operations management and decision making

8/3/2019 Operations Management and Decision Making

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Operations Management and Decision Making(See related pages)

The chief role of an operations manager i s that of planner and decision maker. In this capacity, the operations managerexerts considerable influence over the degree to which the goals and objectives of the organization are realized. Most

decisions involve many possible alternatives that can have quite different impacts on costs or profits. Consequently, it is

important to make informeddecisions.

Operations management professionals make a number of key decisions that affect the entire organization. These include the

following:

What: What resources will be needed, and in what amounts?

When: When will each resource be needed? When should the work be scheduled? When should materials and other supplies

be ordered? When is corrective action needed?

Where: Where will the work be done?

How: How will the product or service be designed? How will the work be done (organization, methods, equipment)? How will

resources be allocated?

Who: Who will do the work?

Throughout this book, you will encounter the broad range of decisions that operations managers must make, and you will be

introduced to the tools necessary to handle those decisions. This section describes general approaches to decision making,including the use of models, quantitative methods, analysis of trade-offs, establishing priorities, ethics, and the systemsapproach. Models are often a key tool used by all decision makers.

Models

Amodel is an abstraction of reality, a simplified representation of something. For example, a childs toy car is a model of a

real automobile. It has many of the same visual features (shape, relative proportions, wheels) that make it suitable for thechilds learning and playing. But the toy does not have a real engine, it cannot transport people, and it does not weigh 2,000

pounds.

Other examples of models include automobile test tracks and crash tests; formulas, graphs and charts; balance sheets andincome statements; and financial ratios. Common statistical models include descriptive statistics such as the mean, median,mode, range, and standard deviation, as well as random sampling, the normal distribution, and regression equations.

Models are sometimes classified as physical, schematic, or mathematical:

Physical models look like their real-life counterparts. Examples include miniature cars, trucks, airplanes, toy animals andtrains, and scale-model buildings. The advantage of these models is their visual correspondence with reality.

Schematic models are more abstract than their physical counterparts; that is, they have less resemblance to the physical

reality. Examples include graphs and charts, blueprints, pictures, and drawings. The advantage of schematic models is thatthey are often relatively simple to construct and change. Moreover, they have some degree of visual correspondence.

Mathematical models are the most abstract: They do not look at all like their real-life counterparts. Examples includenumbers, formulas, and symbols. These models are usually the easiest to manipulate, and they are important forms of inputs

for computers and calculators.

The variety of models in use is enormous. Nonetheless, all have certain common features: They are all decision-making aids

and simplifications of more complex real-life phenomena. Real life involves an overwhelming amount of detail, much of whichis irrelevant for any particular problem. Models omit unimportant details so that attention can be concentrated on the most

important aspects of a situation.

Because models play a significant role in operations management decision making, they are heavily integrated into thematerial of this text. For each model, try to learn (1) its purpose, (2) how it is used to generate results, (3) how these resultsare interpreted and used, and (4) what assumptions and limitations apply.


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The last point is particularly important because virtually every model has an associated set of requirements that indicate theconditions under which the model is valid. Failure to satisfy all of the assumptions (i.e., to use a model where it isnt meant

to be used) will make the results suspect. Attempts to apply the results to a problem under such circumstances can lead todisastrous consequences.

Managers use models in a variety of ways and for a variety of reasons. Models are beneficial because they

1. Are generally easy to use and less expensive than dealing directly with the actual situation.

2. Require users to organize and sometimes quanti fy information and, in the process, often indicate areas whereadditional information is needed.

3. Increase understanding of the problem.

4. Enable managers to analyze What i f ? questions.5. Serve as a consistent tool for evaluation and provide a standardized format for analyzing a problem.

6. Enable users to bring the power of mathematics to bear on a problem.

This impressive list of benefits notwithstanding, models have certain limitations of which you should be aware. The following

are three of the more important limitations:

1. Quantitative information may be emphasized at the expense of qualitative information.2. Models may be incorrectly applied and the results misinterpreted. The widespread use of computerized models

adds to this risk because highly sophisticated models may be placed in the hands of users who are not sufficiently

knowledgeable to appreciate the subtleties of a particular model; thus, they are unable to fully comprehend thecircumstances under which the model can be successfully employed.

