OM 3080 A VERY DETAILED Study Guide 2024/2025

OM 3080 A VERY DETAILED Study Guide 2024/2025 Chapter 1- Introduction - ANSWER-B= Book C= In class What is Operations Management? - ANSWER-B: It's the set of activities that creates value in the form of goods and services by transforming inputs into outputs. C: Operations Management is related to making decisions to manage the transformation process that converts inputs into desired finished goods or services. Process: Inputs- transformation process- outputs- customer Operations - ANSWER-C: The operations function of an organization is the set of activities that creates value in the form of goods and services by transforming inputs into outputs. Outputs: good (tangible) and services (intangible) Inputs: energy, material, labor, capital, and information. What are the functions is an organization? - ANSWER-B: 1. Marketing; which generates demand, or at least takes the order for the product or service (nothing happens until there is a sale) 2. Production/Operations; crates, produced , and delivers the product. 3. Finance/Accounting; tracks how well the organization is doing, pays the bills, and collets the money. What is a supply chain? - ANSWER-B: is a global network of organizations and activities that supply a form with goods and services Example; Soft Drink SC; 1. Farmer 2. Syrup producer 3. Bottler 4. Distributor 5. Retailer What do operations managers do? - ANSWER-B: The management process consists of planning, organizing, staffing, leading, and controlling. Operations managers apply this management process to the decision they make in the OM function. 10 strategic OM decisions requires; - ANSWER-B: planning, organizing, staffing, leading, and controlling. 1. Design of goods and services; - ANSWER-Defines much of what is required of operations in each of the other Om decisions. 2. Managing quality and statistical process control; - ANSWER-Determines the customer's quality exceptions and establishes policies and procedures to identify and achieve that quality. 3. Process and capacity strategies; - ANSWER-Determines how a good or service is produced and commits management to specific technology, quality, Human Resources, and capital investments that determine much of the firm's basic cost structure. 4. Location strategies: - ANSWER-Requires judgments regarding nearness to customers, suppliers, and talent, while considering costs, infrastructure 5. Layout strategies: - ANSWER-Requires integrating capacity needs, personnel levels, technology, and inventory requirements to determine the efficiency flow of materials, people, and information. 6. Human Resources, job design and work measurement: - ANSWER-Determines how to recruit, motivate, and retain personnel with the required talent and skills. 7. Supply chain management: - ANSWER-Decides how to integrate the supply chain into the firm's strategy, including decisions that determine what is to be purchased, from whom, and under what conditions. 8. Inventory management: - ANSWER-Considers inventory ordering and holding decisions and how to optimize them as customer satisfaction, supplier capability, and production schedules are considered. 9. Scheduling: - ANSWER-determines and implements intermediate- and short-term schedules that effectively and efficiently use both personnel and facilities while meeting customer demands. 10. Maintenance: - ANSWER-Requires decisions that consider facilities capacity, production demands, and personnel necessary to maintain a reliable and stable process. The heritage of operations management (5 people) - ANSWER-B: 1. Eli Whitney (1800) 2. Frederick W. Taylor (1881) (Father of scientific management) 3. Henry Ford and Charles Sorensen (1913) 4. Walter Shewhart (1924) 5. W. Edwards Deming (1950) 1. Eli Whitney (1800) - ANSWER-early popularization of interchangeable parts, which was achieved through standardization and quality control. He was able to command a premium price because of their interchangeable parts for the contract he signed with the U.S government for 10,000 muskets. 2. Frederick W. Taylor (1881) (Father of scientific management) - ANSWER-contributed to personnel selections, planning and scheduling, motion study, and ergonomics. Henry L. Grantt and Frank and Lillian Gilbreth were is colleagues who were the first to systematically seek the best way to produce. Taylor also beloved management should assume more responsibility for: 1. Matching employees to the right job 2. Providing the proper training. 3. Providing proper work methods and tools 4. Establishing legitimate incentives for work to be accomplished 3. Henry Ford and Charles Sorensen (1913) - ANSWER-They combined what they knew about standardized parts with the quasi-assembly lines and added a revolutionary concept, where men stood still and materials moved. 4. Walter Shewhart (1924) - ANSWER-He combined his knowledge of statistics with the need for quality control and provided the foundations for statistical sampling in quality control. 