OPERATIONS MANAGEMENT
EXAM 1 PREP
JONATHON FITE
PRESIDENT – PROFESSIONAL DEVELOPMENT INSTITUTE
LECTURER - UNIVERSITY OF NORTH TEXAS
MANAGING PARTNER: KMF INVESTMENTS
OPSM 3830 OPERATIONS MANAGEMENT
SYLLABUS REVIEW: SCHEDULE
2
SYLLABUS REVIEW: SCHEDULE (TR)
3
EXAM 2 OVERVIEW
20 Questions, 80 Minutes; Laptop provided, Open Note:
• 1 Logistics Tradeoff Question
• 2 Core Competency / Operating Strategy Questions
• 2 Productivity Questions
• 2 Moat / Competitive Forces Questions
• 2 Regression / Forecasting Problems
• 5 Forecasting Interpretation Questions
• 2 Project Management Questions
• 2 Article/Podcast/Class Observation Questions
• 2 Reliability and Warranty Problems (one each)
20 total questions
4
QUIZ 1 RECAP
MW
TR
5
QUIZ 1 RECAP
6
QUIZ 1 RECAP
Transportation
Costs
Inventory Costs
Facility (Warehouse) Costs
Labor Costs
7
QUIZ 1 RECAP
8
QUIZ 1 RECAP
9
QUIZ 1 RECAP
10
QUIZ 1 RECAP
11
QUIZ 1 RECAP
12
QUIZ 1 RECAP
13
Quiz 2 Review
14
Quiz 2 Review
15
CORE COMPETENCY &
STRATEGY ALIGNMENT
T3
- Comparison of Efficient and Responsive Supply Chains PRIMARY GOAL:
Efficient
Responsive
Lowest cost
Quick response
Product design strategy Minimize product cost
Modularity to allow
postponement
Pricing strategy
Lower margins
Higher margins
Manufacturing strategy
High utilization
Capacity flexibility
Inventory strategy
Minimize inventory
Buffer inventory
Lead time strategy
Reduce but not at
expense of greater cost
Aggressively reduce even
if costs are significant
Supplier selection
strategy
Cost and low quality
Speed, flexibility, quality
Transportation strategy
Greater reliance on low
cost modes
Greater reliance on
responsive (fast) modes
16
Quiz 2 Review
Productivity
= Output / Input
Crew 2 (a)
Crew 2 (b)
Avg
= 790 / 2 = 395
= 796 / 2 = 398
= 396.5
Crew 3 (a)
Crew 3 (b)
Avg
= 1219 / 3 = 406
= 1143 / 3 = 381
= 393.3
Crew 4 (a)
Crew 4 (b)
Avg
= 1298 / 4 = 324.5
= 1278 / 4 = 319.6
= 322.05
17
QUIZ 2 - Review
150
Productivity
= Output / Input
= Output/ (Labor + Materials + Overhead)
=
(392)(150)
(5 x 40 x 16) + (10 x 2720) + 2500 + (0.5 x 5 x 40 x 16)
=
58,800
3200 + 27200 + 2500 + 1600
=
49000 / 34500 = 1.70
Do Same Thing For Week #2 and then Average Two Results…
18
Quiz 2 Review
19
Quiz 2 Review
20
T4
LOW COST PRODUCER MOAT
- Competitive Assessment Framework: Porters 5 Forces -
Power of Buyers
Threat of New Entrants
•
•
•
Moats?
High Barriers to Entry
• Monopoly
• Regulations
• Capital
Sustained high margins
•
•
•
•
•
•
Power of Suppliers
•
•
•
•
•
Moats?
Stable COGS as a % of Revenues ?
Commodity?
Unions
Component Constraints
•
•
•
•
Moats?
Stables Revenues
Stable Pricing
Stable Gross Margins
Pricing Power!!!
Intensity of Competition
•
Moats?
Monopoly / Market Share
Growing Revenues
High & Sustained Gross / Net Margins
Capital Efficient (ROE/ROA)
Management Impact
Threat of Substitutes
•
•
Moats?
Logic
Key
Moat combats this threat, Company with Moat Wins
Sometimes moat combats this threat
Moat not relevant against this threat
21
T4
BRAND MOAT
- Competitive Assessment Framework: Porters 5 Forces -
Power of Buyers
Threat of New Entrants
•
•
•
Moats?
High Barriers to Entry
• Monopoly
• Regulations
• Capital
Sustained high margins
•
•
•
•
•
•
Power of Suppliers
•
•
•
•
•
Moats?
Stable COGS as a % of Revenues ?
Commodity?
