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Unformatted text preview: AEM1200, Introduction to Business Management. AEM1200, Monday 2/21 Operations Management
Definition Economies of scale as potential Activities Facility location and outsourcing Facility layout and production scheduling Scheduling and Inventory Management in Operations MRP/ERP Total Quality Management Operations Management Operations
The management of the conversion or The transformation of resources (including human resources) into goods and services. services. Economies of Scale Economies
Reduction in cost per unit resulting from increased Reduction production, realized through operational efficiencies. Economies of scale can be accomplished because as production increases, the cost of producing each additional unit falls. unit Short term economies of scale are the result of spreading Short fixed costs across all throughput; fixed Intermediate term economies of scale are the result of Intermediate having longer production runs; having Long term economies or scale are the result of physics, Long which dictate that unit cost as a function of capacity is equal to a function aC^(b-1), where b lies between 0.6 and 1. to Cost Structures of Craft Production and Mass Production (from “The Second Industrial Mass
Divide”, Piore & Sabel, 1986) Piore Operations Management Functions Operations
Facility Location Facility Layout and Production Scheduling Quality Control Inventory Management / Modern Production Inventory Techniques Techniques Facility Location Facility
Resources Labor Raw Material Infrastructure Retail sites Customer interaction “Just in time” Silicon Valley (IT) Boston, New Jersey (chemicals, pharmaceuticals) Manhattan (financial services) Customers “Clusters” Types of Operations Types
Craft production High customization and variability in the product Eg. Glass blowing, fine musical instruments High standarization and uniformity in the product Eg. Car manufacturers Undifferentiated products Chemicals, agriculture Mass production, assembly line Continuous flow production, process plant Scheduling
Project Scheduling PERT / CPM Involves finding out the critical path and ensuring that activities in that sequence do not get delayed; Manufacture Throughput time – Time to produce an unit of output Capacity – Units of output in the unit of time Cycle time = 1 / Capacity Inventory
The amount and number of raw material, parts, and finished products that a company has in its possession; Raw material, components, WIP, finished goods Ordering costs Setup costs Holding costs Stockout costs Costs of maintaining inventory MRP, ERP and beyond MRP,
Materials Requirement Planning A computer-based production management system computer-based that uses sales forecasts to make sure that needed parts and materials are available at the right time and place; place; A software solution that addresses enterprise needs software taking the process view of the organization to meet the organizational goals tightly integrating all functions of an enterprise. of Enterprise Resource Planning Dimensions of Quality Dimensions
Performance Features Reliability Conformance Durability Serviceability Aesthetics Perceived Quality Total Quality Management Total
An integrated, principle-based, organization-wide An strategy for improving product and service quality; strategy Customer focus and satisfaction Continuous improvement and reduction of variation Teamwork Knowledge of tools
Benchmarking Just in time Six-Sigma Paradigm Six sigma quality is a quality measure that allows only 3.4 Six defects per million of opportunities. defects Just-in-Time and Lean Production Just-in-Time
Reducing setup times Increasing flexibility Reducing inventory costs Increasing quality Quality circles Authority to “stop the line” “Lifetime” employment Integrate suppliers into the design and planning process “Kanban” Promote networking across suppliers Worker empowerment Managing the supply chain Comparison of Assembly Costs as a Function of Annual Volume (from “The Second
Industrial Divide”, Piore & Sabel, 1986) Piore Take-Aways Take-Aways
Operations management refers to the set of Operations activities by which an enterprise transforms resources into the products and services it offers; resources Operations management comprises: Location Layout Quality management Scheduling (including MRP and ERP technologies) Inventory management ...
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This note was uploaded on 04/19/2011 for the course AEM 1200 taught by Professor Perez,p.d. during the Spring '06 term at Cornell University (Engineering School).
- Spring '06