Operations Management

PRESENTED BY: AMNA SAFDAR ALI 1

Q. 1 a)Justify that operations management is a multi disciplinary

function with relevant examples.

b) Organizations must focus on the social issues. You are

advised to highlight the social issues involved in operation

management and suggest possible measures.

A) OPERATIONS MANAGEMENT

Operations management focuses on carefully managing the processes to

produce and distribute products and services. Major, overall activities often

include product creation, development, production and distribution. (These

activities are also associated with Product and Service Management) Related

activities include managing purchases, inventory control, quality control,

storage, logistics and evaluations of processes. A great deal of focus is on

efficiency and effectiveness of processes. Therefore, operations

management often includes substantial measurement and analysis of

internal processes. Ultimately, the nature of how operations management is

carried out in an organization depends very much on the nature of the

products or services in the organization, for example, on retail,

manufacturing or wholesale.

MULTI DISCIPLINARY FUNCTION

Purchasing

Control and Coordinating Function of Management

Product and Service Management

Quality Management

Inventory Management

Supply Chain Management

Logistics and Transportation Management

Facilities Management

Configuration Management

Operation Management (5568)


Distribution Channels

Enterprise Resource Planning

PROCUREMENT (PURCHASING) PRACTICES

This topic reviews guidelines for buying various materials from suppliers and

vendors materials, including computers, services from lawyers, insurance,

etc.

MANAGEMENT CONTROL AND COORDINATING FUNCTION

Management control and coordination includes a broad range of activities to

ensure that organizational goals are consistently being met in an effective

and efficient fashion.

PRODUCT AND SERVICE MANAGEMENT

As noted above, the major activities involved in product and service

management are similar to those in operations management. However,

operations management is focused on the operations of the entire

organization, rather than managing a product or service.

QUALITY MANAGEMENT

Quality management is crucial to effective operations management,

particularly continuous improvement. More recent advancements in quality,

such as benchmarking and Total Quality Management, have resulted in

advancements to operations management as well.

INVENTORY MANAGEMENT



Costs can be substantial to store and move inventory. Innovative methods,

such as Just-in-Time inventory control, can save costs and move products

and services to customers more quickly.

LOGISTICS AND TRANSPORTATION MANAGEMENT

Logistics is focused on the flow of materials and goods from suppliers,

through the organization and to the customers, with priority on efficiency

and cost effectiveness.

FACILITIES MANAGEMENT

Effective operations management depends a great deal on effective

management of facilities, such as buildings, computer systems, signage,

lighting, etc.

CONFIGURATION MANAGEMENT

It's important to track the various versions of products and services.

Consider the various versions of software that continually are produced, each

with its own version number. Tracking these versions is configuration

management.

B) SOCIAL ISSUES INVOLVED IN OPERATION MANAGEMENT

Perhaps the most practical approach is to view ethics as a catalyst that

causes managers to take socially responsible actions. The movement toward

including ethics as a critical part of management education began in the

1970s, grew significantly in the 1980s, and is expected to continue growing.

Hence, business ethics is a critical component of business leadership. Ethics

can be defined as our concern for good behavior. We feel an obligation to

consider not only our own personal well-being but also that of other human

beings. This is similar to the precept of the Golden Rule: Do unto others as

you would have them do unto you. In business, ethics can be defined as the

ability and willingness to reflect on values in the course of the organization's



decision-making process, to determine how values and decisions affect the

various stakeholder groups, and to establish how managers can use these

precepts in day-to-day company operations. Ethical business leaders strive

for fairness and justice within the confines of sound management practices.

SOCIAL RESPONSIBILITY

The term social responsibility means different things to different people.

Generally, corporate social responsibility is the obligation to take action that

protects and improves the welfare of society as a whole as well as

organizational interests. According to the concept of corporate social

responsibility, a manager must strive to achieve both organizational and

societal goals.

Current perspectives regarding the fundamentals of social responsibility of

businesses are listed and discussed through the Davis model of corporate

social responsibility, areas of corporate social responsibility, and varying

opinions on social responsibility.