5. W. Edwards Deming (1950) - ANSWER-He believed, just like Frederick Taylor, that management must do more to improve the work environment and processes so that quart can be improved. Operations for goods and services - ANSWER-B: Both have quality standards, are designed and produced on a schedule that meets customer demands, and are made in a facility where people are employed C: Manufactures produce tangible product, services often intangible. Operations activities are often very is similar. Distinction is not always clear. Pure Goods: Food products, chemicals, mining Core Goods: Appliances, Automobiles, Fast-Foos Core Services: Hotels, Airlines, Fine-dining Pure Services: Hospital, Investment, Law firms Characteristics of services - ANSWER--Intangible -Produced and consumed simultaneously -Unique -High customer interaction -Inconsistent product definition -Often knowledge based -Services dispersed -Quality may be hard to evaluate -Reselling is unusual Characteristics of goods - ANSWER--Tangible -Product can usually be kept in inventory -Similar products produced -Limited customer involvement in production -Product standardized -Standard tangible product tends to make automation feasible -Product typically produced at a fixed facility -Many aspects of quality for tangible products are easy to evaluate -Product often has some residual value Example of services - ANSWER-Services; including repair and maintenance, government, food, and lodging, transportation, insurance, trade, financial, real estate, education, legal, medical, entertainment, and other professional occupations. Productivity importance - ANSWER-The creation of goods and services requires changing resources into goods and services. The more efficiently we make this change, the more productive we are and the more value is added to the goof or services provided. Improving productivity means improving efficiency. Inputs-transformation-outputs Productivity - ANSWER-B: is the ratio of outputs (goods and services) divided by the inputs (resources, such as labor and capital) Productivity Variables - ANSWER-C: 1. Labor: Contributes about 10% of the annual increase 2. Capital: Contributes about 38% of the annual increase 3. Management: Contributes about 52% of the annual increase Measurement of productivity - ANSWER-is an excellent way to evaluating a country's ability to provide an improving standard of living for its people. Single factor Productivity (1-1) example - ANSWER-= units produced/ input used For example, if units produced= 1,000 and labor-hours used is 250, then: Single-factor productivity= 1,000/250 = 4 units per labor-hour Multifactor productivity (1-2) example - ANSWER-=Output/ labor+Material+Energy+Capital+Miscellaneous Too Long (Section 1.5 pg. 15) Chapter 4 - ANSWER- Forecasting - ANSWER-B: is the art and science of predicting future events. It may be based on demand-driven data, such as customer plans to purchase, and projecting them into the future. C: Underlying basis of all business decisions -Production -Inventory -Personnel -Facilities Forecast Importance - ANSWER-B: The forecast is the only estimate of demand until actual demand becomes known. Effective planning in both the short run and long run depends on a forecast of demand for the company's products. Forecasting time Horizons - ANSWER-B: Time horizons fall into three categories: 1. Short-range forecast 2. Medium-range forecast 3. Long-range forecast Short-range forecast - ANSWER-B: This forecast has a time span of up to 1 year but is generally less than 3 months. It is used for planning purchasing, job scheduling, workforce levels, job assignments, and production levels. C: Up to 1 year; usually less than 3 months. Job scheduling, worker assignments. Medium-range forecast - ANSWER-B: Also known as intermediate forecast, generally spans from 3 months to 3 years. It is useful in sales planning, production planning and budgeting, cash budgeting, and analysis of various operating plans. C: 3 months to 3 years. Sales and production planning, budgeting long-range forecast - ANSWER-B: Generally, 3 years or more in time span, long-range forecasts are used in planning for new products, capital expenditures, facility location or expansion, and research and development. C: 3+ years. New product planning, facility location. Medium and Long-range forecast are distinguished from short-range forecast by three things: - ANSWER-B: 1. Intermediate and long-range forecast deal with more comprehensive issues supporting management decisions regarding planning and products, plants, and processes. 2. Short-term forecast usually employs different methodologies than longer-term forecasting; moving average, exponential smoothing, and trend extrapolation. 3. Short-range forecasting tends to be more accurate than longer-range forecasts. Factors that influence demand change every day. Seven Steps in forecasting - ANSWER-B: C: 1. Determine the use of the forecast 2. Select the items to be forecast 3. Determine the time horizon of the forecast 4. Select the forecasting model(s) 5. Gather the data 6. Make the forecast 7. Validate and implement results 1. Determine the use of the forecast - ANSWER-Disney uses park attendance forecast to drive decisions about staffing, opening times, ride availability, and food supplies. 2. Select the items to be forecast - ANSWER-For Disney World, there are six main parks. A forecast of daily attendance at each is the main number that determines labor, maintenance, and scheduling. 3. Determine the time horizon of the forecast - ANSWER-Is it short, medium, or long term? Disney develops daily, weekly, monthly, annual, and 5-year forecasts. 4. Select the forecasting model(s): - ANSWER-Disney uses a variety of statistical models that we shall discuss, including moving averages, econometrics, and regression analysis. It also employs judgmental, or nonquantitative, models. 