•Do Data Project 1- Business and Finance on page 589 of the Textbook

System - A collection of entities (objects, people, …) interrelated to each other forming a complex

Classification

· Natural systems – Obey and behave according to the laws of nature

· Man-made systems – designed and operated by people

· Dynamic vs Static

· Adaptive vs Non adaptive

· Continuous vs Discrete

· Deterministic vs Stochastic (probabilistic)

· Stable vs Unstable

Components of a system

· Input

· Process

· Output

Types of Process (Operations)

· Physical

· Exchange

· Locational

· Physiological

· Informational

· Etc

Values created by systems

· Form

· Place

· Time

· Possession

Forces affecting systems

· Technology

· Society

· Economy

· Politics

· Competition

What is operations – is the management of productive systems

What do operations managers do?

· Quality management

· Capacity management

· Capacity management

· Inventory management

· Product/process design

· Forecasting

· Etc

Strategic Plan – by top management

· Set goals

· Set priorities to compete – order winner vs order qualifier

· Price

· Quality

· Flexibility

· On-time delivery

· Customer service

Productivity = output(s) / input(s)

Reasons for delaying the progress

· Lack of direction

· Lack of support

· Too much work

· Inefficient process

· Not enough equipment or supplies

· Low pay

· No chance to advance

Range of activities fall under product/service design

· Translate customers wants and needs into product/service requirement

· Refine existing product/service

· Develop new product/service

· Formulate quality goals

· Formulate cost targets

· Construct and test prototype

· Document specification

Reasons for product/service design or redesign

· Economic

· Social & demographic

· Political, liability, legal

· Technology

· competition

· costs

· availability

· labor

· materials

· resources

Objectives of design

· customer satisfaction – wants & needs

· quality, volume, ease of production, profit, cost, operations (called design for operations)

Phases of product design

· Idea generation – research, technology, reverse engineering

· Feasibility study – finance, operations, marketing

· Product specification

· Process specification

· Prototype development

· Design review

· Market test

· Product introduction

· Follow-up evaluation

Capacity – the capability of a system to produce a quantity of output in a given period or provide service.

· Capacity levels:

· Design

· Effective

· Actual

Utilization = actual / design

Efficiency = actual /effective

Too much capacity – unused equipment, higher inventory, low profit

Too little – lost sales

Capacity bottleneck – theory of constraint

Capacity planning – to determine the appropriate level of capacity to meet demand

Questions to ask:

· New facility

· Modify or expand existing facility

· Close existing facility

· Single site or multiple sites

· One large facility or several small facilities

· Location

· Close to customers

· Close to suppliers

· When to build

· Match demand

· Lead demand

· Lag demand

Managing capacity and demand (short-term)

· Part-time help

· Share capacity

· Use of off peak demand

· Do it faster

· Avoid chatting

· Appointment

· Partition demand

· Back order

· Complementary service

· Import customers

· Customer participation

· Change schedules

· Cross training

Initiating capacity planning

· Increase/decrease demand

· Changing technology

· Changing environment

· Spotting opportunities

Steps in the capacity planning process

· Audit and evaluate the existing capacity

· Forecast capacity requirement

· Define capacity alternatives

· Do financial analyses

· Assess key qualitative issues

· Select an alternative

· Implement the alternative

· Audit and review the actual results