Production and
MGT.104
Production and Operations Management
Operations Management An Asian Perspective by W.J.Stevenson and S.C.Choung
3 Basic Functional Areas
of Business
Operations
Organization
Finance
Finance
Marketing
Operations
Operations Management An Asian Perspective W.J.Stevenson and S.C.Choung
Marketing
What is production and operations
management?
The management of systems or
processes that create goods
and/or provide services.
Operations Management An Asian Perspective by W.J.Stevenson and S.C.Choung
Production and Operations Function: Conversion of Inputs to Outputs
Value Added
= value or price of outputs - cost of inputs
Operations Management An Asian Perspective by W.J.Stevenson and S.C.Choung
EXAMPLES OF INPUTS, TRANSFORMATION
AND OUTPUTS
Operations Management An Asian Perspective by W.J.Stevenson and S.C.Choung
Do manufacturing and
service organizations
have differences?
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
1. Degree of costumer contact
2. Uniformity of input
3. Labor content of jobs
4. Uniformity of output
5. Production and delivery
6. Measurement of productivity
7. Quality assurance
8. Amount of inventory
9. Evaluation of work
10.Ability to patent design
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Characteristic
Goods
Services
Customer Contact
Low
High
Uniformity of Input
High
Low
Labor Content
Low
High
Uniformity of Output
High
Low
Output
Tangible
Intangible
Measurement of Productivity
Easy
Difficult
Opportunity to Correct quality
problems before delivery to
customers
High
Low
Inventory
Much
Little
Evaluation
Easier
More Difficult
Patentable
Usually
Not usually
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
• Service jobs are categorized as
professional
and
non-professional.
Wholesale
and
personal
services
generally fall into the nonprofessional
category.
• Manufacturing jobs don’t show the
bimodal tendency and few salaries fall in
either the high or low range.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Most Important Persons in the
History of Production and
Operations
• Craft Production System refers to the
used of simple, flexible tools to produce
small quantities of customized goods by
highly skilled workers.
• In 18th century, 1776, Adam Smith
introduced division of labor for more
efficient production.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Most Important Persons in the
History of Production and
Operations
• In 19th Century, 1776, Eli
Whitney used interchangeable
parts to develop highly efficient
production system.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Most Important Persons in the
History of Production and
Operations
In 1911, Frederick Taylor introduced scientific
management that is based on observation,
measurement, analysis and improvement of work
methods, and economic incentives.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Most Important Persons in the
History of Production and
Operations
• Henry Ford who introduced mass production to
the automotive industry.
• Mass production system refers to the used of
specialized machinery to produced high volume
of standardized goods by low-skilled workers.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Most Important Persons in the
History of Production and
Operations
• Frank and Lilian Gilbreth emphasized the
human relations movement.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Most Important Persons in the
History of Production and
Operations
• F.W.Harris
who
introduced
mathematical models to be used in
the operations area.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Most Important Persons in the
History of Production and
Operations
Influence of Japanese Manufacturers
•
Six sigma by Motorola
• Lean manufacturing by Toyota
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Making Decisions
• What?
• When?
• Where?
• Who?
• How?
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Making decisions
✓Design of the System
✓Operations of the System
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
SYSTEM DESIGN
Decision Area
Basic Issues
Product and Service Design What do customers want? How can products and services be
improves?
Capacity (long range)
How much capacity will be needed? How can the
organization best meet capacity requirements?
Process Selection
What processes should the organization use?
Layout
What is the best arrangement for departments: equipment
work flow, and storage in terms of cost productivity?
Design of Work Systems
What is the best way to motivate employees? How can
productivity be improved? How to measure work? How to
improve work?
Location
What is a satisfactory location for a facility (factory, store,
tec.)?
Operations Management An Asian Perspective by W.J.Stevenson and S.C.Choung
System Operation
Decision Area
Basic Issues
1. Quality
How are quality goods and services achieved and improved?
2. Quality Control
Are processes performing adequately? What standards should be
sued? Are standards being met?
