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Chapter 1-17
Operations Management

Roberta Russell & Bernard W. Taylor, III
Organization of This Text:
Part I – Operations Management
Intro. to Operations and
Supply Chain Management:
Quality Manage...
Organization of This Text:
Part II – Supply Chain Management
Supply Chain
Strategy and Design:
Global Supply Chain
Procure...
Learning Objectives of
this Course
Gain an appreciation of strategic importance
of operations and supply chain management
...
Chapter 1
Introduction to Operations and
Supply Chain Management
Operations Management
Roberta Russell & Bernard W. Taylor...
Lecture Outline
What Operations and Supply Chain
Managers Do
Operations Function
Evolution of Operations and Supply Chain
...
What Operations and
Supply Chain Managers Do
What is Operations Management?
design, operation, and improvement of producti...
Transformation Process
Physical: as in manufacturing operations
Locational: as in transportation or
warehouse operations
E...
Operations as a
Transformation Process
INPUT
•Material
•Machines
•Labor
•Management
•Capital

TRANSFORMATION
PROCESS

OUTP...
Operations Function
Operations
Marketing
Finance and
Accounting
Human
Resources
Outside
Suppliers
1-10
How is Operations Relevant to my
Major?
Accounting
Information
Technology
Management

“As an auditor you must
understand t...
How is Operations Relevant to my
Major? (cont.)
Economics
Marketing

Finance

“It’s all about processes. I live
by flowcha...
Evolution of Operations and
Supply Chain Management
Craft production
process of handcrafting products or
services for indi...
Evolution of Operations and
Supply Chain Management (cont.)
Scientific management
systematic analysis of work methods

Mas...
Historical Events in
Operations Management
Era
Industrial
Revolution

Events/Concepts

Dates

Originator

Steam engine
Div...
Historical Events in
Operations Management (cont.)
Era

Operations
Research

Dates

Originator

Hawthorne studies
Human
Re...
Historical Events in
Operations Management (cont.)
Era

Events/Concepts Dates Originator

JIT (just-in-time)
TQM (total qu...
Historical Events in
Operations Management (cont.)
Era

Events/Concepts

Internet
Revolution

Internet, WWW, ERP,
1990s
su...
Evolution of Operations and
Supply Chain Management (cont.)
Supply chain management
management of the flow of information,...
Globalization and
Competitiveness
Why “go global”?
favorable cost
access to international markets
response to changes in d...
Globalization and
Competitiveness (cont.)

Hourly Compensation Costs for Production Workers
Source: U.S. Bureau of Labor S...
Globalization and
Competitiveness (cont.)

World Population Distribution
Source: U.S. Census Bureau, 2006.
1-22
Globalization and
Competitiveness (cont.)

Trade in Goods as % of GDP
(sum of merchandise exports and imports divided by G...
Productivity and
Competitiveness
Competitiveness
degree to which a nation can produce goods and
services that meet the tes...
Productivity and
Competitiveness (cont.)

Measures of Productivity

1-25
Productivity and
Competitiveness (cont.)

Average Annual Growth Rates in Productivity, 1995-2005.
1995Source: Bureau of La...
Productivity and
Competitiveness (cont.)

Average Annual Growth Rates in Output and Input, 1995-2005
1995Source: Bureau of...
Productivity and
Competitiveness (cont.)
Retrenching
productivity is increasing, but both output and input
decrease with i...
Strategy and Operations
Strategy
Provides direction for achieving a mission

Five Steps for Strategy Formulation
Defining ...
Strategic Planning
Mission
and Vision

Corporate
Strategy

Marketing
Strategy

Operations
Strategy

Financial
Strategy
1-3...
Order Winners
and Order Qualifiers

Source: Adapted from Nigel Slack, Stuart Chambers, Robert Johnston, and Alan
Betts, Op...
Positioning the Firm
Cost
Speed
Quality
Flexibility

1-32
Positioning the Firm:
Cost
Waste elimination
relentlessly pursuing the removal of all waste

Examination of cost structure...
Positioning the Firm:
Speed
fast moves, fast adaptations, tight linkages
Internet
conditioned customers to expect immediat...
Positioning the Firm:
Quality
Minimizing defect rates or conforming to
design specifications; please the customer
RitzRitz...
Positioning the Firm:
Flexibility
ability to adjust to changes in product mix,
production volume, or design
National Bicyc...
Policy Deployment
Policy deployment
translates corporate strategy into measurable
objectives

Hoshins
action plans generat...
Policy Deployment

Derivation of an Action Plan Using Policy Deployment
1-38
Balanced Scorecard
Balanced scorecard
measuring more than financial performance
finances
customers
processes
learning and ...
Balanced Scorecard
Balanced Scorecard Worksheet

1-40
Balanced Scorecard

Radar Chart

Dashboard

1-41
Operations Strategy
Services
Products

Capacity

Facilities

Human
Resources

Sourcing

Process
and
Technology

Quality

O...
Chapter 1 Supplement
Decision Analysis
Operations Management
Roberta Russell & Bernard W. Taylor, III
Lecture Outline
Decision Analysis
Decision Making without Probabilities
Decision Analysis with Excel
Decision Analysis wit...
Decision Analysis
Quantitative methods
a set of tools for operations manager

