OPERATIONS MANAGEMENT Chapter 1 and class discussion

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 1

OPERATIONS MANAGEMENT Operations 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. 2

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 183

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) 4

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 5

Operations Strategy Chapter 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”) 6

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, schedulingmaintenance decisions – Special note on quality, inventory, scheduling and maintenance in the above list 7

PRODUCT AND SERVICE DESIGN Chapter 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 1768

SERVICE DESIGN Pg 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 9

PROCESS STRATEGY Chapter 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; 10

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 19911

• • • QUALITY STRATEGY Planning 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 12

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 13

Statistical Quality Control Supplement 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 23514

CAPACITY PLANNING Supplement 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 demand management 289 – Productivity, Quality, Location, Layout, Scheduling – External factors 15

CAPACITY PLANNING Supplement 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 - 16

Facility Location Chapter 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 17

Facilities Layout Chapter 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 18

Human Resources Planning Chapter 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 19

SUPPLY CHAIN MANAGEMENT Chapter 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 20

SUPPLY CHAIN MANAGEMENT Chapter 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 44821

Inventory Management Chapter 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) 22 demand 482 - ; Safety stock

AGGREGATE PLANNING Chapter 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 supply – Yield management 532 - 23

MRP and ERP Chapter 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 24

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 25

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 26