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Operation Management Essay

949 words - 4 pages

OPERATIONS MANAGEMENT -TOPICS & EXAMPLES

What Is Operations and Supply Chain Management?
1-2

The design, operation, and improvement of the systems that create and deliver the firm’s primary products and services ¨  Operations and supply chain management (OSCM) is
¨ 

¤  A

functional field of business ¤  Concerned with the management of the entire production/delivery system

Goods versus Services
1-3

Goods

Services

Pure Goods

Core Goods

Core Services

Pure Services

Tangible Less interaction with customers Often homogeneous Not perishable – can be inventoried

Intangible Interaction with customer required Inherently heterogeneous Perishable/time ...view middle of the document...

Four Dimensions of Performance
1-8

¨ 

Important for defining a business strategy and performance measurement.
COST
Efficiency

QUALITY
-Product Quality(performance) -Process Quality (conformance)

VARIETY
Customer Heterogeneity

TIME
Responsiveness to Demand

Four Dimensions: Trade offs
Cost Quality

▪  Efficiency ▪  Measured by:
- cost per unit - utilization

▪  Product quality (how good?)
=> Price

▪  Process quality (as good as
promised?) => Defect rate

Variety

Time

▪  Customer heterogeneity ▪  Measured by:
- number of options - flexibility / set-ups - make-to-order

▪  Responsiveness to demand ▪  Measured by:
- customer lead time - flow time

Efficiency, Effectiveness, and Value
1-10

Efficiency •  Doing something at the lowest possible cost Effectiveness •  Doing the right things to create the most value Value •  The attractiveness of a product relative to its cost
¨ 

Management challenge is balancing the trade-offs between Efficiency and effectiveness

Efficiency and Wall Street
1-11

¨ 

The impact of Operations
1-12

¨ 

Receivable turnover ratio
¤  Measures

efficiency on collecting its sales on credit. ¤  High ratio means efficient collection. ¤  Factors such as quality of products and order processing activities may have a huge impact on this ratio
¨ 

Inventory turnover
¤  Measures

efficiency turning inventory into sales. ¤  Greatly controlled by operations and supply chain processes.
¨ 

Asset Turnover
¤  Measures

efficiency at using assets to generate sales revenue. ¤  Can be influenced by technology investments & outsourcing

Example
1-13

¨ 

Consider the following financial data from the past year for Midwest Outdoor Equipment Corporation.
Gross%Income% Total%Sales% Total%Credit%Sales% Net%Income% Cost%of%Goods%Sold% Total%Assets% Average%Inventory% Average%Receivables% $25,240,000% %%24,324,000% %%18,785,000% %%%%2,975,000% %%12,600,000% %%10,550,000% %%%%2,875,000% %%%%3,445,000%

Receivable turnover = credit sales / avg receivables à 18,785/ 3,445 = 5.45 Inventory turnover = cost of goods sold / avg inventory à 12,600 / 2,875 = 4.38 Asset turnover...

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