OM Midterm Reviewer PDF

**UNIT 1: EVOLUTION OF OPERATION MANAGEMENT** **Finance** -- handles cash flow, current assets, and capital investments. **Marketing** -- focuses on sales, customer demand generation, and understanding customer needs. **Operations Management (OM)** -- is the backbone of the company, like the cond...

**UNIT 1: EVOLUTION OF OPERATION MANAGEMENT** **Finance** -- handles cash flow, current assets, and capital investments. **Marketing** -- focuses on sales, customer demand generation, and understanding customer needs. **Operations Management (OM)** -- is the backbone of the company, like the conductor of an orchestra in a grand symphony of business. **The Role of Operations Management in Business** - The primary function of operations management is to oversee the transformation of a company\'s various resources (including people, facilities, materials, technology, and information) into the final products or services it offers. **Effective operations management** - has been a driving force behind the success of various companies. **Tactical decisions** -- Short-term decisions that focus on specific departments and tasks. **Strategic decisions** -- are made first and determine the direction of tactical decisions, which are made more frequently and routinely. **Manufacturing** -- organizations produce tangible goods that can be stocked in advance, while service organizations create intangible products that can\'t be pre-made. **Quasi-manufacturing organization** - that provides an intangible service: fast and reliable mail delivery. **Historical Milestones** - The practice of operations management, which involves managing the transformation of inputs into goods and services, is a concept as old as human civilization. ***INDUSTRIAL REVOLUTION:*** **The Industrial Revolution** - had a profound and lasting impact on the way goods are manufactured in contemporary times. **James Watt** -- invented steam engines in 1764. **Adam Smith** -- the concept of division of labor was introduced, famously described "The Wealth of Nations" in 1776. **Eli Whitney** -- introduced the concept of interchangeable parts in 1790. ***SCIENTIFIC MANAGEMENT:*** **Scientific management approach** -- faced criticism, especially from workers who believed that it was exploited by management to increase production without fair compensation. **Frederick W. Taylor** - aimed to enhance worker productivity and organizational output through systematic efficiency improvements. **Henry Ford** -- combined technology with scientific management, introducing the moving assembly line to manufacture Ford cars. ***THE HUMAN RELATIONS MOVEMENT:*** **Hawthorne studies** - These studies, carried out at a Western Electric plant in Hawthorne, Illinois during the 1930s, aimed to investigate how changes in the work environment, including alterations in lighting and room temperature, influenced the productivity of assembly-line workers. ***MANAGEMENT SCIENCE:*** **Management science** - Management science was primarily concerned with the development of quantitative techniques to address operations-related issues. **F.W. Harris** -- created the first mathematical model for inventory management in 1913. ***THE COMPUTER AGE:*** **Transformative era (1970s**) -- business operations as computers found widespread adoption. **Just-In-Time (JIT)** -- is an important approach to operations management. The key to coordinate the flow of materials so that the right parts arrive exactly when needed. **Total Quality Management (TQM**) -- aggressively aims to enhance product quality by getting rid of the causes of defects and making quality a central part of the company's culture. **Business process reengineering** - is about reshaping a company\'s methods increase efficiency, improve quality, and reduce costs. **Flexibility** - where companies aim to deliver highly personalized products or services on a large scale. **Time-Based Competition** - Time-based competition represents a pivotal trend in today\'s corporate landscape, emphasizing the race to innovate and deliver new products and services more swiftly than competitors. **Supply Chain Management (SCM**) - plays a pivotal role in efficiently overseeing the flow of materials and information from raw material suppliers to the end customers. **Global Marketplace** - This means considering customers, competitors, and suppliers on a worldwide scale. **Sustainability and Green Options** - This involves reducing waste, recycling, and reusing products and parts, known as sustainability or green operations. **Electronic Commerce (e-commerce)** - is doing business over the Internet, which has become a vital tool for companies since the late 