A model of corporate social responsibility that was developed by Keith Davis

provides five propositions that describe why and how businesses should

adhere to the obligation to take action that protects and improves the

welfare of society and the organization:

Proposition 1: Social responsibility arises from social power.

Proposition 2: Business shall operate as an open system, with open

receipt of inputs from society and open disclosure of its operation to

the public.

Proposition 3: The social costs and benefits of an activity, product, or

service shall be thoroughly calculated and considered in deciding

whether to proceed with it.

Proposition 4: Social costs related to each activity, product, or service

shall be passed on to the consumer.

Proposition 5: Business institutions, as citizens, have the responsibility

to become involved in certain social problems that are outside their

normal areas of operation.



The areas in which business can become involved to protect and improve the

welfare of society are numerous and diverse. Some of the most publicized of

these areas are urban affairs, consumer affairs, environmental affairs, and

employment practices. Although numerous businesses are involved in

socially responsible activities, much controversy persists about whether such

involvement is necessary or appropriate. There are several arguments for

and against businesses performing socially responsible activities.

SOCIAL RESPONSIVENESS

Social responsiveness is the degree of effectiveness and efficiency an

organization displays in pursuing its social responsibilities. The greater the

degree of effectiveness and efficiency, the more socially responsive the

organization is said to be. The socially responsive organization that is both

effective and efficient meets its social responsibilities without wasting

organizational resources in the process. Determining exactly which social

responsibilities an organization should pursue and then deciding how to

pursue them are perhaps the two most critical decision-making aspects of

maintaining a high level of social responsiveness within an organization. That

is, managers must decide whether their organization should undertake the

activities on its own or acquire the help of outsiders with more expertise in

the area.

In addition to decision making, various approaches to meeting social

obligations are another determinant of an organization's level of social

responsiveness. A desirable and socially responsive approach to meeting

social obligations involves the following:

Incorporating social goals into the annual planning process

Seeking comparative industry norms for social programs

Presenting reports to organization members, the board of directors,

and stockholders on progress in social responsibility



Experimenting with different approaches for measuring social

performance

Attempting to measure the cost of social programs as well as the

return on social program investments

The social obligation approach, for example, considers business as having

primarily economic purposes and confines social responsibility activity

mainly to conformance to existing laws. The socially responsible approach

sees business as having both economic and societal goals. The social

responsiveness approach considers business as having both societal and

economic goals as well as the obligation to anticipate upcoming social

problems and to work actively to prevent their appearance.

AREAS OF MEASUREMENT

To be consistent, measurements to gauge organizational progress in

reaching socially responsible objectives can be performed. The specific areas

in which individual companies actually take such measurements vary, of

course, depending on the specific objectives of the companies. All

companies, however, probably should take such measurements in at least

the following four major areas:

1. Economic function: This measurement gives some indication of the

economic contribution the organization is making to society.

2. Quality-of-life: The measurement of quality of life should focus on

whether the organization is improving or degrading the general quality

of life in society.

3. Social investment: The measurement of social investment deals with

the degree to which the organization is investing both money and

human resources to solve community social problems.

4. Problem-solving: The measurement of problem solving should focus on

the degree to which the organization deals with social problems.



Q. 2 Describe the working of production systems like FMS, GT,

and OPT in different organizational settings.

PRODUCTION SYSTEM

The practical expression of Toyota's people and customer-oriented

philosophy is known as the Toyota Production System (TPS). This is not a

rigid company-imposed procedure but a set of principles that have been

proven in day-to-day practice over many years. Many of these ideas have

been adopted and imitated all over the world.

TPS has three desired outcomes:

To provide the customer with the highest quality vehicles, at lowest

possible cost, in a timely manner with the shortest possible lead times.

To provide members with work satisfaction, job security and fair

treatment.

It gives the company flexibility to respond to the market, achieve profit

through cost reduction activities and long-term prosperity.

TPS strives for the absolute elimination of waste, overburden and

unevenness in all areas to allow members to work smoothly and efficiently.

