Introduction to Operations Management

Introduction

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