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Chapter 1

Introduction

1.1. Background

Operations management is important. It is concerned with creating the services and


products upon which we all depend. And all organizations produce some mixture of services
and products, whether that organization is large or small, manufacturing or service, for prot
or not for prot, public or private. Thankfully, most companies have now come to understand
the importance of operations. This is because they have realized that effective operations
management gives the potential to improve both efciency and customer service
simultaneously. But more than this, operations management is everywhere, it is not conned
to the operations function. All managers, whether they are called Operations or Marketing or
Human Resources or Finance, or whatever, manage processes and serve customers (internal
or external). This makes, at least part of their activities operations.

Operations management is also exciting. It is at the centre of so many of the changes


affecting the business world changes in customer preference, changes in supply networks
brought about by internet-based technologies, changes in what we want to do at work, how
we want to work, where we want to work, and so on. There has rarely been a time when
operations management was more topical or more at the heart of business and cultural shifts.

Operations management is also challenging. Promoting the creativity which will


allow organizations to respond to so many changes is becoming the prime task of operations
managers. It is they who must nd the solutions to technological and environmental
challenges, the pressures to be socially responsible, the increasing globalization of markets
and the difcult-to dene areas of knowledge management.

1.2. Problems

1.2.1. What is the definition of strategy process?

1.2.2. What is the 4 types of strategy process?

1.2.3. What is the technology selecting?

1.2.4. What is the concept of capacity?

1.2.5. What is capacity planning?


1.3. Goals

1.3.1. Knowing what is the strategy process.

1.3.2. Knowing what is the 4 types of strategy process.

1.3.3. Knowing what is the technology selection.

1.3.4. Knowing the concept of capacity

1.3.5. Knowing the capacity planning.

1.4. Benefits

For the Readers, The information that shared in this paper can give deeper
understanding about Operation Management (OM). For the Lecture, This paper may be able
to be other teaching reference. For the Writers or Arrangers, this paper can open their main to
the other concept or type of organizing and can help others to find some reference about
operation management.
Chapter 2

Discussion

2.1. Definition of Process Strategy


A process (or transformation) strategy is an organizations approach to transforming
resources into goods and services. The objective of a process strategy is to build a production
process that meets customer requirements and product specification within cost and other
managerial constraints.
The process selected will have a long term effect on efficiency and flexibility of
production as well as on cost and quality of the goods produced. Therefore the limitations of
a process strategy are at the time of the process decision.
So, Process strategy is the development of a long-term plan for using the major
resources of the rm for a high degree of compatibility between these resources and the
rms long-term corporate strategy. Operations strategy addresses very broad questions about
how these major resources should be congured to achieve the desired corporate objectives.
Some of the major long-term issues addressed in operations strategy include

2.2. Four Type of Process Strategy


1. Process Focus
Is when a production capability categorized around processes to assist low-volume,
high-variety production. A most important advantage of process focus is that permits for a
large degree of flexibility for the reason that products can move periodically between
processes, while repetitive focus is more prearranged, systematic and consequently less
flexible than process focus.

2. Repetitive Focus
Is essentially a customary assemblage line that utilizes modules that are organized
earlier than production set in motion.

3. Product Focus
Is a high-volume, low-variety process where the amenities are controlled around the
products. In order for a firm to efficiently use this caption it must operate with high levels of
consistency and massive quality controls yardsticks.

4. Mass Customization
Is the most complex of the four processes and present operations manager to make
inspired and destructive use of organizational resources to put up the unique requirements of
their customers.
PROCESS FOCUS REPETITIVE PRODUCT MASS
FOCUS FOCUS CUSTOMIZATIO
N
Low volume, High-volume, High-volume,
Modular
High variety low-variety high-variety

Small quantity, large Long runs, standardized Large quantity, small Large quantity, large
variety of products product, from modules variety of products variety of products

General purpose Special equipment aids Special purpose Rapid change over on
equipment in use of assembly line equipment flexible equipment

Flexible operators
Broadly skilled Modestly trained Operators less broadly
trained for
operators employees skilled
customization
Many instructions Reduced training and
Few work orders and Custom orders require
because of change in number of job
job instructions many instructions
jobs instructions

Raw material high Raw material low Raw material low


JIT techniques used
relative to product value relative to product value relative to product value
WIP driven down by
WIP high relative to WIP low relative to
JIT techniques used JIT, kanban, lean
output output
production

Units move slowly thru Movement measured in Units move swiftly thru Goods move swiftly
plant hours & days facility thru facility

Finished goods made to Finished goods made to Finished goods made to Finished goods made to
order, not stored frequent forecasts forecast, then stored order

Scheduling complex Scheduling relatively


Scheduling
and concerned with Scheduling based on simple, concerns
sophisticated to
trade-off between building models from a establishing sufficient
accommodate
inventory, capacity, and variety of forecasts rate of output to meet
customization
customer service forecasts

Fixed costs dependent Fixed costs high;


Fixed costs low, Fixed costs high,
on flexibility of variable costs must be
variable costs high variable costs low
facilities low

2.2. Technology Selection


At the end of the decision of the strategy specific process requires the decision about
the equipment and technology that will be used the decision about it became complicated
because there are many alternative method on all the functions of the operation. But the most
important made guidelines is the concept of organising and grouping pupils' namely ability to
respond with a little sacrifice of time, fees consumer value. This can be interpreted the
equipment used is the modular can moved and cheap.