The foundations of TPS are built on standardization to ensure a safe method

of operation and a consistent approach to quality. Toyota members seek to

continually improve their standard processes and procedures in order to

ensure maximum quality, improve efficiency and eliminate waste. This is

known as kaizen and is applied to every sphere of the company's activities.

CONTINUOUS IMPROVEMENT

Like all mass-production systems, the Toyota process requires that all tasks,

both human and mechanical, be very precisely defined and standardized to

ensure maximum quality, eliminate waste and improve efficiency.



Toyota Members have a responsibility not only to follow closely these

standardized work guidelines but also to seek their continual improvement.

This is simply common sense - since it is clear that inherent inefficiencies or

problems in any procedure will always be most apparent to those closest to

the process.

The day-to-day improvements that Members and their Team Leaders make

to their working practices and equipment are known as kaizen. But the term

also has a wider meeting: it means a continual striving for improvement in

every sphere of the Company's activities - from the most basic

manufacturing process to serving the customer and the wider community

beyond.

JUST IN TIME

It is perhaps not widely known that the 'just in time' approach to production

that has now gained almost universal acceptance in world manufacturing

was actually pioneered by Toyota. In fact, a Toyota engineer coined the term

itself.

This, too, is a simple but inspired application of common sense.

Essentially, 'just in time' manufacturing consists of allowing the entire

production process to be regulated by the natural laws of supply and

demand.

Customer demand stimulates production of a vehicle. In turn the production

of the vehicle stimulates production and delivery of the necessary parts and

so on.

The result is that the right parts and materials are manufactured and

provided in the exact amount needed - and when and where they are

needed.

SUPPLIERS & TPS



Just-in-time manufacturing and other elements of the Toyota Production

System work best when they are a common basis for synchronizing activity

throughout the production sequence. This is an egalitarian arrangement in

which each process in the production flow becomes the customer for the

preceding process and each process becomes a supermarket to the following

process.

Independent suppliers participate on an equal footing with Toyota operations

in the production flow, each fulfilling their own role in that flow.

The only participant in the entire sequence who does not answer to anyone

is the customer who selects a vehicle in the marketplace.

Suppliers who participate in the Toyota Production System enjoy the same

benefits that Toyota does from the system. Just-in-time manufacturing can

dissolve inventories at parts suppliers just as readily and effectively as it

does at Toyota's assembly plants. Product quality improves, too. That's

because the Toyota Production System includes measures for illuminating

defects whenever and wherever they occur.

Suppliers who adopt the Toyota Production System also report improvements

in employee-management relations. That is mainly because the system

provides for an expanded role for employees in designing and managing

their own work. It brings together employees and management in the joint

pursuit of improvements in productivity, quality, and working conditions.

FLEXIBLE MANUFACTURING SYSTEM (FMS)

.

A flexible manufacturing system (FMS) is a manufacturing system in which

there is some amount of flexibility that allows the system to react in the case

of changes, whether predicted or unpredicted. This flexibility is generally

considered to fall into two categories, which both contain numerous

subcategories.

The first category, machine flexibility, covers the system's ability to be

changed to produce new product types, and ability to change the order of



operations executed on a part. The second category is called routing

flexibility, which consists of the ability to use multiple machines to perform

the same operation on a part, as well as the system's ability to absorb large-

scale changes, such as in volume, capacity, or capability.

ADVANTAGES

1. Reduced manufacturing times,

2. Lower cost per unit produced,

3. Greater labor productivity,

4. Greater machine efficiency,

5. Improved quality,

6. Increased system reliability,

7. Reduced parts inventories,

8. Adaptability to CAD/CAM operations.

DISADVANTAGES

1. Cost to implement,

2. Substantial pre-planning required,

INDUSTRIAL FMS COMMUNICATION

Training FMS with learning robot SCORBOT-ER 4u, workbench CNC Mill and

CNC Lathe

An Industrial Flexible Manufacturing System (FMS) consists of robots,

Computer-controlled Machines, Numerical controlled machines (CNC),

instrumentation devices, computers, sensors, and other stand alone systems

such as inspection machines. The use of robots in the production segment of

manufacturing industries promises a variety of benefits ranging from high

utilization to high volume of productivity. Each Robotic cell or node will be

located along a material handling system such as a conveyor or automatic

guided vehicle. The production of each part or work-piece will require a

different combination of manufacturing nodes..



