Operation Management

Introduction.
Operration Management Operations function Operrations Manager Business Analysis Operations as a Transformation Process

Types of Transformation Process Physical Transformational Exchange Physiological Psychological Informational Operations in the Organization Core functions o Marketing Functions o Product and service Functions o Technical Functions o Information system Functions Support functions o Accounting and Finance Functions o Human recourse Functions The Processes Hierarchy Network Operations Process 4 Vs of Analysis. Volume Variety Variation Visibility

Operations management Responsibilities Direct responsibilities Indirect Broad Activities of Operations Management o Understanding the operations objectives o Developing an operations strategy o Designing the operations products, services and processes o Planning and controlling the operation o Improving the performance of the operation o Green Management

Performance Objectives
Quality Objective Speed Objective Dependability Objective Flexibility Objective o Types of Flexibility Product or Service Flexibility Mixed Flexibility Volume Flexibility Delivery Flexibility Cost Objective

Strategy
What is Strategy Strategos (latin word) Strategic decisions o Simple decision versus. Total pattern of decisions Levels of Strategy Corporate strategy Business strategy Functional strategy Operations strategy Definition and role Operations versus Operational Content and process os operations strategy Roles of operations strategy Implement strategy Support strategy Drive strategy Four-stage model of operations contributions Hayes and Wheelwright o Internal neutrality o External neutrality o Internally supportive o Externally supportive Perspectives on operations strategy. (4 perspectives) Top-Down perspective (orthodox view) o Form corporate level to functional level of strategy Bottom-Up perspective o Emergent strategies o Deliberate strategies Market- requirements perspective o Competitive factors Order wining versus qualifying factors o Plc influence on performance objectives Operations resources perspective o Resources constraints and capabilities o Intangible resources o Structural and instructural decisions The process of strategy formulation Defining a primary risk task Assessing core competencies Determine order winners and order qualifiers Position the firm

Decision Analysis
The Decision Process in Operations

Define problem and influencing factors Establish decision criteria Select decision-making tool (model) Identify and evaluate alternatives using decision-making tool (model) Select best alternative Implement decision Evaluate the outcome

The Decision-Making Process Quantitative Analysis Logic Historical Data Marketing Research Scientific Analysis Modeling

Qualitative Analysis Emotions Intuition Personal Experience and Motivation Rumors

Terminology

Quantitative Methods of Decision Analysis

Decision Analysis Techniques

Break-even Analysis Preference Matrix Decision Analysis in Uncertainty

Decision Analysis in Risk Decision Analysis Decision Theory Decision Analysis in Certainty

Simple Decision Tree Decision Tree Complex Decision Tree

Decision-Making Environments Decision making under uncertainty Complete uncertainty as to which state of nature may occur

 Decision making under risk Several states of nature may occur Each has a probability of occurring Decision making under certainty State of nature is known Forecasting What is Forecasting? basis of all business decisions Production Inventory Personnel Facilities

Forecasting Time Horizons Short-range forecast Medium-range forecast Long-range forecast

Types of Forecasts Economic forecasts Technological forecasts Demand forecasts

Forecasting Process 1. 2. 3. 4. Determine the use of the forecast Select the items to be forecasted Determine the time horizon of the forecast Select the forecasting model(s) i. ii. Quantitative Model Qualitative Model

5. 6. 7.

Gather the data Make the forecast Validate and implement results

Quantitative Approaches Time-series Model Trend Cyclical Seasonal Random Nave Approach Moving Averages Exponential Smoothing Trend Projection Associative Model Regression Correlation Qualitative Approaches Jury of expert opinions Delphi method Sales force composite Consumer market survey Capacity Planning Design and System Capacity Design Capacity System/Effective Capacity Actual output Utilization and Efficiency Utilization = Actual output/Design capacity

Efficiency = Actual output/Effective capacity Capacity Strategies 1. Long-Term Capacity Strategies 2. Multiple Products Phasing in Capacity Phasing-out Capacity

Short-term Capacity Strategies Inventories Backlog Employment Level Subcontracting Process design

Break-Even Analysis Decision Trees and Capacity Decision Net Present Value (NPV)