OPERATIONS MANAGEMENT OPRE 6260 Raymond Lutz

Products, Processes, and Performance - Chapter 1 Learning Objectives An operation as a transformation process Product attributes / Operational capabilities Process drivers / Operations structure

Operations and Strategy - Chapter 2 –Operational focus Learning Objectives Link between business strategy, operations strategy, and operations structure –Strategy vs. Operational effectiveness –Process drivers / Operations structure –How to do an operational audit

Operations and Strategy - Chapter 2 Link between business strategy, operations strategy, and operations structure –Process classification and relationship with strategy –Tradeoffs of price vs. variety competition: trade off scale economies with variety diseconomies

Process Flow Measures - Chapter 3 Learning Objectives Process measures: time, inventory, and throughput What is an improvement? –Link financial and operational measures –Good operational measures are leading indicators of financial performance Using Little’s Law for process flow analysis: CRU Rental

Flow Time Analysis - Chapter 4 Learning Objectives Process measures: –Flow time - manages critical activities –Capacity manages critical resources Levers for improving –Flow time - manages critical activities –Capacity and throughput Process capacity depends upon a zillion things

Flow Rate and Capacity Analysis - Chapter 5 Learning Objectives Effect of product mix decisions on process capacity –Marginal contribution per unit of bottleneck capacity used Process flow charts with multiple products

Flow Rate and Capacity Analysis - Chapter 5 Backups may not occur in front of a bottleneck Bottlenecks may shift on adding capacity, diminishing returns to capacity investment

Inventory Analysis - Chapter 6 Learning Objectives Increasing batch size of production or purchase increases average inventories and thus cycle time Average inventory for a batch of size Q is Q/2 The optimal batch size trades off setup cost and holding cost

Inventory Analysis - Chapter 6 To reduce batch size, one has to reduce setup time (cost) Square-root relationship between Q and (R,S) –If demand increases by a factor of 4, it is optimal to increase batch size by a factor of 2 and produce twice as often –To reduce a batch size by a factor of 2, setup cost has to be reduced by a factor of 4

Managing Flow Variability: Safety Inventory - Chapter 7 Learning Objectives Postponement can be used to better match supply and demand Accurate response for “fashion” goods –Trade-off cost of over and understocking

Managing Flow Variability: Safety Capacity - Chapter 8 Learning Objectives Queues build up due to variability Reducing variability improves performance If service cannot be provided from stock, safety capacity must be provided to cover for variability

Managing Flow Variability: Safety Capacity - Chapter 8 Pooling servers improves performance Demand and supply management in servers

Process Control and Capability - Chapter 9 Learning Objectives Every process displays variability - normal or abnormal Control charts monitor processes to identify abnormal variability Local control yields early detection and correction of abnormal variability Process “in control” indicates only its internal stability

Process Control and Capability - Chapter 9 Process capability is its ability to meet external customer needs Improving process capability involves changing the mean and reducing normal variability, requiring a long term investment

Process Control and Capability - Chapter 9 Robust, simple, standard, and mistake- proof design improves process capability Joint, early involvement in design improves quality, speed, and cost