1. Syllabus Class 1 (Mar 10): chap 1; chap 2, case study March 17 – No Class Class 2: (Mar 24) chap 5; chap 6 ( thru 243) Class 3: (Mar 31) chap 7; chap 9 (Take home exam) Class 4: (Apr 7) Webster Spring Break Class 5: (Apr 14) chap 10, chap 11 Class 6: (Apr 21) chap 6 (243-250); chap 12, case study Class 7: (Apr 28) Reverse Logistics – need “The Forklifts Have Nothing To Do!” Available in the Lewis and Clark Bookstore; chap 14; chap 16; Supply Chain Security Class 8: (May 5) Chap 13; Chap 3, Take home exam Class 9: (May 12) No Class Other requirements: →visit Harley-Davidson Plant in Kansas City to see operations management in practice and write a 3-5 page paper comparing the class slides and readings to the Harley operations

2. Grades Class Participation – 10% Mid Term – 40% Final Exam – 40% Harley Paper – 10%

3. Decision Analysis

4. The Payoff Table A method of organizing & illustrating the payoffs from different decisions given various states of nature A payoff is the outcome of the decision – a Craps table pay off chart is an example of a payoff chart

5. Payoff Table States Of Nature (Alternatives) Decisionab 1Payoff 1/aPayoff 1/b 2Payoff 2/aPayoff 2/b

6. Decision Making Criteria Under Uncertainty Maximax criterion (optimistic) Choose decision with the maximum of the maximum payoffs Minimin criterion (pessimistic)  Choose decision with the minimum of the minimum payoffs Maximin criterion Choose decision with the maximum of the minimum payoffs

7. STATES OF NATURE Good ForeignPoor Foreign DECISION Competitive ConditionsCompetitive Conditions Expand$ 800,000$ 500,000 Maintain status quo1,300,000-150,000 Sell now320,000320,000 1,300,000 Maximums: 1,300,000; 500,000 320,000 Minimums: 500,000; 320,000; -150,000

9. Chapter 5 Products and Services

10. Product Design Specifies materials Specifies materials Determines dimensions & tolerances Determines dimensions & tolerances Defines appearance Defines appearance Sets performance standards Sets performance standards

11. Service Design Specifies what the customer is to experience Specifies what the customer is to experience Physical items Physical items Sensual benefits Sensual benefits Psychological benefits Psychological benefits

12. An Effective Design Process Matches product/service characteristics with customer needs Matches product/service characteristics with customer needs Meets customer requirements in simplest, most cost-effective manner Meets customer requirements in simplest, most cost-effective manner Reduces time to market - haste vs. speed to market Reduces time to market - haste vs. speed to market Minimizes revisions - quality designed into the product Minimizes revisions - quality designed into the product

13. Stages in the Design Process Idea Generation — Product Concept - can you create your own market? What role does the voice of the customer play in idea generation? Idea Generation — Product Concept - can you create your own market? What role does the voice of the customer play in idea generation? Feasibility Study — Performance Specifications Feasibility Study — Performance Specifications Preliminary Design — Prototype - testing and redesign Preliminary Design — Prototype - testing and redesign Final Design — Final Design Specifications Final Design — Final Design Specifications Process Planning — Manufacturing Specifications - make to order/stock – assembly line? Process Planning — Manufacturing Specifications - make to order/stock – assembly line?

14. The Design Process Pilot run and final tests New product or service launch Final design & process plans Idea generation Feasibility study Product or service concept Performance specifications Functional design Form design Production design Revising and testing prototypes Design specifications Manufacturing or delivery specifications Suppliers R&D Customers MarketingCompetitors

15. Idea Generation Suppliers, distributors, salespersons Suppliers, distributors, salespersons Trade journals and other published material Trade journals and other published material Warranty claims, customer complaints, failures Warranty claims, customer complaints, failures Customer surveys, focus groups, interviews Customer surveys, focus groups, interviews Field testing, trial users Field testing, trial users Research and development Research and development

16. More Idea Generators Perceptual Maps Perceptual Maps Visual comparison of customer perceptions Visual comparison of customer perceptions Benchmarking Benchmarking Comparing product/service against best-in-class Comparing product/service against best-in-class Reverse engineering Reverse engineering Dismantling competitor’s product to improve your own product Dismantling competitor’s product to improve your own product

17. Perceptual Map of Breakfast Cereals HIGH NUTRITION LOW NUTRITION GOOD TASTE BAD TASTE

18. Perceptual Map of Breakfast Cereals HIGH NUTRITION LOW NUTRITION GOOD TASTE Cocoa Puffs BAD TASTE RiceKrispies Wheaties Cheerios ShreddedWheat