Unions
Component Constraints
•
•
•
•
Moats?
Stables Revenues
Stable Pricing
Stable Gross Margins
Pricing Power!!!
Intensity of Competition
•
Moats?
Monopoly / Market Share
Growing Revenues
High & Sustained Gross / Net Margins
Capital Efficient (ROE/ROA)
Management Impact
Threat of Substitutes
•
•
Moats?
Logic
Key
Moat combats this threat, Company with Moat Wins
Sometimes moat combats this threat
Moat not relevant against this threat
22
T4
PATENTS MOAT
- Competitive Assessment Framework: Porters 5 Forces -
Power of Buyers
Threat of New Entrants
•
•
•
Moats?
High Barriers to Entry
• Monopoly
• Regulations
• Capital
Sustained high margins
•
•
•
•
•
•
Power of Suppliers
•
•
•
•
•
Moats?
Stable COGS as a % of Revenues ?
Commodity?
Unions
Component Constraints
•
•
•
•
Moats?
Stables Revenues
Stable Pricing
Stable Gross Margins
Pricing Power!!!
Intensity of Competition
•
Moats?
Monopoly / Market Share
Growing Revenues
High & Sustained Gross / Net Margins
Capital Efficient (ROE/ROA)
Management Impact
Threat of Substitutes
•
•
Moats?
Logic
Key
Moat combats this threat, Company with Moat Wins
Sometimes moat combats this threat
Moat not relevant against this threat
23
T4
MONOPOLY / LICENSE MOAT
- Competitive Assessment Framework: Porters 5 Forces -
Power of Buyers
Threat of New Entrants
•
•
•
Moats?
High Barriers to Entry
• Monopoly
• Regulations
• Capital
Sustained high margins
•
•
•
•
•
•
Power of Suppliers
•
•
•
•
•
Moats?
Stable COGS as a % of Revenues ?
Commodity?
Unions
Component Constraints
•
•
•
•
Moats?
Stables Revenues
Stable Pricing
Stable Gross Margins
Pricing Power!!!
Intensity of Competition
•
Moats?
Monopoly / Market Share
Growing Revenues
High & Sustained Gross / Net Margins
Capital Efficient (ROE/ROA)
Management Impact
Threat of Substitutes
•
•
Moats?
Logic
Key
Moat combats this threat, Company with Moat Wins
Sometimes moat combats this threat
Moat not relevant against this threat
24
T4
SWITCHING COST MOAT
- Competitive Assessment Framework: Porters 5 Forces -
Power of Buyers
Threat of New Entrants
•
•
•
Moats?
High Barriers to Entry
• Monopoly
• Regulations
• Capital
Sustained high margins
•
•
•
•
•
•
Power of Suppliers
•
•
•
•
•
Moats?
Stable COGS as a % of Revenues ?
Commodity?
Unions
Component Constraints
•
•
•
•
Moats?
Stables Revenues
Stable Pricing
Stable Gross Margins
Pricing Power!!!
Intensity of Competition
•
Moats?
Monopoly / Market Share
Growing Revenues
High & Sustained Gross / Net Margins
Capital Efficient (ROE/ROA)
Management Impact
Threat of Substitutes
•
•
Moats?
Logic
Key
Moat combats this threat, Company with Moat Wins
Sometimes moat combats this threat
Moat not relevant against this threat
25
T4
NETWORK EFFECT MOAT
- Competitive Assessment Framework: Porters 5 Forces -
Power of Buyers
Threat of New Entrants
•
•
•
Moats?
High Barriers to Entry
• Monopoly
• Regulations
• Capital
Sustained high margins
•
•
•
•
•
•
Power of Suppliers
•
•
•
•
•
Moats?
Stable COGS as a % of Revenues ?
Commodity?
Unions
Component Constraints
•
•
•
•
Moats?
Stables Revenues
Stable Pricing
Stable Gross Margins
Pricing Power!!!
Intensity of Competition
•
Moats?
Monopoly / Market Share
Growing Revenues
High & Sustained Gross / Net Margins
Capital Efficient (ROE/ROA)
Management Impact
Threat of Substitutes
•
•
Moats?
