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43 Cards in this Set
- Front
- Back
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Operations Management
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Set of activities that creates value in the form of goods and services by transforming inputs into outputs
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Ten decision areas of OM
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Strategic Level Decisions
1. Design of goods and services 2. Location strategy 3. Layout strategy 4. Job design Tactical Level Decisions 5. Supply chain management 6. Process/capacity design Operational level decisions 7. Scheduling 8. inventory control 9. Quality management 10. Maintenance |
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Productivity
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Output/input
Multi factor output/labor+energy+material+capital |
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Why businesses go global
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1. Reduce cost
2. Improve supply chain 3. Provide better goods 4. Understand markets 5. Learn to improve operations 6. Attract and retain global talent |
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Organization mission
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Purpose
what it will contribute to society Must be broken down into different functional areas |
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Strategy
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Action plan to achieve organization mission
Compete on differentiation, cost, and response |
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Operations decision process
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1. Process focused-Low volume, high variety of products (print shop, ER)
2. Repetitive focus- Moderate volume and variety (Cars, applicances, TV) 3. Mass customization- High volume, high variety (Dell) 4. Product focused- high volume, low variety (beer, paper) |
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Product life cycle
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Introduction- best time to increase market share, R&D critical
Growth- Practical to change price and strengthen niche Maturity- Poor time to make changes Decline- Cost control critical |
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International Operations Strategies
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Global strategy- high cost reduction, low responsiveness (standarized product, economies of scale
Transnational Strategy- High cost reduction, high responsiveness (Move material, people, ideas abroad) International Strategy- Low cost reduction, low local responsiveness (import, export existing product) Multidomestic strategy- Low cost reduction, high responsiveness (use existing domestic model globally, franchises) |
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Supply Chain Management
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Set of approaches and methods used to efficiently integrate suppliers, manufacturers so that merchandise is produced at the right quantity, to right location, and at right cost in order to reduce system wide costs
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Why is supply chain management challenging
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Hard to match uncertain demand and supply
System wide optimization |
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Why is Supply Chain Management Important (9)
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Distribution Network configuration-location and capacity of warehouses
Inventory Control- how much and how frequently to order from supplier Make or buy decision Supply chain contracts- centralized system (max profits for all) decentralized system (all for themselves) Distribution Strategies- number of warehouses, cross docking, direct shipping Supply chain integration and strategic partnering Outsourcing and strategies- what are core competencies Product design-when important to redesign IT and Decision support systems-what data is needed, what is source |
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Kieratsu Network
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Supplier becomes part of coalition
Manufacturer gives supply and loan |
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Push vs Pull Supply Chain
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Push- Based on long term demand forecasts
Pull- based on real customer demand Push-Pull- combination system |
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Bullwhip effect
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Small Variations In Order Quantity Lead to High Variations in Perceived Demand.
Disruption higher the further away from source. Happens because of ripple effect |
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Innovative strategies in supply chain management
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1. Accurate pull data- pull product through supply line by Point of sales
2. Lot size reduction 3. Vendor managed inventory- vendor knows when to order to seller 4. Blanket orders- Contract with supplier to purchase certain items 5. Standardization- build products to certain point, decrease variety 6. Radio frequency tags- track items in inventory |
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Steps in vendor selection
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1. Vendor Evaluation-develop criteria firm will use
2. Vendor Development- how to integrate vendor into system (quality requirements, product specifications) 3. Negotiations-cost based, market based, competitive bidding |
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Measuring supply chain performance
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Assets committed to inventory=Total inventory investment/Total assets
Weeks of supply= inventory investment/weekly COGS Inventory Turnover=COGS annual/inventory investment |
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Outsourcing
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Procuring from other suppliers service or products firms use themselves
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Offshoring
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Moving processes to other country but still maintaining control
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Types of inventory
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Raw Materials-purchased but not processed
Work in process-undergone some changes but not complete Maintenance, Repair- necessary to keep machinery functioning Finished goods- awaiting shipment |
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When to use different Inventory models
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Newsvendor- uncertain demand, prob distribution, salvage value, one period
EOQ- Demand is known, independent, lead time known, Setup and holding costs Production Order Quantity Model- Producing/selling at same time, length of production run and daily demand rate given Quantity discount models-when there are different cost associated with different order sizes Safety stock- Standard deviation of demand during lead time given |
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Safety Stock
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Complement of service level
Probability of stock-out+service level=1 |
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ABC Analysis
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Some parts more important and take up more annual dollar volume
Cycle counting used to determine how often to count each type of item (ie count A items once a month and B twice a year) |
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Independent demand vs Dependent Demand
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Independent- demand for item not tied to demand for another
Dependent- Demand of item tied to another |
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Cost of shortage and overage (newsvendor)
How to find Z score/service level |
Shortage= Sales price-cost per unit
Overage= Cost per unit- salvage value Z=cost of shortage/cost of shortage+overage |
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Design Capacity and effective capacity
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Design-maximum theoretical output
Effective- Realistic capacity given constraints |
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Approaches to capacity expansion
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1. Lead demand with incremental approach
2. Lead time with one time expansion 3. Capacity lags demand with incremental expansion 4. Attempts to have an average capacity with incremental expansion |
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Break even analysis
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Find point in dollars and units where cost=Revenue
Need to estimate fixed, variable, and revenue |
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Sustainability
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Resources (reduce use) , Recycle (reuse components), Regulations (conform to them), Reputation (lead)
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Bottleneck
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Process that takes the most time
Determines throughput |
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Characteristics of Waiting Line Systems
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Arrivals/Inputs to system (Size of pop, pattern of arrivals, behavior of arrivals)
Waiting line characteristics (Queue length, discipline) Service characteristics (Queuing system designs, service service time distributions |
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Little's Law
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L=lambda*W
Average number of people in system (L)=Arrival rate into system (lambda)+Average time spent into the system (W) |
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Shared characteristics of all queuing systems
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Single Phase, Possion Arrival, FIFO, Unlimited queue length
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M/M/1
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Single channel, infinite source population, exponential service pattern
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Utility
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Arrival rate/service rate must be less than 1
Lambda/Mu If utility ratio is less than 1 than the system is stable |
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Project
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A sequence of tasks performed to achieve a unique goal within a specific time frame
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Measures of project success
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On time
Within budget Were the project goals met? Was the client satisfied? Were the resources well managed? |
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Scope creep
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When scope of a project changes but the time period to complete and cost do not
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3 Organizational Structures
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Hierarchical- employees organized by type of work and report to heads of department
Project based structure- Project managers report directly to top management Matrix Structure- Mix of project based and hierarchical |
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Critical Path
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Longest path through network
Shortest time in which project can be completed Have no slack time |
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Total slack
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Shared by activities with same slack time
Can use slack time of 1 activity to change earliest start of other and increase earliest start of other Makes slack 0 for one that increases its ES start |
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Free Slack
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Delaying this activity does not affect slack time of other activities
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