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OM 300: EXAM 1
Production
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creation of goods and services
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Operations Management
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set of activities that create value in the form of goods and services by transforming inputs into outputs
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Supply chain
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-global network of organizations that supply a firm with goods and services
-members collaborate to achieve high levels of customer satisfaction, efficiency, and competitive advantage
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Business functions of OM
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-responsible for planning, coordinating, and controlling the resources needed to produce a company's products and services
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Why study OM?
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1)one of 3 major functions of an organization
2)need to know how goods and services are produced
3)want to understand what operations managers do
4) $ part of an organization
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What Operations Managers Do
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Basic Management Functions: Planning, organizing, staffing, staffing, leading, controlling
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Productivity
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Productivity=units produced/input used
-measure of process improvement
-rep. output relative to input
-only through productivity increases can our standard of living improve
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Labor Productivity
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P=Units/labor hours
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Multi-factor productivity
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P=output/labor+Material+Energy+capital+miscll.
-also known as total factor productivity
-outputs and inputs often expressed in $
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Difference between goods and services
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Goods-tangible
services-intangible
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Productivity Variables
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Labor-10% annual increase
Captial- 38% annual increase
Management- 52% annual increase
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Key Variables for Improved Labor Productivity
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-education
-diet
-social overhead
-maintaining and enhancing skills in midst of rapidly changing technology and knowlege
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Management
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ensures labor and capital are effectively used to increase productivity
-use of knowledge
-application of technologies
-knowledge societies
-difficult challenge
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Productivity in the Service Sector
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-labor intensive, unique individual attributes or desires, intellectual tasks preformed by professionals, difficult to mechanize and automate, difficult to evaluate for quality
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Challenges in OM
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-global focus, supply chain partnering, sustainability, rapid product development, mass customization, JIT performance, empowered employees
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Reasons to Globalize
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improve supply chain, reduce costs,improve operations, understand markets, improve products, attract and retain global talent
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How does Globalization reduce costs?
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foreign locations with lower wage rates can lower direct and indirect costs
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Maquiladoras
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Mexican factories located along the US border that receive preferential tariff treatment
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WTO
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an internal organization that promotes world trade by lowering barriers to the free flow of goods across borders
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NAFTA
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Free trade agreement b/w Canada, Mexico, and the US
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European Trade Union
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A European trade group that has 27 member states
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Ergonomic competence
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Scandinavian- how your body responds to an enviorment
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How does globalization improve operations?
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-remains open to the free flow of ideas-ex:GM & Jap auto manufacturer
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Improving the supply chain
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-locating facilities closer to unique resources (Auto-CA, Athl. Shoe-China, Perfume-France)
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Attract and retain global talent
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-offer better employment opportunities
-better growth opportunities and insulation against unemployment
-relocate unneeded personnel to more prosperous locations
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Provide Better Goods and Services
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-objective and subjective characteristics of goods and services
-on-time deliveries
-cultural variables
-improved customer service
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Cultural and Ethical Issues
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-cultures can be quite different& attitudes can be quite different towards punctuality, thievery, lunch breaks, bribery, environment, child labor, and intellectual property
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UnderstandingMarkets
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interacting with foreign customers cans suppliers can lead to new opportunites
-cell phone design from Europe
-Cell Phone fads from Japan
-Extend the product life cycle
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Mission
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the purpose or rationale for an organization's existence
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strategy
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how an organization expects to achieve its mission and goals
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Factors affecting Mission
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Philosophy and values, environment, profitability and growth, public image>Benefit to society
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Competing on Cost
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Provide the maximum value as perceived by customer. Does not Imply low quality. Ex-Wal-Mart, SW, Franz Colruyt
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Strategy
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Action Plan to achieve mission. Functional areas have strategies
exploit opportunities & strengths, neutralize threats, and avoid weaknesses
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Competing on Response
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Flexibility and reliability
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Flexibility
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matching market changes in design innovation and volumes -way of life at HP
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Reliability
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meeting schedules
-German machine industry
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Timeliness
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quickness in design, production and delivery
-Johnson Electric, Pizza Hut, Motorola
