International Operations

Management
New trends in OM
 Global focus
◦ Decline in communication and transportation costs
has made markets global;
◦ Resources such as personnel and capital are available
globally;
◦ Operations managers are responding with innovations
that generate and move ideas, production, and finished
good rapidly.

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New trends in OM
 Just-In-Time performance
◦ How to free assets from inventory and improve
responsiveness
 Supply Chain partnering
◦ Operations managers are outsourcing and building long-
term relationship with its suppliers all over the world.
 Rapid product development
◦ Requires rapid responses in operations especially in
high-tech industries

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New trends in OM
 Mass Customization
◦ Mass customization aims at supplying customized
products and services to each customer in a
responsive and cost effective way.
◦ Broadening product variety gives a company a
distinctive competitive advantage in quickly
responding to ever-changing market environments and
customer tastes.
◦ Challenges in cost control and responsiveness.

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New trends in OM
 Empowered employees
◦ Operations managers are moving more decision making
to the individual worker as more competence is now
required at workplace.
 Environmentally sensitive production
◦ Concerned with designing products and processes that
are environmentally friendly.
 Ethics
◦ Continuing challenge to enhance ethical behavior

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Operations: Global Vs. Domestic

 Riskier and more complex

◦ More risk factors to consider
◦ Transportation becomes more complex and costly.
◦ Product proliferation due to localization and mass
customization.

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Sources of Risk in the global
environment
Risk Factors
Natural disasters
Shortage of skilled personnel
Geopolitical uncertainty
Terrorist infiltration of cargo
Volatility of fuel prices
Currency fluctuation
Port operations/custom delays
Customer/consumer preference shifts
Performance of business partners
Logistics capacity/complexity
Forecasting/planning accuracy
Supplier planning/communication issues

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Operations: Global Vs. Domestic
 Attention paid to cultural, political, and economic
factors
 More difficult interpersonal management task:
◦ International business partners
◦ Officials in central and local governments
 Inventory cost gets higher.
◦ Longer and slower pipeline leads to more pipeline
inventory
◦ Uncertainty in politics and production leads to more
safety stock.
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International Operations Management
 Nowwhat is International Operations Management
(IOM)?
◦ IOM is just Operations Management in the global context.

 Why do we need to study Operations Management in

the global context?
◦ Similarities and differences in the economic, cultural, legal,
and political aspects in different countries bring about both
opportunities and risks in the business world. IOM, as
compared to OM, focuses on the use of operational strategies
to take advantage of the unique opportunities that appear
during the globalization process without being exposed to an
unacceptable level of risk.
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Scheduling Techniques
PERT & CPM

PERT: program Evaluation and review

Technique- Probabilistic approach- For
new project
CPM: Critical Path Method- Deterministic
approach- for known projects

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Important Terms

Activity: it consumes resource like Men,

Material, Money and Time
Event or Node: it doesn’t consumes resources
Predecessor: Previous Activity
Successor: Next Activity

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Important Rules
One starting Node – one Ending Node
Crossing of nodes Not Allowed
Looping of Nodes Not Allowed
Dummy Activity: (when it should use)when
two activities start at same node and end at
common node.
Fulkerson's Rule
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Terminologies
EarliestStarting Time: E
How earlier we can start the Activity
Use Forward Pass(start from Initial
starting stage)
Latest Finishing Time: L
how far we can delay the activity, without
compromising on project end date.
Use Backward Pass(start from finishing
stage)
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Earliest Finishing Time: Tef

Tef = E+ tij (where it is activity Duration)

Latest Starting Time: Tls

Tls = L- tij
Critical Path : Longest path or highest
Activity duration
Critical Activity: Activities which are all
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Float and Slack

Float : Relaxation time in activity

Slack: Relaxation time in Event or Node
Types:
Total float
Free float
Independent float and interference float
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Total Float= Max time available – Duration of activity.
Max available Time = L-E
TF= (L-E) – Tij ------------------1
=> where (L- Tij ) = TLS
= TLS - E ----------- 2
(or) L – (E + Tij) => L – TEF---------3
Free Float = Total float - Head event Slack
FF= TF – (L-E) (it does not affect successive activity)
Independent float = FF – Tail event Slack
IF = FF - (L-E)
Interference Float: Its also called Slack
its affects activity float
Int F = TF – FF
=L-E 17
Sub Critical Activity: Value comes above Zero.
(Critical activity value = 0)
Super critical Activity: value comes in Negative

PERT
Optimistic Time : To
Pessimistic Time : Tp
Most Likely Time : Tm or TL

Expected Time Te = To + 4 TL + Tp
--------------------
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