3. The use of models does not guarantee good decisions.

Quantitative Approaches

Quantitative approaches to problem solving often embody an attempt to obtain mathematically optimal solutions tomanagerial problems. Linear programming and related mathematical techniques are widely used for optimum allocation of

scarce resources. Queuing techniques are useful for analyzing situations in which waiting lines form.Inventory models arewidely used to control inventories. Project models such as PERT (program evaluation and review technique) and CPM (criticalpath method) are useful for planning, coordinating, and controlling large-scale projects. Forecasting techniques are widely

used in planning and scheduling. Statistical models are currently used in many areas of decision making.

In large measure, quantitative approaches to decision making in operations management (and in other functional businessareas) have been accepted because of calculators and high-speed computers capable of handling the required calculations.

Computers have had a major impact on operations management. Moreover, the growing availability of software packages forquantitative techniques has greatly increased managements use of the computer.

Because of the emphasis on quantitative approaches in operations management decision making, it is important to note thatmanagers typically use a combination of qualitative and quantitative approaches, and many important decisions are based on

qualitative approaches.

Performance Metrics

All managers use metrics to manage and control operations. There are many metrics in use, including those related toprofits, costs, quality, productivity, assets, inventories, schedules, and forecast accuracy. As you read each chapter, note the

metrics being used and how they are used to manage operations.

Analysis of Trade-Offs

Operations personnel frequently encounter decisions that can be described as trade-offdecisions. For example, in deciding

on the amount of inventory to stock, the decision maker must take into account the trade-off between the increased level of

customer service that the additional inventory would yield and the increased costs required to stock that inventory. Inselecting equipment, a decision maker must evaluate the merits of extra features relative to the cost of those extra features.

And in the scheduling of overtime to increase output, the manager must weigh the value of the increased output against the

higher costs of overtime (e.g., higher labor costs, lower productivity, lower quality, and greater risk of accidents).

Throughout this book you will be presented with decision models that reflect these kinds of trade-offs. Decision makers

sometimes deal with these decisions by listing the advantages and disadvantagesthe pros and consof a course of actionto better understand the consequences of the decisions they must make. In some instances, decision makers add weights to

the items on their list that reflect the relative importance of various factors. This can help them net out the potentialimpacts of the trade-offs on their decision.


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A Systems Approach

A systems viewpoint is almost always beneficial in decision making. Asystem can be defined as a set of interrelated parts

that must work together. In a business organization, the organization can be thought of as a system composed ofsubsystems (e.g., marketing subsystem, operations subsystem, finance subsystem), which in turn are composed of lowersubsystems. The systems approach emphasizes interrelationships among subsystems, but its main theme is that the whole is

greater than the sum of its individual parts. Hence, from a systems viewpoint, the output and objectives of the organizationas a whole take precedence over those of any one subsystem. An alternative approach is to concentrate on efficiency within

subsystems and thereby achieve overall efficiency. But that approach overlooks the fact that organizations must operate inan environment of scarce resources and that subsystems are often in direct competition for those scarce resources, so that

an orderly approach to the allocation of resources is called for.

A systems approach is essential whenever something is being designed, redesigned, implemented, improved, or otherwise

changed. It is important to take into account the impact on all parts of the system. For example, if the upcoming model of anautomobile will add antilock brakes, a designer must take into account how customers will view the change, instructions for

using the brakes, chances for misuse, the cost of producing the new brakes, installation procedures, recycling worn-outbrakes, and repair procedures. In addition, workers will need training to make and/or assemble the brakes, production

scheduling may change, inventory procedures may have to change, quality standards will have to be established, advertisingmust be informed of the new features, and parts suppliers must be selected.

Global competition and outsourcing are increasing the length of companies value chains, making it more important than everfor companies to use a systems approach to take the big picture into account in their decision making.

EstablishingPriorities

In virtually every situation, managers discover that certain factors are more important than others. Recognizing this enables

the managers to direct their efforts to where they will do the most good and to avoid wasting time and energy oninsignificant factors.

Consider owning and operating an automobile. It has many parts and systems that can malfunction. Some of these arecritical: The automobile would not function or would be dangerous to operate without them. Critical items include the engine

and drive train, steering, brakes, tires, electrical system, and cooling system. In terms of maintaining and repairing the car,these items should receive the highest priority if the goal is to have safe, reliable transportation.

