Production

 creation of goods and

services 4. Location strategy
 Where should we put the
Operations Management facility? On what criteria
 set of activities that create should we base the location
value in the form of goods decision?
and services by transforming
inputs into outputs 5. Layout strategy
 How should we arrange the
Marketing facility? How large must the
 generates demand facility be to meet our plan?

Production/Operations 6. Human resources and job

 creates the product design
 How do we provide a
Finance/Accounting reasonable work
 tracks how well the environment? How much can
organization is doing, pays we expect our employees to
bills, collects the money produce?

Role of Operations Managers 7. Supply-chain management

 Planning  Should we make or buy this
 Organizing component? Who should be
 Staffing our suppliers and how can we
 Leading integrate them into our
 Controlling strategy?

1. Design of goods and services 8. Inventory

 What good or service should  How much inventory of each
we offer? How should we item should we have? When
design these products and do we re-order?
services?
9. Scheduling
2. Managing quality  Are we better off keeping
 How do we define quality? people on the payroll during
Who is responsible for slowdowns? Which jobs do
quality? we perform next?

3. Process and capacity design 10. Maintenance

 What process and what  How do we build reliability
capacity will these products into our processes? Who is
require? What equipment responsible for maintenance?
and technology is necessary
for these processes? Eli Whitney
  in 1978, received
government contract to Labor
make 10,000 muskets  contributes about 10% of the
annual increase
 Showed that machine tools
could make standardized Capital
parts to exact specifications  contributes about 38% of the
annual increase
Frederick W. Taylor Management
 contributes about 52% of the
 “Father of Scientific
annual increase
Management”

Frank & Lillian Gilbreth

 further developed work
measurement methods
 Book & movie: “Cheaper
by the Dozen”, “Bells on
Their Toes”

Henry Ford
 in 1903, created Ford Motor
Company

W. Edwards Deming

 engineer and physicist

 Credited with teaching Japan
quality control methods in
post-WW2

Productivity
 Is the ratio of outputs (goods
and services) divided by the
inputs (resources such as
labor and capital)

Production
 is a measure of output only
and not a measure of
efficiency

Productivity Variables
 performance is documented,
(3) activity time estimates
are recorded, and (4) overall
project time is developed.

Three phases does the

management of projects PERT (Program Evaluation
Technique)
Planning - a project management
- goal setting, defining the
technique that employs three
project, team organization
time estimates for each
Scheduling activity
- relate people, money, and
supplies to specific activities CPM (Critical Path Method)
to each other - a project management
technique that uses only one
Controlling
time factor per activity
- monitor resources, costs,
quality and budget
AON (Activity-On-Node)
Project Organization - a network diagram in which
- In some firms a project nodes designated activities.
organization is developed to
make sure existing programs AOA (Activity-On-Arrow)
continue to run smoothly on
- a network diagram in which
a day-to-day basis while new
projects are successfully arrows designate activities.
completed. Also uses dummy activities.

WBS (Work Breakdown Dummy Activity

Structure)
- only uses in AOAs, they are
- defines the project by
dividing it into its major used to clarify the
subcomponents (or tasks), relationships among the
which are then subdivided arrows or activities
into more detailed
components, and finally into Critical Path Analysis
a set of activities and their - A process that helps
related costs.
determines a project
Gantt charts schedule.
- are a lost-cost means of
helping managers make sure Forward Pass
that (1) activities are - A process that identifies all
planned, (2) order of the early times (ES and EF).
Backward Pass
- An activity that finds all the
late start and late finish
times.

Slack Time
- Slack is the length of time an
activity can be delayed
without delaying the entire
project.

Total Slack
- Time shared among more
than one activity. Delaying
either activity by 1 week
causes not only that activity,
but also the other activity, to
lose its slack.
 Sales Force Composite
- A forecasting technique
based on salesperson's
estimates of expected sales.

Forecasting
- The art and science of Consumer Market Survey
predicting future events. - A forecasting method that
solicits input from customers
Economic Forecasts or potential customers
- Planning indicators that are regarding future purchasing
valuable in helping plans.
organizations prepare
medium to long-range Moving Averages
forecasts. - A forecasting method that
uses an average of the n
Technological Forecasts most recent periods of data
- Long-term forecasts to forecast the next period.
concerned with the rates of
technological progress. Naive Approach
- A forecasting technique
Demand Forecasts which assumes that the
- Projections of a company's demand in the next period is
sales for each time period in equal to demand in the most
the planning horizon. recent period.

Jury Of Executive Opinion Exponential Smoothing

- A forecasting technique that - A weighted-moving-average
uses the opinion of a small forecasting technique in
group of high-level managers which data points are
to form a group estimate of weighted by an exponential
demand. function.

Delphi Method Smoothing Constant

- A forecasting technique using - The weighting factor used in
a group process that allows an exponential smoothing
experts to make forecasts.
 forecast, a number between functional relationships
0 and 1. between independent and
dependent variables.
MAD (Mean Absolute Deviation)
- a measure of the overall Standard Error of the Estimate
forecast error for a model. - A measure of variability
around the regression line -
MAPE (Mean Absolute Percent its standard deviation.
Error)
- The average of the absolute Coefficient Of Correlation
differences between the - A measure of the strength of
forecast and actual values, the relationship between two
expressed as a percent of variables.
actual values.
MSE (Mean Squared Error)
- The average of the squared Coefficient of Determination
differences between the - A measure of the amount of
forecasted and observed variation in the dependent
values. variable about its mean that
is explained by the
Trend Projection regression equation.
- A time-series forecasting
method that fits a trend line Multiple Regressions
to a series of historical data - An associative forecasting
points and then projects the method with more than one
line into the future for independent variable.
forecasts.
Tracking Signal
Seasonal Variations - A measurement of how well a
- Regular upward or downward forecast is predicting actual
movements in a time series values.
that tie to recurring events.
Bias
Cycles - A forecast that is consistently
- Patterns in the data that higher or consistently lower
occur every several years. than actual values of a time
series.
Linear-Regression Analysis
- A straight-line mathematical Adaptive Smoothing
model to describe the
 - An approach to exponential
smoothing forecasting in
which the smoothing
constant is automatically
changed to keep errors to a
minimum.

Focus Forecasting
- Forecasting that tries a
variety of computer models
and selects the best one for a
particular application.

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