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Levels of Operations and the Manufacturing Strategies | MGMT 250, Study notes of Production and Operations Management

Material Type: Notes; Class: OPERATIONS MANAGEMENT; Subject: Management; University: Clark University; Term: Fall 2004;

Typology: Study notes

Pre 2010

Uploaded on 08/07/2009

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MGMT250 Notes September 7, 2004
1. Initial Stuff
A. Schedule
1. Collect H.W. and briefly go over it (any volunteers to put their work on board?).
2. We will finish up Operations Strategy.
3. We will begin Decision Theory and how it helps to make decisions.
3. Case Analysis due week from Thursday.
4. Problems for Chapter 5S may be due next class (depending on how far we get today).
5. For next week read quality assignments. Will try to start Quality next time, if time allows.
2. Levels of operations/manufacturing strategy
1. Internally Neutral (Very Reactive, don't mess anything up).
2. Externally Neutral (Keep up the industry status quo, externally reactive).
3. Internally Supportive (Closely link to business strategy, internally proactive).
4. Externally Supportive (Closely link to other functions and keep an external proactive eye).
Developing a Strategy see graphics. Essentially looking at the market and determining what operations are needed to
fulfill market requirements. Good structural procedure. How do you position a company on the product/process
matrix? Let’s talk about Trek/Huffy again.
New Strategies include:
Quality, Time.
Time based Strategies occur throughout the “Product Development Life Cycle”
Chapter ends with discussion of integration of Craft and Mass for “Lean Production”.
Flexibility-Quality Dependability-Cost
Continuous
Flow
Assembly
Line
Batch
Job
Shop
Low
Volume
One of a
Kind
Multiple
Products,
Low
Volume
Few
Major
Products,
Higher
Volume
High
Volume,
High
Standard-
ization
Commercial
Printer
Heavy
Equipment
Automobile
Assembly
Sugar
Refinery
Flexibility-
Quality
Dependability
Cost
Product-Process Lifecycle Matrix
Variety, Flexibility, & Volume
Product
Variety
High
Moderate
Low
Very Low
flexibility
High
Moderate
Low
Very Low
Low
Volume
Moderate
Volume
High
Volume
Very high
Volume
Job
Shop
Batch
Repetitive
assembly
Continuous
Flow
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MGMT250 Notes September 7, 2004

1. Initial Stuff A. Schedule 1. Collect H.W. and briefly go over it (any volunteers to put their work on board?). 2. We will finish up Operations Strategy. 3. We will begin Decision Theory and how it helps to make decisions. 3. Case Analysis due week from Thursday. 4. Problems for Chapter 5S may be due next class (depending on how far we get today). 5. For next week read quality assignments. Will try to start Quality next time, if time allows.

2. Levels of operations/manufacturing strategy

1. Internally Neutral (Very Reactive, don't mess anything up).

2. Externally Neutral (Keep up the industry status quo, externally reactive).

3. Internally Supportive (Closely link to business strategy, internally proactive).

4. Externally Supportive (Closely link to other functions and keep an external proactive eye).

Developing a Strategy see graphics. Essentially looking at the market and determining what operations are needed to

fulfill market requirements. Good structural procedure. How do you position a company on the product/process

matrix? Let’s talk about Trek/Huffy again.

New Strategies include:

Quality, Time.

Time based Strategies occur throughout the “Product Development Life Cycle”

Chapter ends with discussion of integration of Craft and Mass for “Lean Production”.

Flexibility-Quality Dependability-Cost

Continuous

Flow

Assembly

Line

Batch

Job

Shop

Low

Volume

One of a

Kind

Multiple

Products,

Low

Volume

Few

Major

Products,

Higher

Volume

High

Volume,

High

Standard-

ization

Commercial

Printer

Heavy

Equipment

Automobile

Assembly

Sugar

Refinery

Flexibility-

Quality

Dependability

Cost

Product-Process Lifecycle Matrix

Variety, Flexibility, & Volume

Product

Variety

High Moderate Low Very Low

Equipment

flexibility

High Moderate Low Very Low

Low

Volume

Moderate

Volume

High

Volume

Very high

Volume

Job Shop Batch Repetitive assembly Continuous Flow

3. Decision Theory A. Management means making decisions. There can be 7 steps to a typical decision process: 1. Identify the problem 2. Specify Objectives and the criteria for choosing a solution. 3. Develop alternatives. 4. Analyze and compare. 5. Select the best alternative. 6. Implement the chosen alternative. 7. Monitor the results and feedback. In this class steps 1-5 is focus. In reality all steps are important. B. The manager faces three types of decision environments. 1. Certainty. Deterministic and known values for all parameters. 2. Risk - have some information...statistical usually. 3. Uncertainty - no information on probabilities of occurrences of future events. C. Decision Theory can be used for a number of operations decisions. Works well for strategic..but tactical and operational decisions could be answered: Location, capacity planning, equipment…etc. D. You need to have three major pieces of information to apply decision theory process. 1. Future Conditions (states of nature). 2. Alternatives to choose from. 3. Payoffs for each alternative for a given conditions. This information may be supplemented with finding probabilities of occurrences. Then use decision criteria to evaluate alternatives. These first steps help form a “payoff table” (later we shall see these applied to a “decision tree.”) To complete the payoff table we also: 4. Determine likelihood of states of nature 5. Evaluate alternatives based on some “criteria”, (e.g. maximize profit) and make selection. Let us assume that we have a company a custom clothing store, is looking to its future. Business for this company has been good and it’s looking to build another store in another town. There are a number of alternatives available to them, they could build a facility with 2000 sq. ft, a facility with 10,000 sq. ft. or a 20,000 sq. ft. facility. They decided to have some estimation done and came up with the following preliminary numbers. If they built the 2000 sq. ft. facility and demand was low ( suits a day), then they could expect a net present value on the facility (over the life of the facility) of $5 million. Actually, this is true if demand is at 400 or 1000 suits per day (the other demand estimates). If they built the 10,000 sq. ft. facility they would make $3 million with the 100 suit/day demand, $10 million with the 400 suit/day demand and $16 million, for the 1000 suit/day demand. Yet, if they built the 20,000 sq. ft. facility, they could expect to lose $4 million over the life of the store if demand was 100 suit/day. If demand were 400 or 1000 suits/day his returns would be $2 million and $16 million respectively. How would you set up this problem? How do we read the payoff table? Let us use this table for evaluation in the three different environments. 1. Certainty We know for sure that next period’s demand is going to be high, which alternative do we select? Rather straight forward. If we have estimates available. 2. Uncertainty We have 4 possible analysis criteria (methods) which we can use. Let us put table on board.