Syllabus Class 1 Mar 10

Syllabus • • • Class 1 (Mar 10): chap 1; chap 2, case study March 17 – No Class 2: (Mar 24) chap 5; chap 6 ( thru 243) Class 3: (Mar 31) chap 7; chap 9 (Take home exam) Class 4: (Apr 7) Webster Spring Break Class 5: (Apr 14) chap 10, chap 11 Class 6: (Apr 21) chap 6 (243 -250); chap 12, case study Class 7: (Apr 28) Reverse Logistics – need “The Forklifts Have Nothing To Do!” Available in the Lewis and Clark Bookstore; chap 14; chap 16; Supply Chain Security Class 8: (May 5) Chap 13; Chap 3, Take home exam Class 9: (May 12) No Class Other requirements: →visit Harley-Davidson Plant in Kansas City to see operations management in practice and write a 3 -5 page paper comparing the class slides and readings to the Harley operations

Grades • • Class Participation – 10% Mid Term – 40% Final Exam – 40% Harley Paper – 10%

Decision Analysis

The Payoff Table ü A method of organizing & illustrating the payoffs from different decisions given various states of nature ü A payoff is the outcome of the decision – a Craps table pay off chart is an example of a payoff chart

Payoff Table States Of Nature (Alternatives) Decision a b 1 Payoff 1/a Payoff 1/b 2 Payoff 2/a Payoff 2/b

Decision Making Criteria Under Uncertainty ü Maximax criterion (optimistic) üChoose decision with the maximum of the maximum payoffs ü Minimin criterion (pessimistic) Choose decision with the minimum of the minimum payoffs Maximin criterion üChoose decision with the maximum of the minimum payoffs

STATES OF NATURE DECISION Expand Maintain status quo Sell now Good Foreign Competitive Conditions Poor Foreign Competitive Conditions $ 800, 000 1, 300, 000 320, 000 Maximums: 1, 300, 000; 500, 000 1, 300, 000 Minimums: 500, 000; 320, 000; -150, 000 320, 000 $ 500, 000 -150, 000 320, 000

Chapter 5 Products and Services

Product Design ü Specifies materials ü Determines dimensions & tolerances ü Defines appearance ü Sets performance standards

Service Design ü Specifies what the customer is to experience ü ü ü Physical items Sensual benefits Psychological benefits

An Effective Design Process ü Matches product/service characteristics with customer needs ü Meets customer requirements in simplest, most cost-effective manner ü Reduces time to market - haste vs. speed to market ü Minimizes revisions - quality designed into the product

Stages in the Design Process ü Idea Generation — Product Concept - can you create your own market? What role does the voice of the customer play in idea generation? ü Feasibility Study — Performance Specifications ü Preliminary Design — Prototype - testing and redesign ü Final Design — Final Design Specifications ü Process Planning — Manufacturing Specifications - make to order/stock – assembly line?

The Design Process Idea generation Suppliers R&D Marketing Product or service concept Feasibility study Form design Customers Competitors Performance specifications Revising and testing prototypes Production design Functional design New product or service launch Final design & process plans Design specifications Pilot run and final tests Manufacturing or delivery specifications

Idea Generation ü Suppliers, distributors, salespersons ü Trade journals and other published material ü Warranty claims, customer complaints, failures ü Customer surveys, focus groups, interviews ü Field testing, trial users ü Research and development

More Idea Generators ü Perceptual Maps ü Visual comparison of customer perceptions ü Benchmarking ü Comparing product/service against best-in-class ü Reverse engineering ü Dismantling competitor’s product to improve your own product

Perceptual Map of Breakfast Cereals GOOD TASTE LOW NUTRITION HIGH NUTRITION BAD TASTE

Perceptual Map of Breakfast Cereals GOOD TASTE Cocoa Puffs LOW NUTRITION HIGH NUTRITION Rice Krispies Cheerios Wheaties Shredded Wheat BAD TASTE

Feasibility Study ü Market Analysis Market Segmentation ü Economic Analysis ü Technical / Strategic Analysis ü Performance Specifications Not unlike mission analysis or Intelligence Preparation of the Battlefield

Risk Analysis 1. Identify the Hazards 2. Assess hazards to determine risks. 3. Develop controls and make risk decisions. 4. Implement controls. 5. Supervise and evaluate. From FM 100 -14

Preliminary Design How will it look? ü Create form & functional design ü Build prototype ü Test prototype ü Revise prototype ü Retest

Functional Design (How the Product Performs) ü Reliability ü Probability product performs intended function for specified length of time ü Maintainability ü Ease and/or cost or maintaining/repairing product

Computing Reliability Components in series 0. 90 x 0. 90 = 0. 81

Computing Reliability Components in series 0. 90 x 0. 90 = 0. 81 Components in parallel 0. 90 R 2 0. 95 + 0. 90(1 -0. 95) = 0. 995 0. 95 R 1

System Availability MTBF System Availability, SA = MTBF + MTTR

System Availability MTBF System Availability, SA = MTBF + MTTR PROVIDER MTBF (HR) MTTR (HR) A B C 60 36 24 4. 0 2. 0 1. 0