5. Gather the data needed to make the forecast - ANSWER-Disney's forecasting team employs 35 analysts and 70 field personnel to survey 1 million people/businesses every year. Disney also uses a firm called Global Insights for travel industry forecasts and gathers data on exchange rates, arrivals into the U.S., airline specials, Wall Street trends, and school vacation schedules. 6. Make the forecast. 7. Validate and implement the results - ANSWER-At Disney, forecasts are reviewed daily at the highest levels to make sure that the model, assumptions, and data are valid. Error measures are applied; then the forecasts are used to schedule personnel down to 15-minute intervals. 3 Facts (realities) of the forecast system - ANSWER-B: C: 1. Forecasts are seldom perfect 2. Most forecasting techniques assume that error is some underlying stability in the system. 3. Both product family and aggregated forecasts are more accurate than individual product forecasts. Forecast Approaches (Book) - ANSWER-B: Two general approaches; 1. Quantitative forecasts: use a variety of mathematical models that rely on historical data and/or associative variables to forecast demand. 2. Qualitative forecasts incorporate such factors as the decision maker's intuition, emotions, personal experiences, and value system in reaching a forecast. Forecast Approach (Class) - ANSWER-C: Qualitative; Used when situation is vague and when data are limited, unavailable, or not currently relevant. -New Products -New technology Involves intuition, experience, depends in skill and experience of forecaster(s) Quantitative Methods; Used when situation is 'stable' & historical data exist -Existing products -Current technology Involves mathematical techniques Qualitative Methods - ANSWER-B: 1. Jury of executive opinion 2. Delphi method 3. Sales force composite 4. Market survey 1. Jury of Executive Opinion - ANSWER-B: The opinions of a group of high-level experts or managers, often in combination with statistical models, are pooled to arrive at a group estimate of demand. C: Group of senior management executives who are knowledgeable about their markets, competitors, and the business environment collectively develop the forecast 2. Delphin Method - ANSWER-B: There are three different types of participants in the Delphi method: decision makers, staff personnel, and respondents. 1. Decision makers usually consist of a group of 5 to 10 experts who will be making the actual forecast 2. Staff personnel assist decision makers by preparing, distributing, collecting, and summarizing a series of questionnaires and survey results. 3. The respondents are a group of people, often located in different places, whose judgments are valued. C: Group of internal and external experts are surveyed during several rounds in terms of future events and long-term forecasts of demand, to develop a forecast 3. Sales force composite (Book but not in class) - ANSWER-B: Each salesperson estimates what sales will be in his or her region. These forecasts are then reviewed to ensure that they are realistic. Then they are combined at the district and national levels to reach an overall forecast. 4. Market Survey - ANSWER-B: This method solicits input from customers or potential customers regarding future purchasing plans. It can help not only in preparing a forecast but also in improving product design and planning for new products. C: Forecasts are developed from the results surveying customers on future purchasing needs, new product ideas and opinions. 5. Historical Analogy - ANSWER-C: Forecast of a new product is developed from an existing product which "looks like" the new product in terms of the expected demand pattern for sales of the product. What is a time series - ANSWER-B: 1. Set of evenly spaced numerical data: Obtained by observing response variable at regular time periods 2. Forecast based only on past values: Assumes that factors influencing past and present will continue influence in future Time series types: - ANSWER-1. Trend 2. Seasonality 3. Cycles 4. Random Trend - ANSWER-B: is the gradual upward or downward movement of the data over time. Changes in income, population, age distribution, or cultural views may account for movement in trend. C: -Persistent, overall upward or downward pattern -Changes due to population, technology, age, culture, etc. Seasonality - ANSWER-B: is the data pattern that repeats itself after a period of days, weak, months, or quarters. 6 common seasonality patterns: -Week-Day -Month-week -Month-Day -Year-Quarter -Year-Month -Year-Week C: -Regular pattern of up and down fluctuations. -Due to weather, customs, etc. -Occurs within a single year. Cycles - ANSWER-B: are patterns in the data that occur every several years. They usually tied into the business cycle and rate of major importance in short-term business analysis and planning. Random variations - ANSWER-B: are "blips" in the data caused by chance and unusual situations. They follow no discernible pattern, so they cannot be predicted. C: -Erratic, unsystematic, 'residual' fluctuations -Due to random variation or unforeseen events -Short duration and non-repeating Monitoring and Controlling Forecasts - ANSWER-B: One way to monitor forecasts to ensure that they are performing well is to use a tracking signal. A tracking signal is a measurement of how well a forecast is predicting actual values. Tracking signal - ANSWER-B: Positive tracking signal indicate that demand is greater than forecast Negative tracking forecast signals mean that demand is less than forecast. Chapter 5 - ANSWER- Goods and services selection - ANSWER-B: Great products are the keys to success. Anything less than an excellent product strategy can be devastating to a firm. Many companies focus on only on producing a few products and then concentrate on them. Although the term products often refer to tangible goods, it also refers to offerings by services organizations. Importance of Product design - ANSWER-C: -Must be able to make it (process); technology, availability of resources -Must have the capacity -Must deliver a quality product or service -Must decide inventory policies. 