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149 Cards in this Set
- Front
- Back
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Embarrassing mistake for Jimmy Buffet
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fell of the stage in Australia knocking himself unconscious for 10 minutes
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Who determines the quality level of a product?
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Consumer - fish sandwich story
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How does bobcat compete with competition?
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Go straight to the consumers and make a list of what they'll need
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What is the definition of operations management?
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The science and art of ensuring that goods and services are created and delivered successfully to customers
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What 4 steps are necessary in OM?
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Planning, organizing, directing, and controlling
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What are inputs in the value chain (8)?
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Capital, materials, equipment, facilities, supplies, labor, knowledge, time
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What are the four parts of the transformation system (within the value chain)?
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Alteration, transportation, storage, inspection
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What are the 2 types of output in the value chain?
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goods and services
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What are the 6 factors of the environment in the value chain?
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customers, gv't regulations, competitors, technology, suppliers, and economy
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Know the value chain model
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page tt-4 of notes
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What is the formula for productivity?
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P = Outputs/Inputs
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Partial Measures of Productivity
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a ratio of outputs to only one input (labor, machine utilization, energy efficiency)
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Multifactor Measures of Productivity
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a ratio of outputs to several but not all inputs
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Total Productivity Measures
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ratio of all revenues divided by all costs
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Productivity Index
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can be used to compare a process' productivity at a given time (P2) to the same process' productivity at an earlier time (P1)
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What is the formula for Growth Rate?
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Growth Rate = (P2-P1)/P1
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What are the 6 departments that work through OM?
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Marketing, IS, Finance, Accounting, Engineering, Human Resources
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What is output?
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durable or non-durable manufactured good, or service delivery (service encounter and moment of truth)
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What are the similarities between service and goods manufacturing?
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technology, quality-productivity-response issues, must forecast demand, capacity-layout-location issues, customers and suppliers, scheduling and staffing
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Industrial Revolution (Late 1700s)
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replaced traditional craft methods and substituted machine power for labor
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What were the 3 major contributions of the industrial revolution?
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James Watt (steam engine), Adam Smith (Division of Labor), Eli Whitney (interchangeable parts)
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scientific management (early 1900s)
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Separated planning from doing, management's job was to discover worker's physical limits through measurement
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What were 2 major contributors in scientific management (early 1900s)
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Fredrick taylor (stopwatch time studies), Henry Ford (moving assembly line)
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Human Relations Movement (1930s-1960s)
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Recognition that factors other than money contribute to worker productivity, hawthorne effect, maslow's hierarchy of needs
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Hawthorne effect
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study of western electric plant in Hawthorne, Illinois intended to study impact of environmental factors (heat, light, etc.) on productivity, but found that workers responded to management's attention regardless of environmental changes
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Job Expansion
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added more variety, intended to reduce boredom, job enlargement, rotation, enrichment, and employee empowerment
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What are limitations of job expansion (5)?
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Higher capital cost, individuals may prefer simple jobs, higher wage rates for greater skills, smaller labor pool, higher training costs
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Motivation and Incentive Systems (5)
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Bonuses - cash or stock
Profit sharing - profits for distribution to employees Gain Sharing - rewards for improvements Incentive plans - typically based on production rates Knowledge-based systems - reward for knowledge or skills |
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Computer Age (1970s)
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can use Management Science's quantitative techniques - the ability to process huge amounts of data quickly and relatively cheaply,
Material Requirements Planning for production control |
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Developments (1980s)
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Just in Time (JIT), Total Quality Management (TQM), Business Process Reengineering
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Just in Time (JIT)
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high volume production using coordinated material flows, continuous improvement, and elimination of waste
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Total Quality Management (TQM)
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high levels of product quality through shared responsibility and eliminating the root causes of product defects
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Business Process Reengineering
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Clean sheet redesign of work processes to increase efficiency, improve quality and reduce costs
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Developments (1990s)
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Flexibility, Time-based competition, Supply Chain Management
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Flexibility
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offer a greater variety of product choices on a mass scale (mass customization)
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Time-based competition
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Developing new product designs and delivering customer orders more quickly than competitors
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Supply Chain Management
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cooperating with suppliers and customers to reduce overall costs of the supply chain to increase responsiveness to customers
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Developments 1990s
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Global competition, environmental issues
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Global competition
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international trade agreements open new markets for expansion and lower barriers to the entry of the foreign competitors
*Creates the need for decision-making tools for facility location, compliance with local regulations, tailoring product offerings to local tastes, managing distribution networkds |
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Environmental issues
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Pressure from consumers and regulators to reduce, reuse, and recycle solid wastes and discharges to air and water
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What is an example of gv't regulations?