System Availability MTBF System Availability, SA = MTBF + MTTR PROVIDER MTBF (HR) MTTR (HR) A B C 60 36 24 4. 0 2. 0 1. 0 SAA = 60 / (60 + 4) =. 9375 or 93. 75% SAB = 36 / (36 + 2) =. 9473 or 94. 73% SAC = 24 / (24 + 1) =. 96 or 96%

Production Design ü Part of the preliminary design phase ü Simplification ü Standardization ü Modularity

Final Design & Process Plans ü Produce detailed drawings & specifications ü Create workable instructions for manufacture ü Select tooling & equipment ü Prepare job descriptions ü Determine operation & assembly order ü Program automated machines

Improving the Design Process ü Design teams ü Concurrent design ü Design for manufacture & assembly ü Design to prevent failures and ensure value ü Design for environment ü Measure design quality ü Utilize quality function deployment ü Design for robustness ü Engage in collaborative design

Breaking Down Barriers to Effective Design

Design Teams Preferred solution = cross functional teams ü Marketing, manufacturing, engineering ü Suppliers, dealers, customers ü Lawyers, accountants, insurance companies

Concurrent Design ü Improves quality of early design decisions ü Decentralized - suppliers complete detailed design ü Incorporates production process ü Scheduling and management can be complex as tasks are done in parallel ü include the customer in the process!!

Design for Manufacture and Assembly ü Design a product for easy & economical production ü Incorporate production design early in the design phase ü Improves quality and reduces costs ü Shortens time to design and manufacture ü also known as Design for Six Sigma

Design for Six Sigma • Define – the goals of the design activity • Measure – customer input to determine what is critical to quality from the customers’ perspective – what are customer delighters? What aspects are critical to quality? • Analyze – innovative concepts for products and services to create value for the customer • Design – new processes, products, and services to deliver customer value • Verify – new systems perform as expected

DFM Guidelines ü Minimize the number of parts, tools, fasteners, and assemblies ü Use standard parts and repeatable processes ü Modular design ü Design for ease of assembly, minimal handling ü Allow for efficient testing and parts replacement

Design for Assembly (DFA) ü Procedure for reducing number of parts ü Evaluate methods for assembly ü Determine assembly sequence

Design Review ü Failure Mode and Effects Analysis (FMEA) ü A systematic approach for analyzing causes & effects of failures ü Prioritizes failures ü Attempts to eliminate causes

Value Analysis (Value Engineering) Is there value added? ü Ratio of value / cost ü Assessment of value : 1. Can we do without it? 2. Does it do more than is required? 3. Does it cost more than it is worth? 4. Can something else do a better job 5. Can it be made by less costly method, tools, material? 6. Can it be made cheaper, better or faster by someone else? Should we contract it out?

Design for Environment ü Design from recycled material ü Use materials which can be recycled ü Design for ease of repair ü Minimize packaging ü Minimize material & energy used during manufacture, consumption & disposal ü green laws in Europe -

Examples • Recycling of oil • carpets in land fills - 4 billion pounds in land fills annually • Xerox and Hewlett-Packard - pay for return of printer cartridges on larger printers

Quality Function Deployment (QFD) ü Translates the “voice of the customer” into technical design requirements ü Displays requirements in matrix diagrams ü First matrix called “house of quality” ü Series of connected houses

Design for Robustness ü Product can fail due to poor design quality ü Products subjected to many conditions ü Robust design studies ü Controllable factors - under designer’s control ü Uncontrollable factors - from user or environment ü Designs products for consistent performance

Consistency is Important ü Consistent errors are easier to correct than random errors ü Parts within tolerances may yield assemblies which aren’t ü Consumers prefer product characteristics near their ideal values

Characteristics of Services • • • Services are intangible Service output is variable Service have higher customer contact Services are perishable Service inseparable from delivery Tend to be decentralized and dispersed Consumed more often than products Services can be easily emulated Call girl principle – value diminishes after service is rendered

A Well-Designed Service System is ü Consistent with firm’s strategic focus ü Customer friendly ü Easy to sustain ü Effectively linked between front & back office ü Cost effective ü Visible to customer

Chapter 6 Processes and Technologies

Process Strategy ü Overall approach to producing goods and services ü Defines: ü Capital intensity ü Process flexibility ü Vertical integration ü Customer involvement

Types of Processes ü Projects ü Batch production ü Mass production ü Continuous production

Process Planning ü Make-or-buy decisions ü Process selection ü Specific equipment selection ü Process plans ü Process analysis

Make-or-Buy Decisions 1. 2. 3. 4. 5. 6. Cost Capacity Quality Speed Reliability Expertise What about Proprietary Information? Barrier to Make-or-Buy?