GROUP TECHNOLOGY

The complexity of products is constantly increasing. To meet the world's

growing demand on diversity, highly differentiating products are required.

This as well as historically grown product programs lead to changing product

structures with a high number of variations in products and processes. In

general the huge diversity of parts and processes that alternatively

combines with the lack of transparency and product- and manufacturing

process-related information is the outcome. Here group technology can

make a contribution to identify similarities and patterns of objects and

processes. A huge number of different methods cover a wide range of

applications in nearly all branches of production.

The main field of application of group technology can be characterized as

follows:

Finding similar work pieces or similar manufacturing sequences with

respect to function, design and manufacturing criterias,

Standardization and structuring of similar business processes,

Solving of similar industrial engineering problems.

Q. 3 Identify the quality cost elements associated with the

institutions listed below. Define each of these elements and

suggest how each might be quantified in practice?

A university

A Hospital

A Bank

The Local Bus Line

A text book Publisher

A manufacturer of men’s shoes

QUALITY COST ELEMENTS ASSOCIATED WITH A TEXT UNIVERSITY



A University is a manual of instruction in any branch of study. University are

produced according to the demands of educational institutions. Quality cost

elements of a university are given below:

Teaching staff

Building

Area

Facilities

Recommended books

Course offerings

Above are the quality cost elements of a university that can describe the

quality of a university. The University market does not operate in exactly the

same manner as most consumer markets. First, the end consumers

(students) do not select the product, and the product is not purchased by

faculty or professors. Therefore, price is removed from the purchasing

decision, giving the producer (publishers) disproportionate market power to

set prices high. Similarities are found in the pharmaceutical industry, which

sells its wares to doctors, rather than the ultimate end-user (i.e. patient).

This fundamental difference in the market is often cited as the primary

reason that prices are out of control. The term "Broken Market" first

appeared in Economist James Koch's analysis of the market commissioned

by the Advisory Committee on Student Financial Assistance.

This situation is exacerbated by the lack of competition in the textbook

market. Consolidation in the past few decades has reduced the number of

major textbook companies from around 30 to just a handful. Consequently,

there is less competition than there used to be, and the high cost of starting

up keeps new companies from entering.

QUALITY COST ELEMENTS ASSOCIATED WITH HOSPITAL

Quality cost elements of a hospital are following under:

Location



Qualified Staff

Maintenance

Facilities

Latest Equipments

Location: of a hospital are very much important and basic factor to describe

the quality matters of hospital because good quality hospitals select the

location that will be best as environment and all other aspects.

Qualified Staff: plays vital role to describe the quality of any institution and

organization. In the case of Hospital if nominate and qualified staff will be

there the quality line will be increase.

Maintenance: Maintenance is also very important factor to describe the

quality of any organization. If organization maintains every thing in the best

condition it will impact on the overall quality reputation of the hospital.

Facilities: are another important issue in the case of hospital. There are

many kind of hospitals provide many kind of facilities but good private

hospital provide extra facilities to the patients that is symbol of their quality

maintenance.

Equipments: Latest and modern equipments also very necessary for a

hospital to describe the quality of a hospital. If there will be latest and good

condition equipment in the hospital it will create the good impact regarding

quality to the customers.

This assignment will summarizes the findings from a study of the ingredients

that contribute to excellence in hospital quality. The Economic and Social

Research Institute (ESRI) 2 has combined quantitative research with case

studies and telephone interviews to develop a typology of the key factors

driving the achievement of good results and successful quality improvement

(QI) efforts in hospital care.

QUALITY COST ELEMENTS ASSOCIATED WITH BANKS



Amid sweeping regulatory change, slow economic growth and tightened

margins, banks today are increasingly focused on their most important

stakeholders — their customers.

