or Services Saturation Maturity Decline Demand Growth Introduction Time Figure 4.1

9. Standardization • Standardization • Extent to which there is an absence of variety in a product, service or process • Standardized products are immediately available to customers

10. Product design • Design for manufacturing (DFM) • Design for assembly (DFA) • Design for recycling (DFR) • Remanufacturing • Design for disassembly (DFD) • Robust design

11. The House of Quality Correlation matrix Design requirements Customer require- ments Relationship matrix Competitive assessment Specifications or target values Figure 4.3

12. Differences Between Product and Service Design • Tangible – intangible • Services created and delivered at the same time • Services cannot be inventoried • Services highly visible to customers • Services have low barrier to entry • Location important to service • Range of service systems • Demand variability

13. Quality Management • What does the term quality mean? • Quality is the ability of a product or service to consistently meet or exceed customer expectations.

14. Examples of Quality Dimensions

15. Examples of Quality Dimensions (Cont’d)

16. Total Quality Management A philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction. T Q M

17. Quality at the Source The philosophy of making each worker responsible for the quality of his or her work.

18. Basic Quality Tools • Flowcharts • Check sheets • Histograms • Pareto Charts • Scatter diagrams • Control charts • Cause-and-effect diagrams • Run charts

19. Capacity Planning • Capacity is the upper limit or ceiling on the load that an operating unit can handle. • Capacity also includes • Equipment • Space • Employee skills • The basic questions in capacity handling are: • What kind of capacity is needed? • How much is needed? • When is it needed?

20. Efficiency and Utilization Actual output Efficiency = Effective capacity Actual output Utilization = Design capacity Both measures expressed as percentages

21. Bottleneck Operation Which operation is the Bottleneck operation? Operation 120/hr. Operation 210/hr. Operation 315/hr. ? Maximum output ratelimited by bottleneck

22. Economies of Scale • Economies of scale • If the output rate is less than the optimal level, increasing output rate results in decreasing average unit costs • Diseconomies of scale • If the output rate is more than the optimal level, increasing the output rate results in increasing average unit costs

23. Assumptions of Cost-Volume Analysis • One product is involved • Everything produced can be sold • Variable cost per unit is the same regardless of volume • Fixed costs do not change with volume • Revenue per unit constant with volume • Revenue per unit exceeds variable cost per unit

24. Financial Analysis • Cash Flow - the difference between cash received from sales and other sources, and cash outflow for labor, material, overhead, and taxes. • Present Value - the sum, in current value, of all future cash flows of an investment proposal.

25. Waiting-Line Analysis • Useful for designing or modifying service systems • Waiting-lines occur across a wide variety of service systems • Waiting-lines are caused by bottlenecks in the process • Helps managers plan capacity level that will be cost-effective by balancing the cost of having customers wait in line with the cost of additional capacity