Decision analysis
a set of quantitative deci...
Decision Making
Without Probabilities
States of nature
Events that may occur in the future
Examples of states of nature:
h...
Payoff Table
Payoff table
method for organizing and illustrating payoffs from different
decisions given various states of ...
Decision Making Criteria Under
Uncertainty
Maximax
choose decision with the maximum of the
maximum payoffs

Maximin
choose...
Decision Making Criteria Under
Uncertainty (cont.)
Hurwicz
choose decision in which decision payoffs are
weighted by a coe...
Southern Textile
Company
STATES OF NATURE
Good Foreign

DECISION
Expand
Maintain status quo
Sell now

Poor Foreign

Compet...
Maximax Solution
STATES OF NATURE
Good Foreign

DECISION
Expand
Maintain status quo
Sell now
Expand:
Status quo:
Sell:

Po...
Maximin Solution
STATES OF NATURE
Good Foreign

DECISION
Expand
Maintain status quo
Sell now

Expand:
Status quo:
Sell:

P...
Minimax Regret Solution
Good Foreign
Competitive Conditions

Poor Foreign
Competitive Conditions

$1,300,000 - 800,000 = 5...
Hurwicz Criteria
STATES OF NATURE
Good Foreign

DECISION
Expand
Maintain status quo
Sell now

α = 0.3

Poor Foreign

Compe...
Equal Likelihood Criteria
STATES OF NATURE
Good Foreign

DECISION
Expand
Maintain status quo
Sell now

Poor Foreign

Compe...
Decision Analysis with
Excel

Supplement 1-56
1-
Decision Analysis with
OM Tools

Supplement 1-57
1-
Decision Making with
Probabilities
Risk involves assigning probabilities to
states of nature
Expected value
a weighted ave...
Expected value
EV (x) =
(x
p(xi)xi

n

∑
i =1

where
xi = outcome i
p(xi) = probability of outcome i

Supplement 1-59
1-
Decision Making with
Probabilities: Example
STATES OF NATURE
Good Foreign
Competitive Conditions

DECISION
Expand
Maintain...
Decision Making with
Probabilities: Excel

Supplement 1-61
1-
Expected Value of
Perfect Information
EVPI
maximum value of perfect information to
the decision maker
maximum amount that ...
EVPI Example
Good conditions will exist 70% of the time
choose maintain status quo with payoff of $1,300,000

Poor conditi...
Sequential
Decision Trees
A graphical method for analyzing
decision situations that require a
sequence of decisions over t...
Evaluations at Nodes
Compute EV at nodes 6 & 7
EV(node 6)= 0.80($3,000,000) + 0.20($700,000) = $2,540,000
EV(
6)=
EV(node ...
Decision Tree Analysis
$2,000,000

$1,290,000
0.60

Market growth

2
0.40
$225,000
$2,540,000

$3,000,000

0.80
$1,740,000...
Chapter 2
Quality Management
Operations Management
Roberta Russell & Bernard W. Taylor, III
Lecture Outline
What Is Quality?
Evolution of Quality
Management
Quality Tools
TQM and QMS
Focus of Quality
Management—
Ma...
What Is Quality?
Oxford American Dictionary
a degree or level of excellence

American Society for Quality
totality of feat...
What Is Quality:
Customer’s Perspective
Fitness for use
how well product or
service does what it is
supposed to

Quality o...
Dimensions of Quality:
Manufactured Products
Performance
basic operating characteristics of a product; how
well a car hand...
Dimensions of Quality:
Manufactured Products (cont.)
Conformance
degree to which a product meets pre–established
pre–
stan...
Dimensions of Quality:
Manufactured Products (cont.)
Aesthetics
how a product looks, feels, sounds,
smells, or tastes

Saf...
Dimensions of Quality:
Services
Time and timeliness
how long must a customer wait for service,
and is it completed on time...
Dimensions of Quality:
Service (cont.)
Courtesy:
how are customers treated by employees?
are catalogue phone operators nic...
Dimensions of Quality:
Service (cont.)
Accessibility and convenience
how easy is it to obtain service?
does service repres...
What Is Quality:
Producer’s Perspective
Quality of conformance
making sure product or service is produced
according to des...
Meaning of Quality

2-78
What Is Quality:
A Final Perspective
Customer’s and producer’s perspectives
depend on each other
Producer’s perspective:
p...
Evolution of Quality Management:
Quality Gurus
Walter Shewart
In 1920s, developed control charts
Introduced term “quality ...
Evolution of Quality Management:
Quality Gurus (cont.)
Armand V. Feigenbaum
In 1951, introduced concepts of total quality ...
Deming’s 14 Points
1. Create constancy of purpose
2. Adopt philosophy of prevention
3. Cease mass inspection
4. Select a f...
Deming’s 14 Points (cont.)
6. Institute worker training
7. Instill leadership among
supervisors
8. Eliminate fear among em...
Deming’s 14 Points (cont.)
11. Remove numerical quotas
12. Enhance worker pride
13. Institute vigorous training and
educat...
Deming Wheel: PDCA Cycle

