Introduction to Operations Management
Prof. Christian Terwiesch
Operations in a Restaurant
Prof. Christian Terwiesch
Operations in an Emergency Room
Prof. Christian Terwiesch
Operations from the Perspective of the Customer
Prof. Christian Terwiesch
Four Dimensions of Performance
Cost Quality
▪ Efficiency
▪ Product quality (how good?) ▪ Process quality (as good as promised?)
Variety
Time
▪ Customer heterogeneity
▪ Responsiveness to
demand
Important for - Performance measurement - Defining a business strategy
Prof. Christian Terwiesch
Four Dimensions of Performance: Measurements for a Sandwich Store Cost Quality
▪ Efficiency
▪ Product quality (how good?)
▪ Process quality (as good as
p promised?) )
Variety
Time
▪ Customer heterogeneity
▪ Responsiveness to demand
Prof. Christian Terwiesch
Introduction
Efficient Frontier
Prof. Christian Terwiesch
Four Dimensions of Performance: 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 make-to-order
▪ Responsiveness to p
demand
▪ Measured by:
- customer lead time - flow time
Prof. Christian Terwiesch
What Can Ops Management (This Course) Do to Help? Step 1: Help Making Operational Trade-Offs Responsiveness High
Very short waiting times, Comes at the expense of Frequent operator idle time
Tradeoff Low Low labor productivity
Long waiting times, yet operators are almost fully utilized y
High labor productivity
Labor Productivity (e.g. $/call)
Example: Call center of a large retail bank - objective: 80% of incoming calls wait less than 20 seconds - starting point: 30% of incoming calls wait less than 20 seconds - Problem: staffing levels of call centers / impact on efficiency OM helps: Provides tools to support strategic trade-offs Prof. Christian Terwiesch
What Can Ops Management (This Course) Do to Help? Step 2: Overcome Inefficiencies Responsiveness
High
Current frontier In the industry Competitor A Eliminate inefficiencies Competitor C
Low Low labor productivity
Competitor B High labor productivity Labor Productivity (e.g. $/call)
Example: • Benchmarking shows the pattern above • Don’t just manage the current system… Change it! Provides tools to identify and eliminate inefficiencies => Define Efficient Frontier Types of inefficiencies: -Poor process design - Inconsistencies in activity network Prof. Christian Terwiesch
What Can Ops Management (This Course) Do to Help? Step 3: Evaluate Proposed Redesigns/New Technologies Responsiveness High Redesign process
New frontier Current frontier In the industry Low Low labor productivity High labor productivity
Labor Productivity (e.g. $/call) ( $/ )
Example: • What will happen if we develop / purchase technology X? • Better technologies are always (?) nice to ha e b t will the pa ? al a s have, but ill they pay? OM helps: Evaluates system designs before they occur Prof. Christian Terwiesch
Example: The US Airline Industry
Prof. Christian Terwiesch
Example: The US Airline Industry
Prof. Christian Terwiesch
Introduction
Format of the course
Prof. Christian Terwiesch
Course Outline / Grading / Homework
Objective of the course: Understanding and improving business processes Performance measures How-to Mix of industries: healthcare restaurants automotive computers call centers banking etc healthcare, restaurants, automotive, computers, centers, banking, Course Outline Introduction (0.5 weeks) 1. Process analysis (1.5 weeks) 2. Productivity 3. Product variety 4. Responsiveness 5. Quality Requirements / Prerequisites: There are no prerequisites for the course Some modules require statistical knowledge (standard deviation, normal...
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