Midterm Review BUSMGT
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Date Created: 02/09/15
Midterm Review Chapter 1 Operations and Supply Chain Management 0 What is Operations Management The processes that effectively produce transform and deliver a product or service Involves using resources and managing organizational relationships OM is about how things get done OM contributes to the prosperity of organizations and society 0 What is a Process A system of activities that transforms inputs into valuable outputs How do Products differ from Services Products Are tangible Are a result of manufacturing processes Services intangible service process huge part of US economy 2009 services 769 of GDP Servitization Blending products and services iPod music device product amp download resource service Chapter 2 Strategy and Sustainability 0 Sustainable Operations Management Sustainability Meeting today s needs without compromising the ability to meet tomorrow s Triple Bottom Line TBL Evaluating the rm against economic social and environmental criteria AKA the 3PsPeople Pro t Planet What incorporates a sustainable strategy Social People or Human Capital Employees and stakeholders Planet or Natural Capital Use and impact of resources throughout the life cycle Pro t Beyond traditional accounting to include economic bene t for the host society What is an Operations and supply chain strategy Setting goals and policies and creating plans for using the rms resources to support the organizational strategy Longer range organizational strategy Mid range conversion of strategy into more tactical activities Shorter range implementation of tactics What are the competitive dimensions priorities for operations Competitive dimensions Cost Lowhigh cost price Quality Consistent quality Superior quality Time Delivery speed Ontimereliable delivery Development speed of new productsservices Flexibility Volume exibility Customization postponement mass customization Varietymix Others Service and support beforeafter sale Social and environmental concerns Returnsreverse supply chains Certi cationsregistrations Tradeoffs among competitive dimensions No rm excels simultaneously in all dimensions The organization through operations has choices Focus on one dimension to achieve excellence Tradeoff Try to do well in more than one dimension which accepts a lesser performance versus the single focus Order winners Characteristics causing customers to prefer you over your competitors Order quali ers Characteristics you need to have to be considered by potential customers Productivity a measure of how well resources are used Productivity value of outputs produced value of all input resources Must be compared to be meaningful Coffee on the double 1 Key Competitive Priority lDelivery Speed 2 Other Priorities I High Quality premium beverages Flexibility diversify menu 3 OPERATIONS actions taken Starbucks Set up Industrial Engineering team redesigned ice scoop No signature on CC transactions lt25 Added oater staff new faster espresso machines 4 Operations actions taken COSIlarge menu board Wendy sljnew double sided grill sharply reduces cooking times CARIBOUI no signature on CC lt10 Practice problem 214 0 Calculation for JAN 0 Outpout 2300 units might also be 0 Input 3x325 or 975 0 Productivity 2300975 or 236 0 Similarly for FEBAPR 0 18 175 234 0 Average 236181752344 or 206 Example in class 0 Forecast 1000 unitsweek 0 WIP 600 units 0 Forecast 1000 units5 200 unitsday AKA Taket 0 WIP 600200 gt 3 days demand Pepsi s SupplyChain x Problems in the supply chain 0 out of stock retail 0 delivery delays 0 errors in assembling orders 0 dated ordering system 0 increasing variety of drinks 420 pepsi items mentioned in the Denver market Operations actions taken Technology upgrades 0 Order pickers receive headsets and barcode scanners 0 Sales force use wireless handheld computers to transmit orders faster Revised work schedules to add weekend shifts Benefits achieved Problems detected sooner Reduction in stock outs More sellin opportunities reduced order time and turnaround Reduced delivery time at customer dock by 30 minutes CH 14 Lean Supply Chain 0 Lean the process of increasing the ratio of value to nonvalue by identifying and eliminating m Lean A management framework for waste elimination How does a company achieve Lean operations IRIIR Improving process productivity Reducing inventory Improving quality Increasing worker involvement Reducing variability 0 Push vs Pull Push Production of the item begins in advance of customer needs Pull Customer demand activates production of the service or item Lean systems use M method Sources of m according to Toyota Overproduction Waiting Transportation Inventory Process to much Motion Poor