2-85
Quality Tools

Process Flow
Chart
Cause-andCause-andEffect Diagram
Check Sheet
Pareto Analysis

Histogram
Scatter Diagram
...
Flow Chart

2-87
Cause-andCause-and-Effect Diagram
Cause-andCause-and-effect diagram (“fishbone” diagram)
chart showing different categorie...
Cause-andCause-and-Effect Matrix
Cause-andCause-and-effect matrix
grid used to prioritize causes of quality problems

2-89
Check Sheets and Histograms

2-90
Pareto Analysis
Pareto analysis
most quality problems result from a few causes

2-91
Pareto Chart

2-92
Scatter Diagram

2-93
Control Chart

2-94
TQM and QMS
Total Quality Management (TQM)
customercustomer-oriented, leadership, strategic
planning, employee responsibil...
Focus of Quality Management—
Management—
Customers
TQM and QMSs
serve to achieve customer satisfaction

Partnering
a relat...
Role of Employees in
Quality Improvement
Participative
problem solving
employees involved in
qualityquality-management
eve...
Quality Circles
and QITs
Organization
8-10 members
Same area
Supervisor/moderator

Quality circle
group of workers
and sup...
Quality in Services
Service defects are not always easy
to measure because service output
is not usually a tangible item
S...
Quality Attributes in
Services
Principles of TQM apply
equally well to services
and manufacturing
Timeliness
how quickly a...
Six Sigma
A process for developing and delivering
virtually perfect products and services
Measure of how much a process
de...
Six Sigma:
Breakthrough Strategy—DMAIC
Strategy—
DEFINE

MEASURE

ANALYZE

IMPROVE

CONTROL

3.4 DPMO

67,000 DPMO
cost = ...
Six Sigma:
Black Belts and
Green Belts

Black Belt
project leader

Master Black Belt
a teacher and mentor
for Black Belts
...
Six Sigma
Design for Six Sigma (DFSS)
a systematic approach to designing products and
processes that will achieve Six Sigm...
Cost of Quality
Cost of Achieving Good Quality
Prevention costs
costs incurred during product design

Appraisal costs
cost...
Prevention Costs
Quality planning costs
costs of developing and
implementing quality
management program

ProductProduct-de...
Appraisal Costs
Inspection and testing
costs of testing and inspecting materials, parts, and
product at various stages and...
Internal Failure Costs
Scrap costs
costs of poor-quality
poorproducts that must be
discarded, including labor,
material, a...
External Failure Costs
Customer complaint costs
costs of investigating and
satisfactorily responding to a
customer complai...
Measuring and
Reporting Quality Costs
Index numbers
ratios that measure quality costs against a
base value
labor index
rat...
Quality–
Quality–Cost Relationship
Cost of quality
difference between price of
nonconformance and conformance
cost of doin...
Effect of Quality
Management on Productivity
Productivity
ratio of output to input

Quality impact on productivity
fewer d...
Computing Product
Cost per Unit
Product Cost

(Kd )(I) +(Kr )(R)
=
Y

where:
Kd = direct manufacturing cost per unit
I = i...
Computing Product Yield
for Multistage Processes
Y = (I)(%g1)(%g2) … (%gn)

where:
I = input of items to the production pr...
Quality–
Quality–Productivity Ratio
QPR
productivity index that includes productivity and
quality costs

QPR =

(good-qual...
Malcolm Baldrige Award
Created in 1987 to stimulate growth of
quality management in United States
Categories
Leadership
In...
Other Awards for Quality
National individual
awards
Armand V. Feigenbaum
Medal
Deming Medal
E. Jack Lancaster Medal
Edward...
ISO 9000
A set of procedures and
policies for international
quality certification of
suppliers
Standards
ISO 9000:2000
Qua...
ISO 9000 Certification,
Implications, and Registrars
ISO 9001:2000—only
9001:2000—
standard that carries thirdthirdparty c...
Chapter 3
Statistical Process Control
Operations Management
Roberta Russell & Bernard W. Taylor, III
Lecture Outline
Basics of Statistical Process Control
Control Charts
Control Charts for Attributes
Control Charts for Vari...
Basics of Statistical
Process Control
Statistical Process Control
(SPC)
monitoring production process
to detect and preven...
Basics of Statistical
Process Control (cont.)
Random
inherent in a process
depends on equipment
and machinery,
engineering...
SPC in Quality Management
SPC
tool for identifying problems in
order to make improvements
contributes to the TQM goal of
c...
Quality Measures:
Attributes and Variables
Attribute
a product characteristic that can be
evaluated with a discrete respon...
SPC Applied to
Services
Nature of defect is different in services
Service defect is a failure to meet
customer requirement...
SPC Applied to
Services (cont.)
Hospitals
timeliness and quickness of care, staff responses to requests,
accuracy of lab t...
SPC Applied to
Services (cont.)
FastFast-food restaurants
waiting time for service, customer complaints,
cleanliness, food...
Where to Use Control Charts
Process has a tendency to go out of control
Process is particularly harmful and costly if it
g...
Control Charts
A graph that establishes
control limits of a
process
Control limits
upper and lower bands of
a control char...
Process Control Chart
Out of control
Upper
control
limit
Process
average
Lower
control
limit

