Chap 1: OM - Definition -> Explanation -> Application - Operation managers must address every activities, they are engaged

- Definition -> Explanation -> Application - Operation managers must address every activities, they are engaged with
1.Definition on the value
- Operations Management: the management of the processes that produce or deliver goods and services added chain performance measurement
- Input -> Transformation Process -> Output
- Inputs: Information, Labour, Materials, Equipment, Money (capital)
- Outputs: Goods or Services (satisfy customers)
- Transforming Resources: Facilities, Staff
- Transformed Resources: Materials (Manufacturing), Information (Accountants; Market Research; Libraries), Customers
(Hairdresser; Hotel; Airline; Hospital; Entertainment)
2. The important role of POM

Input examples: Output examples: Transformation process: a) Value added objectives:

- Producing to target, to cost meet customers’requirements at low operational cost
-Land -Goods: automobiles, clothing, - Cutting, drilling, grinding, -Quality – doing things right – error free process reduce defective products, re-works, quality cost, increase customers
-Labor (physical, intellectual) computers, TV, foods, beverages, milling,... satisfaction
-Raw materials (energy, water, shoes, textbooks, furniture,...) - Mixing, packing, canning, - Speed or time compression – customer responsiveness, lead time & elimination of delay, bottlenecks & inventory reduce
chemical, metals, woods, -Services: health-care, car-repair, - Transporting, storing, teaching, wastes in operations
fibers,...) car-wash, banking, education,... advising,... b) How to determine CORE COMPETENCIES?
-Equipment (machines,
computers, trucks, vans, tools,...)
- Facilities (factories, offices,
warehouse, stores...)

- Production is transformation process from INPUT (materials, labors, machines, management, capital) to OUTPUT (goods or
services).
- Transformation process is efficient process when the value of output greater than the total cost of input, in this case, this
process makes value added.

4. POM decisions

- Marketing: Customer need for goods or service,

- Finance: Budgeting, analysis of investment proposals
- Provision of funds,
- Operations: Making goods or providing services,

-Others functions support operations/manufacturing:

+) Marketing: forecast customers’ demand,
- Productivity: output/input
feedbacks, orders.
=> Productivity increases when firms become more efficient, downsize, expand, retrench, or achieve breakthroughs.
+) Finance: analysis investment proposals, budget,
investment funds, stockholders’ requirement
+) Personnel: training programs, hired or fired
employees (recruitment)
+) Purchasing: meets material requirement planning,
tools, equipment to operations.