quality Kanban Systems System used to link production rate to demand The demand M products through the system Setting up a kanban system requires determining the of kanban cards containers needed Each container represents the minimum production lot size An accurate estimate of the leadtime required to produce a container is key to determining how many kanbans are required K expected demand during lead time safety stock Size of the container K DLlSC K oKanban card sets D avg of units demanded over a given time period L lead time to replenish an order in same time units as demand S safety stock expressed as a of demand during lead time C container size Example Avg of units demanded over a given time period D 8hour Lead time to replenish an order L 4 hours 39 Safety stock S 10 39 Container size C 10 units K 8 x 4101 10 352round up to 4 containers What is a VSM Value stream mapping VSM 2step process that starts with how things are done now current state map that allows targeted improvements to eliminate waste Flowcharting tool used to analyze where value is or is not being added as material ows through a process Breakdown of ALL activity into value added and nonvalue added Nonvalue added from ALL sources is measured in common units of TIME and called Lead Time 5 main elements Customer Main fulfillment processes Suppliers Info control center production control Timeline calculation VSM example If operations has 480 minutes available per day to satisfy demand of 120 units production per unit must average 4 minutes per piece At assembly the cycle time is 2 minutes per piece so this activity will be busy only 50 of the time bw the two process steps there is an inventory accumulation of 720 units equivalent to 720120 or 6 DAYS of production at packaging the cycle time is 48 minutes per piece which is ABOVE the avg target production rate PROBLEMS with this process 1 ASSEMBLY is under utilized Remove people Increase sales 2 Inventory is accumulating due to the slow next step 3 Packaging is a bottleneck it slows down the process Since cycle time at packaging 48 gt Cycle Time required to meet demand 40 the process cannot satisfy customer demand 4 Note that lead time 6 days of nonvalue added while actual process time 68 minutes Difference bw value added and nonvalue added Lean in services 1 improvements from workers 2 upgrade housekeeping SS 39 3 quality improvement 4 organize process ow 39 5 update equipment and technology 39 6 level the facility load 7 waste reduction from all sources 39 8 work area reconfiguration 9 introduce Demandpull scheduling 10 develop likeminded supplier networks 0 Article Streamlined Plane Making 1 What isare the common threads bw Boeing and Airbus on the one hand and Toyota on the other 1 Cutting production costs and speeding assembly 2 In what ways are Boeing and Airbus attempting to copy Toyota and HOW 1 slashed their parts inventories copied the way car makers organize factories and trimmed production times 2 Eliminating high costs of individuality by offering a standard set of features on the 787 39 3 Outsourcing 4 using workanalysis methods developed by auto industry 39 5 Boeing began using a huge moving line like Ford s assembly line CH 11 Process Design amp Analysis 0 What is a Process Process A collection of tasks and activities that together transform inputs to outputs that add value Cycle time the avg time bw completion of successive units m the ratio of the time that a resource is actually activated relative to the time that it is available for use NOT a measure of efficiency 0 Flowcharting terms Bufferbuffering a storage area bw stages where the output of a stage is placed prior to being used in a downstream phase ie inventory Blocking occurs when the activities in a stage must stop because there is no place to deposit the item Starving occurs when the activities in a stage must stop because there is no work Bottleneck stage that limits the capacity of the process like three road lanes converging into two 0 What is a line of visibility A line of visibility Used in service owcharts to separate those activity steps that take place with the participation of or in view of the customer ABOVE the line versus those that take place wo a customer present BELOW the line 0 PROCESS DESIGN Maketostock vs Maketoorder Maketostock MTS process activated to meet expected or forecast demand Best for standard items w lower risk of obsolescence Shorter lead time faster delivery Maketoorder MTO Begin production only after receiving a customer order Both workinprocessWIP and finished goodsFG inventory kept to a minimum Best for customized items in lower volumes Assembletoorder ATO build modules and components prior to receiving order assemble product after receiving customer order 