Logic
Key
Moat combats this threat, Company with Moat Wins
Sometimes moat combats this threat
Moat not relevant against this threat
26
QUIZ 2 - Review
27
QUIZ 3 – FORECASTING BASICS
28
QUIZ 3 – FORECASTING BASICS
29
QUIZ 3 – FORECASTING BASICS
30
MEASURING FORECAST ERROR
- Measures of Forecast Accuracy and Bias -
 Mean Absolute Deviation (MAD):
 Mean Squared Error (MSE):
 Mean Absolute Percent Error (MAPE):
These
assess
accuracy
 Root Mean Squared Error (RMSE):
 Mean Deviation (MD):
 Mean Percent Error (MPE):
 Tracking Signal (TS):
31
MEASURING FORECAST ERROR
- Measures of Forecast Accuracy and Bias -
 Mean Absolute Deviation (MAD):
 Mean Squared Error (MSE):
 Mean Absolute Percent Error (MAPE):
 Root Mean Squared Error (RMSE):
 Mean Deviation (MD):
 Mean Percent Error (MPE):
These
assess bias
 Tracking Signal (TS):
32
QUIZ 3 – FORECASTING BASICS
33
QUIZ 3 – FORECASTING BASICS
MAD = 4.1 / 8 = 0.5125
34
QUIZ 3 – FORECASTING BASICS
TS = Bias / MAD
= 3.7 / 0.5125 = 7.22
35
QUIZ 3 – FORECASTING BASICS
36
QUIZ 3 – FORECASTING BASICS
37
QUIZ 4 – FORECASTING APPLIED
38
QUIZ 4 – FORECASTING APPLIED
39
QUIZ 4 – FORECASTING APPLIED
40
QUIZ 4 – FORECASTING APPLIED
41
LINEAR REGRESSION
REGRESSION TEST SUMMARY
sε
Test #1: If
≤ 5%, All good
y
Test #2: If F-test ≤ 5%, All good
Test #3: If P-test ≤ 5%, All good
Test #4: If t-test Outside window,
All good
Good
Good
Bad!
-1.984
0
1.984
42
QUIZ 4 – FORECASTING APPLIED
43
QUIZ 4 – FORECASTING APPLIED
44
QUIZ 4 – FORECASTING APPLIED
45
QUIZ 4 – FORECASTING APPLIED
46
QUIZ 4 – FORECASTING APPLIED
F = [Level + (Time x Trend)] x Seasonal factor =
[3612 +26(264)] x 1.90 = 19904
47
QUIZ 4 – FORECASTING APPLIED
48
QUIZ 4 – FORECASTING APPLIED
49
QUIZ 4 – FORECASTING APPLIED
50
QUIZ 5 – RELIABILITY & PROJECT MGMT
51
QUIZ 5 – RELIABILITY & PROJECT MGMT
Rule 1: 98% x 90 % = 88%
Rule 2: 98% +(1-98%)x 98% = 99.96%
52
QUIZ 5 – RELIABILITY & PROJECT MGMT
Rule 2: 95% +(1-95%)x 75% = 98.75%
Rule 2: 99% +(1-99%) x 80% = 99.8%
Rule 3: 1 – [ (1 - 95%) x (1 - 90%) x (1 - 60% ) ]
1 – [ (0.05) x (0.10) x ( 0.40) ]
1 – [ (0.002) ]
= 99.8%
Rule 1: 98.75% x 99.8 % x 99.8% = 0.9835 = 98%
53
QUIZ 5 – RELIABILITY & PROJECT MGMT
Time = 25
MTBF = 30
T / MTBF = 25 / 30 = 0.833333
Prob (it lives) is a little over 40%
Or more than 40% but less than 60%
54
QUIZ 5 – RELIABILITY & PROJECT MGMT
MTBF
Availability =
MTBF + MTR
200
30
=
200
30 ++10.5
.5
9524
= .99.75%
55
QUIZ 5 – RELIABILITY & PROJECT MGMT
5 + 4 + 7 = 16
5 + 6 + 3 + 7 = 21
5 + 6 + 4 + 4 = 19
6 + 8 + 3 + 7 = 24
6 + 8 + 4 + 4 = 22
56
QUIZ 5 – RELIABILITY & PROJECT MGMT
5 + 4 + 7 = 16
5 + 6 + 3 + 7 = 21
5 + 6 + 4 + 4 = 19
6 + 8 + 3 + 7 = 24
6 + 8 + 4 + 4 = 22
57
QUIZ 5 – RELIABILITY & PROJECT MGMT
5+4+7
= 16 + 3 = 19
5 + 6 + 3 + 7 = 21 + 3 = 24
5 + 6 + 4 + 4 = 19 + 3 = 22
6 + 8 + 3 + 7 = 24
6 + 8 + 4 + 4 = 22 + 3 = 25
58
QUIZ 5 – RELIABILITY & PROJECT MGMT
59
QUIZ 5 – RELIABILITY & PROJECT MGMT
60
QUIZ 5 – RELIABILITY & PROJECT MGMT
61