Slides 2015 for contact 4

1. Operations Management PBSB 813 Contact 4 Johan Jordaan [email protected] 2. Note on the use of these slides These slides provide the basic theory that I would like you to know. There are many more techniques on the slides that came with the textbook, which are also available on eFundi. As I talk you through this slide show, please stop where you don't understand, go to either the textbook (Heizer and Render) or the Heizer & Render slides and make sure you understand them. If you still do not understand, on the first page that you have to submit is space for you to tell me what you do not understand so that I can cover it in class. Once you have gone through the slides, go to the template on eFundi and prepare your submissions for the next contact session. 3. Operations & productivity (1) Topics covered: Contact 4 Global envi- ronment & strategy (2) Managing projects (3) Forecasting demand (4) Product design (5) Quality management (6) Process design (7) Location decisions (8) Layout decisions(9) Job design & work mea- surement (10) Supply chain management (11) Inventory management (12) Scheduling (13 & 15) MRP & ERP (14) JIT & Lean operations (16) Maintenance & reliability (17) Study school Contact 1 Contact 2 Contact 3 Contact 4 Contact 5 Contact 6 Contact 7 4. Outcomes for today's contact OUTCOMES OF THEME I Identify the factors that affect location decisions for both product and service businesses Demonstrate a thorough understanding of the theory by applying the concepts in a real-life organisation OUTCOMES OF THEME J Demonstrate a thorough understanding of job design concepts by applying the theory in real-life organisations. Make informed decisions regarding ethics in a job environment 5. Chapter 8 Theory Location strategy 6. Outline Continued Factors That Affect Location Decisions Labor Productivity Exchange Rates and Currency Risks Costs Political Risk, Values, and Culture Proximity to Markets Proximity to Suppliers Proximity to Competitors (Clustering) 7. Outline Continued Methods of Evaluating Location Alternatives The Factor-Rating Method Locational Break-Even Analysis Center-of-Gravity Method Transportation Model 8. Location Strategy One of the most important decisions a firm makes Increasingly global in nature Significant impact on fixed and variable costs Decisions made relatively infrequently The objective is to maximize the benefit of location to the firm 9. Factor-Rating Method Popular because a wide variety of factors can be included in the analysis Six steps in the method 1. Develop a list of relevant factors called critical success factors 2. Assign a weight to each factor 3. Develop a scale for each factor 4. Score each location for each factor 5. Multiply score by weights for each factor for each location 6. Recommend the location with the highest point score 10. Locational Break-Even Analysis Method of cost-volume analysis used for industrial locations Three steps in the method 1. Determine fixed and variable costs for each location 2. Plot the cost for each location 3. Select location with lowest total cost for expected production volume 11. Center-of-Gravity Method North-South East-West 120 90 60 30 | | | | | | 30 60 90 120 150 Arbitrary origin Chicago (30, 120) New York (130, 130) Pittsburgh (90, 110) Atlanta (60, 40) Center of gravity (66.7, 93.3) + Figure 8.3 12. Transportation Model Finds amount to be shipped from several points of supply to several points of demand Solution will minimize total production and shipping costs A special class of linear programming problems 13. Service Location Strategy 1. Purchasing power of customer-drawing area 2. Service and image compatibility with demographics of the customer-drawing area 3. Competition in the area 4. Quality of the competition 5. Uniqueness of the firms and competitors locations 6. Physical qualities of facilities and neighboring businesses 7. Operating policies of the firm 8. Quality of management 14. Chapter 10 Theory People a part of operations 15. Inefficiencies in a process A B C D E F A B C D E F 16. Constraints on Human Resource Strategy Figure 10.1 HUMAN RESOURCE STRATEGY Product strategy Skills needed Talents needed Materials used Safety Schedules Time of day Time of year (seasonal) Stability of schedules When Location strategy Climate Temperature Noise Light Air quality Process strategy Technology Machinery and equipment used Safety Individual differences Strength and fatigue Information processing and response Who Layout strategy Fixed position Process Assembly line Work cell Product 17. Ethics and the Work Environment Fairness, equity, and ethics are important constraints of job design Important issues may relate to equal opportunity, equal pay for equal work, and safe working conditions Helpful to work with government agencies, trade unions, insurers, and employees 18. The ROAM-Model Asset management Profit management Income management % Return on assets managed (ROAM %) Asset turnover # Net Profit (EBIT)% Sales (Turnover) Total assets Net Profit (EBIT) Sales (Turnover) EBIT Total assets 19. Asset turnover Tells me how well my assets generate sales Tells me how well I manage my assets Tells me something about my management style Predicts sales performance For example: Inventory turnover ITO = Cost of Sales Average inventory ITO = turnover inventory (simplified) Tells me how well I manage my supply chain 20. Back to Asset Turnover (ATO) -29.9% 9.6% 16.5% 17.9% 21.1% -40.0% -30.0% -20.0% -10.0% 0.0% 10.0% 20.0% 30.0% 0-1 1-2 2-3 3-4 4-5 ROS% ATO Relationship between ATO and ROS % in SA 1991- 2010 (all companies, average over 20 years) 21. Your assignment Step 1: Make sure you understand the concepts that are covered in this slide show. If necessary, go through it again or study the textbook. The slides by Heizer & Render (available on eFundi) also give valuable extra information. Step 2: Prepare a one-page summary of the theory. Make sure it fits into the template in the study guide. Remember to make a note of those issues that you want explained in class. Step 3: Find out how location decisions (where appilicable) and people management takes place in your organisation. Give a one-page summary on the template. Step 4: Critique the way location decisions and people management takes place in your organisation. Where necessary, suggest improvements. Give a one-page summary on the template. (If there are diagrams, you are allowed a fourth page for them). Note, this should not become a gripe session. Just stick to how people management influences operations. Step 5: Submit your three-page report on efundi before Thursday night 23:59. This counts towards your individual assignment and your final pass mark! Step 6: For your group assignment, prepare a three-slide PowerPoint show: Slide 1: Briefly present the essence of location strategy and people to your community organisation. Slide 2: Explain whether/how they presently do quality management. Slide 3: Give them advice on how to improve their people management process. Use the template that is on eFundi. One group member must submit on efundi before Thursday night 23:59 as well! Names of both documents must be as indicated in your study guide.