Samenvatting Operations Management - Quantitive Introduction to Business (EBC1036) - Summary of course from UM
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Course
Quantitive Introduction to Business (EBC1036)
Institution
Maastricht University (UM)
Book
Operations Management
Summary of Operations Management. The summary is from edition 14. Not everything from every chapter is summarised. Just the things mentioned in class are important and the sections we should have read according to the tutor.
TEST BANK for Operations Management, 14th Edition by William J. Stevenson, Verified Chapters 1 - 19, Complete Newest Version
TEST BANK for Operations Management, 14th Editio by William Stevenson, Verified Chapters 1 - 19, Complete Newest Version
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Econometrics and Operations Research
Quantitive Introduction to Business (EBC1036)
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1.1 Introduction
-Goods are physical items that include raw materials, parts, subassemblies.
-Services are activities that provide some combination of time. Location, form, or psychological
value.
-The collective success or failure of companies’ operations functions has an impact on the ability of
a nation to compete with other nations an don the nations economy.
-Ideal is supply = demand
-Three basic functional areas: finance, marketing and operations.
-Operations management = the management of systems or processes that create good/ services.
-Supply chain = the sequence of organizations that are involved in producing and delivering.
→ You can outsource it (external) or do it yourself (internal).
→ the transformation of the products is optimal by feedback en control.
→ goods-service combination is a continuum.
-Value-added = the difference between the cost of inputs and the value of the outputs.
1.2 Production of goods versus providing services
-Goods are tangible (aanraakbaar) output, services implies an act.
-Comparisons between manufacturing and service: degree of customer contact, lobar content of
jobs, uniformity of inputs, measurement of productivity, quality assurance, inventory, wages and
ability to patent. (The management of these also have a lot of similarities.)
1.3 Why learn about operations management
-Every aspect of business affects or is affected by operations.
-Having a better understanding of how companies work.
-Lead time = the time between ordering a good or service and receiving it (marketing needs this
information from operations).
1.5 Process management
-A process consists of one or more actions that transform inputs into outputs.
-Three categories of business processes: upper-management processes (entire organisation) +
Operational processes (make up the value stream) + Supporting processes (support the core
processes).
-Basic sources of variation: variety of goods/ services being offered + structural variation in
demand + random variation (can’t be influenced) + Assignable variation (caused by defectives).
1.7 Operations management and decision making
-Operations management professionals make a number of key decisions that affect the entire
organization.
-A model is a abstraction of reality (simplified): physical model (look like their real-life
counterparts) + schematic model (more abstract than physical) + mathematical (most abstract).
-Managers use these because: less expensive, easy, increasing understanding, etc.
-Limitations of models: missing information + can be incorrectly applied + no guarantee.
-Managers can use: quantitative approaches (mathematical optimal solution) + performance
metrics + trade-offs (con against pro) + decision in degree of customization + looking at the big
picture (system = interrelated parts that must work together) + establishing priorities (Pareto
phenomenon = a few factors account for a high percentage of the occurrence of some event(s).
2.2 Competitiveness
-Competitiveness: How effectively an organization meets the wants and needs of customers
relative to other that offer similar goods or services.
-It influences the wants/ needs, price/ quality and advertising and promotion.
,-A lot of areas containing operations and influence on competitiveness are interrelated.
-Chief reasons for organizations failing: neglecting operations strategy, failing SWOT, to much
emphasis on short term and product and service design, neglecting investments in capital an HR,
bad communications, failing considering wants/ needs.
2.3 Mission and strategies
-Mission: the reason for the existence of an organization.
-Mission statement: states the purpose of an organization.
-Goals: provide detail and scope of the mission.
-Strategies: plans for achieving organizational goals. (Overall: entire organization, functional: relate
to each of the functional areas + tactics: methods and actions used to accomplish strategies.)
-Tree main basic strategies: low cost + responsiveness + differentiation from competitors.
-Core competencies: The special attributes or abilities that give an organization a competitive edge.
-SWOT: (strengths(i), weaknesses(i), opportunities(e) and threats(e)).
