270 study sheet midterm.docx

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University of Toronto St. George
Rotman Commerce
Gerhard Trippen

Lecture 1 Operations management: The design and management of systems to make products, provide services and deliver them to the end user. Operations Management is the management (design, operation, and improvement) of the transformation processes that create value (= quality / price). OM is the management of this core activity of any organization: creation of goods and services Operations: transformation of inputs into outputs - Outputs are a combination of product and service - Process: A set of tasks that transform inputs into outputs - Buy + make/create + sell + move: Supply chain management - Efficiency: doing something at lowest possible cost. How well are inputs transformed into outputs? - Effectiveness: doing the right thing to create most value. How far is a stated objective achieved? - Example: Bank o efficient: using fewest people possible at counter o effective: minimize time customers need to wait - Productivity= Productivity is a common measure on how well resources are being used. - Productivity measures: Labor productivity = Output/Labor - Multi-factor measures of productivity= Output/(Labor + Capital + Material) - Total Factor Productivity (TFP) includes all factors of production = Output/(All Input) - Good process: process has to fit business strategy (objectives) o Productivity:maximize output for a given amount of input o Efficiency: Minimize cost o Match supply and demand at least cost - Tradeoff: moving along frontier - Innovation: pushing frontier - Improvement: from one point within to frontier to better - Improvement can be achieved through benchmarking look at competitors and see what they are doing better - profits, return-on-assets Lecture 2: Process Analysis / Theory of Constraints Utilization: Ratio of time a resource is used relative to time it is available Capacity (rate): Dictionary definition: “ability to hold receive store, or accommodate”. - General business sense:“amount of output that a system is capable of achieving over a period of time” “maximum possible output or service rate” - flow times, includes waiting times - What is the output rate of a process? o Capacity rate = maximum possible output rate o Throughput rate or flow rate = actual output rate - Is input rate always equal to output rate? in LR o In SR can be very different - Steps in process analysis: - Step 1: Determine the purpose of the analysis - Step 2: Process Mapping (Define the process) o Determ ine the flow units o Determine the tasks (sub-processes), and the sequence of the tasks o Determine the time for each task o Determine which resources are used in each task o Determine where inventory is kept in the process o Record this through a process flow diagram o Linear flow chart o Swim-lane (deployment) flowchart o Gantt chart - Step 3: Capacity Analysis (also called Bottleneck Analysis) o Determine the capacity of each resource and of the process Linear Flow Chart: order and length of each process - Total flow time= sum Swim-lane(deployment) flowchart: who is doing what, and order Gantt chart: combofocus on time - Capacity rate= orders/hr - capacity rate=bottleneck - if want to improve, first change bottleneck - Cycle time = 1/(Capacity Rate) o Cycle time is the time between completed units o Flow time/throughput time is the time to complete each unit o For a multi-stage process, the cycle time and the flow time are different o Cycle time=time of bottleneck when one bottleneckotherwise divide by number of bottlenecks, ex if everything doubled, tripled o Utilization=time used/time available o Avg utilization: within 2 cycle times how much are you working? o Process is blocked: When the next stage is busy, the order cannot be sent to the next stage after finishing the current stage. o Buffer: makes 2 processes independentvery important if there is variability  Buffer=line-up, ex need space for a line up o Process starved: opposite of blocked: waiting for more input, not working at capacity o Are there any operational benefits of reducing flow time at non-bottlenecks?  Paying for more idle time, no capacity difference, but lowers utilization  Lower flow time: for priority rate better, for continuous the same Lecture 3 Project Management - Project: A set of related tasks or activities, directed towards some major output and requiring a significant period of time to perform o One time - A project is a process - Projects often mismanaged - What does project management involve? o Define, plan, execute, retrospective - Two common representations o Gantt charts and Critical path diagrams - A project must have: o well-defined jobs or tasks whose completion marks the end of the project; o independent jobs or tasks; o and tasks that follow a given sequence - types of critical path: - CPM with a Single Time Estimate o Used when activity times are known with certainty o Used to determine timing estimates for the project, each activity in the project, and slack time for activities - CPM with Three Activity Time Estimates o Optimistic, avg, pessimistic, need stats o Used when activity times are uncertain o Used to obtain the same information as the Single Time Estimate model and probability information - Time-Cost Models o Used when cost trade-off information is a major consideration in planning o Used to determine the least cost in reducing total project time - CPM with Single Time Estimate o 1. Activity Identification o 2. Activity Sequencing and Network Construction o 3. Determine the critical path o 4. Determine the early start/finish and late start/finish schedule  If not will extend project duration - Critical path: MAX path time - All activities along path are critical, if you delay any of them, will delay project o This information allows us to allocate resources among activities to find appropriate trade-offs between project duration and project cost - Pert Chart: shows the ordering of project tasks and the relationship of a task with preceding and succeeding tasks. - “Normal time” is the expected time to complete an activity - “Normal cost” is the cost to complete an activity in its normal time - “Total normal cost” is the sum of ALL normal costs: to complete the entire project, you have to complete all activities - “Crashing” an activity refers to reducing the time it takes to complete the activity - “Crash time” is the minimum possible time to complete an activity - “Crash cost” is the cost to complete an activity in the shortest possible time (i.e., the cost to complete the activity in its crash time - Critical crashable tasks: only include viable options, ie options that are still possible - No pt at looking at non critical bc has slack - Look at critical path to see how many days best option app
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