OM 374 Lecture Notes - Lecture 10: Operations Management, Finished Good, Decision Points
20 May 2018
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Department
Course
Professor
Operations management
concerned with operating, improving and designing processes/operations/systems that transform inputs
into outputs.
Supply Chain
- consists of all stages involved, directly or indirectly, in fulfilling a customer request
- includes supplier, manufacturer, transporter, warehouses, retailers, and customers
Supply chain management
- focuses on managing the flows required to produce a product or supply a service all the way from its
initial state to its end customers
- a total system approach to managing the entire flow of information, materials, and services from raw-
material suppliers through factories and warehouses to the end customer.
Inventory
Cost of goods sold / Average aggregate inventory value
Weeks of Supply
(Average aggregate inventory value / Cost of goods sold) x 52 weeks
Efficient Supply Chain
Low supply uncertainty and Low demand uncertainty
Responsive Supply Chain
Low supply uncertainty and High demand uncertainty
Risk-Hedging Supply Chain
High supply uncertainty and Low demand uncertainty
Agile Supply Chain
High supply uncertainty and High demand uncertainty
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Bullwhip Effect
- An unanticipated change in retail demand results in increased fluctuations in demand as move from
retailer to supplier.
- the fluctuations in demand/orders increase as move from retailers to distributors to manufacturers to
suppliers.
- increases costs at each stage of the supply chain and reduces overall supply chain profitability by
making it more expensive to provide a given level of product availability.
Bullwhip Manufacturing costs
higher because of excess capacity required to meet peak demand.
Bullwhip Inventory cost
higher because each stage holds excess safety stock.
Bullwhip Transportation cost
higher because need capacity to meet peak demand.
Bullwhip Labor cost
shipping and receiving are higher because need capacity to meet peak demand.
Dampen Bullwhip Effect
- Reduce demand fluctuation (i.e.
Guaranteed low price/Meet or beat the competition)
- Fasted recognition of demand change (i.e. Collaborative forecasting & planning)
- Reduce lead times (i.e. Vendor managed inventory)
Vendor-managed inventory
the consumer of a product provides certain information to a supplier of that product and the supplier
takes full responsibility for maintaining an agreed inventory of the material, usually at the buyer's
consumption location (usually a store).
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find more resources at oneclass.com
Basic Process Types
1. Continuous Flow 2. Assembly Line
3. Manufacturing Cell (Batch)
4. Workcenter (Job Shop)
5. Project
Continuously operating
- Continuous Flow/Assembly Line
- Manufacturing Cell (Batch)/Workcenter (Job Shop)
Finite duration
- Project
Assembly Line Process
- Mass produced product, standardized production
- Extremely capital intensive
- Requires high volumes
- Least flexible to change
- Less skilled labor can be utilized
- Examples - automobiles, refrigerators, agricultural and construction equipment manufacturing
Continuous flow
- Liquids or semisolids - flow from one operation to another
- Examples - steel production, oil refinery, breweries, electrical power generation, processed foods,
bottling
Batch product flow
- Product flows through work centers with general purpose equipment
- Smaller lot sizes - used for low-volume orders
find more resources at oneclass.com
find more resources at oneclass.com
Document Summary
Operations management concerned with operating, improving and designing processes/operations/systems that transform inputs into outputs. Consists of all stages involved, directly or indirectly, in fulfilling a customer request. Includes supplier, manufacturer, transporter, warehouses, retailers, and customers. Focuses on managing the flows required to produce a product or supply a service all the way from its initial state to its end customers. A total system approach to managing the entire flow of information, materials, and services from raw- material suppliers through factories and warehouses to the end customer. Cost of goods sold / average aggregate inventory value. Weeks of supply (average aggregate inventory value / cost of goods sold) x 52 weeks. An unanticipated change in retail demand results in increased fluctuations in demand as move from retailer to supplier. The fluctuations in demand/orders increase as move from retailers to distributors to manufacturers to suppliers.