Yet, despite their best efforts to attract and retain customers, customer

confidence levels in banks remain low.

In response, customers are changing their behavior and demanding lower

fees for higher levels of service or other improvements. If these demands are

not met, they are increasingly likely to shop around at other banks for

competitive rates for services and products.

To build on our previous global consumer banking survey in 2011, and to

help banks better understand what they must do to build and maintain

customer relationships, we surveyed 28,560 banking customers across 35

countries to learn more about their needs and preferences. Our banking

teams around the world analyzed the responses.

We hope the data and survey findings are useful to you when planning

strategies and adapting your business models to attain greater customer

loyalty and satisfaction.

SURVEY SUGGESTS THAT FOR BANKS TO REMAIN COMPETITIVE,

THEY MUST:

Give customers the opportunity to choose by making promises and

service offers more transparent.

Rebalance fee structures to achieve the clarity and sustainability

required by regulators and investors.

Help customers shape their own banking experiences by improving

how they provide information and advice, recruiting online affinity

groups and by developing flexible loyalty programs.

Develop models around customer needs by reprioritizing spending,

including increasing the use of low-cost digital models and using more

innovative technology.



COMFORT AND CONVENIENCE

How long is the walk? Can one walk safely along and across the

streets to and from transit stops? Is there a functional and continuous

accessible path to the stop, and is the stop accessible to people with

disabilities?

Is the service reliable?

How long is the wait? Is shelter available at the stop while waiting?

How comfortable is the trip? Will one have to stand? Are there an

adequate number of spaces?

How much will the trip cost?

How many transfers are required?

How long will the trip take in total? How long relative to other modes?

Are the vehicles and facilities clean?

SERVICE DELIVERY

Reliability: how often is the service provided as promised?

Customer service: what is the quality of direct contacts between

passengers and staff and more importantly, the customers’ overall

perception of service quality?

Comfort: what is the passengers’ physical comfort level as they wait

for and use transit service?

SAFETY AND SECURITY

This relates to the likelihood or more importantly perceived likelihood that

one will be involved in an accident (safety) or become the victim of a crime

(security) while using public transport. An example question in this category:

Are there security concerns—walking, waiting, or in the vehicle?

QUALITY COST ELEMENTS ASSOCIATED WITH THE LOCAL BUS LINE



When we consider public transport, except for particular specialized services

and first class services on rail networks, passengers do not generally have

the option of purchasing an additional quality element. The practice thus far

in public transportation planning and management is that conventional

planning tends to overlook service quality impacts.

With regards to the choice market, the public transport provision has to be

competitive against the private car in meeting travelling needs of the user.

As an example given in Litman (2008), car owners have the option and are

often willing to pay considerable sums to include a variety of “optional

extras” such as satellite navigation systems, leather interiors in the car.

Whilst the basic need of the car owner is a means of provision of

transportation from point A to point B, the quality elements and more

importantly the image associated with ownership and use of this car is

clearly an element of importance in the decision making process of car

ownership and purchase. If more car users are to be persuaded to choose

the option of public transport instead, the entire package of public transport

options available has to be improved considerably. When approaching this

group, the objective of quality is designed to entice these choice users by

ensuring that public transport caters both to their basic transportation needs

and also to their implied needs.

For them, public transport needs to deliver at least a journey experience

rivalling that, or better than, the private car. Hence measures improving the

image of public transport, enhancing safety and personal security, reducing

overcrowding are targeted at this segment of the market.

QUALITY COST ELEMENTS ASSOCIATED WITH A TEXT BOOK

PUBLISHER

A textbook or course book is a manual of instruction in any branch of

study. Textbooks are produced according to the demands of educational

institutions. Although most textbooks are only published in printed format,



many are now available as online electronic books and increasingly, although

illegally, in scanned format in P2P networks.

The textbook market does not operate in exactly the same manner as most

consumer markets. First, the end consumers (students) do not select the

product, and the product is not purchased by faculty or professors.

Therefore, price is removed from the purchasing decision, giving the

producer (publishers) disproportionate market power to set prices high.