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CA in '06 bumped MPG limit higher than federal, Big 3 lost alot of sales
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From an overall perspective is it ok to lose manufacturing jobs to other countries with lower wages?
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it depends
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Nafta eliminated trade barriers =>
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manufacturing opened in mexico, demand went up, causing a price increase in wages, labor now moved to china
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what's the bright side to job loss?
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those left are more productive, output per hour spikes (trying to do the same or more with less people)
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Productivity ratio <1 is
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Not good
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cell or team layout using embroidery machines
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created a 40% increase in productivity
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sub optimization
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helping your department at the expense of the company overall
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Example of sub optimization
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union came in after trying to undercut skilled workers, ended up hurting the company for 6 months
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Which of these is a pure service?
Dry Cleaners - Legal Services - Movie Theater - Dentist |
NONE
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People are only motivated by money
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not true
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What 5 things go into strategy development?
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Customer Requirements, SWOT, Environment, Competitors, Market Requirements
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What are the 5 steps of operations strategy?
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Strategy Development -> Mission and Vision Statement -> Core Competencies -> Competitive Priorities ->Operations Strategy
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Strategic Development
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The firm's long-range plan based on an understanding of the marketplace involving environmental scanning, competitive threats, company strengths and weaknesses
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What are the 4 parts of a mission/vision statement?
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Type of business or class of products, demographics of market niche or customer base, organizational values, future direction of the organization
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Internally vs. Externally Focuses
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Internal - I did bad on a test, so what can I do to fix this?
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What does a SWOT Analysis Require?
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realistic approach
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Johnson and Johnson
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Took every bottle off the shelf for 6 months even though it was a localized problem
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Competitive advantage supported by core competencies (4):
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Contributes significantly to value of end product or service, unique capability that provides enduring competitive advantage, what separates the organization from competitors, support or maintenance of core competencies
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Competitive Priorities
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Cost, Time, Flexibility, Innovation, Quality
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Which of the 5 competitive priorities create differentiation for a product?
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Flexibility, Innovation, and quality
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Competing on Cost
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eliminate wasted labor, materials, and facilities, emphasize efficient processes and high productivity, often limit the product range and offer little customization, may invest in automation to increase productivity
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Wal-Mart competes on:
Cost - Quality - Time - Flexibility - Innovation |
All of these
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What did SW airlines do to reduce cost (6)?
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Single passenger class, fuel hedging, single type of plane, simple fare scheme, internet sales, employees working in multiple roles
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Competing on Quality
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High performance design (superior features, high durability, and excellent customer service), Product and service consistency (error free delivery, close tolerances)
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Competing on Time
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Rapid delivery (short time between order placed and product received), On-time delivery (sometimes items can arrive too quickly must be exactly when expected, JIT firms try to avoid clutter of excess inventory)
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What competitive priority does bobcat focus on?
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TIME
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Competing on Flexibility
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Product flexibility - easy to switch between producing different products, easy to customize for specific customer requirements
Volume flexibility - rapidly increase or decrease the amount of product being produced to match demand |
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Competing on Innovation
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Technologies, ideas or service concepts, products, practical application and marketing, research and development
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How customers evaluate goods and services
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search, experience, and credence attributes
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Search attributes
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customer has info prior to purchase (internet)
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Experience Attributes
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form opinion after experiencing (meal)
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Credence attributes
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Must believe in, can't judge right away (surgery), usually have degrees, etc.
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Customers look for what in a product?