1990s. **Outsourcing and Flattening of the world** - is when a company gets things it needs from an outside provider. This can be just one part of the work or even the entire process. **Operation managers** -- are the people responsible for making sure a company runs smoothly. **UNIT 2: STRATEGY AND PRODUCTIVITY** ***DEVELOPMENT OF BUSINESS STRATEGY:*** **Mission** -- defines what the company is all about. **Environmental Scanning** -- watching for trends in the market, the economy, the politics, and society. **Trends in the Environment** -- a company must watch for new trends, like what the customers want and how competitors are doing things. ***ETHICS IN SUPPLIER MANAGEMENT:*** **Supply Chain** -- is the network of activities that delivers a finished product or service to the customer. **Supply chain management** -- is the vital business function that coordinates and manages all the activities of the supply chain linking suppliers, transporters, internal departments, third-party companies, and information systems. **UNIT 3: TOTAL QUALITY MANAGEMENT (TQM)** **Total Quality Management (TQM)** -- it's about improving quality at every level of the organization. **Quality is a bit like beauty** -- it's in the eye of beholder. Different people see quality in different ways. **Conformance to Specifications** -- these measure how well a product or service meets the specific requirements set by its designers. **Fitness for Use** -- this focuses on how well a product does the job it's meant for. **Value for Price Paid** -- quality is linked to the price you pay. **Support Services Provided** -- quality isn't just about the product itself; it also includes the people, processes, and how the organizations handles things. **Psychological Criteria** -- it's about the feelings and judgements people have about a product or services. ***THE COST OF QUALITY:*** **Prevention Cost** -- these are the costs incurred to prevent poor quality from happening. **Appraisal Cost** -- these are the costs involved in checking for defects. **Internal Failure Cost** -- these are costs related to discovering poor quality before the product reaches customers. **External Failure Cost** -- these costs are associated with quality problems that occur after the products has reached customers. **Walter A. Shewhart** -- a statistician at Bell Labs during the 1920s and 1930s. Studied randomness and recognized that variability existed in all manufacturing process. Also, He developed quality control charts. **W. Edwards Deming** -- referred to as the "father of quality control", assisted many Japanese companies in improving quality. **Joseph M. Juran** -- is considered to have had the greatest impact on quality management. **Armand V. Feigenbaum** -- introduced the concept of total quality control. **Philip B. Crosby** -- another recognized guru of TQM, developed the phrase "Do it right the first time". **Kaoru Ishikawa** -- is best known for the development of quality tools called cause and effects diagrams, also called fishbone or Ishikawa diagrams. **Genichi Taguchi** -- is a Japanese quality expert known for his work in product design. ***FEATURES OF THE TOTAL QUALITY MANAGEMENT PHILOSOPHY:*** **Customer Focus** -- companies must always listen to their customers and gather information through surveys, interviews, and more to stay in sync with customer needs. **Continuous Improvement** -- learning problem solving, and making things better. "kaizen" in Japanese. **Cause-and-effect diagrams** -- help identify what might be causing quality problems. **Flowcharts** -- is like a picture that shows the order of steps in a process or operation. **Checklists** -- is a list of common problems and how many times they've been seen. **Control Charts** -- are an important tool for quality control. **Scatter Diagrams** -- are like graphs that helps us see if two things are related to each other. **Pareto Analysis** -- helps us find out which problems matter the most. **Histograms** -- is a chart that shows how often different values appear for something you're measuring. ***QUALITY AWARDS AND QUALITY CERTIFICATIONS:*** **Malcolm Baldrige National Quality Award** -- this award started in 1987 to promote and reward companies that focus on high-quality standards. **The Deming Prize** -- this is an award in Japan for companies that are good at improving quality. **ISO 9000 Standards** - is made up of a set of rules and a certification process. The company must show lots of documents about how they do quality, like how they check quality, how they train workers, and more. **ISO 14000 Standards** -- focuses on three things; Management System Standards, Operation Standards, and Environmental System