-Michael Porter’s five forces model: treats of: new competition, substitutes, power of customers,
suppliers and intensity of competition.
-Order qualifiers: characteristics that customers perceive as minimum standards of acceptability to
be considered as a potential for purchase.
-Order winners: characteristics of an organization’s goods or services that cause it to be perceived
as better than the competition.
-Environmental scanning: the monitoring of events and trends that present threats or
opportunities for a company.
-External factors: economy, political, legal, technology, competition, customers, etc.
-Internal factors: HR, facilities and equipment, financial, products and services, etc.
-Supply chain strategy specifies how the supply chain should function to achieve those goals.
-Sustainability strategy: strategy devoting attention to sustainability goals.
-Global strategy: relates to where the products/ services are made and where the are sold.
2.7 Productivity
-Productivity is a measure of the effective use of resources, usually expressed as the ratio of output
to input. (output/input)
-You have partial (1 input), multifactor (multiple input) and total measures (all the input).
-Productivity is used to track performances, is a aggregate (to compare) measure.
-Process yield: ratio of output of good product to the quantity of raw material input.
-Biggest factors affecting productivity: methods, capital, quality, technology and management.
Further there are still a lot factors affecting, which you might not have influence on (equipment
breakdowns), but you could also outsource to improve it.
-Positive factors: developing measures + look at most critical part + establish reasonable goals, etc.
5.1 Introduction
-Capacity = the upper limit or ceiling on the load that an operating unit can handle.
-Overcapacity: costs are too high, undercapacity: doesn’t meet demand.
5.3 Defining and measuring capacity
-Difficulties in measuring arises when you need to choose how to measure (money, quantity etc).
, -Design capacity = the maximum designed service capacity or output rate. (ideal conditions)
-Effective capacity = design capacity minus allowances such as personal time, equipment
maintenance, delays due to scheduling problems, and changing the mix of products.
-Efficiency = actual output / effective capacity x 100%
-Utilization = actual output / design capacity x 100%
5.4 Determinants of effective capacity
-Main factors which have impact on the capacity: facilities + product and service factors + process
factors + human factors + policy factors + operational factors + supply chain factors + external.
5.5 Strategy formulation
-Three primary strategies: leading (anticipating capacity) + following (builds capacity when exceeds
current demand) + tracking (similar to following but adds in small increments).
-Capacity cushion: extra capacity used to offset demand uncertainty.
5.6 Forecasting capacity requirements
-Long term considerations; demand over time horizon and converting into capacity requirements.
-Short term needs are less concerned with cycles, trends, and seasonal things.
-When time intervals are too short to have seasonal variations in demand, the analysis can often
describe the variations by probability distributions.
-Irregular variations are the most troublesome, difficult or impossible to predict.
-Units of capacity needed: processing time needed/ processing time capacity per unit.
-Misjudgements on capacity lead to substantial losses.
5.7 Additional challenges of planning service capacity
-Three important factors in planning service capacity are: need to be near customers + inability to
store services + degree of volatility of demand.
-Speeds of delivery becomes major concern in service capacity planning.
-Demand management strategies can be used to offset capacity limitations.
5.8 Do it in-house ore outsource it?
-Factors of outsourcing: available capacity + expertise + quality considerations + the nature of
demand + the costs + risks.
5.9 Developing capacity strategies
-Enhance development of capacity strategies: design flexibility into systems + take stage of life
cycle into account (grown or small company) + take a big picture (look at all factors that will
change) (Bottleneck operation: an operation in a sequence of operations whose capacity is lower
than that of the other operations) + Prepare to deal with capacity ‘chunks’ (capacity increase will
be bigger increase than necessary at first) + attempt to smooth out capacity requirements +
identify the optimal operating level (economies of scale: if the output rate is less than the optimal
level, increasing the output rate results in decreasing average unit costs/ opposite diseconomies) +
choose a strategy if expansion is involved.
5.10 Constraint management
-Constraint: something that limits the performance of a process or system in achieving its goals.
Categories of constraint: market, resource, material, financial, supplier, knowledge, policy.
5.11 Evaluating alternatives
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