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Operations Mgt Test 1


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Define Operations Management(OM)(components of OM)
Manage resources to transform inputs into outputs to create value Resources – people, machines, IT systems, equipment, inventory, facilities Transform – make product and/or service Inputs – raw materials, components Outputs – finished goods, components, services Transforming inputs into outputs – turn something into something and sell Value - cost, quality, service, ethics, customization/personalization (ex: matches customers up with suppliers for sourcing….that’s its value provided!)
What is internal facing?
cost lowered, quality raised, productivity/efficiency raised (increased firm competitiveness)
Describe why OM is important
(1)Produces the product/service (2)Performance defines company success (3) Costs dominate
Categorize the the types of OM decisions
(1) Strategic Decisions long term (5-20 years) senior mgt level Production methods/tech, facilities, long-term capacity (2)Tactical Decisions medium term (.5-2 years) mid/senior mgt Aggregate planning, forecasting, quality programs, supply chain (3) Operational Decisions shorter term (daily, weekly) lower mgt Forecast consumption, inventory, production scheduling, labor scheduling
Compare and contrast product versus service characteristics.
* “Products” Tangible Storable - Production ≠ demand Production unimportant Quality pre-assessible * “Service” Intangible Not storable - Production = demand Production important Quality not pre-assessible
Define order winners, order losers, and order qualifiers. (Identify order winners, losers, and qualifiers for a given company.)
Order Qualifier – this is what you have to have to compete in the industry (base level offering)…to play in the market

Order Winner – something that you have that separates you to consumer base (quality)

Order Loser – something that you have that potentially turns someone away (ex: not have certain MPG or warranty, low price for some)

* Order winner for some is a order loser for others (ex: cheap Mexican food vs. “Fine” Mexican food)

Recognize value sources and their definitions.
Apply to a given company.
Value (e.g., Apple)  quality/price, price customer is willing to pay

Cost - Low cost?

Quality - Dependability & Reliability?
ervice - Quick? Received when promised? Responsive to issues?

Convenience - Easy to get?
Style, Features - Current style? Advanced features/technology?

Flexibility, Customization - Producer adapts to change? Delivers to unique needs?

Ethics - Producer operating responsibly?

List and briefly describe the 4 perspectives of the balanced scorecard

Performance measures (KPIs)- progress/ success
How do you know if you’ve had a good day?, Can’t manage what you don’t measure

Financial Perspective- watch cost

Customer Perspective- serve customers

Internal Perspective- inventory cycle times (time from order to delivery)

Learning and Growth- R&D, training, and technology

Define make-to-stock, make-to-order, hybrid.

Provide an example of each.

Push supply chain

Pull supply chain

Assemble to order

Define the process flows
Go from Low efficency and low variety, to high efficency and high variety

Low Volume = Less Standardization

Project - fixed location, equipment moves to product
Specialized tools/labor
High cost
Example: pipe organ

Workcenter/job shop - similar equipment, functions
Example: Martin Guitars, hospital

Manufacturing Cell - dedicated to products/customers needing similar processing
More flexibility than assembly line
"U shaped" assmebly line
Example: TaylorMade Golf

Assembly line - layout by sequence, efficient production steps
Very small amount of customization (long runs w/ same features)
Example: auto

Continuous flow processes - assembly line for one product/service
Typically automated
Low labor (less cost)
Example: Steel/chemicals

Apply the product-process matrix by describing differences across volume, variety, and flexibility (product/process matrix) for different process types
See chart
Conduct a break-even analysis to select a process given expected volume
Breakeven - compare fixed and variable costs to identify best alternatives
Also determine breakeven of process profitability (cost vs. revenue)

Fixed costs (FC) - costs not variable by volume

Variable costs (VC) - costs variable by volume

Total Cost = FC + VC*Volume (TC = y = a + bn)

Define cycle time, throughput time, set-up time, run time
Cycle time – average time between successive completed units

Throughput time – time to process one unit (includes processing, waiting time)

Set-up time – time to prepare equipment, personnel to run a batch

Run time – time to process a batch

Define buffering, bottleneck, utilization, balance delay
Buffering – allows stages to run independently
Blocking – preventing the flow
Starving – not getting any flow

Bottleneck – Defines capacity for the entire process
Can only run as fast as slowest step
There is ALWAYS a bottleneck

Utilization – Actual time of a resource used / best operating time

Balance delay – lost utilization in one stage caused by another bottleneck stage...every step being used the same amount of time

Identify the capacity and bottleneck of a process
See problems
Recognize behavioral aspects of service design

Training, motivation-
extremely important (Ex: Zappos employees making $11/hr and no “perks”…work for helping others

Strong finish -
> strong start (ideally you like to have both, but want good lasting impression)

Effective recovery -
if you mess up, what do you? Customers understand that you may mess up from time to time but must be able to recover to keep customers for life

Service guarantees -
set consistent quality/expectations, focus employees (Ex: 30 min or less)

Construct the service system design matrix.

Describe relationships between sales opportunities, customer contact, and process efficiency.

See diagram

Greater customer contact, greater sales opportunities
More customization = less efficiency
As contact increases, efficiency declines

Mail, E-Mail – Ex: Statement Inserts
Web Site – Ex: ATMs, online banking
Phone – Ex: Help Desk
Face-to-Face (tight specs) – Ex: Teller/Customer Interaction
Face-to-Face (loose specs)- Ex Personal Banker
Face-to-Face (customization) – Ex: extreme personal banker

Define and recognize aspects of a queue, including arrival population, phase, servers, # lines, queue discipline
Arrival population/pattern - how many people can start in system

Finite vs. infinite – run out of room/time to server (ex: office hours)
# servers - multiple employees
# phases - multi phases (ex: seating guests and taking drink order)
# lines/channels - multiple lines look shorter even tho single line going into multiple queues is more efficent

Queue discipline - how do you select people/items out of queue (first in first out, reservation/priority system, generally LIFO in production because it is stacked)

Customer behavior
Jockeying – switching lines
Balking – look at line and choose to not enter
Reneging - leaving the line

Define ways to improve customer experience/perception in queues

Keep customers busy/distracted
Keep line moving
Control expectations
Acknowledge waiting time

Alternatives: self-service, call-back service, reservations, express check-in

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