19. Feasibility Study Market Analysis - Market Segmentation Market Analysis - Market Segmentation Economic Analysis Economic Analysis Technical / Strategic Analysis Technical / Strategic Analysis Performance Specifications Performance Specifications Not unlike mission analysis or Intelligence Preparation of the Battlefield

20. Risk Analysis 1. Identify the Hazards 2. Assess hazards to determine risks. 3. Develop controls and make risk decisions. 4. Implement controls. 5. Supervise and evaluate. From FM 100-14

21. Preliminary Design Create form & functional design Create form & functional design Build prototype Build prototype Test prototype Test prototype Revise prototype Revise prototype Retest Retest How will it look?

22. Functional Design (How the Product Performs) Reliability Reliability Probability product performs intended function for specified length of time Probability product performs intended function for specified length of time Maintainability Maintainability Ease and/or cost or maintaining/repairing product Ease and/or cost or maintaining/repairing product

23. Computing Reliability 0.90 0.90 x 0.90 = 0.81 Components in series

24. Computing Reliability 0.90 0.90 x 0.90 = 0.81 0.95 + 0.90(1-0.95) = 0.995 Components in series Components in parallel 0.95 0.90 R2R2R2R2 R1R1R1R1

25. System Availability System Availability, SA = MTBF MTBF + MTTR

26. System Availability System Availability, SA = MTBF MTBF + MTTR PROVIDERMTBF (HR)MTTR (HR) A604.0 B362.0 C241.0

27. System Availability System Availability, SA = MTBF MTBF + MTTR PROVIDERMTBF (HR)MTTR (HR) A604.0 B362.0 C241.0 SA A = 60 / (60 + 4) =.9375 or 93.75% SA B = 36 / (36 + 2) =.9473 or 94.73% SA C = 24 / (24 + 1) =.96 or 96%

28. Production Design Part of the preliminary design phase Part of the preliminary design phase Simplification Simplification Standardization Standardization Modularity Modularity

29. Final Design & Process Plans Produce detailed drawings & specifications Produce detailed drawings & specifications Create workable instructions for manufacture Create workable instructions for manufacture Select tooling & equipment Select tooling & equipment Prepare job descriptions Prepare job descriptions Determine operation & assembly order Determine operation & assembly order Program automated machines Program automated machines

30. Improving the Design Process Design teams Design teams Concurrent design Concurrent design Design for manufacture & assembly Design for manufacture & assembly Design to prevent failures and ensure value Design to prevent failures and ensure value Design for environment Design for environment Measure design quality Measure design quality Utilize quality function deployment Utilize quality function deployment Design for robustness Design for robustness Engage in collaborative design Engage in collaborative design

31. Breaking Down Barriers to Effective Design

32. Design Teams Marketing, manufacturing, engineering Marketing, manufacturing, engineering Suppliers, dealers, customers Suppliers, dealers, customers Lawyers, accountants, insurance companies Lawyers, accountants, insurance companies Preferred solution = cross functional teams

33. Concurrent Design Improves quality of early design decisions Improves quality of early design decisions Decentralized - suppliers complete detailed design Decentralized - suppliers complete detailed design Incorporates production process Incorporates production process Scheduling and management can be complex as tasks are done in parallel Scheduling and management can be complex as tasks are done in parallel include the customer in the process!! include the customer in the process!!

34. Design for Manufacture and Assembly Design a product for easy & economical production Design a product for easy & economical production Incorporate production design early in the design phase Incorporate production design early in the design phase Improves quality and reduces costs Improves quality and reduces costs Shortens time to design and manufacture Shortens time to design and manufacture also known as Design for Six Sigma also known as Design for Six Sigma

35. Design for Six Sigma Define – the goals of the design activity Measure – customer input to determine what is critical to quality from the customers’ perspective – what are customer delighters? What aspects are critical to quality? Analyze – innovative concepts for products and services to create value for the customer Design – new processes, products, and services to deliver customer value Verify – new systems perform as expected

36. DFM Guidelines ü Minimize the number of parts, tools, fasteners, and assemblies ü Use standard parts and repeatable processes ü Modular design ü Design for ease of assembly, minimal handling ü Allow for efficient testing and parts replacement

37. Design for Assembly (DFA) Procedure for reducing number of parts Procedure for reducing number of parts Evaluate methods for assembly Evaluate methods for assembly Determine assembly sequence Determine assembly sequence