There are other items that are of much less importance, such as scratches in the paint, minor dents, a missing piece ofchrome, and worn seatcovers. In terms of transportation, these should receive attention only after other, more important

items have been attended to.

Between these two extremes lies a range of items of intermediate priority. These should be given attention corresponding totheir importance to the overall goal. The list might include soft tires, weak battery, wheel alignment, noisy muffler, body

rust, inoperative radio, and headlights out of adjustment.

Obviously, certain parts of an automobile are more critical to its operation than others. The same concept applies to

management. By recognizing this and setting priorities, a manager will be in a position to manage more effectively.

It is axiomatic that a relatively few factors are often most important, so that dealing with those factors will generally have adisproportionately large impact on the results achieved. This is referred to as the Pareto phenomenon, which means that all

things are not equal; some things (a few) will be very important for achieving an objective or solving a problem, and otherthings (many) will not. The implication is that a manager should examine each situation, searching for the few factors thatwill have the greatest impact, and give them the highest priority. This is one of the most important and pervasive concepts in

operations management. In fact, this concept can be applied at all levels of management and to every aspect of decisionmaking, both professional and personal.

Ethics

The financial difficulties of companies such as Enron, WorldCom, Global Crossings, Adelphia, Arthur Andersen, and ImClone

Systems brought into question ethical standards and behavior of high-ranking company officials.

In making decisions, managers must consider how their decisions will affect shareholders, management, employees,

customers, the community at large, and the environment. Finding solutions that will be in the best interests of all of thesestakeholders is not always easy, but it is a goal that all managers should strive to achieve. Furthermore, even managers with

the best intentions will sometimes make mistakes. If mistakes do occur, managers should act responsibly to correct thosemistakes as quickly as possible, and to address any negative consequences.


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Operations managers, like all managers, have the responsibility to make ethical decisions.

Ethical issues arise in many aspects of operations management, including

y Financial statements: accurately representing the organizations financial condition.y Worker safety: providing adequate training, maintaining equipment in good working condition, maintaining a safe

working environment.

y Product safety: providing products that minimize the risk of injury to users or damage to property or theenvironment.

y Quality: honoring warranties, avoiding hidden defects.

y The environment: not doing things that will harm the environment.y The community: being a good neighbor.y Hiring and firing workers: avoiding false pretenses (e.g., promising a long-term job when that is not what is

intended).

y Closing facilities: taking into account the impact on a community, and honoring commitments that have beenmade.

y Workers rights: respecting workers rights, dealing with workers problems quickly and fairly.

Organizational Chart

Operations and Supply Management: A Critical Responsibility of EveryManager(See related pages)

If you have an interest in becoming a great manager, the topics in this book are important for your

achieving this goal. Whether the economy is booming or in a recession, delivering a firm's goods andservices in the most effective manner is critical to its survival. And if you think this book is just about

manufacturing and relevant only for people working in a factory, you are in for some surprises aboutthis fascinating field.

At the most fundamental level, operations and supply management (OSM) is about getting work done

quickly, efficiently, without error, and at low cost. In the context of this book, the terms operationsand supply take on special meaning. Operations refers to the processes that are used to transform

the resources employed by a firm into products and services desired by customers. Supply refers to


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how materials and services are moved to and from the transformation processes of the firm. Take a

simple manufacturing plant that makes golf balls. The manufacturing plant takes rubber, cork, andother material from suppliers and through a series of transformation processes makes golf balls. These

golf balls are sold to customers after moving through a distribution system designed to supply retailoutlets with the golf balls. So when we use the term operations and supply management we are

referring to this integrated system that at one end coordinates the purchase of material from suppliersand at the other end supplies the golf balls to the retail outlets where they can be purchased by

customers.

Supply Chain

The topics in this book include those that it is felt all managers should understand. All managers shouldunderstand the basic principles that guide the design of transformation processes. This includes

understanding how different types of processes are organized, how to determine the capacity of aprocess, how long it should take a process to make a unit, and how the quality of a process is

monitored. Oil refineries, automobile manufacturing, computer makers, and food products all usedifferent types of manufacturing processes. Similarly, services such as insurance companies, fast food

restaurants, and call centers are organized in unique ways. Other than understanding how theprocesses within these operations are organized, another major set of topics relates to how the

operations are supplied. Parts and other raw materials must be moved into and out of these operations.On the input side, suppliers' coordination is needed so that appropriate quantities of material and other

items are made available. On the output or customer side, the finished goods are distributed oftenthrough a complex network of distribution centers and retailers. These supply activities include where to

locate the facilities, strategic sourcing and outsourcing of material and service, and managing thesupply inventories.