The types of Technology Selection in Operation Management, is divided into 2 kind,


there are:

Technology of Production
The development of technology is needed to improve productivity and can be applied
in all sectors that produce goods and services. In the adjacent will be introduced nine
technology area namely:

1. Engine technology
many operational activities using the machine for cutting drilling, grind setting. In
the era of computerization is now has many created how to control the new engine
using CHIP computer such as CNC machine (computer numerical control ) namely
machinery that has a computer and its own memory.

2. Automatic Identification Systems (AISs) and RFID


New equipment from the CNC machine to ATM automatic teller machine)
controlled with digital electronic signals. The making of digital data is done
through Computerization including with AISs (Automatic Identification System)
that help move data into electronic form which is easy to manipulated.

3. Control the process


control the process is the use of information technology to control the physical
process.
Follows the system control the process work in some way, but that usually :
Sensors collect data
Device read data on a certain period, perhaps once every minute or every second
Measurements converted to a digital signal that is sent on a digital computer.
computer Program read the file , then analyzes data.
Output produced there in various forms, including messages on the computer
screen or printer, signals that command the motor to change the settings of the
valve, alert light or sirens, SPC diagram, or specific scheme .

4. The Vision System


Vision System is the use of the video camera and technology in the role of the
examination. As an example, vision system used to check the fries so that the
defect can be known when potatoes are in production line.
5. Robot
Robot is a machine flexible, have the ability to change the human energy work
through electronic nerves running a number of motor switches. As an example,
Ford uses a robot to perform 98% welding process in the car-car.
6. Automated Storage and Retrieval Systems (ASRSs)
is the warehouse controlled by the computer that puts the components
automatically from the fratricidal toward specific place in the warehouse. This
system is used to be used in the retail trade distribution facilities such as Wal-Mart,
Tupperware containers, and Benetton. This system is also used in the area of the
preparation and testing of manufacturing companies.

7. Automated Guided Vehicle (AGVs)


is the chariot guided and electronically controlled used to move materials. AGV
also used in offices to deliver food.

8. Flexible Manufacturing Systems (FMSs)


is a system that uses an automatic work cells that are controlled by electronic
signals from a computer mother.

9. Computer Integrated Manufacturing (CIM)


Is a manufacturing system where CAD, FMS, inventory control, warehouse and
shipping combined. The extension of the Flexible Manufacturing System (FMS).
FMS and CIM reduces the difference between the production with low volume high
variations with high volume production with low variations. Information
Technology makes FMS and CIM overcome increasing variations that
simultaneously with increasing volume.

Technology of Service
The rapid technology development also occurred in the service sector, which
regarding electronic diagnostic equipment on a car workshop, health equipment until
the equipment used at the airport in flight services. The following table which presents
examples of technology in the field of services.

Service Industry Example


Economy Industry Debit cards , ATMs , Internet Stock Trading
School Industry Electronic bulletion boards , Online journals
Restaurants Wireless orders from waiters to kitchen , Robot butchering
Communication Electronic Publishing , Interactive TV
Hotels Electronic Check In/Out , Electronic Key/Lock System
Wholesale/Retail Trade E-Commerce , bar coded data , Electronic Communication

2.3. Concept of Capacity

Capacity refers to a system's potential for producing goods or delivering services over
a specified time interval. Capacity planning involves long-term and short term considerations.
Long-term considerations relate to the overall level of capacity; short-term considerations
relate to variations in capacity requirements due to seasonal, random, and irregular
fluctuations.

Capacity is the ability of a systems potential for producing goods or delivering


services over a specific time interval. The capacity decisions within a company are very
important because they help determine the limit of output and provide a major insight to
determining operating costs. Basic decisions about capacity often have long term
consequences and this chapter explains the ramifications of those choices. When considering
capacity planning within a company, three key inputs should be considered. The three inputs
are the kind of capacity to be determined, how much of the products will be needed, and
when will the product be needed.

2.4. Capacity Planning


The most important concept of capacity planning is to find a medium between long
term supply and capabilities of an organization and the predicted level of long term demand.
Organizations also have to plan for actual changes in capacity, changes in consumer wants
and demand, technology and even the environment. When evaluating alternatives in capacity
planning, managers have to consider qualitative and quantitative aspects of the business.
These aspects involve economic factors, public opinions, personal preferences of managers.

Types of capacity:

1. Fixed capacity: The capital asset (Building and equipments) the company will
have at a particular time is known as the fixed capacity. They cannot easily
changed within the intermediate time range. Capacity represents an upper limit to
the internal capacity, that the company concentrates can use in its effort to meet
demand.

