operation management tools and retail business

1. Prepared by
Nigatu Ashango

2. Over view of Operation tools
 Operation tools or Scientific methods have been man’s
outstanding asset to pursue an ample number of activities.
 The major advantage of mathematical models/operation
tools is that it facilitates in taking decision faster and more
accurately
 Whether it is a manufacturing unit, or a service
organization, the resources have to be utilized to its
maximum in an efficient manner.
 The successful use of Quantitative Technique for
management would help the organization in solving
complex problems on time, with greater accuracy and in
the most economical way

3. Overview cont…
 Today, several scientific management techniques are
available to solve managerial problems in dynamic
retail world.
 use of these techniques helps managers become
explicit about their objectives and provides additional
information to select an optimal decision.
 Some of (major) tools or models to be discussed in
next slides include; Transportation model,
Assignment model, waiting (Queuing) model,
Networking model and Inventory model

4. Operation tools and retail
business
 The retail industry is at the center of a dramatic shift
in the way consumers shop and interact with their
retailers
 After hundreds of years of customers “going to the
store,” the store is now, more and more, coming to the
customer
 Customers, using digital tools and channels, have
broken down the retail wall. Today, they demand that
retailers be wherever they are: at home, at work,
travelling, even just waiting in line.

5. Continued….
 The retailers who are winning today are the ones who
are best at understanding, predicting and addressing
their target customer needs.
 A customer-centric retail strategy can be enabled by
adapting traditional analytics approaches to leverage
customer-based insights.
 New devices in customers’ hands expand product
presentation. It’s a constantly changing game as well:
customers will always demand even better experiences.

6. Continued….
 More and more, innovative retailers using brilliant
strategies, advanced technologies, best practices, and
operational excellence grow revenue by delivering
satisfying buying experiences wherever their
customers are and whenever they want to buy.
 Therefore, the use of operation tools to solve problems
of retail business of today world, which is more
dynamic than ever, is fundamental issue for any
successful business operation.

7. 1. Transportation model
 It is associated with day-to-day activities in our real life
and mainly deals with logistics.
 It helps in solving problems on distribution and
transportation of resources from one place to another
 The goods are transported from a set of sources (e.g.,
factory) to a set of destinations (e.g. warehouse) to
meet the specific requirements.
 transportation problems deal with the transportation
of a product manufactured at different plants (supply
origins) to a number of different warehouses (demand
destinations).

8. Transport…
 The model helps in locating a new facility, a
manufacturing plant or an office when two or more
number of locations is under consideration.
 The total transportation cost, distribution cost or
shipping cost and production costs are to be
minimized by applying the model

9. 2.Assignment model
 The basic objective of an assignment problem is to
assign n number of resources to n number of activities
so as to minimize the total cost or to maximize the
total profit
 assignment arises because available resources such as
men, machines, etc., have varying degree of efficiency
for performing different activities such as job

10. Assignment….
 The assignment model can be applied in many
decision-making processes like
 determining optimum processing time in machine
operators and jobs, effectiveness of teachers and
subjects, designing of good plant layout, etc
 This technique is also be found suitable for routing
travelling salesmen to minimize the total travelling
cost, or to maximize the sales

11. 3. Queuing model
 Deals with problems that involve waiting (or queuing).
 Whenever a customer arrives at a service facility, some of
them usually have to wait before they receive the desired
service
 It is quite common that instances of queue occurs everyday
in our daily life
 Examples of queues or long waiting lines;
 Waiting for service in banks.
 Waiting for a train or a bus.
 Waiting for checking out at the Supermarket.
 Waiting at the telephone booth or a barber's saloon

12. Queuing…
 In designing a queuing system, the system should balance
service to customers (short queue) and also the economic
considerations (not too many servers).
 Queuing theory explores and measures the performance in
a queuing situation such as average number of customers
waiting in the queue, average waiting time of a customer
and average server utilization.
 In general , a queuing system comprises with two
components, the queue and the service facility. The queue
is where the customers are waiting to be served. The service
facility is customers being served and the individual service
stations.

13. 4.Network model
 Any project involves planning, scheduling and controlling a
number of interrelated activities with use of limited
resources, namely, men, machines, materials, money and
time
 The projects may be extremely large and complex such as
construction of a power plant, a highway, a shopping
complex, ships and aircraft, introduction of new products
and research and development projects
 It is required that managers must have a dynamic planning
and scheduling system to produce the best possible results
 It also requires managers to react immediately to the
changing conditions and make necessary changes in the
plan and schedule

14. Network…
 A convenient analytical and visual technique of PERT
and CPM prove extremely valuable in assisting the
managers in managing the projects
 Both PERT and CPM techniques have similarity in
terms of concepts, the basic difference is, PERT is used
for analysis of project scheduling problems
 CPM has single time estimate and PERT has three time
estimates for activities and uses probability theory to
find the chance of reaching the scheduled time.
 Both PERT / CPM networks contain two major
components; Activities, and Events

15. 5.Inventory model
 Inventory can be defined as the stock of goods,
commodities or other resources that are stored at any
given period for future production.
 Inventory control is a process itself, with the help of
which, the demand of items, scheduling, purchase
receiving, inspection, storage and dispatch are
arranged in such a manner that at minimum cost and
in minimum time, the goods can be dispatched.

16. Benefits of material controls
 It helps to minimize loss by obsolescence, deterioration,
damage etc.
 It helps to protect against thefts, wastages, etc.
 It helps managers in decision making.
 To minimize capital investment in inventory.
 To minimize cost of material purchasing.
 To increase the storing capacity.
 To maintain reasonable stocks of materials.
 To facilitates regular and timely supply to customers.
 To ensures smooth production operations.
 To check national wastage.

17. Conclusion
 The above mentioned operation tools and other
methods, tools and models that are not included in
this presentation are the key tools for optimum
operation, cost minimization and profit
maximization of any business

18. Thank you!