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Operations Management - Coggle Diagram

- - - - reasons to avoid: cost (ties up working capital and these would be high administrative and insurance costs), space (requires storage space), quality (may deteriorate over time, become damaged or obsolete), operational/organisational (may hide problems)
    - - reasons to avoid: cost (primarily time cost to the customer), space (requires areas for waiting or phone lines for held calls), quality (may upset customers if they have to wait too long->lose customers), operational/organisational (may put under pressure on start and so quality is compromised for throughput)
    - - reasons to avoid: cost (cost of setup process, update and maintenance), space (requires memory capacity, secure and/or special environment), quality (data maybe corrupted/lost/become obsolete), operational/organisational (databases need constant management access, updating sectors)
    - - disadvantages (8):
        -working capital
        -storage costs
        -potential obsolescence
        -risk of damage
        -deterioration
        -special handling
        -opportunity
        -insurance admin
    - - operations principle: different inventory management decision rules are needed for different classes of inventory
        
        ABC system
        
        Class A items - 20% of high-value items that would account for around 80% of the total stock value
        
        Class B items - 30% of the medium-value items that would account for around 10% of the total stock value
        
        Class C items - 50% of low-value items that would account for around 10% of the total stock value
  - - - holding costs: holding cost/unit x average inventory (Q/2)
      - ordering cost: ordering costs x number of costs per period (D/Q)
      - total cost: (holding cost x EOQ /2) + (ordering cost x D/EOQ)
      - EOQ = under root (2 x ordering cost x D)/holding cost
      - time between orders: EOQ/D
      - order frequency: D/EOQ per period
    - - p-the rate at which parts are being made and put into inventory
      - d-the rate at which demand depletes inventory
      - Ct=(ChEBQ(P-d))/2P + CoD/EBQ
      - EBQ=under root 2CoD/Ch(1-(d-p))
- - - - demand fluctuations types: climatic festive, behavioural, political, financial, social
        
        e.g. wollen knitwear factory, retail store, aluminium producer
        
        how to cope with demand fluctuations? -absorb demand (level capacity)
        -adjust output to match demand (choose demand)
        -change demand (demand management)
        
        level capacity plan - we keep out capacity totally level, we totally ignore any demand changes
        
        demand<capacity = we are building up stocks that can be used later when demand>capacity. it can be risky in the fashion industry because trends might change. we cannot do that with SERVICE INDUSTRY because that would result in unutilised capacity (retail store,
        
        when we absorb demand and keep output level
        -make customers wait (queues, backlags),
        -have excess capacity,
        -make to stock (part finished and finished goods)
        
        adjusting capacity (chase demand plan)
        -more difficult to achieve than a level capacity because of varying number of staff, working hours, amount &equipment needed
        -adopted by operations that cannot store output (perishable products and fast fashion
        -avoids excess staff and waste of money
        
        adjust output to match demand?
        hire-fire
        temporary demand-lay-off
        overtime-short-time
        subcontract-3rd party work
        
        capacity loading: demand is steadily increasing and we increase capacity ahead of time and then we keep it steady to see if demand does increase as anticipated and when it does, we increase it again. Proactive approach
        
        +: sufficient capacity to meet demand, capacity 'cushion' easy to absorb extra demand, supply-related start-up problems with new plants minimised, customers shielded
        -: utilisation of plant usually low -> high costs, risks of permanent over-capacity if it doesn't reach the forecasted levels, capital investment required at an early stage
        
        capacity lagging: we wait until demand increases and then we step it up, more cautious
        
        +: sufficient demand to drive full capacity: unit costs minimised, utilisation high, over capacity minimised if forecasts are optimistic, capacity spending on plants is delayed
        -: insufficient capacity to fully meet demand, reduced or no ability to exploit short-term increases: potential for lost revenue, supply-related start-up problems with new plants could have significant impact: reduced customer service
        
        using inventory: applies to not perishable products, use it to smooth demand, building up the stocks
        
        +: all demand is satisfied, revenue maximised, high customer service, high utilisation and hence costs are minimised, short-term surges can be met from inventory
        -:working capital requirements can be high, tied-up funds, inventory unavailable for expansion, increased risk of product obsolescence or deterioration
        
        demand management: change pattern of demand, price, advertising and develop alternative products and/or services
        
        choosing an approach: performance objectives:
        -cost: underutilisation of capacity -> high unit costs
        -quality: temporary staff -> errors
        -speed: response improved by inventory -
        dependability,
        -flexibility: surplus capacity for volume flexibility
        
        forecasting: -qualitative using experts, questionnaire completed by experts -quantitative based on pattern of past behaviour over time taking into account the reasons for variation
      - capacity planning and control.
        1) measure aggregate capacity and demand
        2)identify the alternative capacity plans
        3) choose the most appropriate capacity plan
        
        aim: provide the appropriate capacity at any given point in time
        
        appropriateness can be judged by: costs, revenue, working capital, service level
        
        rough cut capacity planning (RECP) -quick check to see if critical resources meet predicted demand, feasibility of production (it can flag if a required schedule of production is infeasible and can identify shortfalls in available capacity)
        
        formula: hours to make x number of items
- - - - quality planning - the process of identifying quality standards relevant to the project and deciding how to meet them
      - quality improvement - purposeful change of the product to improve confidence or reliability of the outcome
      - quality control - continuing effort to uphold the process integration and reliability in achieving an outcome
      - quality assurance - systematic planned actions necessary to offer sufficient reliability so that a particular service/product will meet the specified standards/requirements
    - - the issue that we need to balance is trying to consolidate the operations view of quality with the customers view of quality (model of satisfaction)
        
