Unit 1 Review Assignment

Directions: Please address the questions below.

Chapter 1

1. In your own words, define operations management and explain why business managers
should study operations management.
Operations management is is an area of management concerned with overseeing, designing, and
redesigning business operations in the production of goods and/or services. It involves the
responsibility of ensuring that business operations are efficient in terms of using as little
resources as needed, and effective in terms of meeting customer requirements. It is concerned
with managing the process that converts inputs (in the forms of materials, labor, and energy) into
outputs (in the form of goods and/or services).

The definition of operation management is clear, and concise. If a business manager wants to run
a successful business they would need to learn and understand the importance of operations, and
running them. They would have to learn to change policies, make decisions in production and
make changes so that their business can be more efficient and maximize profit. They must be
able to learn techniques and skills in order to manage inputs and outputs of the company; this can
all be learned in operations management.

2. Name and briefly describe the 10 decision areas of operations management.

1. Goods and service design. Design of goods and design defines much of the transformation
process. The factors of cost, quality and human resources must be made during the stage.
Operation management of product and services is also different because due to different
characteristic and tangible / intangible feature.

2. Quality. Customer has a very high quality standards and operations management decision in
quality must be clear and strict for its members to understand and comply. It must set a quality,
standard and operating procedure to meet customers’ high expectation.

3. Process and capacity design. Manufacturing of physical products may have higher
importance on process and capacity design than services operation. Operation management
(product) should decide what process it, what type of technology and to what extent, human
resources, quality and maintenance that determines its basic cost structure. Services operation
decision on this area is much simpler and it can determine by customers who directly involved in
the process. For example, customer will ask tailor to design specific fashion clothes. Capacity
design issue is critical for services because it will try to reduce waiting time and avoid lost of
sales due to insufficient capacity. For manufacturing capacity design is based on firm’s financial
capability, forecast for future and market demand.

4. Location can be an area for operation management to decide and with globalization of
business, operation managers too must think global. For physical goods, location selection can be
determined by pools of qualified human resources, technology, raw material, access to market
and government policy. For services as it is direct to customers, the location is determined by
market accessibility or near to customer as possible.

5. Layout design. Material flow, process selection technology used, capacity needs, workers
needs, inventory requirement, and capital will influence the decision for layout design. For
services such as hotels, beside capacity needs layout also will enhance its attributes and features
to the customers.

6. Human Resources and Job Design – Employees is the integral part in the total system
design. Operation management must set a policy to set labor standards to ease transition of skills,
improvement of knowledge, skills and abilities, build a balance work and life quality in an
effective cost target. For services one extra area operation management should touch, which is
customers relationship that they are dealing directly.

7. Supply Chain Management – Decisions that have to take place of what to produce, what
material to buy, from where, how is the cost and how is the delivery from supplier to the final
end customers in on-time delivery and minimum cost possible. It is more critical in production of
goods than services.

8. Inventory – Decisions on how and where the inventory level to keep long term customers
satisfaction, suppliers, material availability for not to disrupt the production, human resources
needed for this purpose and important the holding cost from financial perspective. Goods
production are more concern because manufacturer may kept raw material, in progress work
order and final goods while services is not critical as it is directly produce and consume
simultaneously.

9. Scheduling – Efficient way of allocation, control and management of materials, capital goods
and human resources to efficiently produce the final goods from the input available. Schedules
are more formal in goods production with short, medium and long term planning to
accommodate customers demand. For services the demand is more direct and volatile and often
concern on human resources and KSA availability to meet current customer’s needs.

10. Maintenance – Decision must be made regarding the desired level of reliability, stability and
systems must be established by management to maintain that reliability and stability.