38. Design Review Failure Mode and Effects Analysis (FMEA) Failure Mode and Effects Analysis (FMEA) A systematic approach for analyzing causes & effects of failures A systematic approach for analyzing causes & effects of failures Prioritizes failures Prioritizes failures Attempts to eliminate causes Attempts to eliminate causes

39. Value Analysis (Value Engineering) Ratio of value / cost Ratio of value / cost Assessment of value : Assessment of value : 1. Can we do without it? 2. Does it do more than is required? 3. Does it cost more than it is worth? 4. Can something else do a better job 5. Can it be made by less costly method, tools, material? 6. Can it be made cheaper, better or faster by someone else?Should we contract it out? Is there value added?

40. Design for Environment Design from recycled material Design from recycled material Use materials which can be recycled Use materials which can be recycled Design for ease of repair Design for ease of repair Minimize packaging Minimize packaging Minimize material & energy used during manufacture, consumption & disposal Minimize material & energy used during manufacture, consumption & disposal green laws in Europe - green laws in Europe -

41. Examples Recycling of oil carpets in land fills - 4 billion pounds in land fills annually Xerox and Hewlett-Packard - pay for return of printer cartridges on larger printers

42. Metrics for Design Quality ü Percent of revenue from new products or services ü Percent of products capturing 50% or more of the market ü Percent of process initiatives yielding a 50% or more improvement in effectiveness ü Percent of suppliers engaged in collaborative design

43. Metrics for Design Quality ü Percent of parts that can be recycled ü Percent of parts used in multiple products ü Average number of components per product ü Percent of parts with no engineering change orders (ULLS/SAMS/SARSS) ü Things gone wrong - should be identified by the returns process

44. Quality Function Deployment (QFD) Translates the “voice of the customer” into technical design requirements Translates the “voice of the customer” into technical design requirements Displays requirements in matrix diagrams Displays requirements in matrix diagrams First matrix called “house of quality” First matrix called “house of quality” Series of connected houses Series of connected houses

45. Design for Robustness Product can fail due to poor design quality Product can fail due to poor design quality Products subjected to many conditions Products subjected to many conditions Robust design studies Robust design studies Controllable factors - under designer’s control Controllable factors - under designer’s control Uncontrollable factors - from user or environment Uncontrollable factors - from user or environment Designs products for consistent performance Designs products for consistent performance

46. Consistency is Important Consistent errors are easier to correct than random errors Consistent errors are easier to correct than random errors Parts within tolerances may yield assemblies which aren’t Parts within tolerances may yield assemblies which aren’t Consumers prefer product characteristics near their ideal values Consumers prefer product characteristics near their ideal values

47. Characteristics of Services Services are intangibleServices are intangible Service output is variableService output is variable Service have higher customer contactService have higher customer contact Services are perishableServices are perishable Service inseparable from deliveryService inseparable from delivery Tend to be decentralized and dispersedTend to be decentralized and dispersed Consumed more often than productsConsumed more often than products Services can be easily emulatedServices can be easily emulated Call girl principle – value diminishes after service is renderedCall girl principle – value diminishes after service is rendered

48. A Well-Designed Service System is Consistent with firm’s strategic focus Consistent with firm’s strategic focus Customer friendly Customer friendly Easy to sustain Easy to sustain Effectively linked between front & back office Effectively linked between front & back office Cost effective Cost effective Visible to customer Visible to customer

49. Design for High-Contact Services DESIGN DECISIONHIGH-CONTACT SERVICELOW-CONTACT SERVICE Planned for average demand Excess capacity required to handle peaks in demand Capacity Measured against established standards; testing and rework possible to correct defects More variable since customer is involved in process; customer expectations and perceptions of quality may differ; customer present when defects occur Quality control Designed for efficiency Must look presentable, accommodate customer needs, and facilitate interaction with customer Facility layout Near labor or transportation Convenient to customer Facility location

50. Design for High-Contact Services DESIGN DECISIONHIGH-CONTACT SERVICELOW-CONTACT SERVICE Fixed, less extensive Varies with customer; includes environment as well as actual service Service package Mostly back-room activities; planned and executed with minimal interference Mostly front-room activities; service may change during delivery in response to customer Service process Customer concerned only with completion date Must accommodate customer schedule Scheduling Technical skills Must be able to interact well with customers and use judgment in decision making Worker skills