3. Supply Chain
Management
How to achieve effective flows of information and goods
throughout the chain?
4. Inventory Management
How much to order? When to order? Which items should get the
most attention?
5. Aggregate Planning
How much capacity will be needed over the intermediate range?
How can capacity needs best be met?
6. Materials Requirements
Planning
What materials, parts and subassemblies will be needed and
when?
7. Just-in-Time and Lean
Systems
How to achieve a smooth, balanced flow of work using fewer
resources?
8. Scheduling
How can jobs and resources best be scheduled? Who will do
which job?
9. Project Management
Which activities are the most critical to the success of a project?
What resources will be needed and when will they be needed?
Operations Management An Asian Perspective by W.J.Stevenson and S.C.Choung
Operations of the System
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Purchasing
refers to a business
activity of acquiring
goods or services to
accomplish its
goals.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Industrial Engineering
• Industrial engineering is
concerned with scheduling,
performance standards,
work methods, quality
control and material
handling.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Distribution
• Distribution
involves the
shipping of
goods to
warehouses,
retail outlets or
final customers.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
3 Levels of
Distribution Intensity
• Intensive Distribution
• Selective Distribution
• Exclusive Distribution
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
• Maintenance is responsible for general
upkeep and repair of equipment,
building and grounds, heating and airconditioning, removing toxic wastes,
parking and security.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
General
Approaches
to Decision
Making
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
General Approaches to Decision Making
1. MODEL
An abstraction of reality; a simplified
representation of something.
Classifications:
a. Physical Models – the real-life counterparts
b. Schematic Models – more abstract
c. Mathematical Models – most abstract
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Physical Model
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and S.C.Choung
General Approaches to Decision Making
2. Quantitative Approaches
-Linear Programming
-Queuing Techniques
-Inventory Models
-Project Models such as PERT and CPM
-Forecasting Techniques
-Statistical Models
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
General Approaches to
Decision Making
3. Performance Metrics
4. Analysis of Trade-offs
5. Systems Approach
6. Establishing Priorities
7. Ethics
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
General Approaches to Decision
Making
• A performance metric measures an
organization's behavior, activities,
and performance.
Example: Dashboard is a visual, easy-tounderstand presentation that shows key
performance indicators that an organization
defines to assess whether its operation is on track
to achieve its business goals.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
General Approaches to Decision Making
• A trade-off (or tradeoff) is a situational
decision that involves diminishing or
losing one quality, quantity or property of a
set or design in return for gains in other
aspects.
ANALYSIS OF TRADEOFFS
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
General Approaches to Decision Making
• A system can be defined as a set of interrelated parts
that must work together.
• The main theme is that the whole is greater than the sum
of its individual parts.
• A systems approach is essential whenever something is
being designed, redesigned, implemented, improved, or
otherwise changed.
Systems Approach
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
General Approaches to Decision Making
* Establishing Priorities
• Pareto Phenomenon - the 80/20 rule
* scrutinize the items on your “To Do” list, focus on
the few, larger items that will generate the most significant
results. The list might not grow much shorter, but you will be
practicing effective prioritization.
* In assessing risks for an upcoming project, not
every risk carries equal significance. Select the top risks that
pose the highest potential for damage (given the probability of
occurrence) and focus your monitoring and risk planning
activities on those items. Don’t ignore the others, however,
distribute your focus proportionately.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
TRENDS IN BUSINESS TODAY (PRODUCTION AND
OPERATIONS)
• Outsourcing
• Globalization
• Technology refers to the application of scientific discoveries to
the development and improvement of goods and services.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
• Six Sigma (process of cost and time reduction/productivity
improvement/process yield improvement/quality
improvement/increasing customer satisfaction)
Lean Production System (use minimal amounts of resources
to produce a high-volume of high-quality goods with some
variety)
Agility (ability to respond quickly to demands/opportunities)
Revenue management
Operations strategy.
Working with fewer resources.
Process analysis and improvement, and quality
improvement.
