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Introduction To Operations

This document provides an overview of key concepts in operations management, including the four dimensions of operational performance (cost, quality, variety, and time), tradeoffs between these dimensions, and process analysis. It discusses that operations must balance the four dimensions based on business strategy, and examines the efficient frontier where productivity can be improved without sacrificing other dimensions. Process analysis focuses on flow rate, inventory, and flow time. Identifying bottlenecks is important to understand what drives these performance measures. Productivity and quality are also briefly mentioned.

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Angel Gabriel Frasco Jerónimo
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41 views5 pages

Introduction To Operations

This document provides an overview of key concepts in operations management, including the four dimensions of operational performance (cost, quality, variety, and time), tradeoffs between these dimensions, and process analysis. It discusses that operations must balance the four dimensions based on business strategy, and examines the efficient frontier where productivity can be improved without sacrificing other dimensions. Process analysis focuses on flow rate, inventory, and flow time. Identifying bottlenecks is important to understand what drives these performance measures. Productivity and quality are also briefly mentioned.

Uploaded by

Angel Gabriel Frasco Jerónimo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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Introduction to operations

1. Introduction
2. Process analysis
3. Productivity
4. Quality

Introduction
Four dimensions of operational performance
How operation management does and how it relates to the business strategy of a firm.
The performance of an operation well along 4 dimensions:

 Cost
o High efficiency operation
 Quality
o Product and process QA
 Variety
o Customer heterogeneity
 Time
o Responsiveness to Customer

And those dimensions are important because we are going to create measures for them and have to be in line with the
business strategy.
Related on Strategy, Michael porter says there are 2 ways in which an organization can get competitive advantage.:
Through cost leadership or differentiation (variety, quality, timeliness).

Trade-offs and the efficient Frontier


It would be awesome to excel at the 4 dimensions, but not always is possible and we have to make Trade-offs between
these 4 dimensions.
There is a strong tension between productivity and responsiveness.
The efficient frontier  is the line where we can have a better productivity, less cost or more responsiveness (Imagine a
benchmark on a graph). If we are off the Frontier have the possibility to improve without any sacrifice.
We must create a new frontier, but we have to evaluate before making them.
We must prioritize some of the 4 dimensions. Efficient frontier is a line that include all firms to its lower loft.  The line
of firms that has not other firm that per rate or dominates the firm.
It is important as our Gap to measure inefficiency or if we are wasting resources.
Process Analysis
Flow rate, inventory, and flow time
Responding to Why some operations are better than other in terms of Response, productivity etc  we must go inside
business processes that makes up for the operations.
In process analysis we are going to see the 3 most important performance measures.
1. Flow rate
a. Throughput  number of flow units going through the process per unit of time
b. Slope between units we are measuring
2. Inventory
a. Number of flows units in the process at a given moment
3. Flow time
a. Time it takes a flow unit to go from the beginning to the end of the process
4. Flow Unit
a. Customer
It is important to identify these concepts in the process to better understand the steps.
Also, is important to understand inventory, who cares about inventory? We have 2 perspectives: economic and
operational. And happens whenever we have mismatches between supply and demand. In economics, they ignore those
mismatches, and just focusing on prices will adjust once we have a mismatch between supply and demand.
But watch out, prices won’t solve the problem in inventory, for that reason understanding the 4 concepts that we describe
above are the most important issues in both operational and managerial.
Finding the bottleneck
Now, we understand the three main concepts, but what are the drivers between those variables?
We introduce the concept of bottleneck and process flow diagram. That diagram help us to understand and describe in a
graphical way the step-by-step process and each form on it is used to represent a different activity:

 Triangle
o For line, capturing waiting line or inventory
 Boxes
o Captures activities
 Arrows
o Captures the flow units

Differences between project management and Process management:


 Process management  related to doing things repeatedly

Ready for some definitions:


 Processing times: how long does the worker spend on the task?
 Capacity= 1/processing time: how many units can the worker make per unit of time If there are m workers at
the activity: Capacity= m/processing time
 Bottleneck: process step with the lowest capacity
 Process capacity: capacity of the bottleneck
 Flowrate = Minimum{Demand rate, Process Capacity)
 Utilization = Flow Rate / Capacity
 Flow Time: The amount of time it takes a flow unit to go through the process
 Inventory: The number of flow units in the system
* The chains in only as strong as its weakest link.

Productivity

Quality
sd

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