1

2

3

4

5

6

7

8

9

1...
Normal Distribution

95%
99.74%
- 3σ

- 2σ

- 1σ

µ=0

1σ

2σ

3σ

3-132
A Process Is in
Control If …
1. … no sample points outside limits
2. … most points near process average
3. … about equal n...
Control Charts for
Attributes
p-chart
uses portion defective in a sample

c-chart
uses number of defective items in
a samp...
p-Chart
UCL = p + zσp
LCL = p - zσp
z = number of standard deviations from
process average
p = sample proportion defective...
Construction of p-Chart
pSAMPLE

1
2
3
:
:
20

NUMBER OF
DEFECTIVES

PROPORTION
DEFECTIVE

6
0
4
:
:
18
200

.06
.00
.04
:...
Construction of p-Chart (cont.)
pp=

total defectives
total sample observations

UCL = p + z

p(1 - p)
n

= 200 / 20(100) ...
0.20
UCL = 0.190

0.18

Construction
of p-Chart
p(cont.)

Proportion defective

0.16
0.14
0.12
0.10

p = 0.10

0.08
0.06
0...
c-Chart

UCL = c + zσc
LCL = c - zσc

σc =

c

where
c = number of defects per sample

3-139
c-Chart (cont.)
Number of defects in 15 sample rooms

SAMPLE

1
2
3

NUMBER
OF
DEFECTS

:
:
15

c=

12
8
16

:
:
15
190

1...
24
UCL = 23.35

c-Chart
(cont.)

Number of defects

21
18
c = 12.67
15
12
9
6
LCL = 1.99

3

2

4

6

8

10

12

14

16

S...
Control Charts for
Variables
Range chart ( R-Chart )
Ruses amount of dispersion in a
sample

Mean chart ( x -Chart )
uses ...
x-bar Chart:
Standard Deviation Known
=
UCL = x + zσx

LCL = = - zσx
x

x1 + x2 + ... xn
n

=
x =
where
=

x = average of ...
x-bar Chart Example:
Standard Deviation Known (cont.)

3-144
x-bar Chart Example:
Standard Deviation Known (cont.)

3-145
x-bar Chart Example:
Standard Deviation Unknown
=
UCL = x + A2R

=
LCL = x - A2R

where

x = average of sample means
3-146
Control
Limits

3-147
x-bar Chart Example:
Standard Deviation Unknown
OBSERVATIONS (SLIP- RING DIAMETER, CM)
(SLIPSAMPLE k

1

2

3

4

5

x

R
...
x-bar Chart Example:
Standard Deviation Unknown (cont.)
∑R

R=

=
x=

k

∑x
k

=

=

1.15
10

= 0.115

50.09 5.01 cm
=
10
...
5.10 –
5.08 –

UCL = 5.08

5.06 –

Mean

5.04 –
=
x = 5.01

5.02 –
5.00 –

x- bar
Chart
Example
(cont.)

4.98 –
4.96 –

LC...
R- Chart
UCL = D4R
R=

LCL = D3R
∑R
k

where
R = range of each sample
k = number of samples
3-151
R-Chart Example
OBSERVATIONS (SLIP-RING DIAMETER, CM)
(SLIPSAMPLE k

1

2

3

4

5

x

R

1

5.02

5.01

4.94

4.99

4.96
...
R-Chart Example (cont.)
UCL = D4R = 2.11(0.115) = 0.243
LCL = D3R = 0(0.115) = 0
Retrieve Factor Values D3 and D4

Example...
R-Chart Example (cont.)
0.28 –
0.24 –

UCL = 0.243

Range

0.20 –
0.16 –

R = 0.115

0.12 –
0.08 –
0.04 –
0–

LCL = 0
|
|
...
Using x- bar and R-Charts
xRTogether
Process average and process variability must be in control
It is possible for samples...
Control Chart Patterns
Run
sequence of sample values that display same characteristic
Pattern test
determines if observati...
Control Chart Patterns (cont.)
UCL

UCL
LCL
Sample observations
consistently below the
center line

LCL
Sample observation...
Control Chart Patterns (cont.)
UCL

UCL
LCL
Sample observations
consistently increasing

LCL
Sample observations
consisten...
Zones for Pattern Tests
=
3 sigma = x + A2R

UCL
Zone A

= 2
2 sigma = x +
(A
(A2R)
3

Zone B
= 1
1 sigma = x +
(A
(A2R)
3...
Performing a Pattern Test
SAMPLE
1
2
3
4
5
6
7
8
9
10

x

ABOVE/BELOW

UP/DOWN

ZONE

4.98
5.00
4.95
4.96
4.99
5.01
5.02
5...
Sample Size Determination

Attribute charts require larger sample sizes
50 to 100 parts in a sample
Variable charts requir...
SPC with Excel

3-162
SPC with Excel and OM Tools

3-163
Process Capability
Tolerances
design specifications reflecting product
requirements

Process capability
range of natural v...
Process Capability (cont.)
Design
Specifications
(a) Natural variation
exceeds design
specifications; process
is not capab...
Process Capability (cont.)
Design
Specifications
(c) Design specifications
greater than natural
variation; process is
capa...
Process Capability Measures
Process Capability Ratio
Cp =

tolerance range
process range
upper specification limit lower s...
Computing Cp
Net weight specification = 9.0 oz ± 0.5 oz
Process mean = 8.80 oz
Process standard deviation = 0.12 oz

