Pareto phenomenon (ABC analysis)
 Classifying items, activities, or tasks according to some
measure of importance and allocating efforts and resources
accordingly
 A vital few things are important for reaching an objective or solving a
problem
 80/20 rule – 80% of the problems are caused by 20% of the activities
How do we identify the vital few?
Pareto phenomenon, ABC analysis,
& Recognition of Priorities
Acknowledging the fact that certain aspects of any management situation are
more important than others is called Recognition of Priorities.
Models
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A model is an abstraction of reality
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Physical
Schematic
Mathematical
Quantitative approach
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Linear programming
Transportation model
Inventory models
Waiting line models
Statistical models
Recent Trends
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Global Competition
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Operations Strategy
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Flexibility
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Cycle Time Reduction
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Business Process Re-engineering
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Supply Chain Management
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Workers Involvement
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Lean Manufacturing

Total Quality Management
Recent Trends
 Global Competition
 Global Market
 Global Suppliers
 Operations Strategy
 Quality based
 Time based
 Flexibility
 Variety of products
 High Volume as well as Low Volume
 Cycle Time Reduction
 The less time RM (Raw Material), WIP (Work In
Process), FG (Finished Goods) spend in the
Manufacturing and Logistics process, the less
opportunity they have to absorb costs.
Recent Trends
 Business Process Re-engineering
 Value added and NVA activities
 Supply Chain Management
 NOT from RM storage to FG warehouse
 From the original suppliers to final consumers
 Workers Involvement
 Workers are not costs, they are assets
 Lean Manufacturing
 Inventory is waste
 Total Quality Management
Examples of Exam Questions
1. The following activities are all a part of system operations as opposed
to system design
a)
b)
c)
d)
e)
long term forecasting, product design, capacity planning, inventory management.
short term forecasting, product design, capacity planning, inventory management
short term forecasting, production planning, capacity planning, inventory management
short term forecasting, production planning, quality assurance, inventory management
none of the above
2. Pareto Phenomenon is the same as
a)
b)
c)
d)
e)
ABC analysis
analysis of trade-off
systems analysis
quantitative approaches
none of the above
Review Questions (cont.)
3. In ABC analysis
a)
b)
c)
d)
e)
25% of items form 25% of the measure
10% of items form 10% of the measure
90% of items form 90% of the measure
50% of items form 50% of the measure
15% of items form 75% of the measure
of importance
of importance
of importance
of importance
of importance
4. Given
(I) Lean operations, (II) Operations strategy, (III) Business process re-engineering
(A) Inventory is waste, (B) Time based operations, (C) High Volume as well as Low Volume,
(D) Value-added and NVA activities
Which of the following selections is correct?
a)
b)
c)
d)
e)
(I)
(I)
(I)
(I)
(I)
matches with (D), (II) matches with (C), (III) matches with (B)
matches with (A), (II) matches with (B), (III) matches with (C)
matches with (A), (II) matches with (B), (III) matches with (D)
matches with (A), (II) matches with (D), (III) matches with (C)
matches with (C), (II) matches with (D), (III) matches with (B)
Review Questions (cont.)
5. Given
(I) supply chain management, (II) Flexibility, (III) Operations strategy
(A) Quality based operations, (B) Workers are asset, (C) Value added and NVA activities,
(D) from suppliers to consumers, (E) High Volume as well as low volume
Which of the following selections is correct?
a)
b)
c)
d)
e)
(I) matches with (D), (II) matches with (E), (III) matches with (C)
(I) matches with (D), (II) matches with (E), (III) matches with (A)
(I) matches with (A), (II) matches with (E), (III) matches with (D)
(I) matches with (C), (II) matches with (D), (III) matches with (E)
(I) matches with (E), (II) matches with (B), (III) matches with (D)