0 Little s Law In a stable system the longterm avg of unitscustomers in a stable system or the system inventory is equal to the average arrival rate multiplied by the average time in the system It s a relationship bW Lits and time Inventory Throughput rate X Flow Time Example Car Batteries Avg cost 45 12 hours to make a car assembles 200 cars per 8hour shift currently one shift holds on average 8000 batteries in raw material inventory WIP Throughput time X Flow timeWIP 25 batteries X 12 hours 300 Total 8000 300 8300 batteries And 8300 X 45each 373500 Flow time Inventory Throughput 8000 200 batteriesday 40 days supply inventory 0 Measuring Process Performance Ef ciency how well a resource is being used eXpressed as a ratio of actual to standard ouput Actual output Standard output Productivity a ratio of outputs to inputs output input Utilization the percentage of available time that is being used Time Activated Time Available operation time the time used to process one or a group of items This is the amount of capacity or available time needed Operation time Run time Setup time Flow time the avg amount of time it takes a unit to move through the system Flow time operation queue transportation delay times Process velocity throughput ratio ratio of value added time to ow time Value added time ow time 0 How can you improve a process Perform activities in parallel Change the sequence of activites Reduce interruptions CH 7 Manufacturing Processes 0 What are the strategies of production MTO ATO MTS 0 Breakeven analysis a mathematical technique that allows a comparison of total costs for different processes Total revenue total cost RQFVQ 01 QFRV Q volume of customersunits V the unit variable cost F fixed cost R revenue per unit VQ total variable cost Total cost F VQ Total revenue RQ CH 18 Demand Management and Forecasting 0 Forecasting 4 basic types Qualitative Time series analysis Causal relationships Simulation 0 Qualitative built upon the judgments and opinions of people most often experts Used in situations where there is a lack of sufficient data Decoupling point point at which inventory is stored which allows supply chain to operate independently 0 Forecasting Method Selection Guide 0 Simple moving average Amount of historical dataH 612 months weekly data often used Data patternDstationary ie no trend or seasonality Forecast horizonDshort 0 Weighted moving average ampsimple exponential smoothing Amount of historical dataH 5 to 10 observations needed to start Data patternH stationary Forecast horizonH short 0 Simple moving average formula Ft At1At2At3 Atn n Ft forecast for period n number of periods to be averaged Atl actual occurrence in the past period At2 At3 etc actual occurences 2 periods ago 3 periods ago 0 Weighted Moving Average formula Allows unequal weighting of prior time periods The sum of the weights must equal 1 CH 9 Service Processes 0 What is a service package Supporting facilities Physical resources that must be in place to provide service Facilitating goods Material purchasedconsumed by customer while receiving services Information Data needed to provide service Explicit services Benefits readily observable by customer essential feature of the service Implicit services Psychological benefits that customer may sense nonessential feature oservice 0 How does a Service design differ from a process design 1 the process and the product must be developed simultaneously 2 service op lacks the legal protection a product has 3 service package constitutes the major output of development process 4 many parts of the service package are defined by the training individuals receive 5 many service org s can change their service offering over night 0 How does customer contact affect the design of service processes More customer contact will impact quality delivery exibility and cost Can be disruptive and make processing inefficient Technology can change the way customers and providers interact 0 Service blueprinting standard tool for service process design owchart unique feature the distinction bW high customer contact aspects of the service and those activites the customer does not see 0 Service Failsa ng PokaYokes A proactive approach Procedures that block a mistake from becoming a service defect 0 3 contrasting service designs l the production line approach McDonalds service delivery treated like manufacturing 2The selfservice approach ATM machines customer takes greater role in production of the service 3 the personal attention approach Ritzcarlton Hotel company CH 10 Waiting Line Analysis 0 Arrival characterisics Size of the arrival population either infinite or limited fixed Arrival rate the number of units arriving per period
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