Chapter 2

3. Operations managers constantly seek ways to reduce costs while providing value to its
customers. “Going global” may reduce costs by using lower priced labor and
manufacturing facilities. NAFTA, the North American Free Trade Agreement, is a free
trade agreement between Canada, Mexico and the United States. The WTO, World Trade
Organization, promotes world trade by lowering tariffs or taxes on the flow of goods
among countries and between borders.
 a. Research one of these two trade agreements (NAFTA or WTO). Give a brief
outline of the agreement.
The World Trade Organization (WTO) is an organization that intends to supervise and
liberalize international trade. The organization officially commenced on January 1, 1995 under
the Marrakech Agreement, replacing the General Agreement on Tariffs and Trade (GATT),
which commenced in 1948. The organization deals with regulation of trade between participating
countries; it provides a framework for negotiating and formalizing trade agreements, and a
dispute resolution process aimed at enforcing participants' adherence to WTO agreements which
are signed by representatives of member governments and ratified by their parliaments Most of
the issues that the WTO focuses on derive from previous trade negotiations.
b. Describe the effects of the agreement on one type of operation or industry here in
the USA.
The system has been helpful in opening foreign markets for U.S. exports. Further, the dispute
settlement mechanism “curbs the protectionist instincts of U.S. trade policymakers and so
underpins prosperity” by acting as a counterweight to less productive but politically influential
domestic industries.

c. What are your predictions for future operations management under this
agreement? If you were the United States, how would you amend this agreement?

I think that WTO is good, in that it promotes free trades with all countries, but I also think that it
not in favor of smaller poorer countries. The WTO supposedly operates on a consensus basis,
with equal decision-making power for all. In reality, many important decisions get made in a
process whereby poor countries' negotiators are not even invited to closed door meetings, and
then 'agreements' are announced that poor countries didn't even know were being discussed.
Many countries do not even have enough trade personnel to participate in all the negotiations or
to even have a permanent representative at the WTO. This severely disadvantages poor countries
from representing their interests. Likewise, many countries are too poor to defend themselves
from WTO challenges from the rich countries, and change their laws rather than pay for their
own defense. If I could I would admen the WTO to ensure that all countries have a chance, even
the smaller more undeveloped ones, so that everyone has a fair chance in trade. I think
ultimately in the future smaller countries will catch on and want change, and the WTO will have
to abide by the changes.

4. Operations management must support the company mission and overall strategy.

a. Define mission and strategy and describe how these two serve different purposes.
A mission is the purpose or rationale for an organizations existence. A strategy is the outline of
how the organization expects to achieve its mission and goals. The mission is different then
strategy in that it comes before the strategy. The mission defines what the organization is to be,
and the strategy is the guiding tool to reach the mission. In simple terms, a strategy is the
ingredients and the mission is the finished food product.
 b. Select a firm. Research the firm through the internet or library. Identify the
mission of the firm and the strategy that supports the mission.
Wal-Mart is a big company that everyone knows. There mission is to provide quality products
for a low price. There strategy has to been to have control of their suppliers, Wal-Mart has some
un oradox practices they will have suppliers and request lower wholesale prices, and if they don’t
not abide they will drop the supplier. When Wal-Mart does get lower whole prices for the goods
mainly from “China” they are able to offer us lower prices. Wal-Mart has had much success in
sailing its products so many suppliers abide by the demands for lower prices. Ultimately it
works Wal-Mart’s mission which is to provide us quality products for a lower cost than any
other business.

Chapter 3

5. Product/service life cycles are shrinking. Time to market is reduced. However, customer
demands are increasing. Project management plays a key role in the production process.

a. Identify and describe the three phases of project management.

Planning involves defining objectives of the project, listing of tasks

or jobs that must be performed, determining gross requirements for
material, equipment and manpower and preparing estimates of costs and
durations for the various jobs or activities to bring about the
satisfactory completion of the project.

Scheduling is the allocation of resources. These resources, in

conceptual sense, are time and energy, but in practical sense are time,
space, equipment and effort applied to material. More specifically ,
scheduling is the mechanical process of formalizing the planned
functions , assigning the starting and completion dates to each part (or
activity ) of the work in such a manner that the whole work (or project )
proceeds in timely manner.

Controlling- is the function that must monitor the quality of all

phases of the work, to meet the universal goal of building the project
as specified. Monitor time by checking physical progress against the
schedule. Monitor costs through a cost-control system based on the
project budget.
 b. Explain the concept of “time” in project management.

Time means everything. After the scheduling process it is important to know your estimated
time for each assignment. Time estimates drive the setting of deadlines for delivery and planning
of projects, and hence will impact on other people’s assessment of your reliability and
competence as a project manager. Time estimates often determine the pricing of contracts and
hence the profitability of the contract/project in commercial terms.