51. Chapter 6 Processes and Technologies

52. Process Strategy Overall approach to producing goods and services Overall approach to producing goods and services Defines: Defines: Capital intensity Capital intensity Process flexibility Process flexibility Vertical integration Vertical integration Customer involvement Customer involvement

53. Types of Processes Projects Projects Batch production Batch production Mass production Mass production Continuous production Continuous production

54. Process Selection with Break-Even Analysis Total cost= fixed cost + total variable cost TC= c f + vc v Total revenue=volume x price TR= vp Profit= total revenue - total cost Z=TR - TC = vp - ( c f + vc v )

55. Process Selection with Break-Even Analysis c f = fixed cost v = volume (i.e., number of units produced and sold) c v = variable cost per unit p = price per unit Total cost= fixed cost + total variable cost TC= c f + vc v Total revenue=volume x price TR= vp Profit= total revenue - total cost Z=TR - TC = vp - ( c f + vc v )

56. Solving for Break-Even Volume TR= TC vp = c f + vc v vp - vc v = c f v ( p - c v )= c f v = c f p - c v

57. Break-Even Analysis Fixed cost= c f = $2,000 Variable cost= c v = $5 per raft Price= p = $10 per raft

58. Break-Even Analysis Fixed cost= c f = $2,000 Variable cost= c v = $5 per boogie board Price= p = $10 per board The break-even point is v = = = 400 boards c f p - c v 2000 10 - 5

59. Process Planning Make-or-buy decisions Make-or-buy decisions Process selection Process selection Specific equipment selection Specific equipment selection Process plans Process plans Process analysis Process analysis

60. Make-or-Buy Decisions 1. Cost 2. Capacity 3. Quality 4. Speed 5. Reliability 6. Expertise What about Proprietary Information? Barrier to Make-or-Buy?

61. Source: Aberdeen Research, “Low-Cost Country Sourcing Success Strategies: Maximizing and Sustaining the Next Big Supply Savings Opportunity,” Jun 2005

62. Specific Equipment Selection 1.Purchase cost 2.Operating cost 3.Annual savings 4.Revenue enhancement 5.Replacement analysis 6.Risk and uncertainty 7.Piecemeal analysis – “one piece at a time”

63. Process Plans Blueprints Blueprints Bill of material Flat or multiple layers - part or assembly Bill of material Flat or multiple layers - part or assembly Assembly chart / product structure diagram Assembly chart / product structure diagram Operations process chart - list of operations involved in assembly Operations process chart - list of operations involved in assembly Routing sheet - sequence of events Routing sheet - sequence of events

64. Operations Process Chart Part nameCrevice Tool Part No.52074 UsageHand-Vac Assembly No.520 Oper. No.DescriptionDept.Machine/ToolsTime 10Pour in plastic bits041Injection molding2 min 20Insert mold041#0762 min 30Check settings041113, 67, 65020 min & start machine 40Collect parts & lay flat051Plastics finishing10 min 50Remove & clean mold042Parts washer15 min 60Break off rough edges051Plastics finishing10 min

65. Process Analysis The systematic examination of all aspects of a process to improve its operation The systematic examination of all aspects of a process to improve its operation Faster Faster More efficient More efficient Less costly Less costly More responsive More responsive Basic tools Basic tools Process flowchart Process flowchart Process diagrams Process diagrams Process maps Process maps

66. Process Flowchart Symbols OperationsInspection Transportation Delay Storage

67. Process Flowchart

68. Process Diagram Reserve Storage Quality Assurance Back to Vendor UPS Parcel Post Next-Day UPS Mono- gramming Embroid- ering Hemming Gift Boxing Receiving Active Bins PickingPacking Shipping

69. Process Map Place order Drink Eat salad or soup Eat dinner Receives check Gives payment to waiter Collect change, leave tip Fill in tip amount Give order to waiter Prepare dinner order Prepare soup or salad order Give order to waiter Is order complete? Give soup or salad order to chef Give dinner order to chef Get drinks for customer Deliver salad or soup order to customer Deliver dinner to customer Deliver check to customer Receive payment for meal Cash or Credit? Bring change to customer Run credit card through Return credit slip to customer Collect tip Y N Credit Cash CustomerWaiterSalad ChefDinner Chef

70. Continuous Improvement and Breakthroughs Breakthrough Improvement Continuous improvement refines the breakthrough Continuous improvement activities peak; time to reengineer process

71. Process Reengineering Model validation Key performance measures Detailed process map Pilot study of new design Full-scale implementation Innovative ideas Design principle s High-level process map Customer requirements data Strategic directive Baseline analysis Benchmark data Goals & specifications for process performance