Cp =
...
Process Capability Measures
Process Capability Index
=
Cpk = minimum

x - lower specification limit
3σ

,

upper specifica...
Computing Cpk
Net weight specification = 9.0 oz ± 0.5 oz
Process mean = 8.80 oz
Process standard deviation = 0.12 oz
=
x -...
Process Capability
with Excel

3-171
Process Capability
with Excel and OM Tools

3-172
Chapter 3 Supplement
Acceptance Sampling
Operations Management
Roberta Russell & Bernard W. Taylor, III
Lecture Outline
SingleSingle-Sample Attribute Plan
Operating Characteristic Curve
Developing a Sampling Plan with Excel
Av...
Acceptance Sampling
Accepting or rejecting a production lot based
on the number of defects in a sample
Not consistent with...
Single–
Single–Sample
Attribute Plan
Single sampling plan
N = lot size
n = sample size (random)
c = acceptance number
d = ...
Producer’s and
Consumer’s Risk
AQL or acceptable quality level
proportion of defects consumer will accept in
a given lot

...
Producer’s and
Consumer’s Risk (cont.)
Good Lot

Reject

No Error

Type I Error
Producer’ Risk

Bad Lot

Accept

Type II E...
Operating Characteristic
(OC) Curve
shows probability of accepting lots of
different quality levels with a specific
sampli...
OC Curve (cont.)
1.00 –
α = 0.05

Probability of acceptance, Pa

0.80 –

OC curve for n and c

0.60 –

0.40 –

0.20 –
β = ...
Developing a Sampling Plan
with OM Tools
ABC Company produces mugs
in lots of 10,000. Performance
measures for quality of ...
Average Outgoing
Quality (AOQ)
Expected number of defective
items that will pass on to
customer with a sampling plan
Avera...
AOQ Curve

Supplement 3-183
3-
DoubleDouble-Sampling Plans
Take small initial sample
If # defective ≤ lower limit, accept
If # defective > upper limit, r...
MultipleMultiple-Sampling Plans
Uses smaller sample sizes
Take initial sample
If # defective ≤ lower limit, accept
If # de...
Chapter 4
Product Design
Operations Management
Roberta Russell & Bernard W. Taylor, III
Lecture Outline
Design Process
Concurrent Design
Technology in Design
Design Reviews
Design for Environment
Design for Rob...
Design Process
Effective design can provide a competitive
edge
matches product or service characteristics with
customer re...
Design Process (cont.)
Product design
defines appearance of product
sets standards for performance
specifies which materia...
Design Process (cont.)

4-190
Idea Generation
Company’s own
R&D department
Customer complaints
or suggestions
Marketing research
Suppliers

Salespersons...
Idea Generation (cont.)
Perceptual Maps
Visual comparison of
customer perceptions

Benchmarking
Comparing product/process
...
Perceptual Map of
Breakfast Cereals

4-193
Feasibility Study
Market analysis
Economic analysis
Technical/strategic analyses
Performance specifications

4-194
Rapid Prototyping
testing and revising a
preliminary design model
Build a prototype
form design
functional design
producti...
Form and Functional Design
Form Design
how product will
look?

Functional Design
how product will
perform?
reliability
mai...
Computing Reliability

Components in series
0.90

0.90

0.90 x 0.90 = 0.81

4-197
Computing Reliability (cont.)
Components in parallel
0.90
R2
0.95 + 0.90(1-0.95) = 0.995
0.90(1-

0.95
R1

4-198
System Reliability
0.90

0.98

0.98

0.92

0.98

0.92+(10.92+(1-0.92)(0.90)=0.99

0.98

0.98 x 0.99 x 0.98 = 0.951
4-199
System Availability (SA)

SA =

MTBF
MTBF + MTTR

where:
MTBF = mean time between failures
MTTR = mean time to repair

4-2...
System Availability
(cont.)
PROVIDER

MTBF (HR)

MTTR (HR)

A
B
C

60
36
24

4.0
2.0
1.0

SAA = 60 / (60 + 4) = .9375 or 9...
Usability
Ease of use of a product or service
ease of learning
ease of use
ease of remembering how to use
frequency and se...
Production Design
How the product will be made
Simplification
reducing number of parts, assemblies, or options in a
produc...
Design
Simplification
(a) Original design

Assembly using
common fasteners

Source: Adapted from G. Boothroyd and
P. Dewhu...
Final Design and Process Plans
Final design
detailed drawings
and specifications
for new product or
service

Process plans...
Design Team

4-206
Concurrent Design
A new approach to
design that involves
simultaneous design of
products and processes
by design teams
Imp...
Technology in Design
Computer Aided Design (CAD)
assists in creation, modification, and analysis of
a design
computercompu...
Collaborative Product Design
(CPD)
A software system for collaborative design and
development among trading partners
With ...
Design Review
Review designs to prevent failures and
ensure value
Failure mode and effects analysis (FMEA)
a systematic me...
FMEA for Potato Chips
Failure
Mode