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Strategies for Competitive Advantage
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Differentiation, cost leadership, rapid response
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Porter's Five Forces Model
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Rivalry, Threat of Substitutes, Buyer Power, Supplier Power, Barriers to entry
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value chain
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-a way to identify this elements in the product/service supply chain that uniquely add value
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Key Success Factors
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Activities or factors that are key to achieving competitive advantage
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Core Competencies
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a set of skills, talents, and capabilities in which a firm is particularly strong
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Product Life Cycle
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Introduction,growth,maturity,decline
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Introduction
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Company Strategy: best period to increase MS, R&D engineering is critical
OM Strategy: Product Design and development critical, frequent product improvements and options, increase capacity, frequent and process design changes, short production runs, high production costs, limited models, attention to quality
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Growth
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Company Strategy-Practical Change price or quality image, strengthen niche
OM Strategy- forecasting critical, product and process reliability, competitive product improvement options, increase capacity, shift towards product foci, enhance distribution
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Maturity
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Company Strategy- Poor time to change image or price or quality, competitive costs become critical, defend market position
OM Strategy- Standardization, less rapid product changes, optimum capacity, increasing stability of process, long production runs, product improvement, cost cutting
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Decline
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Company Strategy: cost control critical
OM Strategy: Little product differentiation, cost minimizing, overcapacity in the industry, prune line to eliminate items not returning good margin, reduce capacity
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Outsourcing
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procuring from external sources services or products that are normally part of an organization
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Rating Outsourcing Providers
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-insufficient analysis most common reason for failure
-factor rating method
-points and weights assigned for each factor to each
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International Business
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a firm engages in cross-border transactions
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Multinational Corporation
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firm has extensive involvement in international business owning or controlling facilities in more than one country
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International strategy
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a strategy in which global markets are penetrating using exports and licenses with little local responsiveness
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multi-domestic strategy
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a strategy in which operating decisions are decentralized to each country to enhance local responsiveness
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Global Strategy
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a strategy in which operating desisions are decentralized to each country to enhance local responsiveness
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Process Strategies
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how to produce a product or provide services that meets or exceeds customer requirements and meets cost and managerial goals
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Process Focus
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-specific activities or processes
-general purpose equipment and skilled personnel
-high degree of product utilization
-high costs and low equipment utilization
-example- arnold palmer hospital
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Repetitive focus
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- medium volume, medium variety- assembly lines
- use of modules allow some customization (parts and assemblies made previously)
- ex: Harley-Davidson
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Engineering Drawing
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shows dimensions, tolerances, and materials
shows codes for group technologies
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Bill of Material
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lists components, quantities, and where used. Shows product structure
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purchasing a firm
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speeds development
issues concern the fit b/w the acquired organization and product of the host
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Joint Ventures
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both organizations learn
risks are shared
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Alliances
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cooperative agreements b/w independent organizations ex- regal marines- alliance of boat companies
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Route Sheet
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lists the operations and times req. to produce a component
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Robust Design
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Product is designed so that small variations do not adversely affect the product. Lower cost and higher quality
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Team Approach
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cross-functional-representatives from all disciplines or functions
product development design for manufacturability teams, value engineering teams
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"whole organization" approach
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no organizational divisions-Japanese
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computer-aided manufacturing (CAM)
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uses stored data regarding various products to provide instructions for automated production equipment.
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Virtual Reality Technology
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A computer-based technology that provides an interaction, three-dimensional learning experience.
allows people to see the finished design before a physical model is built
very effective in large-scale designs such as plant layout
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Computer-aided design
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-using computers to design products and prepare engineering documentation
-shorter development cycles, improved accuracy, lower costs
-information and designs can be deployed worldwide
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Value Analysis
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focuses on design improvement during production
seeks improvements leading either to a better product or a product which can be produced more economically with less environmental impact
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Modular Design
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-products designed in easily segmented components
-adds flexibility to both production and marketing
-improved ability to satisfy customer requirements
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