1. McGraw-Hill/Irwin Copyright © 2007 by The McGraw-Hill Companies, Inc. All rights reserved. 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. Automobile assembly, steel making Home remodeling, retail sales Automobile Repair, fast food Goods-service Continuum Figure 1.3 Computer repair, restaurant meal Song writing, software development GoodsService Surgery, teaching

4. Historical Evolution of Operations Management  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 Table 1.7

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. Banks, ATMsConvenienceLocation Disneyland Nordstroms Superior customer serviceService Burger King Supermarkets Variety VolumeFlexibility Express Mail, Fedex, One-hour photo, UPS Rapid delivery On-time delivery Time Sony TV Lexus, Cadillac Pepsi, Kodak, Motorola High-performance design or high quality Consistent qualityQuality U.S. first-class postage Motel-6, Red Roof Inns Low CostPrice Examples of Operations Strategies Table 2.2

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

8. Life Cycles of Products or Services Time Introduction Growth Maturity Saturation Decline Deman d 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.  Design for manufacturing (DFM)  Design for assembly (DFA)  Design for recycling (DFR)  Remanufacturing  Design for disassembly (DFD)  Robust design Product design

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

12.  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 Differences Between Product and Service Design

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. TQM

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 Operation 1 20/hr. Operation 2 10/hr. Operation 3 15/hr. ? Which operation is the Bottleneck operation? Maximum output rate limited 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. 1.One product is involved 2.Everything produced can be sold 3.Variable cost per unit is the same regardless of volume 4.Fixed costs do not change with volume 5.Revenue per unit constant with volume 6.Revenue per unit exceeds variable cost per unit Assumptions of Cost-Volume Analysis

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