TRENDS IN BUSINESS TODAY (PRODUCTION AND
OPERATIONS)
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
• Competitiveness
This relates to the effectiveness of an organization in
the marketplace relative to other organizations that offer
similar products or services.
• Strategy
This relates to the plans that determine how an
organization pursues it goals.
• Productivity
This relates to the effective use of resources, and it
has a direct impact on competitiveness.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
• Marketing influences competitiveness in
several ways, including:
1. Identifying consumer wants and/or needs;
2. Price and quality are key factors in consumer
buying decisions; and
3. Advertising and promotion
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations has a major influence
on competitiveness through:
1. product and service
design
2. cost
3. location
4. quality
5. response time
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations has a major influence
on competitiveness through:
6. flexibility
7. inventory management
8. supply chain management
9. Service
10. Managers and workers
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Why some organizations fail?
• 1. Putting too much emphasis on short-term financial
performance at the expense of research and
development.
• 2. Failing to take advantage of strengths and
opportunities, and/or failing to recognize competitive
threats.
• 3. Neglecting operations strategy.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Why some organizations fail?
• 4. Placing too much emphasis on product and
service design and not enough on process design and
improvement.
• 5. Neglecting investments in capital and human
resources.
• 6. Failing to establish good internal communications
and cooperation among different functional areas.
• 7. Failing to consider customer wants and needs.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
MISSION
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
What is a mission?
Organization’s reason for existence.
What is a mission statement?
It express the purpose of an organization.
What are goals?
It provide detail and scope of the mission.
What are strategies?
The plans for achieving organizational goals.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
There are three basic business strategies:
• • Low cost.
• • Responsiveness.
• • Differentiation from competitors.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Strategies
and
Tactics
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Types of Strategies:
Organizational strategies
- are organizations overall
strategies.
Functional strategies
- are organization’s key areas
strategies.
• Tactics
- are the methods and actions used
to accomplish strategies.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Planning And Decision
Making Are Hierarchical In
Organizations
Operations Management An Asian Perspective by W.J.Stevenson and S.C.Choung
Core competencies
The special attributes or abilities that give an
organization a competitive edge.
Distinctive Competencies
The special attributes or abilities that give an
organization a competitive advantage.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Strategy Formulation
1.) Link strategy directly to the organization’s mission or
vision statement.
2.) Assess strengths, weaknesses, threats and opportunities, and
identify core competencies.
Environmental scanning is the considering of events
and trends that present either threats or opportunities
for the organization.
* SWOT analysis
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
KEY
INTERNAL
FACTORS
• Human Resources
•
•
•
•
•
•
•
Facilities and Equipment
Financial Resources
Customers
Products and Services
Technology
Suppliers
Patents/labor relations/company or product image/distribution
channels/relationships with distributors/maintenance of
facilities and equipment/access to resources/access to markets
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
KEY EXTERNAL FACTORS
•
•
•
•
•
•
Economic Conditions
Political Conditions
Legal environment
Technology
Competition
Markets
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Strategy Formulation
3.) Identify the Distinctive competencies (order winners and
order qualifiers).
Order qualifiers are characteristics that customers
perceive as minimum standards of acceptability to be considered as
a potential for purchase.
Order winners are characteristics of an organization’s
goods or services that cause it to be perceived as better than the
competition.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Strategy Formulation
4.) Select one or two strategies (e.g., low
cost, speed, customer service) to focus on.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Here are some examples of different strategies an organization might
choose from:
• Low cost. Outsource operations to third-world countries that have
low labor costs.
• Scale-based strategies. Use capital-intensive methods to achieve
high output volume and low unit costs.
• Specialization. Focus on narrow product lines or limited service to
achieve higher quality.
• Newness. Focus on innovation to create new products or services.
• Flexible operations. Focus on quick response and/or customization.
• High quality. Focus on achieving higher quality than competitors.
• Service. Focus on various aspects of service (e.g., helpful, courteous,
reliable, etc.).