Source: Aberdeen Research, “Low-Cost Country Sourcing Success Strategies: Maximizing and Sustaining the Next Big Supply Savings Opportunity, ” Jun 2005

Specific Equipment Selection 1. Purchase cost 2. Operating cost 3. Annual savings 4. Revenue enhancement 5. Replacement analysis 6. Risk and uncertainty 7. Piecemeal analysis – “one piece at 8. a time”

Process Plans ü Blueprints ü Bill of material Flat or multiple layers - part or assembly ü Assembly chart / product structure diagram ü Operations process chart - list of operations involved in assembly ü Routing sheet - sequence of events

Operations Process Chart Part name Crevice Tool Part No. 52074 Usage Hand-Vac Assembly No. 520 Oper. No. Description Dept. Machine/Tools Time 10 Pour in plastic bits 041 Injection molding 2 min 20 Insert mold 041 #076 2 min 30 Check settings & start machine 041 113, 67, 650 20 min 40 Collect parts & lay flat 051 Plastics finishing 10 min 50 Remove & clean mold 042 Parts washer 15 min 60 Break off rough edges 051 Plastics finishing 10 min

Process Analysis ü The systematic examination of all aspects of a process to improve its operation ü ü Faster More efficient Less costly More responsive ü Basic tools ü Process flowchart ü Process diagrams ü Process maps

Process Flowchart Symbols Operations Inspection Transportation Delay Storage

Process Flowchart Description of process 1 Unload apples from truck 2 Move to inspection station 3 Weigh, inspect, sort 4 Move to storage 5 Wait until needed 6 Move to peeler 7 Apples peeled and cored 15 8 Soak in water until needed 20 9 Place in conveyor 5 10 Move to mixing area 11 Weigh, inspect, sort Distance (feet) Location: Graves Mountain Process: Apple Sauce Time (min) Operation Transport Inspect Delay Storage Step Date: 9 -30 -02 Analyst: TLR Page 1 0 f 3 Total 20 100 ft 30 50 ft 360 20 ft 30 480 190 ft

Process Diagram UPS Active Bins Receiving Reserve Storage Quality Assurance Picking Packing Monogramming Embroidering Back to Vendor Hemming Gift Boxing Shipping Parcel Post Next-Day UPS

Process Map Customer Waiter Place order Is order complete? Salad Chef Dinner Chef N Y Give soup or salad order to chef Prepare soup or salad order Prepare dinner order Give dinner order to chef Drink Get drinks for customer Eat salad or soup Deliver salad or soup order to customer Eat dinner Deliver dinner to customer Receives check Deliver check to customer Gives payment to waiter Receive payment for meal Cash or Credit? Credit Cash Collect change, leave tip Bring change to customer Run credit card through Fill in tip amount Return credit slip to customer Collect tip Give order to waiter

Principles for Redesigning Processes • • Remove waste, simplify, consolidate Link processes to create value Let the swiftest and most capable execute Capture information digitally and propagate

Principles for Redesigning Processes • • • Provide visibility through information about process status Fit the process with sensors and feedback loops Add analytic capabilities Connect, collect and create knowledge around the process Personalize the process

Other ways to redesign the process • Define • Measure • Improve Velocity Management Methodology • • • Define Measure Analyze Improve Control General Electric’s Six Sigma Methodology

Techniques for Generating Innovative Ideas ü ü Vary entry point to a problem Draw analogies Change your perspective Use attribute brainstorming

Information Technology ü Management Information Systems (MIS) ü Move large amounts of data ü Decision Support Systems (DSS) ü Add decision making support ü Expert System ü Recommend decision based on expert knowledge

Artificial Intelligence ü Neural networks ü Emulate interconnections in brain ü Genetic algorithms ü Based on adaptive capabilities in nature ü Fuzzy logic ü Simulate human ability to deal with ambiguity

Enterprise Software ü Collect, analyze, and make decisions based on data ü ERP - Enterprise Resource Planning ü Managing wide range of processes üHuman resources, materials management, supply chains, accounting, finance, manufacturing, sales force automation, customer service, customer order entry ü Finding hidden patterns through data mining

ERP • SAP – 42% of market; forecast to 43% in 2006 • Oracle – 20%; forecast to 23% 2006 • Sage Group – 6% • Microsoft – 4% • Horror Stories – Hershey’s, Dell

Advanced Communications ü ü Electronic data interchange (EDI) Internet, extranets Wireless communications Teleconferencing & telecommuting ü Bar coding, Radio Frequency Identification ü Virtual reality Distance Learning?

RFID • • Active Tags Always on Battery powered Can be read from up to 300 ft • US Army • Savi Tags • • Passive Tags Small Must be activated May be turned off England California Rolex

Automated Material Handling ü Conveyors ü Automated guided vehicle (AGV) ü Automated storage & retrieval system (ASRS) Grainger/Defense Distribution Center, San Joaquin

Flexible Manufacturing Systems (FMS) ü Programmable machine tools ü Controlled by common computer network ü Combines flexibility with efficiency ü Reduces setup & queue times ü cellular layout - more on design next week

Robotics ü Programmable manipulators ü Follow specified path ü Better than humans with respect to ü Hostile environments ü Long hours ü Consistency ü Adoption has been slowed by ineffective integration and adaptation of systems ü Welding at Harley Davidson Plant

Next Week • Chapter 7, 9 • Handout Mid Term