Nunticha L. ID 5513961
Natcha K. ID 5513962
Rada C. ID 5514026
IBM4715 Designing and Managing Global Operations
Introduction+Chapter 1, 2,3,4,9
Summarize sheet Midterm 2/2014
Group M2N
Introduction: Operations Strategy
What is ‘Strategy’?
Strategy is an elaborate and systematic plan of action
Competitive Strategy: The Positioning View
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Cost leadership
Differentiation
Focus
Levels of Strategy-Making
Views to Develop Strategy
1. Best Product
Classic competitive strategy: low-cost, unique set of features, or niche segment
2. Total Customer Solution
Customer center and satisfy them is priority, close relationship to customer
3. System Lock-in
Comprehends, company, customers, suppliers and its product & service to please
customers
Business Strategy: Dimensions along which Customers Assess Performance
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Cost
Quality
Availability
Features/Innovativeness
Environmental performance
Strategy-Making in Context
Operations Strategy: Goals
 Cost
 Quality
 Availability
 Features/Innovativeness
 Environmental Performance
Strategy-Making: Step 1
 Understand what position the firm wants to or can take in the marketplace by learning
about:
 Competitors
 Suppliers
 Complementary product or service offerings and firms offering them
 Spaces outside the industry into which the firm might expand
 Customer needs
Strategy-Making: Step 2
Understand what capabilities the firm has to offer, can or should develop both within
and across the key functional areas of the firm:
 Operations
 Marketing
 Research and development
 Human resources
 Finance and accounting
 As well as outside the firm with supply chain partners
Strategy-Making: Step 3
 Integrate or synthesize the activities and capabilities of the functions to achieve:
 Coherent strategic fit in support of a desired strategic direction
 Development of a set of capabilities to pursue a new strategic direction
---------------------------------------------------------------------------------------------------------------Chapter 1: Operation and Competitiveness
Operation is a function or system that transfer inputs into outputs of greater value
Transformation process is a series of activities along a value chain extending from supplier
to customers.
To make transformation more efficiency
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Physical = manufacturing operations
Locational = transportation operations
Exchange = retail operations
Physiological = health care
Psychological = entertainment
Informational = communication
Operation management is a design operation and improvement of productive system.
Evaluation of operations management
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Craft production = process of handcraft products
Division of labours = divided job into series of small tasks and each performed by
different workers
Interchangeable parts = standardization of parts initially
Scientific management = system analysis of work methods
Mass production = high-volume production of a standardization for mass market
Lean production = adaptation of mass production
Historical events in operations management
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Industrial revolution = used machines
Scientific management = do the same thing then you will become an expert
(efficiency)
Human relations = Hawthorne studies and Motivation theories
Operations research = used technology to improve
Quality revolution = JIT (just-in-time) = no area to keep stock then produce follow
order
Globalization = trade outside countries when goods are exceed local market
Internet revolution
Productivity increase by
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Become efficient = output increase only
Expand = both input and output are increase
Achieve breakthroughs = output increase while input decrease
Downsize = input decrease only
Retrench = both output and input are derease
Competitive priorities
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Cost
Quality
Flexibility
Speed
Operation strategy: Products and Services
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Make-to-order = customization
Make-to-stock = standardization
Assemble- to-order = add options according to customer customized
Production Strategy: Process and technology
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Project = do one at a time production of products
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Batch production =system process many different job at a same time
Mass production
Continuous production = use for very high volume commodity products
Service Strategy: Process and technology
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Professional service = high customized, very labour intensive
Service shop = customized, labour intensive
Mass service = less customized, less labour intensive
Service Factory = least customized, least labour intensive
Element of strategy
1. Time
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S-T
Intermediate
L-T
2. Focus
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Process technology
Market issues
Volume
Quality tasks
3. Evaluation
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Cost
Quality
Profitability
Customer satisfaction
4. Consistency
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Professionalism
Proliferation
Change in task
Explicit goals
---------------------------------------------------------------------------------------------------------------Chapter 2: Operation strategy
Competitive Strategy: The positioning view
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Option for firm positioning:
o Cost leadership = leader in term of lowest cost
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o
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Based
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Differentiate = unique products
Focus = niche market
Variety-based = satisfy some need but it is a majority need
Needs-based = focus on market segmentation and satisfy all need
Access-based = like needs-based but more specific access way to customers
Level of strategy-making
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Corporate level
Business level
Functional level
View to develop strategy
1. Best product = choose positioning
2. Total customer solution = customer center and satisfy them priority, close relationship to
customer
3. System Lock-in = add additional services to make loyalty and satisfaction. Offer without
customers need.
Business Strategy: Dimension slang which customers access performance
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Cost
Quality
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Availability
Features/ innovativeness
Environment performance
Operations Strategy: Goals
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Cost
Quality
Availability
Features/ innovativeness
Environment performance
---------------------------------------------------------------------------------------------------------------Chapter 3: Project Management + Chapter 9: Project Scheduling
The Elements of Project Scheduling
Project Definition
Statement of project, goals, and resources required.
Activity Definition.
Content and requirements of each activity
Project Scheduling
Specification of starting and ending times of all activities
Project Monitoring
Keeping track of the progress of the project
Project Management
Project Management is the management activities of planning, directing, and
Controlling resources (people, equipment, material) to meet the technical, cost, and
Time constraints of a project.