Similarities are found in the pharmaceutical industry, which sells its wares to

doctors, rather than the ultimate end-user (i.e. patient).

This fundamental difference in the market is often cited as the primary

reason that prices are out of control. The term "Broken Market" first

appeared in Economist James Koch's analysis of the market commissioned

by the Advisory Committee on Student Financial Assistance.

This situation is exacerbated by the lack of competition in the textbook

market. Consolidation in the past few decades has reduced the number of

major textbook companies from around 30 to just a handful. Consequently,

there is less competition than there used to be, and the high cost of starting

up keeps new companies from entering.

QUALITY COST ELEMENTS ASSOCIATED WITH MANUFACTURER OF

MEN’S SHOWS

Quality Cost elements of a show company

According to trend

Making Quality

Material used

Designing

Advertising

Pricing Strategy



According to Trend: Product should be according to the latest trend used

in the society, Show Company has to follow the latest trends in the society

and then design the show.

Quality: Quality of shows should be acceptable for the consumers according

to their use of shows.

Material Used: Company should use the quality material during making of

men’s shows.

Designing: Designing should be according to the demand of consumers and

time to time company should introduce the new designs in the market.

Advertising: Advertising is very important for the quality maintenance of

any product in these days. High quality adds would be create good quality

impacts on the consumer mind.

Pricing: Pricing of product should be according to the market trend this will

also increase the quality of your product.

Q. 4 In a stock company, marketing department makes a sales forecast each

year by developing a sales force composite. Meanwhile, operations

make a sales forecast based on past experience and trends. The

operation forecast usually turn out to be an increase over last year but

still 20 percent less than the forecast of marketing department. How

should forecasting in the company be done?

FORECASTING

Forecasting is the process of making statements about events whose actual

outcomes (typically) have not yet been observed. A commonplace example

might be estimation of some variable of interest at some specified future



date. Prediction is a similar, but more general term. Both might refer to

formal statistical methods employing time series, cross-sectional or

longitudinal data, or alternatively to less formal judge mental methods.

Usage can differ between areas of application: for example, in hydrology, the

terms "forecast" and "forecasting" are sometimes reserved for estimates of

values at certain specific future times, while the term "prediction" is used for

more general estimates, such as the number of times floods will occur over a

long period.

Risk and uncertainty are central to forecasting and prediction; it is generally

considered good practice to indicate the degree of uncertainty attaching to

forecasts. In any case, the data must be up to date in order for the forecast

to be as accurate as possible.[1]

Although quantitative analysis can be very precise, it is not always

appropriate. Some experts in the field of forecasting have advised against

the use of mean square error to compare forecasting methods

CATEGORIES OF FORECASTING METHODS

QUALITATIVE VS QUANTITATIVE METHODS

Qualitative forecasting techniques are subjective, based on the opinion and

judgment of consumers, experts; appropriate when past data is not

available. It is usually applied to intermediate-long range decisions.

Examples of qualitative forecasting methods are informed opinion and

judgment, the Delphi method, market research, historical life-cycle analogy.

Quantitative forecasting models are used to estimate future demands as a

function of past data; appropriate when past data are available. The method

is usually applied to short-intermediate range decisions. Examples of

quantitative forecasting methods are:[citation needed] last period demand, simple


http://en.wikipedia.org/wiki/Forecasting#cite_note-0


and weighted moving averages (N-Period), simple exponential smoothing,

multiplicative seasonal indexes.

REFERENCE CLASS FORECASTING

Reference class forecasting was developed by Oxford professor Bent

Flyvbjerg to eliminate or reduce bias in forecasting by focusing on

distributional information about past, similar outcomes to that being

forecasted. Daniel Kahneman, Nobel Prize winner in economics, calls

Flyvbjerg's counsel to use reference class forecasting to de-bias forecasts,

"the single most important piece of advice regarding how to increase

accuracy in forecasting.

TIME SERIES METHODS

Time series methods use historical data as the basis of estimating future

outcomes.