Companies today have found how essential great operations and supply management is to the success

of the firm. Saving a dollar or a euro in how a product is produced or distributed results directly in anextra dollar or euro of profit. What other area can claim this? If Marketing sells an extra dollar or euro's

worth of product, profit only sees a few percent of this. If Finance figures out a way to get an extra percent on an investment, by the time the extra cost of procuring the investment, managing the

transaction, and accounting for the investment is factored in, little return is left to show in added profit.Operations and supply management is focused on the actions of providing services and products. Doing

this at low cost and at a level of service that meets customer expectations is essential for businesssuccess.

In this chapter, we study companies that have had great success due largely to great operations and

supply management. IKEA, the Swedish home products retailer described in the opening vignette, is amodel of operations and supply efficiency. Products are designed so that they can be produced, sold to

the retail market through their superstores and delivered to the customer quickly and at very low cost.In the following section, Progressive Insurance, a service company, is described. Their innovative use of

the Internet and mobile claims agents has given the firm significant competitive advantage throughinnovative operations and supply management.


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Productivity

Productivity is the relationship between a given amount of output and the amount

of input needed to produce it. Profitability results when money is left over from

sales after costs are paid. The expenditures made to ensure that the product or

service meets quality specifications affect the final or overall cost of the products

and/or services involved. Efficiency of costs will be an important consideration in

all stages of the market system from manufacturing to consumption. Quality

affects productivity. Both affect profitability. The drive for any one of the three

must not interfere with the drive for the others. Efforts at improvement need to be

coordinated and integrated. The real cost of quality is the cost of avoiding

nonconformance and failure. Another cost is the cost of not having qualityof

losing customers and wasting resources.

As long as companies continually interact with their customers and various

partners, and develop learning relationships between all levels of management and

employees, the levels of productivity and quality should remain high.

Cost Time

To achieve the goal will take a certain amount oftime and need certain resources. These resources havea cost, e.g. people get a salary,machines have wear & tear or need to be hired or purchased.

Sometimes you can shrink the time - i.e. make a project end sooner - by increasing the cost, for exampleby hiring more people or renting faster machinery.

Sometimes you can shrink the cost by reducing the feature set; this would not increase the cost by woulddecrease the time.

Job Shop-

Job shops are typically small manufacturing businesses that handlejob production, that is, custom/bespoke or

semi-custom/bespoke manufacturing processes such as small to medium-size customer orders or batch jobs.

Job shops typically move on to different jobs (possibly with different customers) when each job is completed.

By the nature of this type of manufacturing operation, job shops are usually specialized in skill and processes.

In computer science the problem of job shop scheduling is considered strongly NP-hard.

A typical example would be a machine shop, which may make parts for local industrial machinery, farm

machinery and implements, boats and ships, or even batches of specialized components for the aircraft

industry. Other types of common job shops are grinding, honing,jig-boring, gear manufacturing,

and fabrication shops.

The opposite would be continuous flow manufactures such as textile, steel,food manufacturing and manual

labor.


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Batch ProductionBatch production is a technique used in manufacturing, in which the object in question is created stage bystage over a series of workstations. Batch production is common in bakeries and in the manufacture of sportsshoes, pharmaceutical ingredients, purifying water (APIs), inks, paints and adhesives. In the manufacture ofinks and paints, a technique called a colour-run is used. A colour-run is where one manufactures the lightestcolour first, such as light yellow followed by the next increasingly darker colour such as orange, then red and so

on until reaching black and then starts over again. This minimizes the cleanup and reconfiguring of themachinery between each batch. White (by which is meant opaque paint, not transparent ink) is the only colourthat cannot be used in a colour-run because a small amount of white pigment can adversely affect the mediumcolours. The chemical, tire, and process industry (CPT) segment uses a combination of batch and processmanufacturing depending the product and plant.

Continuous Production

Continuous production is a method used to manufacture, produce, or process materials without interruption.