3 Strategies for New Product Introduction - ANSWER-C: -Differentiation: the products in a way that they customer receives as adding value -Low cost: Achieve maximum value with minimum cost -Rapid response: Fast response to customer. Product Life Cycle - ANSWER-B: 1. Introduction 2. Growth; Cost of development and production 3. Maturity 4. Decline; Sales revenue Life Cycle phase - ANSWER-1. Introductory Phase 2. Growth Phase 3. Maturity Phase 4. Decline Phase Introductory Phase - ANSWER-1. Research 2. Product development 3. Process modification and enhancement 4. Supplier development Growth Phase - ANSWER-Product design has begun to stabilize, and effective forecasting of capacity requirements is necessary. Adding capacity or enhancing existing capacity to accommodate the increase in product demand may be necessary. Maturity Phase - ANSWER-Competitors are established. So high-value, innovative production may be appropriate. Improved cost control, reduction in options, and a paring down of the product line may be effective or necessary for profitability and market share Decline Phase - ANSWER-Dying products are typically poor products in which to invest resources and managerial talent. Unless dying products make some unique contribution to the firm's reputation or its product line or can be sold with an unusually high contribution, their production should be terminated. Product design criteria - ANSWER-1. Understanding the customer 2. Economic change 3. Sociological and demographic change 4. technological change 5. Other changes brought through market practice 1. Understanding the customer - ANSWER-Many commercially important products are initially thought of and even prototyped as users rather than producers. 2. Economic change - ANSWER-Brings increasing levels of affluence in the long run but economic cycles and price changes in the short run. 3. Sociological and demographic change - ANSWER-May appear in such factors as deceasing family size. This trend alters the size preference for homes, apartments, and automobiles 4. Technological Change - ANSWER-Makes possible everything from smartphones to iPads to artificial hearts 5. Political and legal change - ANSWER-brings about new trade agreements, tariffs, and government requirements 6. Other changes brought through Market Practice - ANSWER-Professional standards, suppliers, and distributors QFD - ANSWER-B: (Quality function deployment) refers to both (1) determining what will satisfy the customer and (2) translating those customer desires into the target design C: House of quality, a graphic technique for defining the relationship between customer desires and product (or services) Elements of QFD 1. Identifying what the customer wants; Customer attributes 2. Identify how the good or service will satisfy customer wants- Engineering characteristics 3. Relate customer wants to product how's 4. Identify relationship between the firm's how's 5. Develop importance rating-Relative importance of customers attributes 6. Evaluate competing products - Competition 7. Determine the desirable technical attributes. - Target Values and relative positioning? Value Analysis/ Value Engineering - ANSWER-C: -Purpose is to simplify products and processes -Objective is to achieve better performance at a lower cost while maintaining all functional requirements defined by the customer Manufacturability and value engineering - ANSWER-B: Activities are concerned with improvement of design and specifications at the research, development, design, and preproduction stages of product development. In addition to immediate, obvious cost reduction, design for manufacturability and value engineering may produce other benefits. These include: -Reduced complexity of the product. -Reduction of environmental impact. -Additional standardization of components. -Improvement of functional aspects of the product. -Improved job design and job safety. -Improved maintainability (serviceability) of the product. -Robust design. Robust design (Only book) - ANSWER-B: means that the product is designed so that small variations in production or assembly do not adversely affect the product. Modular Designs (Only book) - ANSWER-Products designed in easily segmented components. Modular designs offer flexibility to both production and marketing. Operations managers find modularity helpful because it makes product development, production, and subsequent changes easier. CAD (Only book) - ANSWER-B: (Computer-aided design) is the use of computers to interactively design products and prepare engineering documentation. CAD uses three-dimensional (3D) drawing to save time and money by shortening