        perceived quality is governed by the magnitude and direction of the gap between customers' expectations and their perception of the service/product
    - - sandcore model quality+dependability+speed+flexibility+cost
  - - - traditional model: -failure costs reduce as provision on quality increases -there is optimum amount of quality effort which minimises total cost quality -there must be a point beyond which a diminishing return sets in
      - with adjustments -failure and poor quality is acceptable -costs are known and measurable -failure costs increase and prevention costs are inevitable
      - increasing effort spent on preventing errors occurring in the first place brings a more than equivalent reduction in other cost categories (prevention, appraisal, internal failure, external failure)
    - - ISO 9001:2008 standard provides a set of standardised requirements for a QM system which should apply to any organisation regardless of the size of whether it is public/private sector
        
        1) QM should be customer focused 2) Quality performance should be measured 3) QM should be improvement driven 4)Top management should demonstrate their commitment to maintaining and continually improving management systems
- - - - differentiating projects by volume, variety and characteristics: first timers, as before but, paint by numbers
      - differentiating projects by scale, complexity and uncertainty
      - differentiating projects by novelty, complexity, technology and pace
    - - 6 stages of project management
        1) understand the environment, internal and external factors,
        2) define objectives,
        3) plan,
        4) execute (technical execution
        5) control (ensuring it is carried out according to the plan)
        6) learn (review performance and improve)
        
        once the project manager has understood the fundamental characteristics of the project, they must consider the stakeholders/agents internal: client, project sponsor, project team, functional managers etc. external: end-users, suppliers and employees. different stakeholders would stress different aspects of the project
        
        model; stakeholders interest/power. manage closely, keep satisfied, keep informed, monitor
        
        stages of the planning process 1) identify activities in the project 2) estimate the price and resources for activities 3) identify the relationships and dependencies between the activities 4) identify time and resource schedule constraints 5) fix the schedule for time constraints
- - - - long-term planning and control:
        -uses AD forecasts
        -determines resources in aggregate form
        -objectives set in largely financial
      - medium-term planning and control:
        -uses partially disaggregated demand forecasts
        -determines resources and contingencies
        -objectives set in both financial and operational terms
      - short-term planning and control:
        -uses totally desegregated forecasts or actual demand
        -makes interventions to resource to correct deviatory form plans
        -ad hoc consideration of operations objectives
    - - loading - the amount of work that is allocated to a work centre. Operations principle: for any given level of demand a planning and control system should indicate the implications for the loading on any part of operation
        
        finite loading limits the loading on each centre to their capacities even if it means that jobs will be late, It is an approach which only allocated work to a work centre up to a prescribed/preset limit working over capacity is no allowed or acceptable: -is relevant where it is possible to limit the load -necessary to limit for safety reasons -cost of limiting is not prohibitive
        
        infinite loading allows the loading on each centre to exceed their capacities to ensure that jobs are not late. It is an approach that does not limit the accepting work but instead tries to cope with it: -operations where it is not possible to limit the load -not necessary to limit the load&flexible capacity -the cost of liming is prohibitive
      - sequencing: decision must be taken on the oder in. which to process the work
        
        priorities given to work in an operation are often determined by some predefined sets of rules. Sometimes the physical nature of the inputs may determine the sequence e.g. dyeing operations
        
        customer priority sequencing: immediate resuscitation, very urgent, urgent, standard, non-urgent
        
        customer priority sequencing
        
        due date
        
        the work is sequenced according to when it is due for delivery irrespective of the size or the importance of each customer e.g. printers.
        it improves delivery dependability and the average delivery speed, but it might not provide optimal productivity, quite flexible
        
        last in first out (LIFO) - more convenient, but not an equitable approach
        
        first in, first out (FIFO) will serve customers at exactly the same sequence as they arrive in
        
        longest operation time (LOT) - sequence longest operations first. high utilisation, but it does not take into account delivery speed, reliability or flexibility
        
        shorter operation time (SOT) - shortest operations go first. ease cash flow, improves delivery performance, but may affect total productivity and can damage service to larger customer
      - schedules are familiar statements of volume and timing in many customer environments
        
        the aim is to make sure that sufficient number of people are working at any point in time in order to provide a capacity appropriate for the level of demand e.g. postal deliveries, call centre
      - monitoring and control
        
        operations principle: a planning and control system should be able to detect deviations from plans within a timescale that allows an appropriate response
        
        a push system of control is where items are moved onto the next stage as soon as they have been processed
        
        a pull system of control is when items are moved only when the next stage wants them
        
        the drum, buffer and rope concept model
        
        types of control: negotiated control, intuitive control, trial and error control, expert control, routine control
        
        customer interface activities: service positioning, individual customer requests, delivery promise, changes in customer requests, negotiate change in delivery promise, predelivery feedback, delivery feedback, customer reaction, post-delivery activities,
        
        managing suppliers expectations: establishing supply relationship, specific requirement request, delivery promise confirmation, changes to requirements request, negotiate change to requirement request, predelivery info, delivery feedback, supplier reaction, postdelivery action
      - critical ratio rule: time remaining/workdays remaining=due date-today's date/workdays remaining)