1. CHAPTER 4 DECISION MAKING IN OPERATIONS MANAGEMENT

2. GE’s Appliance Park : DM & PS
현재의 상황
GE’s five-factory complex located near Louisville
Innovative appliances and manufacturing technology → Outdated factory(40년) : Loss of $47million(1992)
New energy standard for washing machines(1994)
대안(option)
노후 시설에 대한 조사 비용 : $70million
GE’s washers 외주 : slashing 1,500 job & endangering long-range prospects for Appliance Park
의사결정사항
Evaluate impact of their various options on five factory
Separate the symptoms of problems from their causes

3. THE NATURE OF MANAGEMENT
MANAGEMENT is the process of directing resources and organizing activities designed to achieve corporate/organization objectives.
Top management must wear bifocals, i.e., it must effectively manage the present while getting ready for what the future might bring.

4. THE FIVE FUNCTIONS OF MANAGEMENT
Planning
Organizing
Controlling
Analyzing
Directing-Implementing
Deciding what to do
Understanding data
Developing structures &
Assigning resources to them
Carrying out decisions
Measuring
the result
&
Comparing
The results

5. THE FIVE FUNCTIONS OF MANAGEMENT
Planning
What : Establish the goal & objective
When : Establish the time period(예:1994)
Who : Determine plan’ scope(예:Washing machine operation)
How : Identify the action and their sequences(예 : restore vs. close)
Performance measure(예: Cost, M/S, Profit, Productivity)
Analyzing : correction & elimination(예:PC hard-disk조립)
Organization : developing structures(design sequence of task & allocate resource)
Directing/Implementing : action(Communicate the goal & Commit resources-예:장비노후에 투자)
Controlling : measure,Feedback - Linkage b/w plan & action

6. THE MANAGER AS A PROBLEM SOLVER
SYMPTOMS indicate that something is wrong.(thermometer., GE’s M/S, too little)
PROBLEMS are a perceived gap between a present situation and some desired situation.
A Classification Scheme for Problems
Structured vs. ill-structured
Desired State
Unknown
Known
Ill-structured problem
Semi-structured problem
Unknown
Present State
Semi-structured problem
Well-structured problem
Known

7. PROBLEM, CAUSE & SOLUTION
Strategic versus Operational Orientation(time)
Urgency of a Problem(crises vs.opportunity)
Activity Focus(행위의 유형:trade-off 평가)
Queuing(Service Center)
Allocation(Job)
Inventory(재고유지비)
Sequencing(Job & Machine)
Cause
Anything that creates or contributes to a gap b/w current and desired future situation( A source of observed symptoms)
Solution
A set of actions designed to close the gap b/w the current and desired future situations by changing the conditions
Routing(Machine & site)
Replacement(tool 교체)
Competition(pricing or bidding)
Search(sampling & inspection)

8. A MANAGERIAL APPROACH TO PROBLEMS
The three choices
Solve the problem : Optimum solution
Resolve the problem : Effective solution
Dissolve the problem : Eliminate condition
A Five-Stage Problem Solving Process
Problem Statement/ Diagnosis
Size-Up/ Description
Prescription/Alternatives
Analysis
Implementation

9. PROBLEM-SOLVING PROCESS
Size-up/Description : gathering information
불분명한 문제 규명, 올바른 문제 파악, 해결되어야 할 문제 파악, 새로운 문제 발견
Tool : Observation, Participation, Questionnaires. Interview, Written document, Process mapping, Check sheet, Benchmarking
Problem Statement/Diagnostics-critical agreement
Identify controllable vs. Uncontrollable variables, Constraints & desired outcomes
Analysis : 현재상황 개발, tool: 모형
Prescription/Alternatives : 대안제시 및 평가
Implementation : 해결책 선정 후 실행-작업자 영향고려

10. TOTAL COST ANALYSIS
Total Cost = Quantitative + Qualitative, cost-benefit 분석
Quantitative Costs
Variable, Fixed, Semi-variable
Relevant and irrelevant – sunk cost, level of capacity utilization.
Opportunity : best alternative use of resource
Qualitative Costs
Reputation, goodwill
Personal view and bias
TRADE-OFF ANALYSIS
Identifying the indifference point

11. DEMING CYCLE (PDCA) The Deming Cycle is a four-step process:(GE)
Never-Ending Improvement
Act A
Plan P
Check C
Do D
The Deming Cycle is a four-step process:(GE)
PLAN - Identify a problem worthy of study and then identify actions to close the gap.
DO - Implement the plan of action.(pilot project)
CHECK - See how well it worked.(variable & performance)
ACT - evaluate results and either continue the process or institutionalize the improvements.

12. CAUSE-AND-EFFECT DIAGRAMS
A problem solving tool that visually represents relationships between symptoms and their root causes
Cause
Cause
Cause
Problems
Cause
Cause
Causes
Effects

13. CAUSE-AND-EFFECT DIAGRAMS
Types of C&E diagram-nature of the problem & the process
The dispersion analysis : cause of dispersion or variation
The process classification : tracing through the activities in the production process
Constructing a C&E Diagram(GE)
the Problem to Examine → Major Categories of Causes →more Specific Causes → Circle likely Cause →verify the Causes(Deming’s PDCA cycle)
Benefits of Cause-and –Effect Diagrams
Education, discussion, dada-collection, any OM problem

14. PARETO ANALYSIS
A problem solving tool that sets management priorities based on the assumption that 80% of any operational problem results from 20% of the operational factors.
100
most important factor 80 60 40
least important 20

15. PARETO ANALYSIS Procedure Benefits of Pareto Analysis
Identify categories about which to collect information
Decide on the time period to cover
Calculate total frequencies of variations by category for the time period
Sort the Categories in descending order
Identify the vital few Categories that account for most of the variation
Adjust the categories for any qualitative factors
Present the data graphically, if appropriate
Benefits of Pareto Analysis
Vital few activities
Best opportunities for improving operation

16. CHECK SHEETS
A tool used to collect data and classify the observations into categories.
Types of check sheets
Attribute check sheet category such as a pass or fail rating for product quality.
Variable check sheets : continuous data → discrete categories
Location check sheets : location of events
Begin with decision about its purpose → choose → categories of event to track → consult the workers → designate an appropriate time period

17. MODEL BUILDING
A model is an abstract representation of reality that simplifies actual events and situations.
Models are designed to answer:
What : identify important element
How : Relationships
Why : Reason
Under what conditions : specify condition
Types of model
Physical Model - Iconic model , Analog model
Mathematical model – descriptive model, normative model(optimization model)
모형화 과정
단순화 및 추상화, 모형의 타당성 검토, 결과의 예측, 평가, 수정.

18. TYPES OF DECISION MAKING
Decision Making under Certainty :
대안을 선택한 경우 어떤 결과가 발생할 지를 의사결정자가 확실히 앎
선형 계획법, 목표 계획법, PERT/CPM
Decision Making under Risk
미래에 전개될 수 있는 상화에 대해서 각 상황의 발생가능성을 확률로 나타냄
위험에 대한 의사결정자의 태도(위험선호형, 위험회피형, 위험중립형)
의사결정나무, 확률적 선형 계획법, 확률적 재고 모형, 시뮬레이션 모형
Decision Making under Uncertainty
발생 가능한 여러 가지 상황 추정, 각 대안과 상황에 따른 의사결정 결과 추정할 수 있으나 상황의 발생 확률을 예측할 수 없슴
최대최소값, 최대최대값, 최소최대기회손실, 라프라스 기준 등
Decision Making under Conflict
각 결과는 다른 사람, 경쟁상대의 행동에 따라 달라짐
게임 이론