5. The effects of the product/service life cycle

3. POM strategies
- Knowledge Transfer – Education, Training

• Manufacturing Process Type: Mass Processes: automobile plant, TV factory, food processes, DVD production. Thousands * Ideas from Staff
variants of car with different engine size, colour, extra equipment but does not affect the basic processes of production. - Salesperson or customer service who meet customers and know what they like and do not like.
Service Process Types: Mass service * Ideas from Research and Development (R&D)
Layout: Cell, Product - Time and Investment
2. Concept Screening
• Manufacturing Process Type: Continuous Processe: Petrochemical refineries, electricity utilities, steel making, paper making, Evaluate concepts by assessing the worth or value of design options
continuous water treatment process * Feasibility of the design option – Can we do it?
Service Process Types: Mass service - Do we have the skills, quality of resources?
Layout: Product - Do we have the organisational capacity?
- Do we have the financial resources to cope with this option?
2. Process Mapping * Acceptability of the design option – Do we want to do it?
Chap 2: Process Design and Layout Types, Process Mapping - Definition: Describing processes in terms of how the activities within the process relate to each other also called: Process - Does the option satisfy the performance criteria which the design is trying to achieve?
1.Process types: Volume-Variety Blueprinting, Process Analysis - Will our customers want it?
- Process Mapping Symbols: The symbols that are used to classify different types of activity; they usually derive either from - Does the option give a satisfactory financial return?
information systems flow charting or scientific management. * Vulnerability of each design option – do we want to take the risk?
- Do we understand the full consequences of adopting the option?
- Being pessimistic, what would go wrong if we adopt the option?
- What would be the consequences of everything going wrong?
3. Preliminary Design
Specifying the components of the Design
* Reducing Design Complexity – Keep it Simple!
- Standardisation: Product, Service, Processes; variety reduction
- Commonality: Using common elements across the range of products/services e.g. iPhone, Cars, AirBus
- Modularisation: Designing standardised ‘Sub-components’ of a product or service which can be put together in different
ways. e.g. Education, Computers, Holiday packages
4. Evaluation & Improvement
- Quality Function Deployment (QFD): A formal articulation of how the company sees the relationship between the
requirements of the Customer (the whats) and the Design characteristics of the New Product (the hows)
- Integrates the ‘House of Quality’ and the ‘Voice of the
Customer’
5. Prototyping & Final Design
Too Risky to launch a product or service before testing it out!
*Computer-Aided-Design (CAD)
*Alpha and Beta Testing
Alpha Testing: Internal process where the developers or manufacturers examine the
product for errors (not opened to market or potential customers)
Beta Testing: External process ‘pilot test’ what takes place in the ‘real world’ before
commercial production (i.e. Field testing, pre-release testing, customer validation,
Chap 3: Management & Operation customer/user acceptance testing)
I.Product & Service Design
II.Planning & Control
(4 differents layouts) 1. Planning and Control
• Manufacturing Process Type: Project Processes: Well-defined start and finish, long time between starting different jobs. Uncertainties in Supply and Demand
Process map = complex. E.g. Shipbuilding, Construction, Movie production • Planning: (Long term) Supply products and services to meet the demands of its customers on the operation
Service Process Types: Professional service • Control: The process of coping with (Short term) changes to the plan and the operation
Layout: Fixed, functional 2. Activities of Planning and Control
• Manufacturing Process Type: Jobbing Processes: High variety and low volume, share resources, e.g. Specialist tool-makers,
furniture restorers, bespoke tailors, printing tickets for local events.
Service Process Types: Sevice shop
Layout: Functional, Cell
1. Concept Generation
• Manufacturing Process Type: Batch Processes: Produce more than one, fairly repetitive, e.g. Machine tool manufacturing,
* Ideas from Customers – Marketing
frozen food, components parts for mass-produced assemblies of automobiles
- Identifying new product or services opportunities
Service Process Types: Sevice shop
- Use market research tools for gathering data from customers to test out ideas
Layout: Functional, Cell
* Listening to Customers
- Ideas from customers on a day-to-day basis, or from complaints
* Ideas from Competitor Activity
 - Speed of response to customer – Build up inventory to avoid queuing
- Dependability – affected by how close demand levels to capacity
- Flexibility – Volume Flexibility enhanced by surplus capacity, Respond to
unexpected demand
4. Process of Managing Capacity
- Measure total Capacity and Demand. Understand changes to Demand and Capacity The Process of Managing Capacity
- Determine the operations base level of Capacity
- Identify and Select methods of coping with mismatches between Demand and Capacity
- Understand the consequences of different capacity decisions
5. Measuring Capacity
Generally Capacity is measured in terms of:
3. The 5S – Input Measures: these are usually used for low volume more flexible processes (A pizza restaurant may measure it in
Sort (Seiri) Straighten (Seiton) Shine (Seiso) Standardise Sustain (Shitsuke) available tables)
a)Loading: The amount of work allocate to each part of the operation (How much to do) (Seiketsu) – Output Measures: these are usually used for high volume processes (A car company may measure capacity in vehicles per
Finite Loading – Set a limit Eliminate what is Position things in Keep things clean Maintain Develop a year (NISSAN UK is 450,000 per annum)
• Possible to limit the Load: Doctor / Hairdresser not needed and such a way that and tidy; no refuse cleanliness and commitment and
• Necessary to limit the Load: Safety reason for finite number of people, weight of luggage keep what is they can be easily or dirt in the work order – perpetual pride in keeping to
• The Cost of limiting the load is not prohibitive: Limited Edition needed. reached whenever area. neatness. standards.
Infinite Loading – No limit, try to cope with it - Eliminate all they are needed. - Everything is - To prevent - To make 5Ss a
• Not possible to limit the Load: A&E in Hospital unnecessary items - Arrange items so clean, neat, tidy and setbacks in the first habit in the way we
• Not necessary to limit the Load: Fast-food service - Unnecessary that they can be ready to use. 3 pillars (Sort, Set In do our day-to-day
• The Cost of limiting the load is prohibitive: Retail banking / Service refers to those found quickly by - Tools: Five-Minute Order and Shine) activities
b) Sequencing: The order of work in the operation (In what order?) things that are not Anybody, Shine, cleaning and - Tools: Best - Tools: 5-S
• Physical Constraints needed for current Anywhere, Inspection Practice contests, visual
• Customer Priority work. Anytime. Items checklists, checklist documentation and management
• Due Date should be easy to of activities needing sharing, SOPs boards showing 5-S
• First-in First Out (FIFO) find, easy to use maintenance (e.g. (Standard audit, 6. Understand the changes in Capacity & Demand
• Last-in First Out (LIFO) and easy to put the ‘5-second Operating slogans,handbooks, - Demand forecasting: is of central concern in Capacity Management
• Longest Operation Time (LOT) away. stapler’ test) Procedures) poka Yoke! - Predictable Variations: in demand may cause an operation some problems, but at least if demand variation is known, the
• Shortest Operation Time First (SOT) - Tools - Colour documented and (Mistake-proofing operation can plan for it.
c) Scheduling: Timetable of activities – Start -> Finish (When to do things?) Coding, Signboards, posted, Checklists & processes, using - Unpredictable Variations: in demand is significantly more difficult to deal with. it usually means having to keep some spare
• Gantt chart Labeling. job cycle charts. Automatic devices capacity in reserve to be deployed as and when it is needed and usually this is expensive.
d) Monitoring and Control: Detecting what is happening and if new plans / reactions are needed (Are activities going to or methods to avoid - A classic case: Ice-cream Sales
plan?) simple human +) a Hot summer and they are high
error.) +) a Cool summer and they are low

