Responsibilities of operations management • Organizing – Degree of centralization Subcontracting Staffing Hiring/laying off Use of Overtime Directing Incentive plans Issuance of work orders Job assignments • Budgeting • Reporting Capacity • Planning – Product and Service Make or Buy Location Layout Projects Scheduling Controlling Inventory Quality
Operations Managers and decision making • Tools for Decision Making. – Pareto (ABC) Analysis Analysis of Tradeoffs – Systems Approach Quantitative Approaches –
How do we identify the vital few? Pareto phenomenon (ABC analysis) Classifying items, activities, tasks, … according to some measure of importance and allocating efforts and resources accordingly • A vital few things are important for reaching an objective or solving a problem. • 80/20 Rule - 80% of problems are caused by 20% of the activities. How do we identify the vital few?
Pareto phenomenon, ABC analysis, Recognition of Priorities Dealing with the fact that certain aspects of any management situation are more important than others is called recognition of priorities
Analysis of tradeoffs Tradeoffs What are the pros and cons of models?
Analysis of tradeoffs Buying a new machine Additional Investment Higher Productivity Better Quality More Flexibility Having more inventory Higher Carrying Costs More Obsolescence Better Customer Service
“The whole is greater than the sum of the parts.” Systems approach “The whole is greater than the sum of the parts.” Suboptimization 2 > 1+1
Systems approach Systems approach and Sales Purchasing Production
Systems A set of parts with interrelationship between parts organized to achieve a goal How systems grow up
A model is an abstraction of reality. Models • A model is an abstraction of reality. – Physical Schematic – Mathematical
Quantitative approach • Linear programming Transportation model Inventory models Waiting line models Statistical models
Recent trends Global competition Operations strategy Flexibility Cycle time reduction Business process re-engineering Supply Chain Management Workers involvement Lean Manufacturing Total quality management
Recent trends Global competition Operations strategy Flexibility Global Market Global Suppliers Operations strategy Quality based Time based Flexibility Variety of products High Volume as well as low volume Cycle time reduction The less time RM, WIP, and FG spend in the Manufacturing and Logistics process products the less opportunity they have to absorb costs
Business process re-engineering Supply Chain Management Recent trends Business process re-engineering Value added and NVA activities Supply Chain Management Not from RM storage to FG warehouse From the original suppliers to final consumers Workers involvement Workers are not cost they are assets Lean Manufacturing Inventory is waste Total quality management