1

OPERATIONS MANAGEMENT(Chapter 1 and class discussion)

• Operations– Functional area like marketing or finance– It is considered a line function– Includes manufacturing and services

• Management– Planning, organizing, directing/leading and

control

Thus, OM = P,O,D/L,C of Operations

2

OPERATIONS MANAGEMENTOperations and Productivity

(Chapter 1)

• What is OM ? Pg 4– Operations

• Manufacturing as well as services• Functional area. Examples p.5

– Management Pg 6• Setting objectives• Planning, Organizing, Directing/Leading, Control of

operations (Functions of Management)• Resources, Efficiency and Effectiveness• Strategic, tactical and operational plans• Role of Forecasting• Management decision making: scientific methods,

behavioral issues, management science: optimal solutions; heuristic rules.

3

Operations and Productivity (Chapter 1)

• Recent trends 12– The service sector growth 9-

• Service Management as a field• Differences between goods and services OM• Customer perception of quality• Contact employee importance

– Quality and productivity 13-– Supply chain partnerships– Continuous improvement– Global competition and outsourcing– Diversity in workforce and customer base– Ethics, SR and environmental concerns 18-

4

Operations and Productivity (Chapter 1)

• Productivity 13– Measurement 14 single and multi factor

• Ethics and social responsibility 18• Globalizing operations 28 (from chapter 2)

– Reasons 28; cultural and ethical issues 31 options 43

• Quality: Basics of TQM• System design: Basics of JIT• Supply chain partnerships: Basics of SCM

(TQM, JIT and SCM are discussed later in separate chapters)

5

DECISION MAKING IN OM

• Environment analysis. SWOT• Corporate level strategy decisions

– Mission and strategy 31-

• Business level strategy (also called competitive priorities) decisions

• Functional level strategy decisions – Operations Strategy

• Actual operations decisions

6

Operations StrategyChapter 2

• Competitive advantage through operations pg. 33-– Low cost, differentiation, response– Compare these with “competitive priorities”

discussed in class. i.e., cost/price, quality, availability and flexibility

– See Figure 2.4 p. 36– Make a complete list of competitive strategies

(“competitive priorities”)

7

Strategic Decisions of OM(Operations Strategy) Pg. 39

• See the complete list (10) of strategic OM decision. 36– Product design, process selection, capacity,

quality, location and layout, HR/job design, SC strategies, inventory, scheduling-maintenance decisions

– Special note on quality, inventory, scheduling and maintenance in the above list

8

PRODUCT AND SERVICE DESIGNChapter 5

• Importance of generating new products p.158-– Product life cycle 159– Percentage of sales from new products in leading firms 162

• Product development cycle. P. 163• Information for product/service design

– QFD p. 163-• Manufacturability 166

– Modular design 167; Teams/Concurrent Engineering 163-• More techniques/tools

– CAD/CAM 167- ; Value analysis 169; environmental concerns 169; time to market 172-

– Assembly drawings, Assembly charts 176-

9

SERVICE DESIGNPg 178-

• Customer satisfaction with services– Expectations and perceptions: The gap model

• Variables in service design– Product/service balance– Contact level/worker-equipment combination– Customer interaction and participation 269– Customization level– Technology– Employee selection– Service standards

10

PROCESS STRATEGYChapter 7

• The aim is to select a process strategy/type• Process strategies/types p. 256-

– Process focus; repetitive; product focus; mass customization

• Process strategy fit with volume and variety p. 256-

• Comparison of characteristics of process types p. 262-

• Process design analysis tools 265-– Process mapping; process charts;

11

PROCESS STRATEGY

• Some production technologies 271-– Computerized machines (CNC) 272- ; Robots– AIS/RFID 272-– Materials handling; ASRS, AGV 273-– FMS; CIM 274-

• Importance of continuous process improvement 198-– Process re-design 276-– Benchmarking p. 200– Process improvement approaches 198-

• PDCA, Six Sigma– Process analysis and improvement tools 203-– Involvement of customers, employees and suppliers 199-

12

QUALITY STRATEGYPlanning Quality

Chapter 6

• Planning quality of products and services

• Quality as a strategy Chapter 2

• Why improve quality ? p. 194-

• Cost of Quality p. 196

• What is quality ?– Products. Garvin’s classification– Services. Dimensions of service quality 204

13

QUALITY STRATEGY

• Total Quality Management 198-

– Deming, Juran and Crosby 196-

• Leadership and strategic planning

• Employee involvement; empowerment 199

• Customer focus

• Supplier relations (details in chapter 11)