2. Adjustable capacity: It is on and the size of the workforce, the number of hours
per week they work, the number of shifts and the extent of sub-contracting

3. Design capacity: It is the planned rate of output of goods and services under
normal full-scale operating conditions. It is also known as installed capacity. It
sets the maximum limit to capacity and servers to judge the actual utilization of
capacity.

4. System capacity: It is the maximum output of a specific product or product-mix


that the system of workers and machines i.e., the productive system is capable of
producting as an integral whole. It is less than or equal to the design capacity of
the individual components because the system may be limited.

5. Potential capacity: It is that, which can be made available within the decision
horizon of the top management

6. Immediate capacity: It is that, which can be made available within the current
budgeted period.
7. Effective capacity: Is the capacity, which is used within the current budget period.
It also known as practical capacity or operating capacity.

8. Normal capacity or Rated capacity: This is the estimated quantity of output or


production, that should be usually achieved as per the estimation done by the
industrial engineering department.

9. Actual or Utilized capacity: This is the actual output achieved during a particular
time period.

Classification of capacity planning:

1. Long term and Short term capacity planning

Long term or long range capacity is planning is concerned with accommodating


major changes that affect the overall level of the output in the longer run. Major
changes could be decisions to develop new product lines expand existing facilities
and construct or phase out production plants.

Shortm term or short range capacity planning is concerned with responding to


relatively intermediate variations in demand. In the short term planning horizon,
capacity concerns involve the fluctuations in demand caused by seasonal or
economic factors.

2. Finite and infinite capacity planning

In operations planning, two conflicting constraints are time and capacity. If time is
fixed by the customers required delivery date or processing cycle. It is possible to
accept time as the primary constraint and plan backwards to accommodate these
times. In such cases, planning backwards to infinite capacity offers a potential
solution to the problem. On the other hand, if the processing time is not a
constraint in cases where products are produced to stock and sell, it is simpler to
use a forward plan based on finite capacity.

Three key inputs to capacity planning:


1.The kind of capacity that will be needed
2.How much capacity will be needed
3.When will it be needed
*Accurate forecasts are critical to the planning process

Factors affecting capacity planning:

1.Controlable factors such as amount of labor employed, facilities installed, machines,


tooting, shifts worked per day, days worked per week, overtime work, sub-
contracting, alternative routing of work, preventive maintenance and number of
production set-ups
2.Less controllable factors are absenteeism, labour-performance, machine break-
down, material shortage, scrap and rework and unexpected problems such as strike,
lockout, fire accidents etc.

Steps in the Capacity Planning Process :


1. Estimate future capacity requirements
2. Evaluate existing capacity and facilities and identify gaps
3. Identify alternatives for meeting requirements
4. Conduct financial analyses of each alternative
5. Assess key qualitative issues for each alternative
6. Select the alternative to pursue that will be best in the long term
7. Implement the selected alternative
8. Monitor results

Chapter 3

Summary
3.1. Conclusion

Operations Strategy is a process (or transformation) strategy is an organizations


approach to transforming resources into goods and services. The objective of a process
strategy is to build a production process that meets customer requirements and product
specification within cost and other managerial constraints.
The process selected will have a long term effect on efficiency and flexibility of
production as well as on cost and quality of the goods produced. Therefore the limitations of
a process strategy are at the time of the process decision.
In Operations Strategy, there are any 4 kinds ,there are :
Process Focus
Repetitive Focus
Product Focus
Mass Customization

Strategy specific process requires the decision about the equipment and technology
that will be used the decision about it became complicated because there are many alternative
method on all the functions of the operation. But the most important made guidelines is the
concept of organising and grouping pupils' namely ability to respond with a little sacrifice of
time, fees consumer value. This can be interpreted the equipment used is the modular can
moved and cheap.

The types of Technology Selection in Operation Management, is divided into


2 kind, there are :
o Technology of Production
o Technology of Service

The Concept Capacity is the ability of a systems potential for producing goods or
delivering services over a specific time interval. The capacity decisions within a company are
very important because they help determine the limit of output and provide a major insight to
determining operating costs.

Classification of capacity planning:


1.Long term and short term capacity planning
2.Finite and infinite capacity planning

There are Three key inputs to capacity planning:


1. The kind of capacity that will be needed
2. How much capacity will be needed
3. When will it be needed
8 Steps in the Capacity Planning Process :
1. Estimate future capacity requirements
2. Evaluate existing capacity and facilities and identify gaps
3. Identify alternatives for meeting requirements
4. Conduct financial analyses of each alternative
5. Assess key qualitative issues for each alternative
6. Select the alternative to pursue that will be best in the long term
7. Implement the selected alternative
8. Monitor results

9 Types of capacity planning:


1. Fixed capacity
2. Adjustable capacity
3. Design capacity
4. System capacity
5. Potential capacity
6. Immediate capacity
7. Effective capacity
8. Normal capacity or rated capacity and actual or utilized capacity