Continuous production is called a continuous process or a continuous flow process because the materials,

either dry bulk or fluids that are being processed are continuously in motion, undergoing chemical reactions or

subject to mechanical or heat treatment. Continuous usually means operating 24 hours per day, seven days

per week with infrequent maintenance shutdowns, such as semi-annual or annual. Some chemical plants can

operate for more than one or two years without a shutdown.

Some common continuous processes are the following:

Oil refining

Chemicals

Synthetic fibers

Fertilizers

Pulp and paper

Blast furnace (iron)

Metal smelting

Power stations

Natural gas processing

Sanitary waste water treatment

Continuous casting of steel

Rotary kilns forcalcininglime orcement

Float glass

Scheduling Operation

Scheduling is an important tool formanufacturing 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


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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 shippingdate 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

Repetative OperationIn using Mathematica, you sometimes need to repeat an operation many times. There are many ways to do this.Often the most natural is in fact to set up a structure such as a list with many elements, and then apply your

operation to each of the elements.

Labour Intensive Operation

L a b o u r - i n t e n s i v e

y Labour refers to the people required to carry out a process in a business.

y Labour-intensive processes are those that require a relatively high level of labour compared tocapital investment.


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y These processes are more likely to be used to produce individual or personalised products, or toproduce on a small scale

y The costs of labour are: wages and other benefits, recruitment, training and so on.

y Some flexibility in capacity may be available by use of overtime and temporary staff, or by laying-off workers.

y Long-term growth depends on being able to recruit sufficient suitable staff.

y

Labour intensive processes are more likely to be seen in Job production and in smaller-scaleenterprises.

Operation Scheduling Techniques

Purpose of Scheduling

Scheduling methods

Forward schedulingBackward scheduling

Scheduling ActivitiesRouting

LoadingDispatching

Scheduling by Type of OperationsJob operations

Repetitive operationsLabor intensive operations

Service operations-Scheduling techniques

Gantt chartsJohnson's job sequencing rules

Queuing analysisCritical ratio method

Chapter Summary

Organizations schedule their activities in order to meet customers'requirements on time and improve theiroperational efficiency. Scheduling of activities is important for both manufacturing and service firms. An operation

can be scheduled in different ways.

But they can be broadly divided into forward scheduling, backward scheduling and a combination of both. Routing,loading, and dispatching are the important activities in the scheduling of an operation. Routing describes the

sequence of operations and the work centers that perform the work.

Loading assigns jobs to various work centers. Dispatching is the release of an order to start the productionoperation. The different priority rules in dispatching are: earliest due date, longest processing time, shortest

processing time, first in first serve, and slack time remaining.

The method of scheduling also varies with the type of operation. Operations managers follow different approachesin scheduling job operations, repetitive operations, and labor-intensive operations. Appointment systems,

reservation systems and strategic product pricing are the important approaches in the scheduling of service

operations.

Operations managers can follow several scheduling techniques such as Gantt charts, Johnson's job sequencingrules, queuing analysis, and the critical ratio method to schedule their operations.

Gantt Chart

A Ganttchart is a type ofbar chart, developed by Henry Gantt, that illustrates a project schedule. Gantt charts

illustrate the start and finish dates of the terminal elements and summary elements of a project. Terminal

elements and summary elements comprise the work breakdown structure of the project. Some Gantt charts


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also show the dependency (i.e., precedence network) relationships between activities. Gantt charts can be

used to show current schedule status using percent-complete shadings and a vertical "TODAY" line as shown

here.

Although now regarded as a common charting technique, Gantt charts were considered revolutionary when first

introduced[citation needed]. In recognition ofHenry Gantt's contributions, the Henry Laurence Gantt Medal is

awarded for distinguished achievement in management and in community service. This chart is also used in

Information Technology to represent data that has been collected.

Johnson Sequencing Rules

In operations researchJohnson's Rule is a method of scheduling a number of jobs on two successive work

centers. The primary objective of Johnson's Rule is to find an optimal sequence of jobs to

reduce makespan (the total amount of time it takes to complete all jobs). It also reduces the number of idle time

between the two work centers.

Before the technique can be applied, several conditions need to be in place:

1. The time for each job must be constant.

2. The job times must be mutually exclusive of the job sequence.

3. All jobs must go through first work center before going through the second work center.

4. There must be no job priorities.

Johnson's Rule is as follows:

1. List the jobs and their times at each work center.

2. Select the job with the shortest time. If the job is for the first work center, then schedule the job first. If

that job is for the second work center then schedule the job last. Break ties arbitrarily.

