Operations Management: Supply Chain & Logistics

• Operations management is part of a business that provides goods or services, conceptualizes everything, and is a system of processes.

Supply Chain

• Supply chain is involved in producing and delivering goods or services, it is a process of flow.

Logistics

• Logistics is the process of transportation from one place to another.

Basic Functions of an Organization

• Finance
• Operations
• Marketing
• Process management is how organizations achieve goals, using a procedure or method.
• A Process transforms inputs into outputs.

Upper-Management Processes

• Upper Management governs the operation of the organization, providing organizational governance and strategy.
• Top management includes roles such as CEO, CMO, CTO, President, and Managing Director.

Operational Processes

• Operational processes are core processes that make up the value stream (production/services).

Supporting Processes

• Supporting processes support the core processes.

Operations Decision-Making

• Operations decision-making is management characterized by scientific principles.
• Organized knowledge, empirical data and computations, systematic data analysis, and repeatable results are needed.
• Characteristics of decision-making range from single judgement to complex analysis.
• The type of analysis depends on the significance/duration of decisions, time availability/costs, and decision complexity.

Framework of Decision-Making

• Analytical/Scientific decision frameworks imply systematic steps.
• These steps are: defining the problem, establishing criteria, formulating a model, generating alternatives, evaluating alternatives, and implementation/monitoring.
• Decision methodology uses available information to determine appropriate analytical methods.

Risk and Uncertainty Methods

• Risk and uncertainty methods use probabilistic information about decision variables/outcomes.

Statistical Analysis

• Statistical analysis can be objective/subjective using probability.
• Techniques used for decision-making include hypothesis testing, statistics, decision theory, correlation/regression, forecasting, and ANOVA.
• Queuing theory analyzes queues for service systems, maintenance, and shop floor control.
• Simulation duplicates the essence of an activity or series of actions to show possible future happenings.
• A heuristic method is used for decision-making.
• Heuristic techniques use rules to solve scheduling, layout, and distribution problems, providing solutions for specific problems.

Network Analysis Techniques

• Network Analysis included decision trees, CPM and PERT Methods.
• They identify actions to control project activities.
• CPM and PERT methods determine how to finish a project the fastest.
• Utility theory, or preference theory, incorporates experiences/values into a formalized decision structure.

Possible Decision Criteria

• There are four main decision criteria:
  • Maximin
  • Maximax
  • Laplace
  • Minimax Regret
• Decision-making under uncertainty occurs when information on likely states of nature is unavailable.
• Extreme uncertainty methods occur when no information can assess the likelihood of alternative outcomes.

Strategies

• Game theory is a strategy that helps decision-makers when there is no information to choose a course of action when conditions are unknown.
• A coin flip is used when decision-makers are indifferent to the outcome.
• Maximin determines the worst possible payoff and picks the "best worst".
• The Pessimistic approach establishes a "guaranteed minimum"
• Maximax determines the best possible payoff.
• Maximize is an Optimistic approach, advising to “Go for it".
• Laplace determines the best average payoff.
• Laplace treats each state of nature as likely.
• Minimax Regret determines the worst regret and seeks to reduce the difference between the payoff that is realized and the best payoff for each state of nature.

Explore operations management, a core business function encompassing goods, services, and processes. Understand supply chains for production and logistics for transportation. Learn about organizational functions like finance, operations, and marketing, with a focus on process management and decision-making.