• Sustainability. Focus on environmental-friendly and energy-efficient
Operations Management An Asian Perspective by W.J.Stevenson and
operations.
S.C.Choung
Operations Strategy
• The approach, consistent with
the organization strategy, that
is used to guide the operations
functions.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
QUALITY-BASED STRATEGIES
•Strategies focuses on
quality in all phases of
an organization.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Time-Based Strategies
•Strategy that focuses on
reduction of time
needed to accomplish
tasks.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
PRODUCTIVITY
• A measure of the effective use of resources, usually expressed
as the ratio of output to input.
Productivity = Output
Input
Productivity Growth = current productivity-previous productivity x 100
previous productivity
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
COMPUTING PRODUCTIVITY
The units of output used in productivity measures depend on the type of job performed.
The following are examples of labor productivity:
Operations Management An Asian Perspective by W.J.Stevenson and S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Department A can produce parts at a rate of 50/day. Department B
uses those parts are the rate of 10/ day. Each day unused parts are
added to inventory. At what rate does the inventory of unused parts
build up?
1. The question to be answered: At what rate does inventory of
unused parts build up (i.e., increase) per day?
2. The given information:
Production rate 50 parts/day
Usage rate
10 parts/day
3. For this simple problem, no formula or table is needed. Inventory
build-up is simply the difference between the production and usage
rates.
4. Production rate
50 parts/day
Usage rate
10 parts/day
Inventory buildup 40 parts/day
•
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
SOLUTION:
Operations Management An Asian Perspective by W.J.Stevenson and S.C.Choung
Numerous factors affect
productivity
• Methods
• Capital
• Quality
• Technology
• Management
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Other factors that affect
productivity include the following:
• Standardizing processes and procedures wherever possible to
reduce variability can have a significant benefit for both
productivity and quality.
• Quality differences may distort productivity measurements.
• Use of the Internet can lower costs of a wide range of
transactions, thereby increasing productivity.
• Computer viruses can have an immense negative impact on
productivity.
• Searching for lost or misplaced items wastes time, hence
negatively affecting productivity.
• Scrap rates have an adverse effect on productivity, signaling
inefficient use of resources.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Other factors that affect productivity
include the following:
• New workers tend to have lower productivity than seasoned
workers.
• Safety should be addressed. Accidents can take a toll on
productivity.
• A shortage of technology-savvy workers hampers the ability of
companies to update computing resources, generate and sustain
growth, and take advantage of new opportunities.
• Layoffs often affect productivity. The effect can be positive and
negative. Labor turnover has a negative effect on productivity;
replacements need time to get up to speed.
• Design of the workspace can impact productivity.
• Incentive plans that reward productivity increases can boost
productivity.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Improving Productivity
1. Develop productivity measures for all operations.
2. Look at the system as a whole in deciding which operations are
most critical. It is overall productivity that is important.
3. Develop methods for achieving productivity improvements, such
as soliciting ideas from workers (perhaps organizing teams of
workers, engineers, and managers), studying how other firms have
increased productivity, and re-examining the way work is done.
4. Establish reasonable goals for improvement.
5. Make it clear that management supports and encourages
productivity improvement. Consider incentives to reward workers
for contributions.
6. Measure improvements and publicize them.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Product
and
Service Design
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
• Product and service design refers to the
entire process of engineering a potential
future product or service, including its
form, fit, and function.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
• Service Design is the activity of planning
and implementing change to improve a
service's quality to meet the needs of the
users of that service. It is a holistic,
customer-centric approach using design
principles, tools, processes and an
empathetic understanding of customer
needs.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
PRODUCT DESIGN
• The process of creating or improving
a product by learning what consumers
want and examining
similar products
that are already
available.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
From the organization’s standpoint, the key questions are:
• 1. Is there demand for it?
• 2. Can we do it?
• 3. What level of quality
is appropriate?
• 4. Does it make sense from
an economic standpoint?
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Reasons for product
and service design.