6. Explain the difference between AOA (Activity-on-Arrow) and AON (Activity-on-Node)

networks? Which would you use if you were a project manager?
I would use AON. AON is more popular then AOA for project management because of the
following reasons, AON project networks are considerably easier to construct than AOA project
networks. AON project networks are easier to understand than AOA project networks for
inexperienced users, including many managers. AON project networks are easier to revise than
AOA project networks when there are changes in the project. AOA is used mainly to show what
it takes to reach the start of finish of the project.

7. Using your own place of work (or that of a close friend or family member), respond to
the following:

a. Give an example of a situation in which project management is needed or is

currently being used.
The Army usually before deployment tends to want to do such things as family
picnics and family trips, to ensure that the troops spend as much time as possible
with family members. The issue with this is that it usually takes money which
needs to be raised.

b. Identify any project management techniques that are used. (PERT, CPM, , AOL,
AON)
When we begin this process I myself and other leaders have used first had the
AON technique in fact in the diagram below I will show you an example of the
type of graph we drew when we were planning trips before deployment. We first
ask for donations from each solider in the company, then we use the money to
start a fundraiser BBQ where we can double or triple our profit, then after that the
commander of the company match what we make times 2 the end result is a all
expense paid trip for every soldier and 4 family members to a amusement park.
 $3000 our
money
$9000
Grossed
income for
all expense
Raise money threw Fundraising BBQ
Donations, hand MONEY FROM DONATIONS Raise $3000 paid trip to
Commander
ins, and pay for a FOR FUNRAISER BBQ
money x2 theme park
day off. $1000 $6000

8. Define the term critical path. Explain why critical path does not mean “shortest path.”
Critical path or the CMP- stands for Critical path method, is an algorithm for scheduling
a set of project activities. It is an important tool for effective project management. CPM
is commonly used with all forms of projects, including construction, aerospace and
defense, software development, research projects, product development, engineering, and
plant maintenance, among others The sequence of activities that must be completed on
schedule for the entire project to be completed on schedule. This is the longest duration
path through the work plan. For example if an activity on the critical path is delayed by
two days, then entire project will be delayed by two days, unless another activity on the
critical path can be accelerated by two days.

9. As a project manager, would you consider crashing a noncritical activity? Explain why
you would or why you would not and give an example of such an activity.
Depending upon how fast I need the project done if the noncritical activity would offer me
more time than it would be important to crash it. For example if I was trying to build a house
and it needed to be done in 6 weeks. If I had decided to include a door that needed to be
ordered because of its design, but it was my decision of what type of door need to be put on
the house. If we were at week 5 and the door took two weeks to come, I would have to crash
that activity and use another door that has a faster shipping time, in order to complete the
project on time.

Chapter 4

10. Forecasting is a critical function in operations management.

a. Explain how demand forecasting affects different operational systems.

Demand forecasting -is the activity of estimating the quantity of a product or service that
consumers will purchase. Demand forecasting involves techniques including both informal
methods, such as educated guesses, and quantitative methods, such as the use of historical sales
data or current data from test markets. Demand forecasting may be used in making pricing
decisions, in assessing future capacity requirements, or in making decisions on whether to enter a
new market. Demand forecasting has effects on human resources, as far as hiring, training and
laying off workers, all may depend on the anticipated demand for workers. Capacity as well, if
capacity is inadequate the resulting shortages my lead to losing consumer base, it is important to
forecast the demand of space needed beforehand. Supply- Chain management, knowing what is
needed and when it is needed is part of demand forecasting, with supply-change management it
is important to have the amount that might be demanded, and to be able to acquire it at a low
price to ensure profit.

b. Identify and briefly describe the qualitative approach and the quantitative
approach.

Quantitative approach forecast are forecast that employ mathematical modeling to forecast
demand, such as historical data and models. It is especially useful in planning and control.

The qualitative approach to project prioritization considers short- and long-term goals, resource
availability and the possible benefits of the project to the organization. Decisions and actions
made by top management to facilitate the priority-setting process should be known to all
employees to ensure their cooperation and understanding.