72. Principles for Redesigning Processes Remove waste, simplify, consolidateRemove waste, simplify, consolidate Link processes to create valueLink processes to create value Let the swiftest and most capable executeLet the swiftest and most capable execute Capture information digitally and propagateCapture information digitally and propagate

73. Principles for Redesigning Processes Provide visibility through information about process statusProvide visibility through information about process status Fit the process with sensors and feedback loopsFit the process with sensors and feedback loops Add analytic capabilitiesAdd analytic capabilities Connect, collect and create knowledge around the processConnect, collect and create knowledge around the process Personalize the processPersonalize the process

74. Other ways to redesign the process Define Measure Improve Define Measure Analyze Improve Control Velocity Management Methodology General Electric’s Six Sigma Methodology

75. Techniques for Generating Innovative Ideas Vary entry point to a problem Vary entry point to a problem Draw analogies Draw analogies Change your perspective Change your perspective Use attribute brainstorming Use attribute brainstorming

76. Information Technology Management Information Systems (MIS) Management Information Systems (MIS) Move large amounts of data Move large amounts of data Decision Support Systems (DSS) Decision Support Systems (DSS) Add decision making support Add decision making support Expert System Expert System Recommend decision based on expert knowledge Recommend decision based on expert knowledge

77. Decision Support System Personnel Accounting Production Marketing Distribution Other areas Management Information: reports, model results Data Computer system: data processing

78. Decision Support System Management Information System Personnel Accounting Production Marketing Distribution Other areas Management Information: reports, model results Data Computer system: data processing

79. Decision Support System Management Information System What-if? analysis Personnel Accounting Production Marketing Distribution Other areas Management Information: reports, model results DataDecisions Computer system: data processing Quantitative techniques Figure 4.12

80. Artificial Intelligence Neural networks Neural networks Emulate interconnections in brain Emulate interconnections in brain Genetic algorithms Genetic algorithms Based on adaptive capabilities in nature Based on adaptive capabilities in nature Fuzzy logic Fuzzy logic Simulate human ability to deal with ambiguity Simulate human ability to deal with ambiguity

81. Enterprise Software Collect, analyze, and make decisions based on data Collect, analyze, and make decisions based on data ERP - Enterprise Resource Planning ERP - Enterprise Resource Planning Managing wide range of processes Managing wide range of processes Human resources, materials management, supply chains, accounting, finance, manufacturing, sales force automation, customer service, customer order entry Human resources, materials management, supply chains, accounting, finance, manufacturing, sales force automation, customer service, customer order entry Finding hidden patterns through data mining Finding hidden patterns through data mining

82. ERP SAP – 42% of market; forecast to 43% in 2006 Oracle – 20%; forecast to 23% 2006 Sage Group – 6% Microsoft – 4% Horror Stories – Hershey’s, Dell

83. Advanced Communications Electronic data interchange (EDI) Electronic data interchange (EDI) Internet, extranets Internet, extranets Wireless communications Wireless communications Teleconferencing & telecommuting Teleconferencing & telecommuting Bar coding, Radio Frequency Identification Bar coding, Radio Frequency Identification Virtual reality Virtual reality Distance Learning?

84. RFID Active Tags Always on Battery powered Can be read from up to 300 ft US Army Savi Tags Passive Tags Small Must be activated May be turned off England California Rolex

85. Automated Material Handling Conveyors Conveyors Automated guided vehicle (AGV) Automated guided vehicle (AGV) Automated storage & retrieval system (ASRS) Grainger/Defense Distribution Center, San Joaquin Automated storage & retrieval system (ASRS) Grainger/Defense Distribution Center, San Joaquin

86. Flexible Manufacturing Systems (FMS) Programmable machine tools Programmable machine tools Controlled by common computer network Controlled by common computer network Combines flexibility with efficiency Combines flexibility with efficiency Reduces setup & queue times Reduces setup & queue times cellular layout - more on design next week cellular layout - more on design next week

87. Robotics Programmable manipulators Programmable manipulators Follow specified path Follow specified path Better than humans with respect to Better than humans with respect to Hostile environments Hostile environments Long hours Long hours Consistency Consistency Adoption has been slowed by ineffective integration and adaptation of systems Adoption has been slowed by ineffective integration and adaptation of systems Welding at Harley Davidson Plant Welding at Harley Davidson Plant

88. Next Week Chapter 7, 9 Handout Mid Term