•
•
•
•
•
•
Economic
Social and demographic
Political, liability, or legal
Competitive
Cost or availability
Technological
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Idea Generation
• Reverse engineering
refer to the
dismantling and inspecting of a competitor’s
product to discover product improvements.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Idea Generation
• Research and development (R&D)
refers to
organized efforts that are directed toward increasing
scientific knowledge and product or process innovation.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
R&D efforts may involve:
1. Basic research has the objective of
advancing the state of knowledge about a
subject, without any near-term expectation of
commercial applications.
2. Applied research has the objective of
achieving commercial applications.
3. Development converts the results of applied
research into useful commercial applications.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Legal Issue
Most organizations are subject to numerous government agencies that
regulate them. Among the more familiar federal agencies are the Food
and Drug Administration, the Occupational Health and Safety
Administration,
the Environmental
Protection
Agency, and
• Product liability
is the
responsibility
of various
a
state and local agencies. Bans on cyclamates, red food dye, phosphates,
fordesigners
any injuries
damages
caused
andmanufacturer
asbestos have sent
scurryingor
back
to their drawing
boards
faulty product
because
of poor to
workmanship
to by
findaalternative
designs that
were acceptable
both government
regulators
and customers.
Similarly,
automobile
pollution
or design.
Manufacturers
also
are faced
with standards
the
and safety features, such as seat belts, air bags, safety glass, and energyimplied warranties created by state laws under the
absorbing bumpers and frames, have had a substantial impact on
Uniform
Commercial
Code
, been
which
saystoward
that toy
automotive
design.
Much attention
also has
directed
design
to remove
sharpanedges,
small pieces
can cause choking, and
products
carry
implication
ofthat
merchantability
toxic
further
regulates
construction,
andmaterials.
fitness;The
thatgovernment
is, a product
must
be usable
for
requiring the use of lead-free paint, safety glass in entranceways, access
intended
purposes.
to its
public
buildings
for individuals with disabilities, and standards for
insulation, electrical wiring, and plumbing.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Ethical and Environmental Issue
Designers are often under pressure to speed up the design process
and to cut costs. These pressures often require them to make tradeoff decisions, many of which involve ethical considerations.
One example of what can happen is “vaporware,” when a software
company doesn’t issue a release of software as scheduled as it
struggles with production problems or bugs in the software. The
company faces the dilemma of releasing the software right away or
waiting until most of the bugs have been removed—knowing that
the longer it waits, the more time will be needed before it receives
revenues and the greater the risk of damage to its reputation.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
HUMAN FACTORS
• Human factor issues often arise in the design of consumer
products. Safety and liability are two critical issues in many
instances, and they must be carefully considered. For example,
the crashworthiness of vehicles is of much interest to
consumers, insurance companies, automobile producers, and
the government.
• Another issue for designers to take into account is adding new
features to their products or services. Companies in certain
businesses may seek a competitive edge by adding new
features. Although this can have obvious benefits, it can
sometimes be “too much of a good thing,” and be a source of
customer dissatisfaction.
“creeping featurism”
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Organizations generally want designers to
adhere to guidelines such as the following:
• Produce designs that are consistent
with the goals of the organization.
• Give customers the value they expect.
• Make health and safety a primary
concern.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
ENVIRONMENTAL FACTORS:
SUSTAINABILITY
• Cradle-to-grave assessment ,
also known as life cycle
analysis, is the assessment of the
environmental impact of a
product or service throughout its
useful life, focusing on such
factors as global warming (the
amount of carbon dioxide
released into the atmosphere),
smog
formation,
oxygen
depletion, and solid waste
generation.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
• End-of-life (EOL) programs deal with products that have reached
the end of their useful lives. The products include both consumer
products and business equipment.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
The Three Rs:
Reduce, Reuse, and Recycle
•
Reduce: Value Analysis
Value analysis refers to an examination of
the function of parts and materials in an effort to
reduce the cost and/or improve the performance of a
product.