3. Eliminate the job selected from further consideration.

4. Repeat steps 2 and 3, working towards the center of the job schedule until all jobs have been

scheduled.

In case there is significant idle time at the second work center (from waiting for the job to be finished at the first

work center), then job splitting may be used.

[edit]Example

There are 5 jobs. Each job needs to go through work center A and B. Find the optimum sequence of jobs using

Johnson's Rule.


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Job Times (hours)

Job Work Center A Work Center B

A 3.20 4.20

B 4.70 1.50

C 2.20 5.00

D 5.80 4.00

E 3.10 2.80

1. The smallest time is located in Job B (1.50 hours). Since the time is in Work Center B, schedule this job last.

Eliminate Job B from further consideration.

? ? ? ? B

2. The next smallest time is located in Job C (2.20 hours). Since the time is in Work Center A, schedule this job

first. Eliminate Job C from further consideration.

C ? ? ? B

3. The next smallest time after that is located in Job E (2.80 hours). Since the time is in Work Center B,

schedule this job last. Eliminate Job E from further consideration.

C ? ? E B

4. The next smallest time after is located in Job A (3.20 hours). Since the time is in Work Center A, schedule

this job first. Eliminate Job A from further consideration.


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C A ? E B

5. The only job left to consider is Job D.

C A D E B

Critical Ratio Method

Critical Ratio is an index number computed by dividing the time remaining until

due date by the work time remaining. As opposed to priority rules, critical ratio is

dynamic and easily updated. It tends to perform better than FCFS, EDD, SPT, andLPT on the average job lateness(delays) criterion. The critical ratio gives priority to

jobs that must be done to keep shipping on schedule. It is used in conjuction withMRP systems and has broad industrial application. The critical ratio is measure ofurgency of any order compared to the other orders for the same facility. The ratio is

based on when the completed order is required and how much time is required to

complete.

Service System Design MetrixThe Service-System Design Matrix is a useful tool for understanding the different elements of a service system. The matrixestablishes the relationship between three key factors of service and how these factors relate to service production and delivery.The first factor is the degree of contact between the consumer and the service provider; the second factor is the opportunity forsales (the greater the amount of contact; the greater the sales opportunity); the third factor of the system is production efficiency

(services that require a large amount of customisation and customer input have lower efficiency).The service system design matrix defines the relationship between sales opportunity (factor two) and production efficiency (factorthree) measured against the amount of human interactivity (factor one).It categorizes six main types of service delivery systems from simple mail contact through to face-to-face total customisation. Thematrix is useful as it reveals many of the variables and constraints of a particular service system. It can be used to pinpoint theparticular focus on an operation or it can assist in the assessment of the needs of workers within the system.In reality service design managers can use many theoretical and methodological approaches and the service system designmatrix is just one of a multitude of theoretical systems used to accurately design systems in order for them to remain competitiveand to continue to attract customers. They go through these rigorous processes so that their business can gain competitiveadvantages and conquer new markets. Companies that can identify the interests of their customers are able to open up new andhopefully profitable prospects as long as they cultivate service offerings that create better and more pleasant experiences for thecustomer.To see an example of the service system design matrix, head over to this site and scroll down

Service Blueprinting

he service blueprint is a technique used for service innovation. The technique was first described by Lynn

Shostack, a bank executive, in the Harvard Business Review in 1984. The blueprint shows processes within

the company, divided into different components which are separated by lines.


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Building a blueprint

The process of structuring a blueprint involves six steps:[1]

1. The identification of the service process, that is supposed to be blueprinted

2. The identification of the customer segment or the customers that are supposed to experience the

service

3. Picturing the service from the customers perspective

4. Picturing the actions of the contact employee (onstage and backstage), and/or technology actions

5. Linking the contact activities to the needed support functions

6. Adding the evidence of service for every customer action step

Operational classification of services

THE OPERATIONAL CLASSIFICATION OF SERVICES IS BASED ON THE TYPE OF SERVICES PROVIDED ANDTHE TARGET CUSTOMERS, EX HOSPITALITY SERVICES RECREATIONAL SERVICES CONSULTANCY SERVICESHOTEL SERVICES ... and so on

operations management and decision making

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