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Chapter 1 - Operations and Productivity: Consumed Simultaneously Kept in Inventory Produced Involvement in Production
Chapter 1 - Operations and Productivity: Consumed Simultaneously Kept in Inventory Produced Involvement in Production
Competitive Advantage – the creation of a unique Transnational – a strategy that combines the
advantage over competitors. benefits of global-scale efficiencies with the
benefits of local responsiveness.
- Product selection and design
- Quality International – a strategy in which global markets
- Process are penetrated using exports and licenses.
- Location
Multi-Domestic – a strategy in which operating
- Layout
decisions are decentralized to each country to
- Human Resources
enhance local responsiveness.
- Supply Chain
- Inventory
- Scheduling
- Maintenance
Different strategies to achieve competitive
advantage
- Differentiation – being unique
- Cost Leadership – being cheaper
- Response – being faster
ISSUES IN OPERATIONS STRATEGY
Resources view – a method managers use to
evaluate the resources at their disposal and
manage or alter them to achieve competitive
advantage.
Value-chain analysis – a way to identify those
elements in the product/service chain that uniquely
add value.
Five forces model – a method of analyzing the five
forces in the competitive environment.
Strategy Development and Implementation
SWOT Analysis – a method of determining internal
strengths and weaknesses and external
opportunities and threats.
Activity-on-arrow (AOA) – a network diagram in
which arrows designate activities.
CHAPTER 3 – MANAGING PROJECTS
Critical path analysis – a process that helps
Three phases of management of projects determine a project schedule.
- Planning Forward pass – a process that identifies a;; the
- Scheduling early times.
- Controlling
Backward pass – an activity that finds all the late
Project organization – an organization formed to start and late finish times.
ensure that programs (projects) receive the proper
management and attention. Slack time – free time for an activity. Also, referred
to as free float or free slack.
- It can be temporary or permanent. A
permanent organization is usually called Three time estimates in PERT
a matrix organization.
- Optimistic time – the best activity
Project Scheduling – involves sequencing and completion time that could be obtained
allotting time to all project activities. in a PERT network.
- Pessimistic Time – the worst activity
- Gantt charts – planning charts used to time that could be expected in a PERT
schedule resources and allocate time. network.
- activities are planned - Most likely time – the most probable
- order of performance is documented time to complete an activity in a PERT
- activity time estimates are recorded network.
- overall project time is developed
Crashing – shortening activity time in a network to
Project Controlling – using a feedback loop to reduce time on the critical path so total completion
revise the project plan and having the ability to shift time is reduced.
resources to where they are needed most.
Four steps of crashing a project
PROJECT MANAGEMENT TECHNIQUES
1. Compute the crash cost per week for each
PERT (Program Evaluation and Review activity in the network.
Technique) – a project management technique
that employs three time estimates for each activity.
( crashcost−normal cost)
CPM (Critical path method) –a project crash cost per period=
(normal time−crash time)
management technique that uses only one time
factor per activity.
Six Basic Steps in PERT and CPM: 2. Find the critical path in the project network.
3. Select the activity on this critical path that
1. Define the project and prepare the work can still be crashed and has the smallest
breakdown structure crash cost period.
2. Develop the relationships among the 4. Update all the activity times.
activities
3. Draw the network connecting all the
activities
4. Assign time and/or cost estimates to each
activity.
5. Compute the longest time path through the
network.
6. Use the network to help plan, schedule,
monitor, and control the project.
Critical Path – the computed longest paths through
a network.
Activity-on-node (AON) – a network diagram in
which nodes designate activities.
CHAPTER 4 – FORECASTING DEMAND Delphi Method – a forecasting technique using a
group process that allows experts to make
Forecasting - process of predicting future events. forecasts.
Types of Forecast Sales force composite – a forecasting technique
- Technological - predict technological based on salespersons’ estimates of expected
progress sales
- Economic – predict inflation rate and Market survey – a forecasting method that solicits
planning indicators that are valuable in input from customers regarding future purchasing
helping organizations prepare medium plans.
to long range forecast.
- Demand Forecast – predict sales of Quantitative Models
existing products/services and
Time-Series Models – a forecasting technique that
projections of a company’s sales for
uses a series of past data points to make a
each time period in the planning horizon
forecast. Naïve approach, moving average and
Forecasting Time Horizons exponential smoothing are under time-series
models.
- Short range – time span of 1 year but is
generally less than 3 months. - Naïve approach – a forecasting
- Medium range – 3 months to 3 years technique which assumes that demand
- Long range – 3 years or more in the next period is equal to demand in
the most recent period.
Strategic Importance of Forecasting - Moving average – a forecasting
- Supply chain – supplier relation, method that uses an average of the n
innovation of product, speed and cost to most recent periods of data to forecast
market the next period.
- Human resources – hiring, training, - Exponential Smoothing – a weighted-
laying off of workers moving-average forecasting technique
- Capacity – capacity shortages can in which data points are weighted by an
result to undependable delivery, loss of exponential function.
customer’s loss of market share. Four components of time-series
- Trend
Seven steps in the Forecasting System - Seasonality
1. Determine the use of forecast - Cycles
2. Select the items to be forecasted - Random variations
3. Determine the time horizon of the forecast Casual Models – use variables or factors that
4. Select the forecasting models might influence the quantity being forecasted
5. Gather the data needed to make forecast
6. Make the forecast - The goal of it is to develop the best
7. Validate and implement the results statistical relationship between a
dependent variable and one or more
FORECASTING TECHNIQUES independent variables.
Qualitative models Associative Models – usually consider several
Forecasts that incorporate such factors as variables that are related to the quantity being
the decision maker’s intuition, emotions, personal produced.
experiences, and value system. - Linear-Regression Analysis – a
Jury of executive opinion – a forecasting straight-line mathematical model to
technique that uses the opinion of a small group of describe the functional relationship
high level managers to form a group estimate of between independent and dependent
demand. variables.
- Standard error of the estimates – a Maturity Phase
measure of variability around the
- Competitors are established
regression line – its standard deviation.
- Maintain market share
- Coefficient of correlation – a measure
- High-volume, innovative production may
of the strength of the relationship
be appropriated.
between two variables.
- Improved cost control, reduction in
Multiple-regression – an associative forecasting operations and a pairing down of the
method with more than one independent variable. product line
- Termination ( to avoid continuous loss
by withdrawing)
Decline Phase
CHAPTER 5 - PRODUCT DESIGN - ways to improve the product
- Dying products are typically poor
Product Design – effective and efficient
product in which to invest resources and
development of ideas to generation that leads to a
managerial talent.
new product.
Product-by-Value Analysis
Product Decision – the selection, definition, and
design of products. - A list of products, in descending order of
their individual dollar contribution to the
OBJECTIVE OF PRODUCT DECISION
firm, as well as the total annual dollar
To develop and implement a product contribution of the product.
strategy that meets the demands of the market - It allows management to evaluate
place with a competitive advantage. possible strategies for each product.