Type of Project
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PURE PROJECT
FUNCTIONAL PROJECT
MATRIX
Pure Project
A pure project is where a self-contained team works full-time on the project
Advantage
The project manager has full authority over
the project
Team members report to one boss
Shortened communication lines
Team pride, motivation, and commitment are
high
Disadvantage
Duplication of resources
Organizational goals and policies are
ignored
Lack of technology transfer
Team members have no functional
area "home"
Functional Project
A functional project is housed within a functional division
Advantage
A team member can work on several
projects
Technical expertise is maintained
within the functional area
The functional area is a “home” after
the project is completed
Critical mass of specialized knowledge
Matrix Project Organization Structure
Disadvantage
Aspects of the project that are not
directly related to the functional area
get short-changed
Motivation of team members is often
weak
Needs of the client are secondary and
are responded to slowly
Advantage
Disadvantage
Enhanced communications between
functional areas
Too many bosses
Pinpointed responsibility
Depends on project manager’s
negotiating skills
Duplication of resources is minimized
Potential for sub-optimization
Functional “home” for team members
Policies of the parent organization are
followed
Work Breakdown Structure
A work breakdown structure defines the hierarchy of project tasks, subtasks, and work
packages
Network-Planning Models
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A project is made up of a sequence of activities that form a network representing a
project
The path taking longest time through this network of activities is called the “critical
path”
The critical path provides a wide range of scheduling information useful in managing
a project
Critical Path Method (CPM) helps to identify the critical path(s) in the project
networks
Network Representation
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Projects may be represented as networks with:
Arrows representing activities.
Nodes representing completion of a set of activities (milestones).
Pseudo activities may be required to satisfy precedence relationships.
Figure 9-4 shows a typical project network
Figure 9-4
Critical Path Method
An analytical tool that provides a schedule that completes the project in minimum
time subject to the precedence constraints. In addition, CPM provides:
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Starting ending times for each activity
Identification of the critical activities (i.e., the ones whose delay necessarily delay the
project).
Identification of the non-critical activities, and the amount of slack time available
when scheduling these activities.
Types of Critical Path Methods
1. CPM with a Single Time Estimate
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Used when activity times are known with certainty
Used to determine timing estimates for the project, each activity in the project, and
slack time for activities
2. CPM with Three Activity Time Estimates
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Used when activity times are uncertain
Used to obtain the same information as the Single Time Estimate model and
probability information
3. Time-Cost Models
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Used when trade-off information cost is a major consideration in planning
Used to determine the least cost in reducing total project time
CPM with a Single Time Estimate
Steps in the CPM with Single Time Estimate
1. Activity Identification
2. Activity Sequencing and Network Construction
3. Determine the critical path
- From the critical path all of the project and activity timing information can be
Obtained
The duration of each activity is listed above each node in the diagram. For each path,
add the duration of each node to determine it's total duration. The critical path is the one with
the longest duration. There are three paths through this project...
CPM with Three Activity Time Estimates (PERT)
PERT: Project Evaluation and Review Technique
PERT is a generalization of CPM to allow for uncertain activity times. For each
Activity the user must specify:
a = minimum completion time
b = maximum completion time
m = most likely completion time
The method assumes each activity time follows a beta distribution, which can be fit
precisely with specification of a, b, and m.
The mean and standard deviation of activity times are estimated from the following
formulas (based on the beta distribution).
In PERT one assumes that the path the with longest expected completion time is the
true critical path (this is only an approximation, since true critical path is a random variable).
Network
Time-Cost Models
Basic Assumption: Relationship between activity completion time and project cost
Time Cost Models: Determine the optimum point in time-cost tradeoffs
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Activity direct costs
Project indirect costs
Activity completion times
Suppose that projects can be expedited by reducing the time required for critical
activities. Doing so results in an increase in some costs and a decrease in others. The goal is
to determine the optimal number of days to schedule the project to minimize total cost.
Maximum crashing with lowest cost
Time-Cost Relationship
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Crashing costs increase as project duration decreases
Indirect costs increase as project duration increases
Reduce project length as long as crashing costs are less than indirect costs
Chapter 4: Forecasting Method
1. Qualitative Methods (Judgment method)
Executives/Managers, opinions, Expert opinions,
Consumer Survey, Sales force estimate
2.Quantitative Methods
Time series analysis (use past behavior of the
variable to predict future)
Causal method (added the TS with external data)
 Time Series Analysis
 Simple Moving Average Formula The simple moving average model assumes
an average is a good estimator of future behavior
The formula for the simple moving average is:
 Weighted Moving Average Formula While the moving average formula
implies an equal weight being placed on each value that is being averaged, the
weighted moving average permits an unequal weighting on prior time periods
 Exponential Smoothing Forecasts Forecast is the weighted average of of the
forecast and the actual value from the prior period.
****The MAD Statistic to Determine Forecasting Error
The ideal
MAD is
zero which would mean there is no forecasting error .The larger
the MAD, the less the accurate the resulting model
 Simple Linear Regression Model
Yt is the regressed forecast value or dependent variable in the model, a is the
intercept value of the the regression line, and b is similar to the slope of the
regression line. However, since it is calculated with the variability of the data
in mind, its formulation is not as straight forward as our usual notion of slope.
 Econometric Models
Single Equation Model of the Demand For Cereal (Good X)
QX = a0 + a1PX + a2Y + a3N + a4PS + a5PC + a6A + e
QX = Quantity of X
PX = Price of Good X
Y = Consumer Income
N = Size of Population
PS = Price of Muffins
PC = Price of Milk
A = Advertising
e = Random Error
 Seasonal Variation
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