• Reuse: Remanufacturing
Remanufacturing refers to refurbishing
used products by replacing worn-out or defective
components, and reselling the products.
Designing products so that they can be more
easily taken apart has given rise to yet another design
consideration: Design for disassembly (DFD) .
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
The Three Rs:
Reduce, Reuse, and Recycle
• Recycling
means recovering materials for future
use. This applies not only to manufactured parts but also
to materials.
The pressure to recycle has given rise to the term
design for recycling (DFR), referring to product design
that takes into account the ability to disassemble a used
product to recover the recyclable parts.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
OTHER DESIGN CONSIDERATIONS
✓ Product Or Service Life Cycles
Most expensive
for a company to
a launch a
product/size of
the market for the
product is
small/sales are
low but increasing
Strong growth
in sales and
profits
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Product is
establish
hence need to
maintain the
market share
that have built
up
Market of the
product start
to shrink
OTHER DESIGN CONSIDERATIONS
✓ HOW MUCH STANDARDIZATION TO
INCORPORATE
Standardization refers to the extent to which
there is absence of variety in a product, service, or process.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Mass
customization
is a strategy of
producing
standardized
goods or
services, but
incorporating
some degree
of
customization
in the final
product or
service.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
OTHER DESIGN CONSIDERATIONS
✓ PRODUCT
OR
SERVICE
RELIABILITY
Reliability is a measure of the ability
of a product, a part, a service, or an entire
system to perform its intended function
under a prescribed set of conditions.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
A fundamental question concerning
improving reliability is:
How much
reliability is
needed?
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
OTHER DESIGN CONSIDERATIONS
✓ RANGE OF OPERATING CONDITIONS UNDER
WHICH A PRODUCT OR SERVICE MUST
FUNCTION
Robust Design
Design that results in products or services that can
function over a broad range of conditions.
Operations Management An Asian Perspective by W.J.Stevenson and S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and S.C.Choung
• Service refers to an act, something that is done to or for a
customer (client, patient, etc.). It is provided by a
service
delivery system , which includes the facilities, processes, and
skills needed to provide the service. Many services are not pure
services, but part of a product bundle —the combination of
goods and services provided to a customer. The service
component in products is increasing. The ability to create and
deliver reliable customer-oriented service is often a key
competitive differentiator. Successful companies combine
customer-oriented service with their products. System design
involves development or refinement of the overall
service
package
: 1. The physical resources needed.
2. The
accompanying goods that are purchased or consumed by the
customer, or provided with the service.
3. Explicit services
(the essential/core features of a service, such as tax preparation).
4. Implicit services (ancillary/extra features, such as friendliness,
courtesy).
SERVICE DESIGN
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Phases in service design process
1. Conceptualize.
Idea generation
Assessment of customer wants/needs (marketing)
Assessment of demand potential (marketing)
A useful tool for conceptualizing a service delivery system is
the service blueprint , which is a method for describing
and analyzing a service process. A service blueprint is much
like an architectural drawing, but instead of showing building
dimensions and other construction features, a service
blueprint shows the basic customer and service actions
involved in a service operation.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Phases in service design process
2. Identify service package components needed
(operations and marketing).
3. Determine performance specifications
(operations and marketing).
4. Translate performance specifications into
design specifications.
5. Translate design specifications into delivery
specifications.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Characteristics of Well-Designed Service Systems
1. Being consistent with the organization’s mission.
2. Being user-friendly.
3. Being robust if variability is a factor.
4. Being easy to sustain.
5. Being cost-effective.
6. Having value that is obvious to customers.
7. Having effective linkages between back-of-the-house operations
(i.e., no contact with the customer) and front-of-the-house operations
(i.e., direct contact with customers). Front operations should focus
on customer service, while back operations should focus on speed
and efficiency.
8. Having a single, unifying theme, such as convenience or speed.
9. Having design features and checks that will ensure service that is
reliable and of high quality.
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung
Operations Management An Asian Perspective by W.J.Stevenson and
S.C.Choung