Standards. **UNIT 4: QUALITY CONTROL AND SIX SIGMA** ***CATEGORIES OF STATISTICAL QUALITY CONTROL (SQC):*** **Descriptive Statistics** -- these tools describe quality characteristics and relationships using stats like mean, standard deviation, range, and data distribution. **Acceptance Sampling** -- this method involves randomly inspecting a sample of goods to decide whether to accept or reject an entire batch based on the results. ***TWO MAIN TYPES OF VARIATION:*** **Common Causes of Variation** -- they're unavoidable and stem from slight variations in processing. **Assignable Causes of Variation** -- can be identified and corrected to maintain product quality. **Descriptive statistics** -- describes certain characteristics of a product and a process. **Mean** -- is a statistic that measures the central tendency of a set of data. **Distribution of Data** -- a third descriptive statistic used to measure quality characteristics is the shape of the distribution of the observed data. **The Six Sigma** -- originally devised by Motorola in the 1980s with the aim of enhancing processes and eradicating flaws. **UNIT 5: LEAN SYSTEMS** ***THE CORE BELIEFS OF JUST-IN-TIME (JIT) PHILOSOPHY:*** 1. Eliminate Waste 2. Broad View of Operations 3. Simplicity 4. Continuous Improvement 5. Visibility 6. Flexibility ***THE DIFFERENCE BETWEEN "PUSH" AND "PULL" SYSTEMS:*** **Pull system** -- is a manufacturing strategy where products are only made when they are needed by customers. **Push system** -- where products are made in advance of demand. ***THE KEY ELEMENTS OF JIT MANUFACTURING:*** **Just-in-time manufacturing** -- this element focuses on the production system to make JIT possible. **Total quality management (TQM)** -- is a philosophy that focuses on continuous improvement of all aspects of the organization. **Respect for people** -- this element emphasizes the importance of employee empowerment and involvement. ***THE ELEMENT OF TQM AND THEIR ROLE IN JIT:*** **Quality at the source** -- this concept means that quality problems should be identified and corrected at the point where they occur, rather than waiting until the product is finished and ready to be shipped. **Continuous improvement** -- this concept means that the organization should always strive to improve its performance in all areas. **Respect for people** -- this concept means that all employees should be treated with respect and dignity and that their contributions should be valued. ***KEY ROLES THAT PEOPLE PLAY IN JIT:*** 1. Identifying and solving problems 2. Continuous improvement 3. Teamwork 4. Quality ***EXAMPLES OF JIT CONCEPTS THAT CAN BE APPLIED IN SERVICE ORGANIZATIONS:*** 1. Improved Quality 2. Uniform facility loading 3. Use of multifunction workers 4. Reductions in cycle time 5. Minimizing setup times and parallel processing 6. Workplace organizations ***IMPACT OF JIT ON ALL FUNCTIONAL AREAS OF THE COMPANY:*** 1. Accounting 2. Marketing 3. Finance 4. Information systems (IS) **UNIT 6: FORECASTING AND DEMAND PLANNING** **Forecasts** -- are like predictions about the future, but they're rarely perfect. Predicting the future is tricky but it's uncertain. ***TYPES OF FORECASTING METHODS AND THEIR CHARACTERISTICS:*** **Quantitative forecasting method** -- are based on mathematical modeling. **Qualitative forecasting method** -- has the advantage of being able to incorporate last-minute "inside information" in the forecasts. **Executive Opinion** -- this method involves a group of managers getting together and making a forecast based on their collective insights. **Market Research** -- surveys and interviews are used to figure out what customers like, dislike, and want. **The Delphi Method** -- is about reaching a consensus among a group of experts while keeping their identities anonymous. **Tha Naïve Method** -- is one of the simplest forecasting models. It assumes that the next period's forecast is equal to the current period's actual. **Linear Trend Line Linear** -- is a time series technique that computes a forecast with trend by drawing a straight line through a set of data. **Forecast Accuracy** -- can be assessed only if forecast performance is measured over time. ***FORECASTING SOFTWARE:*** **Spreadsheets** -- these are like Excel, easy to use, and good for basic forecasting. **Statistical Packages** -- programs like SPSS and SAS are super powerful for stats and forecasting. **Specialty Forecasting Packages** -- offers a wide range of forecasting tools but might not have extensive stats capabilities. ***GUIDELINES FOR CHOOSING FORECASTING SOFTWARE:*** 1. Check features 2. Platform compatibility 3. Ease of use 4. Customization 5. Interactive vs. Batch 6. Data size 7. Support 8. Accuracy