• Continuous improvement 198-

– Benchmarking 200; Tools 203-

• Malcolm Baldrige National Quality Award 195

• ISO 9000 standards 197

14

Statistical Quality ControlSupplement 6

• Acceptance sampling 237-– Sampling plans– AQL, LTPD, Type I and II errors– AOQ

• Statistical Process Control (SPC) 222-– Natural and assignable variations 223-– Use of control charts– Control charts for attributes 230-– Control charts for variables 214-

• Process capability 235-

15

CAPACITY PLANNINGSupplement 7

• How capacity is measured. p. 286• Design and effective capacity p. 287

– Capacity utilization; efficiency

• Capacity planning over ST/MT/LT p. 286• Factors affecting capacity

– Demand and demand management 289

– Productivity, Quality, Location, Layout, Scheduling

– External factors

16

CAPACITY PLANNINGSupplement 7

• Capacity planning options - short term

• Capacity planning options - medium term

• Capacity expansion for long term needs– Timing decisions 290

– Scale decisions• Economies and diseconomies of scale 288

• Techniques– Breakeven analysis; decision trees; financial analysis

291-

17

Facility LocationChapter 8

• Nature and Importance of location decisions 312• Factors affecting location decisions. 313-

– Locating facilities globally

• Methods of evaluating location alternatives– Factor rating method 317

– Location breakeven method 318

– Center of gravity method 319

• Location of services 322

18

Facilities LayoutChapter 9

• Nature and importance of the problem 342• Types of layouts 342• Process (oriented) layouts 349-

– Information needed; evaluating alternatives; computer programs for evaluation

– Variations: offices, stores

• Product (oriented) layouts = assembly lines 358-– Cycle time; output; no. of workers; idle time; efficiency

19

Human Resources PlanningChapter 10

• Importance of long term HR planning; principles– HR planning as an integral part of strategic planning– Quality and productivity

• Traditional HRM activities– Hiring, training, evaluation, compensation

• Modern HRM issues– Job design 386- ; motivation 386; employee involvement, participation, teams

389, empowerment

• Establishing work standards – Supplement 10

• d

20

SUPPLY CHAIN MANAGEMENTChapter 11

• What is a supply chain? What is SCM? 432• Strategic importance of the supply chain 432-

– SC decisions and business strategy– SC costs as a percentage of sales

• The outsourcing v. vertical integration decision 434-• Supplier management. Basic principle 446-

– Selection 446; many or few suppliers? 438– Orientation/mutual agreement on goals/development – Evaluation and rating– Incentives – Participation

21

SUPPLY CHAIN MANAGEMENTChapter 11

• Integration of the supply chain 441– What is integration ? Advantages.– Efficient v responsive supply chains– Technology of integration

• RFID 442

• E-commerce Supplement 11

• Distribution/Logistics management 448-

22

Inventory ManagementChapter 12

• Inventory management is an integral part of SCM• Functions of inventory 476 Types 476-• Inventory classification – ABC classification 477

– Uses of ABC classification: Inventory review; cycle counting 479

• The simple (EOQ) inventory model for uniform demand 482– Reorder point model when there is a lead time 486– Other variations: simultaneous production; quantity

discounts; backorders• Inventory model for non uniform (probabilistic) demand

482- ; Safety stock

23

AGGREGATE PLANNINGChapter 13

• Aggregate planning is medium term prod planning p. 518-

• Relationship to other plans 519• Aggregate planning strategies 520

– Chase, level and mixed strategies 523- ; adv. And disadv.

• Methods for selecting a plan 524-• Aggregate capacity planning in services 530-

– Managing demand and supply

– Yield management 532-

24

MRP and ERPChapter 14

• The master production schedule p. 552

• MRP Process– Bill of materials 555

– Inventory records 556

– Lead times 557

– Purchase orders outstanding 556

– Lot sizing 563

• Integrating Capacity planning. MRP II 567-

• ERP systems 570

25

SHORT TERM SCHEDULING Chapter 15

• Examples 590

• Scheduling criteria 593– completion/flow time, waiting time, makespan, utilization

• Sequencing jobs in work centers– Priority rules: FCFS, SPT, EDD, LPT, Slack 599

– Critical ratio 602

• Scheduling with one machine/resource 600

• Scheduling with two machines 603

• Multiple machine situations

• d

26

JIT and LEAN PRODUCTION SYSTEMS Chapter 16

• JIT philosophy– Waste reduction. Variability reduction 628

• Pull v. Push production systems 628• Partnerships with suppliers 629• JIT and operations

– Quality 641– Layout 632– Inventory 633– Scheduling 637– Work force 641

• What is “lean production” ? 641