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Dissatisfiers, satisfiers, exciters/delighters
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Dissatisfiers
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product/service must have to even be considered
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Satisfiers
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features customers would like to see
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Exciters/delighters
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Order winners, surprises customer, unexpected
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Customer Benefit Package
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Peripheral or facilitating goods and services offered alongside the dissatisfiers
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Bundled CBPs and Strategic Alliances
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Primary Wants and Needs must = primary goods or services, shooting for multiple sales strategies can lead to customer confusion
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operating efficiency = operating strategy
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FALSE
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Design of Operations
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Structure - Facilities, flow of work, technology, supply chain
Infrastructure - planning and control systems, work design and compensation, workforce |
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Process Design
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Process Focused = Customized
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Performance Measures (8)
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Financial, Customer/Market, Safety, Quality, Time, Flexibility, Innovation and Learning, Productivity
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Financial Performance Measures (4)
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Revenue, Return on Investment, Operating Profit, Cost of quality
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Customer/Market Measures of Performance (2)
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Customer satisfaction with goods/service quality and response time
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Safety Performance Measures (3)
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Customer, Employee, Public
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Quality Performance Measures (3)
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Consumer Evaluation, Defects, Service Quality
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Making the most of Customer Complaints
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Service recovery, mgt must provide means, reward low customer complaints
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Minor, Major, Critical Defects
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Minor - overcooked beef
Major - gristly beef Critical - undercooked chicken |
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Flexibility Performance Measures (4)
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Goods/services design, empowerment (training), Volume, Product flexibilities
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Time Performance Measures (3)
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Wait, Cycle, and Lead time
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Innovation and Learning Performance Measures (2)
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Training, New goods and services
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Revenue Management System
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services most amenable to RMS (yield management) are one or more of the following:
Perishability, segmented markets, advance sales of the service, high fixed costs relative to variable costs |
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Poor forecasting
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can result in poor inventory and staffing decisions, resulting in part shortages, inadequate customer service, and many customer complaints as well as loss of revenue
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Types of Forecasts (3)
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Economic, Technological, Demand
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Economic Forecasting
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address the business cycle - inflation rate, money supply, etc.
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Principles of Forecasting
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Grouped forecasts are more accurate than individual items, one of the biggest problems with forecasting systems is that they are driven by different departmental needs and incentive systems
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When are accurate forecasts needed?
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Throughout the value chain and they are used by all functional areas of the organization
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Demand Planning modules
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enable companies to integrate planning information from different departments or organizations into a single demand plan
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What key capabilities do demand planning modules offer (5)
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Multilevel Planning, Data Analysis, Statistical Forecasting, Trade Promotion Support, Collaborative Demand Planning
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Collaborative demand planning
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information-sharing across the entire value chain
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Product Life Cycle
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Introduction and growth require longer forecasts than maturity and decline, throughout the life cycle forecasts are useful in projecting staffing and inventory levels, as well as factory capacity
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What are the 4 phases of the product life cycle?
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Introduction, growth, maturity, and decline
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Introduction (life cycle)
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Best period to increase market share, research and development engineering is critical
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Growth (life cycle)
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Practical to change price or quality image, strengthen niche
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Maturity (Life cycle)
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Poor time to change image, price, or quality, competitive costs become critical, defend market position
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Decline
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Cost control critical
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Delphi Method is
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an expert opinion
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IBM began 1994 with obsolete computers, what did this cause?
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Underestimated for next year
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Forecasting is not easy (Oil supply in early 70s)
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Arab states artificially increased prices while continuing to produce, US producers couldn't compete due to price/production controls, new domestic "wildcatters" flourished, oil imports increased, gas shortages
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What were the impacts on consumers of the oil shortage in the early 70s?
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55 mph speed limit on every highway, could only fill up 2x a week by your last name, gas was expensive and cars were too heavy leading to imports and smaller cars becoming more popular
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Should Hydril have scaled back growth in the 70s?
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Not enough info
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Forecasting Steps (5)
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What needs to be forecast, what data is available to evaluate, select and test the forecasting model, generate the forecast, monitor forecast accuracy over time
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What needs to be forecast?
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Level of detail, units of analysis, and time horizon required
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Select and test the forecasting model
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cost, ease of use, and accuracy
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Types of Forecasting Methods (2)
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Qualitative Judgemental Methods, Quantitative or Judgmental Methods
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Qualitative or Judgmental Methods
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when no historical data is available, only judgmental forecasting is possible, subjective
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Quantitative or Statistical Methods
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Forecasts generated through mathematical modeling. Statistical forecasting is based on the assumption that the future will be an extrapolation of the past
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Strengths/Weaknesses of Qualitative/Judgmental Models
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Strengths: incorporates inside info, particularly useful when the future is expected to be very different than the past
Weaknesses: Forecaster bias can reduce the accuracy of the forecast |
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Types of Qualitative or Judgmental Models (3)
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Executive Opinion, Market Research, Delphi Method
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Executive opinion
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A group of managers meet and come up with a forecast (good for strategic or new product forecasting, bad b/c one person's opinion can dominate the forecast)
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Market Research
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Uses surveys and interviews to identify customer preferences (good determinant of customer preferences, but can be difficult to develop a good questionnaire)
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Delphi Method
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Seeks to develop a consensus among a group of experts (Excellent for forecasting long-term product demand, technological development, unfortunately it is time consuming to develop)
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Which Forecasting method did Lear Jet use?
