Important Business Decisions
Examples:
Introduction to Operations
Management
Process selection & improvement
It is everywhere!
Capacity requirement
Resource allocation
Logistics
BUAD 311T Operations Management for
Accounting Majors
Session 1
Inventory
Where your leaders come from?
Course Outline
Process Analysis and Capacity Management
Waiting Line Management
Optimization and Linear Programming
Revenue Management
Inventory and Supply Chain Management
3
Right Management 2011
Processes
Processes: Examples
Definition: A business process is a set of
coordinated tasks and activities that will lead to
accomplishing a specific organizational goal.
Processes are the main building block of
operations.
Inputs
(customers
and/or
materials)
Transformation Process
(components)
Producing an iPad
Acquiring a company
Making a hamburger
Delivering a book from Amazon to a customer
Receiving a BS degree from Marshall
Others?
Outputs
(goods
and
services)
5
Process Selection
McDonalds
Customer
places order
Will different companies intentionally choose
different processes to accomplish the same
goal?
Examples?
Let us describe the process of making a
hamburger
Raw
Material
in McDonalds
in IN-N-OUT
Cook
Assemble
Activity
Storage
Decision
Flow
Finished
Goods
Deliver
This is a make-to-stock system.
(Prior to 1999)
McDonalds Advantages and
Disadvantages
IN-N-OUT
Advantages:
Customer
places order
Raw
Material
Cook
What are the advantages
and disadvantages?
Fast (customers get the hamburger right away).
Assemble
Disadvantages:
Deliver
Hamburger quality may suffer.
Some hamburgers may not be sold, and will have to be
discarded.
This is a make-to-order system.
9
How can McDonalds improve its quality
(taste)?
Make-to-stock vs. Make-to-order
MTS
10
Customer
places order
MTO
Cost
Responsiveness
Variety (customization)
Quality
Raw
Material
11
Cook
Assemble
Activity
Storage
Decision
Flow
Finished
Goods
Deliver
This is a make-to-stock system.
(Prior to 1999)
12
McDonalds New Hybrid Process
New Hybrid Process
Customer
places order
Raw
Material
Cook
WIP
Assemble
Advantages:
Customized hamburger, tailored to customer preferences
Fast
Deliver
Disadvantages:
High investment cost
Need to manage inventory of cooked materials
(Patties can be kept for up to 30 minutes.)
(After 1999)
This is a hybrid system.
13
14
Process Analysis
Make-to-stock vs. Make-to-order
Any other companies/examples?
Process Evaluation
Different processes lead to different advantages and
disadvantages.
Is there a simply better process, i.e., no trade-offs?
15
Processes: Selling a ticket
16
Processes: Selling a ticket
We are interested in the management of processes.
Selling a ticket seems easy, but
17
18
Processes: Selling a ticket
Processes: Selling a ticket
What do the flow charts look like?
Which one has better performance?
Risk pooling effect
By aggregating individual processes, the variability is
reduced and better performance can be achieved.
19
Why learn OM?
20
Operations Management
OM defines the competitiveness of the
corporations
OM enables a systematic view at organizational
processes
OM provides the concepts and tools used in
business decision making
OM presents promising career opportunities
What is Operations Managements philosophy to
decision-making? (DMAIC)
DEFINE the problem and scope the work effort of the project
team
MEASURE the current process or performance
ANALYZE the current performance to isolate the problem
IMPROVE the problem by selecting a solution
CONTROL the improved process or product performance to
ensure the targets are met
21
Operations Management
What have we learned?
Key questions:
22
An overview of Operations Management
How to build a process flowchart
The advantages/disadvantages of make-to-order
vs. make-to-stock
A preview of risk pooling
Operations Management Approach/Philosophy
How to design processes to improve performance?
How to reduce cost?
How to deliver goods and services faster?
How to improve quality?
How to provide more variety and advance customer
satisfaction?
23
24
Next Class
ARES reading:
Changing Ahead to Push Electric Cars
Los Angeles Times, December 27, 2008
Latest Starbucks Buzzword: Lean Japanese Techniques
Wall Street Journal, August 1, 2009
Starts to form teams
