1

DECISION MAKING IN OMChapter 1. 10-

• CORPORATE STRATEGY

• BUSINESS STRATEGY– COMPETITIVE PRIORITIES

• OPERATIONS STRATEGY

• OPERATING DECISIONS

2

COMPETITIVE STRAGTEGIES AND OPERATIONS STRATEGY

Chapter 1

• Competitive priorities: P, Q, A, F 14-

• Planning areas in operations = Operations Strategy. These were listed in a previous slide.– Product/Service Design

– Process selection/ Vertical Integration decisions

– Technology selection

– Quality planning

– Work force/Human resources planning

– Capacity planning

– Location of facilities

– Layout of facilities

– Supplier Selection

3

PLANNING AREA 1: PRODUCT/SERVICE DESIGN

Notes

• Information for design; QFD

• Product developing process – Technical-legal-environmental-ethical review

– Market feasibility

– Financial feasibility

• Manufacturabilty

• Service design– Service package

4

Planning Area 2: Process Selection -Chapter 3

• Process Types/Choice 98-– Job, batch, line and continuous– Job/batch process v. Line process

• Volume and variety

• Product-Process matrix 98

5

PROCESS SELECTION

• Process determines other dimensions

Line flow Flexible flow

• Volume High Low

• Variation

• Resource flexibility 106

• Cap.intensity/Automation107

• Vertical Integration

• Customer Involvement 105

6

PROCESS SELECTION

• Additional Concepts– Fixed v. Flexible automation

• Modern technologies: CAD, CAM, Robotics, FMS

– Economies of scope 109– Process re-engineering 113– Process analysis and improvement 112 and chapter 6

• Systematic approach 124; Six sigma approach 182-• Documenting the process 126-

7

PROCESS SELECTION

– Measurement and analysis tools 133-

– Benchmarking 139

– Simulation 137

• Process choice in services 95 chapter 3– Customer contact 95

– Degree of customization (divergence) 96

– Emphasis on front office/back office

– Customer contact matrix for service processes 97

8

Planning Area 3: Quality Planning Chapter 5

– Evolution of Quality Management

• Inspection based quality control (QC)

• Statistical Quality Control (SQC)

• Inspection alone does not improve quality

• Quality must be managed: P, O, D/L, C

• Quality improvement is a long term strategy

• QI is a company-wide effort

• Customer focus and supplier involvement

• TQM; continuous improvement 180

• Deming, Juran and Crosby

• Malcolm Baldrige Award 201-

• ISO 9000 certification 200

9

USING QUALITY AS A COMPETITIVE WEAPON

• Improved quality could increases market share

• ….. and fetch higher prices

• ….and reduce costs

• The result is higher profits.

10

WHY WOULD COSTS DECREASE WHEN QUALITY IS IMPROVED ?

• Costs of quality 176

• Prevention costs 176

• Appraisal costs 177

• Internal failure costs 177

• External failure costs 177

• Short term effects

• Long term effects

11

QUALITY PLANNING

• Customer perception of quality 178– Conformance to specifications – Value– Fitness for use– Aesthetics– Durability– Reliability

12

QUALITY PLANNING

• Definition of Value: meeting or exceeding customer expectations– customer expectations– management understanding– design of products/services, processes– delivery to customer– customer perception

• Customer satisfaction:

13

QUALITY PLANNING

• Elements of TQM

– Leadership (B1)

• Vision, cultural change

• Commitment, Involvement

• Strategic planning (B2)

– Employee Involvement (B3)180

• Participation

• Teams and teamwork 180 Types of teams

• Job design: enlargement, enrichment, rotation

• Empowerment

14

QUALITY PLANNING

– Elements of TQM

• Customer Focus (B4)• Activities in customer focus• Process management (B5)• Measurement and Reporting (B6 and 7)

– Statistical Quality Control 183-• Variation in output 184• Control charts: attributes 193 variables 188• Acceptance sampling. Sampling plan and size 183• Process capability 195- PC Ratio 197