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Summary Operations Management
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1 of 20Lecture 1
Operations management is the set of activities that creates value in the form of goods and
services by transforming inputs into outputs. During this course, we will look into the operations of
individual companies in the supply chain.
Essential functions:
1. Marketing - generates demand
2. Production/operations - creates the product
3. Finance/accounting - tracks how well the organization is doing, pays bills, collects the money.
Areas that will be dealt with:
1. Performance requirements and analysis
2. Process design
3. Planning and scheduling
Productivity
Measure of process improvement. Represents output relative to input. There is a difference
between single factor productivity and multi factor productivity (one kind of input vs. Multiple).
Productivity increase improves standard of living
Single factor productivity = Units produced/Input used
Multi factor productivity = Output/
Labor + material + energy + capital + miscellaneous
Pitfall 1: Always use the same unit of time, it is one of the most common mistakes. Day/week/year
will get switched up. It does not matter which one you take, as long as you are consistent.
Pitfall 2: Read carefully. Bring a marker
Overview: Planning and Scheduling
Long term
Intermediate-term
Short-term
Operations crossing the border
- Transnational (high cost reduction, high local responsiveness)
- Global (High cost reduction, low local responsiveness)
- International (Low cost reduction, low local responsiveness)
- multidomestic (low cost reduction, high local responsiveness)
2021-2022 Operations Management
,2 of 20
Learning curve effect
The time needed to produce a unit decreases with each additional unit , You get better at
something when you do it more often.
The time needed decreases at a decreasing rate as cumulative production increases
A decrease in time follows an exponential curve called the learning or experience curve.
Arithmetic approach
A learning rate of L, means that each time the production doubles, then the time needed for
producing a unit will equal the original production time multiplied by L.
Queuing theory
Queue is another name for waiting line. Balance cost of providing good service with cost of
customers waiting
Arrival: 1 person, machine, part that arrives and demands service (arrival rate is labda)
Queue discipline: Rules determining the order that arrivals receive service
Channel: number of servers
Phase: number of steps in service
Number of events that occur in an interval of time.
Mean service rate = mu
Mean service time = 1/mu
There are various types of queuing models
- Simple (M/M/1) (information booth at a mall)
- Multi-channel (M/M/s) (airline ticket counter)
- Constant service. (M/D/1) (automated car wash)
2021-2022 Operations Management
, 3 of 20
The first letter refers to the arrival process. M means ‘Poisson distributed’.
The second letter refers to the service process. M means ‘negative exponential’ service times. D
means deterministic (constant) service times.
The third letter refers to the number of service channels.
Steps to solve a typical exam question
1. Identify the appropriate waiting line model
2. Determine labda and mu
3. Identify the appropriate performance measure
4. Find the correct formula in the appendix
5. Fill out the formula
If the answer in step 1 is M/M/S, then steps 4 and 5 are not applicable.
Learn by heart!
Lq = labda * Wq Wq = Ws - 1/mu
Ls = labda * Ws Lq = Ls - labda/mu
Lecture 2
Deterministic performance estimation
Deterministic performance estimation is a way to analyse a production, for many organizations
part of the daily operations. This consists of three parts: waiting lines, learning curves and
deterministic performance estimation.
Why would you want to evaluate processes?
Various evaluation metrics: daily production, utilisation, work in process, etc.
Designing a process is not a static decision. Once there is a process, it is constantly assessed. It is
thus also continuously improved.
Why are there large differences between simulation studies and deterministic performance
estimation?
- In deterministic performance estimation we assume there is no uncertainty. In a simulation
model, we can imitate variability.
Three methods compared
Deterministic performance estimation
- widely applicable
- Easy and fast
- Rough estimate only
2021-2022 Operations Management
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