Moving average

Weighted moving average

Kalman filtering

Exponential smoothing

Autoregressive moving average (ARMA)

Autoregressive integrated moving average (ARIMA)

CAUSAL / ECONOMETRIC FORECASTING METHODS

Some forecasting methods use the assumption that it is possible to identify

the underlying factors that might influence the variable that is being

forecast. For example, including information about weather conditions might

improve the ability of a model to predict umbrella sales. This is a model of

seasonality which shows a regular pattern of up and down fluctuations. In

addition to weather, seasonality can also be due to holidays and customs



such as predicting that sales in college football apparel will be higher during

football season as opposed to the off season. Casual forecasting methods are

also subject to the discretion of the forecaster. There are several informal

methods which do not have strict algorithms, but rather modest and

unstructured guidance. One can forecast based on, for example, linear

relationships. If one variable is linearly related to the other for a long enough

period of time, it may be beneficial to predict such a relationship in the

future. This is quite different from the aforementioned model of seasonality

whose graph would more closely resemble a sine or cosine wave. The most

important factor when performing this operation is using concrete and

substantiated data. Forecasting off of another forecast produces inconclusive

and possibly erroneous results.

ARTIFICIAL INTELLIGENCE METHODS

Artificial neural networks

Group method of data handling

Support vector machines

Often these are done today by specialized programs loosely labeled

Data mining

OTHER METHODS

Simulation

Prediction market

Probabilistic forecasting and Ensemble forecasting

Business forecasters and practitioners sometimes use different terminology

in the industry. They refer to the PMAD as the MAPE, although they compute

this as a volume weighted MAPE For more information see Calculating

demand forecast accuracy.



Reference class forecasting was developed to increase forecasting accuracy

by framing the forecasting problem so as to take into account available

distributional information. Daniel Kahneman, winner of the Nobel Prize in

economics, calls the use of reference class forecasting "the single most

important piece of advice regarding how to increase accuracy in forecasting.

Forecasting accuracy, in contrary to belief, cannot be increased by the

addition of experts in the subject area relevant to the phenomenon to be

forecast.

APPLICATIONS OF FORECASTING

The process of climate change and increasing energy prices has led to the

usage of Egan Forecasting of buildings. The method uses forecasting to

reduce the energy needed to heat the building, thus reducing the emission

of greenhouse gases. Forecasting is used in the practice of Customer

Demand Planning in everyday business forecasting for manufacturing

companies. Forecasting has also been used to predict the development of

conflict situations. Experts in forecasting perform research that use empirical

results to gauge the effectiveness of certain forecasting models. Research

has shown that there is little difference between the accuracy of forecasts

performed by experts knowledgeable of the conflict situation of interest and

that performed by individuals who knew much less.

Similarly, experts in some studies argue that role thinking does not

contribute to the accuracy of the forecast. The discipline of demand

planning, also sometimes referred to as supply chain forecasting, embraces

both statistical forecasting and a consensus process. An important, albeit

often ignored aspect of forecasting, is the relationship it holds with planning.

Forecasting can be described as predicting what the future will look like,

whereas planning predicts what the future should look like. There is no single

right forecasting method to use. Selection of a method should be based on

your objectives and your conditions (data etc.). A good place to find a



method, is by visiting a selection tree. An example of a selection tree can be

found here. Forecasting has application in many situations:

LIMITATIONS

As proposed by Edward Lorenz in 1963, long range weather forecasts, those

made at a range of two weeks or more, are impossible to definitively predict

the state of the atmosphere, owing to the chaotic nature of the fluid

dynamics equations involved. Extremely small errors in the initial input, such

as temperatures and winds, within numerical models doubles every five

days.

Q. 5 a) What relationship exists between layout decisions, capacity

decisions, and scheduling?

b) Compare the manual and quantitative models for process layout

design. What could be the advantages of each of the model?

A) MAKING POPULAR LAYOUT DECISIONS

You’re a Web designer, right? You fascist oppressor. What gives you the right

to be so arrogant and close-minded?

Amazing, isn’t it? We’ve only just met and here I am insulting and berating

you. And you don’t even know why, though you might have some idea.