Chap 4: Capacity & Demand Management

1.Capacity Management
a) Capacity: The maximum level of value-added activity that an operation, or process, or facility is capable of over a period of
time.
b) Capacity Management: is basically the analysis, decisions and communications used
to balance. The capacity at a production or service point with the demand from customers (orders, visitors etc.).
2. Capacity Plans
- Long term which look at investment in new facilities and equipment
- Medium term which look at supply chain decisions, market demand and capacity constraints
- Short term which focuses on labour force, inventories, overtime budgets and other day to day decisions
3. Objective of Capacity Management
- Costs - affected by the balance between capacity and demand
Capacity > Demand = Under-utilisation of Capacity = High units cost
- Revenues – affected by the balance between capacity and demand
Capacity ≥ Demand = All demand is satisfied and no revenue lost -Maximum Capacity: is the maximum that can be achieved under ideal conditions. It can only be sustained for short periods,
- Working Capital – Build up finished goods inventory prior to demand and may rely on overtime, contract staff, extra
Demand is satisfied but the organisation has to fund the inventory shifts.
- Quality of Goods or Services – affected by Capacity Plan – -Effective Capacity:is the maximum output that a process can economically sustain under normal conditions. it may only be
Hiring temporary staff  Increase errors / defects single shift working, with minimal or no overtime

Step 4: Control quality against those standards

Chap 5: Inventory Management 1) Where in the operation should they check that it is conforming to standards?
1.Inventory / Stock - At the beginning
- Defi: The stored accumulation of material resources in a transformation system. 2) Should they check every service or product or take a sample?
Transformed Resources (Inventory Control): e.g. Stocks of Materials, Stocks of Information, Queues of customers in a theme - Might be dangerous to inspect everything
park • Capital- - Might destroy product or interfere service
Transforming Resource: e.g. Rooms in a hotel, Cars in a vehicle-hire firm - Can be time-consuming and costly
=>Inventory occurs in operations because the Timing of Supply and Demand do NOT always match. 3) How should the checks be performed?
2. Types of inventory - Statistical Process Control (SPC)
- Raw materials: purchased parts used in manufacturing other items Step 5: Find and correct causes of poor quality
- Work-in-Process (WIP): parts that are in the manufacturing process +) Type I errors: occur when a decision was made to do something and the situation did not warrant it.
- Sub-assemblies: manufactured parts that are partially completed and stocked in inventory +) Type II errors: occur when nothing was done, yet a decision to do something should have been taken as the situation did
- Finished goods: Items ready for sale to a customer indeed warrant it.
- MRO: Maintenance, Repair and Operation supplies. Step 6: Continue to make improvements
3. Function of inventory -Six Sigma – Recommends a particular approach of measuring, improving and managing quality and operations performance
generally.
+) Improvement Cycle: Plan-Do-Check-Act (PDCA): Plan -> Do -> Check -> Act
+) Total Customer Satisfaction (DMAIC) Six Sigma: Define -> Measure -> Analyse -> Improve -> Control
3. Four segments of Cost of quality
5. Cycle Inventory - Prevention Costs: Costs associated with preventing defects from occurring in the first place
-Cycle inventory = lot size/2 = Q/2 - Appraisal Costs: Costs associated with controlling quality to check to see if problems or errors have occurred during and after
» D= Annual demand of the product the creation of the product / service
» S= Fixed cost incurred per order - Internal Failures Costs: are failure costs associated with errors which are dealt with inside the operation
» C= Cost per unit - External Failures Costs: are failure costs associated with errors which go out of the operation to a customer
» h=Holding cost per year as a fraction of product cost
» H=Holding cost per unit per year =hC
» Q=Lot size
» n=Order frequency

4. Pareto’s rule

4. Statistical Process Control (SPC)

- SPC is concerned with checking a product or service during its creation. If there is reason to believe that there is a problem
with the process, then it can be stopped and the problem can be identified and rectified.
- Not just to make checks of a single sample but to monitor the quality over a period of time using
a) Process Capability
Chap 6: Quality Management - is a measure of the acceptability of the variation of the process. Cp is given by the ratio of the specification range to the
1.Defi natural variation of the process (i.e. ±3 Standard Deviations)
- Quality: Consistent conformance to customers’ expectations
- Conformance: There is a need to meet a clear specification. Ensuring a product/service conforms to specification is a key
operations task.
- Customers’ expectations: take the views of customers into account, which may be influenced by price.
2. Quality Management – Six steps
Step 1: Define the quality of the product or service
Step 2: Decide how to measure each quality
+) Variables: can be measured on a continuously variable scale – Length, Diameter, Weight, Time
+) Attributes: assessed by judgement and have two states – Right or Wrong, Works or Doesn’t work, Looks OK or Not OK
Step 3: Set quality standards
+) ISO 9000 – a set of worldwide standards that established the requirements for companies’ quality management system
+) ISO 14000 – International standard that guides environmental management systems and covers initial planning,
implementation and objective assessment