OPERATIONS

MANAGEMENT
OPRE 6260

Raymond Lutz
 Products, Processes, and
Performance - Chapter 1
Learning Objectives
An operation as a transformation
process
Product attributes / Operational
capabilities
Process drivers / Operations structure
 Operations and Strategy -
Chapter 2
Operational focus

Learning Objectives
Link between business strategy, operations
strategy, and operations structure
Strategy vs. Operational effectiveness
Process drivers / Operations structure
How to do an operational audit
 Operations and Strategy -
Chapter 2
Link between business strategy,
operations strategy, and operations
structure
Process classification and relationship with
strategy
Tradeoffs of price vs. variety competition:
trade off scale economies with variety
diseconomies
 Process Flow Measures -
Chapter 3
Learning Objectives
Process measures: time, inventory, and
throughput
What is an improvement?
Link financial and operational measures
Good operational measures are leading indicators of
financial performance
Using Littles Law for process flow analysis: CRU
Rental
Flow Time Analysis - Chapter
4
Learning Objectives
Process measures:
Flow time - manages critical activities
Capacity manages critical resources
Levers for improving
Flow time - manages critical activities
Capacity and throughput
Process capacity depends upon a zillion things
 Flow Rate and Capacity
Analysis - Chapter 5
Learning Objectives
Effect of product mix decisions on
process capacity
Marginal contribution per unit of bottleneck
capacity used
Process flow charts with multiple
products
 Flow Rate and Capacity
Analysis - Chapter 5
Backups may not occur in front of a
bottleneck
Bottlenecks may shift on adding
capacity, diminishing returns to capacity
investment
Inventory Analysis - Chapter 6

Learning Objectives
Increasing batch size of production or
purchase increases average inventories
and thus cycle time
Average inventory for a batch of size Q is
Q/2
The optimal batch size trades off setup cost
and holding cost
Inventory Analysis - Chapter 6
To reduce batch size, one has to reduce
setup time (cost)
Square-root relationship between Q and
(R,S)
If demand increases by a factor of 4, it is
optimal to increase batch size by a factor of 2
and produce twice as often
To reduce a batch size by a factor of 2, setup
cost has to be reduced by a factor of 4
 Managing Flow Variability:
Safety Inventory - Chapter 7
Learning Objectives
Postponement can be used to better
match supply and demand
Accurate response for fashion goods
Trade-off cost of over and understocking
 Managing Flow Variability:
Safety Capacity - Chapter 8
Learning Objectives
Queues build up due to variability
Reducing variability improves
performance
If service cannot be provided from
stock, safety capacity must be provided
to cover for variability
 Managing Flow Variability:
Safety Capacity - Chapter 8
Pooling servers improves performance
Demand and supply management in
servers
 Process Control and
Capability - Chapter 9
Learning Objectives
Every process displays variability - normal or
abnormal
Control charts monitor processes to identify
abnormal variability
Local control yields early detection and correction
of abnormal variability
Process in control indicates only its internal
stability
 Process Control and
Capability - Chapter 9
Process capability is its ability to meet
external customer needs
Improving process capability involves
changing the mean and reducing
normal variability, requiring a long term
investment
 Process Control and
Capability - Chapter 9
Robust, simple, standard, and mistake-
proof design improves process
capability
Joint, early involvement in design
improves quality, speed, and cost