Cause of
Failure

Effect of
Failure

Corrective
Action

Stale

low moisture content
ex...
Fault tree analysis (FTA)

4-212
Value analysis (VA)
Can we do without it?
Does it do more than is required?
Does it cost more than it is worth?
Can someth...
Value analysis (VA) (cont.)
Updated versions also include:
Is it recyclable or biodegradable?
Is the process sustainable?
...
Design for Environment and
Extended Producer Responsibility
Design for environment
designing a product from material that ...
Design for Environment

4-216
Sustainability
Ability to meet present needs without compromising
those of future generations
Green product design
Use few...
Quality Function
Deployment (QFD)
Translates voice of customer into technical
design requirements
Displays requirements in...
House of Quality
Importance

5
TradeTrade-off matrix
3
Design
characteristics

1

4

2

Customer
requirements

Relationshi...
Competitive Assessment
of Customer
Requirements
Competitive Assessment
Customer Requirements

1

2

3

9

Removes wrinkles...
Presses quickly

-

+

Doesn’t stick to fabric

-

Provides enough steam

+

+

+ +
-

-

-

+ - +
+

-

Automatic shut-of...
4-222

Automatic shutoff

Protective cover for soleplate

Time to go from 450º to 100º

Time required to reach 450º

Flow ...
Units of measure

lb

in.

cm

ty

ea

Iron A

3

1.4

8x4

2

SS

27

15

0.5

45

500

N

Y

Iron B

4

1.2

8x4

1

MG
...
Completed
House of Quality

SS = Silverstone
MG = Mirorrglide
T = Titanium

4-224
A Series of Connected
QFD Houses
Part
characteristics

Process
characteristics

A-2
Parts
deployment

Operations

A-3
Proc...
Benefits of QFD
Promotes better understanding of
customer demands
Promotes better understanding of
design interactions
Inv...
Design for Robustness
Robust product
designed to withstand variations in environmental and
operating conditions

Robust de...
Design for Robustness (cont.)
Tolerance
allowable ranges of variation in the dimension of a
part

Consistency
consistent e...
Quantifies customer
preferences toward
quality
Emphasizes that
customer preferences
are strongly oriented
toward consisten...
Copyright 2009 John Wiley & Sons, Inc.
All rights reserved. Reproduction or translation of this work beyond
that permitted...
Chapter 5
Service Design
Operations Management
Roberta Russell & Bernard W. Taylor, III
Lecture Outline
Service Economy
Characteristics of Services
Service Design Process
Tools for Service Design
Waiting Line A...
Service Economy

Source: U.S. Bureau of Labor Statistics, IBM Almaden Research Center
5-233
5-234
Characteristics of Services
Services
acts, deeds, or performances

Goods
tangible objects

Facilitating services
accompany...
Continuum from
Goods to Services

Source: Adapted from Earl W. Sasser, R.P. Olsen, and D. Daryl Wyckoff,
Management of Ser...
Characteristics
of Services (cont.)
Services are
intangible
Service output is
variable
Services have higher
customer conta...
Service
Design
Process

5-238
Service Design
Process (cont.)
Service concept
purpose of a service; it defines target
market and customer experience

Ser...
Service Process Matrix

5-240
High v. Low Contact
Services
Design
Decision
Facility
location
Facility
layout

High-Contact Service
Convenient to
custome...
High v. Low Contact
Services (cont.)
Design
Decision

High-Contact Service

Quality
control

More variable since
customer ...
High v. Low Contact
Services (cont.)
Design
Decision

High-Contact Service

Low-Contact
Service

Worker skills

Must be ab...
High v. Low Contact
Services (cont.)
Design
Decision
Service
process

Service package

High-Contact Service

Low-Contact
S...
Tools for Service Design
Service blueprinting
line of influence
line of interaction
line of visibility
line of support

Fr...
Service Blueprinting

5-246
Service Blueprinting (Con’t)

5-247
Elements of
Waiting Line Analysis
Operating characteristics
average values for characteristics that describe
performance o...
5-249
Elements of
Waiting Line Analysis (cont.)
Arrival rate (λ)
(λ
frequency at which customers arrive at a waiting line
accord...
Elements of
Waiting Line Analysis (cont.)
Channels
number of
parallel
servers for
servicing
customers

Phases
number of
se...
Operating Characteristics
Operating characteristics are assumed to
approach a steady state

5-252
Traditional Cost Relationships
as service improves, cost increases

5-253
Psychology of Waiting
Waiting rooms
magazines and
newspapers
televisions

Bank of America

Disney
costumed characters
mobi...
Psychology of Waiting (cont.)
Preferential treatment
Grocery stores: express lanes for customers with
few purchases
Airlin...
Waiting Line Models
SingleSingle-server model
simplest, most basic waiting line structure

Frequent variations (all with P...
Basic Single-Server Model
SingleAssumptions
Poisson arrival rate
exponential service
times
firstfirst-come, firstfirstserv...
Basic Single-Server Model (cont.)
Singleprobability that no customers
are in queuing system

( )

P0 =

λ
1–
µ

λ

L=
µ–λ
...
Basic Single-Server Model (cont.)
Singleaverage time customer
spends in queuing system
W=

1
µ–λ

=

L
λ

average time cus...
Basic Single-Server Model
SingleExample

5-260
Basic Single-Server Model
SingleExample (cont.)

