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CH1 INTRODUCTION
Production Creation of goods &
services
Operations Management Set of
activities that create value in the
form of goods and services by
transforming inputs into outputs
ESSENTIAL FUNCTIONS
1. Marketing Generates
demand
2. Production/operations
Creates product
3. Finance/accounting
Why study OM?
1. One of the major functions of
any organization
2. Need to know how goods &
services are produced
3. Costly part of an organization
THE STRATEGIC DECISIONS
1. Design of goods & services
- Whats required
- Determines quality,
sustainability, and human
resources
2. Managing Quality
- Customers quality
expectations
- Identify and achieve
quality
3. Process and capacity design
- Production of
goods/services
4. Location Strategy
- Nearness to customers,
suppliers, and talent
Considers cost,
infrastructure, etc.
5. Layout Strategy
- Efficient flow of materials,
people, and information.
6. Human resources and job
design
- Recruit, motivate, and
retain employees
7. Supply-chain management
- Determines whats to be
purchased, from whom,
and under what conditions
8. Inventory management
- Customer satisfaction,
supplier capability,
production schedule.
9. Scheduling
10.
Maintenance
- Considers facility, prod,
and personnel
HISTORY
Eli Whitney
-
Frederick Taylor
-
Father of Scientific
Management
Created efficiency
principles
Henry Ford
-
W. Edwards Deming
PRODUCTIVITY VARIABLES
1. Labor 10% annual increase
CH 4 FORECASTING
Forecasting
-
Short-range forecast
-
STEPS IN FORECASTING
1.
2.
3.
4.
5.
6.
7.
FORECASTING APPROACHES
Qualitative Methods
-
Medium-range forecast
-
3 months to 3 years
Sales & production
planning, budgeting
3+ years
New product planning,
facility location, research
& development
QUALITATIVE METHODS
TYPES OF FORECASTS
Economic Addresses business
cycle (inflation rate, money supply,
etc.)
Quantitative Methods
Long-range forecast
-
Determine use
Select items to be forecasted
Determine time horizon
Select forecasting model/s
Gather data
Make forecast
Validate & implement results
STRATEGIC IMPORTANCE OF
FORECASTING
-
Human Resources
Capacity
Supply Chain Management
QUANTITATIVE METHODS
Time-Series Models
1. Nave Approach
- Assumes demand in next
period is same
- Cost effective & efficient
2. Moving Averages
- Series of arithmetic means
- Little/No trend
- Often for smoothing
3. Exponential smoothing
- Form of weighted moving
average
- Little record of past data
4. Trend projection
Associative Model
5. Linear regression
Unpredictable
Unforeseen
events
Short &
nonrepeating
Product Design
-
Good/Service the
organization provides
Typically focuses on core
products
Customers buy
satisfaction, not just
physical goods
Fundamental to strategies
Differentiation
Low cost
Rapid response
Introduction
-
Research
Product development
Process modification
Supplier development
Growth
-
Maturity
Decline
Established competitors
High volume; innovative
Improved cost control
Product-by-Value Analysis
-
Lists products in
descending order of their
individual dollar
contribution to the firm
Lists the total annual
dollar contribution of the
product
Helps management
evaluate alternative
strategies
CH 5s SUSTAINABILITY
Sustainability
-
CH 7 PROCESS STRATEGY
-
How to produce a
product / provide a service
that:
Meets/Exceeds
customer
requirements
Meets cost &
managerial goals
Has long term effects on
Efficiency &
production flexibility
Costs & quality
4 Basic Strategies
-
Process focus
Repetitive focus
Product focus
Mass customization