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Qualitative/Judgmental via Delphi Method to develop a mathematical model to figure out where to store Jets, mechanics, and pilots
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Strengths and Weaknesses of Quantitative/Statistical Methods of forecasting
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Strengths: Consistent and Objective, can consider a lot of data at once
Weaknesses: Necessary data isn't always available, forecast quality is dependent upon data quality |
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What are the 2 types of quantitative models?
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Time Series, Causal
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Time Series Model
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Assumes the future will follow the same patterns as the past -- a set of observations measured at successive point in time or over successive periods of time.
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Causal Models
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Explores cause and effect relationships, uses leading indicators to predict the future
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What are the five types of series patterns?
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Trend, seasonal, cyclical, random variation, irregular variation
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Trend series pattern
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Persistent overall pattern (down or up), changes due to population, tech, age, culture, etc., typically several years duration
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Linear/nonlinear Trend patters (4)
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Linear decreasing - bad news!
Linear increasing - Trend for pt 1 of project Nonlinear Increasing - Good if demand can be met Nonlinear Decreasing - Sell all stock if ship is sinking |
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Cyclical Component
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Repeating up and down movements, affected by business cycle, political, and economic factors, multiple years duration, often causal or associative relationships
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Random variation
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unexplained deviation of a time series from a predictable pattern, such as a trend, seasonal, or cyclical pattern -> these cause forecasts to never be 100% accurate
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Irregular variation
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one-time variation that is explainable, hurricane can cause a surge in demand for building materials, food, and water
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Logic of Time Series Models
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Data - historic pattern + random variation and/or irregular variation
Historic pattern may include trend, seasonality, and cycle |
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What are the 3 types of predictive Time Series Models?
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Naive - Forecast is equal to the actual value observed during the last period Simple Mean - The average of all available data
Moving Average - Average value over a set time period, each new forecast drops the oldest data point and adds a new observation |
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Naive Approach
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sometimes cost effective and efficient, can be a good starting point
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Moving Average Method
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used if little or no trend, used often for smoothing, provides overall impression of data over time
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Single Exponential Smoothing
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Uses weighted average, smooths out irregular fluctuations, weights of older data get progressively smaller
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What is the formula for exponential smoothing?
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Ft+1 = alpha * At + (1 - alpha) * Ft
Ft = Last period's forecast At = last period's actual value |
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alpha selection
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forecast quality is highly dependent on selection of alpha:
if the time series is very volatile a smaller alpha is preferred The problem is whether recent changes reflect random variation or real change in long-term demand |
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Forecasting Seasonality
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Calculate the average demand per season, calculate a seasonal index for each season of each year, average the indexes by season, forecast demand for the next year and divide by the number of seasons, multiply next year's average seasonal demand by each average seasonal index
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Causal Models
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Leading indicators hint can help predict changes in demand, causal models build on these cause-and-effect relationships
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Measuring forecast accuracy
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Error = Actual - Forecasted
Need to know how much we should rely on our chosen forecasting method |
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Tracking Signal Formula
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TS = Sum (Actual - Forecast)/Mean Absolute Deviation
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Forecasting in the Service Sector
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Has unusual challenges:
Special need for short term records, needs differ greatly as function of industry and product, holidays and other calendar events, unusual events |
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Capacity
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the maximum output rate of a production or service facility or units of resource available
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Capacity planning
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the process of establishing the output rate that may be needed at a facility: capacity is usually purchased in chunks
Need to know how much and when to spend capital for additional facility and equipment |
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Measuring Capacity (UPS)
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Began operating in Houston in 1970, measured capacity in number of stops but didn't account for driving miles, wasn't accurate
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Effective Capacity
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Actual output per unit of time expected with normal conditions
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