5-261
Service Improvement Analysis
waiting time (8 min.) is too long
hire assistant for cashier?
increased service rate

hire an...
Basic Single-Server Model
SingleExample: Excel

5-263
Advanced Single-Server Models
SingleConstant service times
occur most often when automated equipment or
machinery performs...
Advanced Single-Server
SingleModels (cont.)

5-265
Basic Multiple-Server Model
Multiplesingle waiting line and service facility with
several independent servers in parallel
...
Basic Multiple-Server Model
Multiple(cont.)
probability that there are no customers in system
1
P0 = n = s – 1
1 λ n
1 λ s...
Basic Multiple-Server Model
Multiple(cont.)
probability that customer must wait
Pw =

L=

()

1
s!

λ

µ

s

sµ

sµ – λ

λ...
Basic Multiple-Server Model
MultipleExample

5-269
Basic Multiple-Server Model
MultipleExample (cont.)

5-270
Basic Multiple-Server Model
MultipleExample (cont.)

5-271
Basic Multiple-Server Model
MultipleExample (cont.)

5-272
Basic Multiple-Server Model
MultipleExample (cont.)

5-273
Basic Multiple-Server Model
MultipleExample (cont.)
To cut wait time, add another service
representative
now, s = 4

There...
MultipleMultiple-Server Waiting Line
in Excel

5-275
Chapter 6
Processes and Technology
Operations Management
Roberta Russell & Bernard W. Taylor, III
Lecture Outline
Process Planning
Process Analysis
Process Innovation
Technology Decisions

6-277
Process Planning
Process
a group of related tasks with specific inputs and outputs

Process design
what tasks need to be d...
Process Strategy
Vertical integration
extent to which firm will produce inputs and control outputs of
each stage of produc...
Outsourcing
Cost
Capacity
Quality

Speed
Reliability
Expertise

6-280
Process Selection
Projects
one-of-a-kind production of a product to customer order

Batch production
processes many differ...
Sourcing Continuum

6-282
ProductProduct-Process Matrix

Source: Adapted from Robert Hayes and Steven Wheelwright, Restoring the Competitive Edge
Co...
Types of Processes
PROJECT

Type of
product

Type of
customer

Product
demand

BATCH

MASS

CONT.
CONT.

Unique

Made-toMa...
Types of Processes (cont.)
PROJECT

BATCH

MASS

CONT.
CONT.

Demand
volume

Very low

Low to
medium

High

Very high

No....
Types of Processes (cont.)
PROJECT

BATCH

MASS

CONT.
CONT.

Equipment

Varied

GeneralGeneralpurpose

SpecialSpecialpurp...
Types of Processes (cont.)
PROJECT

Advantages

DisDisadvantages

Examples

BATCH

MASS

CONT.
CONT.

Custom work,
latest ...
Process Selection with
BreakBreak-Even Analysis
examines cost trade-offs associated with demand volume
Cost
Fixed costs
co...
Process Selection with
BreakBreak-Even Analysis (cont.)
Total cost = fixed cost + total variable cost
TC = cf + vcv
Total ...
Process Selection with
BreakBreak-Even Analysis (cont.)
TR = TC
vp = cf + vcv
vp - vcv = cf
v ( p - c v) = c f
v=

cf

p -...
BreakBreak-Even Analysis: Example
Fixed cost = cf = $2,000
Variable cost = cv = $5 per raft
Price = p = $10 per raft
Break...
BreakBreak-Even Analysis: Graph
Dollars

Total
cost
line

$3,000 —

$2,000 —

$1,000 —
Total
revenue
line
400
BreakBreak-e...
Process Plans
Set of documents that detail manufacturing
and service delivery specifications
assembly charts
operations sh...
Process Selection
Process A

Process B

$2,000 + $5v = $10,000 + $3v
$5v
$3v
$2v = $8,000
$2v
v = 4,000 rafts

Below or eq...
Process Analysis

•
systematic
examinatio
n of all
aspects of
process to
improve
operation

6-295
An Operations Sheet for a Plastic Part
Part name

Crevice Tool

Part No.

52074

Usage

Hand-Vac
Hand-

Assembly No. 520
O...
Process Analysis
Building a flowchart
Determine objectives
Define process boundaries
Define units of flow
Choose type of c...
Process Flowcharts
look at manufacture of product or delivery
of service from broad perspective
Incorporate
nonproductive ...
Process Flowchart
Symbols
Operations
Inspection
Transportation
Delay
Storage
6-299
Process
Flowchart
of Apple
Processin
g
6-300
6-301
Simple Value Chain Flowchart

