Operations Final Review

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Operations Final Review
2012-04-21 16:47:40
Operations Final Review

Operations Final Review
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  1. Ways to reduce capacity waste to increase capacity (4)
    • 1. Eliminate non value add activities
    • 2. Avoid defects and re-work
    • 3. Reduce set up loss - batch processes
    • 4. Move work to nonbottleneck resources.
  2. Service process improvement (3):
    • 1. Decrease arrival rate or increase # of servers
    • 2. Make appointments to syncrhonize available processing capacity with demand
    • 3. Increase buffer capacity to reduce blocking arrivals
  3. Safety inventory is used to ensure both customer service measures (2)
    • 1. Cycle Service Levels
    • 2. Fill Rate requirements
  4. Ways to better manage wait times (4)
    • 1. Safety capacity (additional servers)
    • 2. Decrease variability (appointments)
    • 3. Improve synchonization
    • 4. Increase buffer capacity (bigger, nicer wait room)
  5. To reduce processing time (5):
    • 1. Process simplification
    • 2. Worker specilization (specific tasks that can be performed quickly)
    • 3. Technology/automation - barcode scanning
    • 4. Process standardization
    • 5. Limit employee turnover for more consistent processing times.

    Ex. - online boarding passes for flight + check in (24 hours online)
  6. To reduce variability (service) - 2:
    • 1. Reduce arrival variability - scheduling/appointments
    • 2. Reduce processing time variability - limit variety (standardization)
  7. Reduce Variability (manufactoring) - 3
    Simplification (fewer parts, fewer varieties) - fewer defects

    Standardization (standard parts, processes) - reduces chances for errors

    Mistake proofing - reduces chance for human errors (data integriy checks, drop downs in excel)
  8. Analysis of variability (4)
    • 1. pareto charts
    • 2. Histograms - Bar chart of frequency of observerd peformance measure
    • 3. Run chart - measure of process performance over period of time
    • 4. Multi vari chart
  9. CPFR - Collaborative Planning Forecasting and Replenishment
    Working with customer's data and include it in forecast to better forecast demand.
  10. Bullwhip effect causes (3)
    • order batching
    • demand signal processing
    • price fluctuations (low price = buy a lot now)
  11. Counteract Bullwhip effect (4)
    • 1. Reduce info flow time
    • 2. Reduce economies of scale
    • 3. CPFR
    • 4. VMI (coordinate repleneshiment and forecasting)
  12. Six Sigma - DMAIC
    Define, Measure, Analyze, Improve, Control
  13. Lean (4)
    1. Remove waste (non value add activities) from process2. Reduce processing/cycle times3. Minimize Cost4. Improves utilization of scarce resources
  14. Six Sigma (4)
    • 1. Minimize variation
    • 2. Data driven
    • 3. DMAIC
    • 4. Goal = Tight process, meet customer expectations.
  15. Performance Measures - Financial Peformance
    Difference between value of outputs and cost of production/delivery to MEET CUSTOMER EXPECTATIONS

    • * Absolute performance (revenue, cost, etc.)
    • * Performance releative to Asset Utilization (ROA, ROI)
    • * Survival strength (Cash flow)

  16. Performance Measures - External Performance
    Providing goods that meet/excede customer expectations (cost, response time, variety, quality)

    McDonalds vs Ruth's Chris

  17. Peformance Measures - Internal Performance
    Must correlate between financial and external performance measures

    • * Defined defect goal
    • * 3rd party logistics held to damage allowance

    Productivity goals should meet customer expectations within budget constraints.
  18. Operations Frontier
    Shows how firms operate in the competive product space (responsiveness vs cost efficiency)

    Firms that operate on the operations frontier are most effective and best in class
  19. Strategic Positioning
    Position a firm wants to occupy within the competitive product space
  20. Corporate Strategy - Business Strategy - Function Strategy
    Corporate Strategy - Businesses firm will compete in and how resources will be allocated to each business

    Business Strategy - Defines scope of each division in terms of product attributes and market segments it will serve (competitive analysis of industry)

    Function Strategy - Define marketing, operations, finance.
  21. Strategic Fit
    Alignment of strategic position and the competencies of its proces architecture and managerial policies (day to day mgmt)

    i.e. low cost operation can be both efficient and effective - i.e.e Walmart.
  22. Flow Time
    On average how much time does a typical flow unit spend within the process boundaries?

  23. Flow Rate
    On average, how many flow units pass through the process per unit of time

    i.e. how many seats per hour
  24. Classifications of Inventory (5)
    • 1. Cycle Stock - inventory created through raw material/transporation
    • discounts (volume discounts justify addit. inventory levels)

    2. WIP - flow units within a process. production to co-pack for final assembly

    3. Goods in Transit (air transport faster, but more expensive)

    4. Seasonal stock - raw material availability (fruits, vegies), transport constrains (river during winter), holidays

    5. Safety stock - Minimizes stock out potential - build for uncertainty (policial unrest (mid east for fuel), labor disputes, etc.)
  25. Inventory Costs - Order/Setup Costs
    Cost of placing order beyond the actual prodcut costs (info systems, facilities needed, reviewing inventory levels, etc.)
  26. Just in Time inventory mgmt (JIT) - 6 things
    • 1 Material arrives just when needed
    • 2 Good for high volume, predicable demand products
    • 3 Need very reliable supply chain
    • 4 Productivy improvements
    • 5 Space utiliziation improvements
    • 6 Remove waste
  27. Inventory Turns
    How many times you flow inventory through process

    Higher = better (turning inputs into sold outputs)
  28. Ways to Shorten Critical Path
    • Work in Parallel
    • Work Smarter
    • Do it right the first time
    • Work faster
  29. Direct Observation (flow time measurement)
    • Observe process over predetermined/extended period of time
    • Select random flow units
    • Measure flow time from entry to exit
    • Compute average of flow times
  30. Little's Law (flow time measurement)
    Average Inventory = Throuhgput x Flow Time

    • Observe process over predetermined/extended period of time
    • Select random flow units
    • Measure actual inventory within boundaries of each time point
    • Compute average inventory
  31. Short flow times are good because (4):
    • 1. For customer's, less wait = more value
    • 2. Short delivery time = more cash flow
    • 3. Reduction of inventory
    • 4. Faster "to market" performance (first mover advantage, earlier correction of issues from customer feedback)