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OPERATIONS MANAGEMENT

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  1. OPERATIONS MANAGEMENT OPRE 6260 Raymond Lutz

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

  3. 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

  4. 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

  5. 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

  6. 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

  7. 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

  8. 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

  9. 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

  10. 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

  11. 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

  12. 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

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

  14. 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

  15. 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

  16. 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