MNB11601 chapter 10 – Operations Management

What are the four main advantages of efficient and effective operations management?
Cost reduction
Increased revenue
Less capital investment
Explain how efficient and effective operations management can result in higher profit.
Better operation processes result in:
* Less rework
* Less scrap
* Higher quality
If production cost decreases, profit increases
Explain how efficient and effective operations management can result in a lower capital investment required.
Better processes, better use of equipment and facilities, optimising operations functioning: Less money required for acquisition and maintenance of equipment.
How is productivity measured?
Ratio of output to input
Explain how effective and efficient operations management can result in a good business reputation?
Better processes = less rework = higher quality = good word of mouth
List the six main elements of customer /client needs.
Higher qualityLower costs
Shorter lead time
Greater adaptability (flexibility)
Lower variability (reliability)
High level of service
List the six operations management performance objectives.
Do things right the first time
Do things cost effectively
Do things fast
Make changes quickly
Do things right every time
Do things better
What are the three steps in the transformation process?
List the resources to be transformed in the transformation process.
Material (raw material processed into products)
Customers / clients (dentist, gym)
Information (newspaper)
List the resources required to make transformation possible.
Human resources
Equipment / facilities
List the characteristics of products.
Physically tangible and durable
Output kept in stock
Little customer contact
Manufactured before use
Long response time
Local and international markets
Large production facilities
Capital intensive production
Quality easily measurable
List the characteristics of services.
Intangible and perishable
Output not kept in stock
Plenty of client contact
Provision and consumption simultaneous
Short response time
Mainly local markets
Small service provision facility
Labour intensive
Quality difficult to measure
List the four Vs of operation processes.
If volume is high in the operation process, variation, variety and variability will be low. True or false?
If an operation has high variety, variation and variability, the volume will also be high. True or false?
Define volume of output in the operation process.
Refers to the number of items produced by the operation, over a given period of time.
Define variety of output in the operation process.
This refers to the range of different items produced by the operation over a given period.
Define variation of output in the operation process.
This refers to the demand pattern for the output of the operation, which may be constant or changing. (Think seasonal demand changes for example).
Define visibility of output in the operation process.
This refers to how much of the operation the customers / clients experience personally or are exposed to.
Operational processes for manufacturers can be classified in five groups. What are they?
Project / Jobbing
Describe the project process type in operation classification for manufacturers.
Operational processed that are highly individual and unique.
Normally tackled on a large scale.
Examples: construction of a new stadium, development programme for a new car.
Describe jobbing as a classification in operational processes for manufacturers.
Operational processes conducted on a small scale with a low volume of output.
The nature of the work is the same throughout but each job is unique.
Example: jewellery manufacture.
Describe a batch process in the classification of operational processes for manufacturers.
A limited range of products is manufactured by the business and production occurs in batches.
Example: toasters, grills, irons all made by the same manufacturer.
Describe mass processes as a classification of operational process types for manufacturers.
The production of products in high volumes with low variety. The process is repetitive, predictable and easy to manage.
Describe continous process in the classification of operational processes.
A step beyond mass production, even greater volumes, little variety. Process continues with breaks only for maintenance and / or upgrading.
List the classifications of process types for service providers.
Professional service
Service shops
Mass services
Describe professional services as a classification of a process type for a service provider.
High client contact, often on one-to-one basis, service is provided according to customer’s need. Doctor, dentist, attorney.
Describe service shops as a classification of the operational processes of service providers.
Fair amount of client contact, standardised services to some extent. More variety than in mass service. Examples: bank, hotel, retail store.
Describe mass service as a classification of operational processes of service providers.
Limited client contact, largely standardised services, services equipment oriented and provided on large scale. Examples: post and telecommunication services, transport services.
Operations design includes two important aspects. What are they?
Product design (what will be built)
Process design (how will it be built)
The design of a product / service begins and ends with the customer. True or false?
All products and services consist of three components. What are they?
Describe the concept component of a product / service.
The set of expected benefits that the client / customer purchases when he purchases the product / service.
Example: he buys a car, but expects safety, reliability, road holing etc.
What are the steps in the design process of a product or service?
concept generation;
screening process;
preliminary design;
evaluation and improvement;
prototype and final design