6-302
Process Innovation
Continuous improvement
refines the breakthrough

Breakthrough
Improvement

Total redesign
of a process ...
From Function to Process

Sales

Manufacturing

Purchasing

Accounting

Product Development
Order Fulfillment
Supply Chain...
Process Innovation

Customer
Requirements

Strategic
Directives

Baseline Data
Benchmark
Data

Goals for Process
Performan...
HighHigh-Level Process Map

6-306
Principles for Redesigning
Processes
Remove waste, simplify, and consolidate
similar activities
Link processes to create v...
Principles for Redesigning
Processes (cont.)
Provide visibility through fresher and richer
information about process statu...
Techniques for Generating
Innovative Ideas
Vary the entry point to a problem
in trying to untangle fishing lines, it’s bes...
Techniques for Generating
Innovative Ideas (cont.)
Try inverse brainstorming
what would increase cost
what would displease...
Technology Decisions
Financial justification of technology
Purchase cost
Operating Costs
Annual Savings
Revenue Enhancemen...
Components of e-Manufacturing
e-

6-312
A Technology Primer
Product Technology
Computer-aided
design (CAD)
Group technology
(GT)
Computer-aided
engineering (CAE)
...
A Technology Primer (cont.)
Product Technology
Product data
management
(PDM)
Product life cycle
management
(PLM)
Product
c...
A Technology Primer (cont.)
Process Technology
Standard for
exchange of
product model data
(STEP)
Computer-aided
design an...
A Technology Primer (cont.)
Manufacturing Technology
Computer
numerically control
(CNC)
Flexible
manufacturing
system (FMS...
A Technology Primer (cont.)
Manufacturing Technology
Automatic guided
vehicle (AGV)

A driverless truck that moves materia...
A Technology Primer (cont.)
Information Technology
Business – to –
Business (B2B)
Business – to –
Consumer (B2C)
Internet
...
A Technology Primer (cont.)
Information Technology
Bar Codes
Radio Frequency
Identification tags
(RFID)
Electronic data
in...
A Technology Primer (cont.)
Information Technology
Supply chain
management (SCM)
Customer relationship
management (CRM)
De...
Chapter 7

Capacity and Facilities
Operations Management
Roberta Russell & Bernard W. Taylor, III
Lecture Outline
Capacity Planning
Basic Layouts
Designing Process Layouts
Designing Service Layouts
Designing Product Layo...
Capacity
Maximum capability to produce
Capacity planning
establishes overall level of productive
resources for a firm

3 b...
Capacity Expansion Strategies
Capacity (cont.)
Capacity increase depends on
volume and certainty of anticipated demand
strategic objectives
costs of exp...
Economies of Scale
it costs less per unit to produce high levels of
output
fixed costs can be spread over a larger number ...
Best Operating Level for a Hotel
Machine Objectives of
Facility Layout
Arrangement of areas within a facility to:
Minimize material-handling
costs
Utilize ...
BASIC LAYOUTS
Process layouts
group similar activities together
according to process or function they
perform

Product lay...
Process Layout in Services
Women’s
lingerie

Shoes

Housewares

Women’s
dresses

Cosmetics
and jewelry

Children’s
departm...
Manufacturing Process Layout
A Product Layout
In

Out
Comparison of Product
and Process Layouts
Product
Description

Type of process

Product
Demand
Volume
Equipment

Process

...
Comparison of Product
and Process Layouts
Product
Workers
Inventory
Storage space
Material handling
Aisles
Scheduling
Layo...
FixedFixed-Position Layouts
Typical of projects in
which product produced
is too fragile, bulky, or
heavy to move
Equipmen...
Designing Process Layouts
Goal: minimize material handling costs
Block Diagramming
minimize nonadjacent loads
use when qua...
Block Diagramming
Unit load
quantity in which
material is normally
moved

Nonadjacent load
distance farther
than the next ...
Block Diagramming: Example
Load Summary Chart

4

2

5

3

DEPARTMENT

Department 1

1

FROM/TO

2

3

100
—

50
200
—

1
...
Block Diagramming:
Example (cont.)
2
2
1
1
4
3
2
3
1
1

3
4
3
2
5
5
5
4
4
5

200 loads
150 loads
110 loads
100 loads
60 lo...
Block Diagramming:
Example (cont.)
Block Diagram
type of schematic layout diagram; includes space requirements
(a) Initial...
Relationship Diagramming

Schematic diagram that
uses weighted lines to
denote location preference
Muther’s grid
format fo...
Relationship Diagramming: Excel
Relationship A Absolutely necessary
E Especially important
Diagramming: Example
I Important
O Okay
U Unimportant
X Undesir...
Relationship Diagrams: Example (cont.)
(a) Relationship diagram of original layout

Offices

Stockroom

Locker
room

Toolr...
Relationship Diagrams: Example (cont.)
(b) Relationship diagram of revised layout

Stockroom

Shipping
and
receiving

Offi...
Computerized layout
Solutions
CRAFT
Computerized Relative Allocation of Facilities
Technique

CORELAP
Computerized Relatio...
Designing Service
Layouts
Must be both attractive and functional
Types
Free flow layouts
encourage browsing, increase impu...
Types of Store Layouts
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Operationsmanagement 919slidespresentation-090928145353-phpapp01
Operationsmanagement 919slidespresentation-090928145353-phpapp01
Operationsmanagement 919slidespresentation-090928145353-phpapp01
Operationsmanagement 919slidespresentation-090928145353-phpapp01
Operationsmanagement 919slidespresentation-090928145353-phpapp01
Operationsmanagement 919slidespresentation-090928145353-phpapp01
Operationsmanagement 919slidespresentation-090928145353-phpapp01
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