Week1 Lecture Topic: introduction and operations strategy
1. 2 Individual case studies (due time: week 5 25%, week 9 30% in class)
2. Group case study research project 5% week 7 in class
3. Research presentation 10% week 11 and 12
4. Case study Research Report 30% week 11 in class
1. Operations and strategies for operations
(Operations are everywhere.)
For organizations, effective and efficiency operations are to increase company’s revenue and reduce its costs.
It is heart of every organization.
Organizations exist to create value
Organization need to meet customer’s needs and wants to gain bigger size market and gain more market share to become the market leader who gains more benefit from their operations.
Pull system: doing research to know your target customers to meet their needs and wants.
Operations are the tasks that create value.
Consumers purchase their products from the providers that offer them the most value for their money.
Why customers buy their products? -----To let the customers see your products’ value that is useful to target customers.
Customers doing purchasing usually do the comparison on the money they need to pay and how much value they can get from the product. (Value and cost comparison)
Two central themes of operations: customer values and competitiveness
Costs of organization to provide value must need to lower to the value that customer to prepare to pay. Otherwise, company will face lose customers and provider opportunities to their competitors.
Key Elements of operations
Systemic vies of operations OUTPUT: It should have more value than input
Input Process Output
Transforming (Value adding process)
Production system: the conversion process
System: a purposeful collection of people, objects, and procedures for operating within an environment
Operations: concerned with transforming inputs into useful outputs according to an agreed-upon strategy and thereby adding value to some entity.
Inputs include facilities, labor, capital, equipment, raw materials, and supplies.
A less obvious input is knowledge
The operations function quite frequently fails in its task because it cannot complete the transformation activities within the required time limit.
The part of the system that adds value to inputs.
Four major ways:
Alter/Transform: changes structurally
Transport: located somewhere else
Store: kept in a protected environment
Inspect: understand its properties
Outputs:( textbook page 10 table 1.1&1.2)
Two types of outputs commonly result from a production system which contain the values:
Products (physical goods)
Services (abstract or nonphysical)
Most outputs are bundles of benefits
That is why most retail stores insist on “Just-in-Time” system, because every second you store the products, the store or company will lose interest that bundled with the products.
Some are tangible and others intangible
May be accompanies by a facilitating goods.
Value = perceived benefits / costs (fixed costs and variety costs---variety costs will increase by