Let me clear it up for you: in your last three design projects, you excluded

visitors, ran roughshod over user expectations, and generally displayed a

lack of understanding of the medium. This is the case no matter what design

techniques you used; no matter whose books you read; no matter what you

did. You thug.

What the blinking font am I talking about? I’m talking about Web design,

which requires a constant balancing of pros and cons, and which does not

admit to universally applicable answers. Unfortunately, this means that when



you make a choice in how to style your site, you’re going to annoy

somebody. Change that decision, and you’ll annoy somebody different.

Let’s take the eternal debate of fixed versus liquid (or fluid or elastic or jello

or whatever term you prefer) layout. On the one hand, you have the ability

to set your design layout at a fixed width, using pixels or ems or some other

fixed unit of measure. This has the advantage of giving you a more-or-less

controlled design space, and as a bonus can help overcome some annoying

positioning bugs in IE/Win. On the down side, if a user has a really wide

browser window, then there’s a whole bunch of white space to the sides of

the design’s content; alternatively, a very narrow browser window will invoke

the dreaded horizontal scrollbar (eeeek!).

The other choice is to go fluid (or liquid or whatever), using mainly

percentages to define the widths of layout areas. The win here is that your

content will always fill the browser window, or at least some portion of it,

regardless of that window’s width. No ugly leftover whitespace! On the other

hand, users with really wide windows will get really long lines of text, which

most people find difficult to read; at the other end, a really narrow window

can mean single-word lines of text or, worse, some content overlapping other

content.

CAPACITY DECISIONS

He Psychiatric Consultation Service at Massachusetts General Hospital (MGH)

sees medical and surgical inpatients with comorbid psychiatric symptoms

and conditions. Such consultations require the integration of medical and

psychiatric knowledge. During their thrice-weekly rounds, Dr. Huffman and

Dr. Stern discuss the diagnosis and management of conditions confronted.

These discussions have given rise to rounds reports that will prove useful for

clinicians practicing at the interface of medicine and psychiatry.

One of the most common reasons for a psychiatric consultation in the

general hospital is to help decide whether a patient has the clarity of mind to



agree to or refuse a treatment or procedure. Such decisions require the

consideration of many factors, and patients may have the capacity to make

some decisions—but not others—regarding their medical care.

Have you ever been puzzled about whether a patient has the capacity to

make treatment decisions? If the patient lacks the capacity to make a certain

decision, do you know what to do next? The following case of a man with

fever and confusion highlights several of the issues germane to capacity

decisions. The discussion and appended references should clarify key issues

in the determination of capacity.

SCHEDULING

Scheduling is an important tool for manufacturing and engineering, where it

can have a major impact on the productivity of a process. In manufacturing,

the purpose of scheduling is to minimize the production time and costs, by

telling a production facility when to make, with which staff, and on which

equipment. Production scheduling aims to maximize the efficiency of the

operation and reduce costs.

Production scheduling tools greatly outperform older manual scheduling

methods. These provide the production scheduler with powerful graphical

interfaces which can be used to visually optimize real-time work loads in

various stages of production, and pattern recognition allows the software to

automatically create scheduling opportunities which might not be apparent

without this view into the data. For example, an airline might wish to

minimize the number of airport gates required for its aircraft, in order to

reduce costs, and scheduling software can allow the planners to see how this

can be done, by analyzing time tables, aircraft usage, or the flow of

passengers.

Companies use backward and forward scheduling to allocate plant and

machinery resources, plan human resources, plan production processes and

purchase materials.



Forward scheduling is planning the tasks from the date resources become

available to determine the shipping date or the due date.

Backward scheduling is planning the tasks from the due date or required-by

date to determine the start date and/or any changes in capacity required.

The benefits of production scheduling include:

Process change-over reduction

Inventory reduction, leveling

Reduced scheduling effort

Increased production efficiency

Labor load leveling

Accurate delivery date quotes

Real time information

(b) THE MANUAL AND QUANTITATIVE MODELS FOR PROCESS

LAYOUT DESIGN








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