development cycles for virtually all products. One extension of CAD is design for manufacture and assembly (DFMA) software, which focuses on the effect of design on assembly. CAD systems have moved to the Internet through e-commerce, where they link computerized design with purchasing, outsourcing, manufacturing, and long-term maintenance. CAM - ANSWER-(Computer-aided manufacturing) refers to the use of specialized computer programs to direct and control manufacturing equipment. When CAD information is translated into instructions for CAM, the result of these two technologies is CAD/CAM. The combination is a powerful tool for manufacturing efficiency. Fewer defective units are produced, translating into less rework and lower inventory. More precise scheduling also contributes to less inventory and more efficient use of personnel. Value Analysis (Only book) - ANSWER-seeks improvements that lead to a better product, a product made more economically, or a product with less environmental impact. The techniques and advantages for value analysis are the same as for value engineering, although minor changes in implementation may be necessary because value analysis is taking place while the product is being produced. Chapter 7 - ANSWER- Product-Process Matrix (Better with picture) - ANSWER-1. Process focus- Low volume, high variety (one or few units per run (allows customization)) Ex. Hospitals, Restaurants, machine, print 2. Repetitive focus- Repetitive process, changes in Module (Modest runs, standardized modules) ex. Autos. motorcycles, home appliances 3. Product focus- High volume, low variety, continuous process. ex. Commercial baked goods, steel, glass, beer, Frito-Lay 4. Mass customization High variety (one or few units per run (allows customization)), High Volume ex. difficult to achieve but huge rewards Process strategies (In class only) - ANSWER--Job shop (Process focus) 1. Similar equipment or functions are grouped together. 2. Processing many different jobs at the same time in groups 3.Furniture, machine shops, health care -Assembly line (Repetitive) 1.Also called mass production process 2.Producing large volumes of a standard product for a mass market 3. Automobiles, televisions, personal computers, fast food -Continuous process (product focus) Producing very high 1.Producing very high-volume commodity products 2.Complete Automated and operates 24 hours/day 3. Refined oil, treated water, chemicals, paints Lean Operation - ANSWER-B: supply the customer with exactly what the customer wants when the customer wants it, without waste, through continuous improvement. Lean operations are driven by workflow initiated by the "pull" of the customer's order C: Lean Manufacturing kills two major "traditional" concepts: •the push method-replacing it with the pull method • the batch and economic lot principles-replacing them, wherever possible/feasible, with the flow method (batch of 1) 7+1 Wastes - ANSWER-1. Over-production 2. Waiting- defect equipment 3. Transport- transporting materials or products 4. Over-processing-taking unneeded steps 5. Inventory 6. Movement- unnecessary movements 7. Defects-Scrap or bad quality 8. Unused expertise- Not using expertise of knowledge JIT - ANSWER-Just-in-time s an approach of continuous and forced problem solving via a focus on throughput and reduced inventory Push method - ANSWER-C: In a push production method, workpieces manufactured by a previous process is transferred ("forced transfer") to the next process irrespective of its readiness to receive and process those workpieces. This normally generates WIP- work in progress. Pull method - ANSWER-In a pull production method, next process down "pulls" from the previous process just what needed, only when needed, and in the quantity needed. Nothing happens upstream unless something happens downstream. TPS - ANSWER-B: The Toyota Production System (TPS), with its emphasis on continuous improvement, respect for people, and standard work practices, is particularly suited for assembly lines. Kanban - ANSWER-B: is a Japanese word for card. In their effort to reduce inventory, the Japanese use systems that "pull" inventory through work centers. They often use a "card" to signal the need for another container of material—hence the name kanban. A kanban is simply a signal to make a specific quantity of a specific item, with a specific due date. Advantage of Kanban’s - ANSWER--When the producer and user are not in visual contact, a card can be used; otherwise, a light, flag, or empty spot on the floor may be adequate. -Usually, each card controls a specific quantity of parts, although multiple card systems are used if the work cell produces several components or if the lot size is different from the move size. T-he kanban cards provide a direct control (limit) on the amount of work-in-process between cells. 5Ss - ANSWER-1. Sort/segregate: Keep what is needed and remove everything else from the work area. 2.Simplify/straighten: Arrange and use methods analysis tools to improve workflow and reduce wasted motion. 3.Shine/sweep: Clean daily; eliminate all forms of dirt, contamination, and clutter from the work area. 4.Standardize: removed variations from the process by developing standard operating procedures and checklists; good standards make the abnormal obvious. 5.Sustain/ self-discipline: Review periodically to recognize efforts and to motivate to sustain progress. Continues.....