Operations – the “doing” or “getting done”
Biz Strategy – the “how” and “who” we sell products to
Biz Strategy: Differentiation(better product) and cost
leadership (lowest cost)Performance Dimensions: cost,
quality, time, flexibility
Operation Strategy: Equip./Labor (General/specialized),
Production/Inventory strat. (MTS-make to stock, MTO-
made to order, ATO-assemble to order)
Layout:Product:Machines organize as per sequence
needed to manufacturer a specific product.
Process:(ordered by process) machines with similar
functions are grouped together. Cellular:most
flexible:combines machines into product groupings(cells).
Based on "families" of products. Similar to the way a
Toyota plant layout.Patterns of
demand:Horizontal:Average of the
numbers(SMA,WMA,EXP.S)Trend:upwards and
downwardsSeasonal:Umbrella sales (lots in April, and
little to none in November)Cyclical:Several
yearsRandom:Noise - does not follow the previous
four.Forecast:prediction of future events used for
planning purposes.CorrelationCoeffocoent(r)describes
the slope relationship.
CoeffecientofDetermination(r2)goodness of fit, between
0 and 1).Naive f.cast-next period equals demand for the
current period.SMA,WMA:sum of weight x
demand,EXP.S:emphasis given to the most recent
demand, larger alpha results in more responsive to
changes, smaller alpha treat past demand more uniformly
and result in more stable forecast.
MultiplicativeSeasonalMethod(MSM):est. of avg.
demand to arrive at a seasonal f.cast. MSM(STEPS):1.For
each year, calculate the average demand for each season
by dividing annual
demand by the number of seasons per year.2.For each
year, divide the actual demand for each season by the
average demand per season, resulting in a seasonal factor
for each season.3.Calculate the average seasonal factor
for each season using the results from Step 2. 4. Calculate
each season’s forecast for next year.
AddititiveSeasonalMethod:f.cast generated by adding a
constant estimate to avg. Demand per season. Tracking
Signals:indicate whether a method of forecasting is
accurate and predictive changes in demand.Time-
SeriesCriteria: minimize CFE, MAPE,MAD,MSE,Maximize
R2,use trackingsignal, etc. for stable demand use lower
alpha values or larger oberservations, for dynamic
demand, use higher alpha or smaller observations.
Judmentalmethod:contextual knowledge gained through
experience.Project:managing shortages to meet an
objective, Types of Projects :pure-little to no outside
communication, Functional-housed in a specific
dept,Matrix-several bosses.Project Phases:conception,
evaluation, planning, execution, close.
WorkBreakDownStructure(WBS):statement of all work to
be completed.Gantt: shows precedence and inter-
relationships of tasks and subprojects,If to complex, gantt
becomes difficult to manage.Network Diagram: planning
method designed to depict the relationships between
activies, that cosit of nodes(circles) and arrows. Activity
on Node(AON) uses critical path method where nominal
(expected) durations of tasks used to estimate a nominal
project duration value. Critical Path(CP): sequence of
activities between a projects start and finish that takes
the longest time to complete. Objective: is to finish a
project as EARLY as possible but are limited by the C.P.
Precedence relationships: a relationship that determines
a sequence for undertaking activities; it specifies that one
activity cannot start until a preceding activity has been.
Earliest Start(ES):earliest finish time of the immediately
preceding activity.Earliest Finish(EF):Earliest start time
plus its estimated duration.LatestFinish(LF):latest start
times of the activity that immediately
follows.LatestStart(LS):latest finish time minus its
estimated duration.ActivitySlack(S):maximum length of
time that an activity can be delayed without delaying the
entire project. FreeSlack:the amount that the start of an
activity can be delayed.An activity will have slack time
as long as its not on critical path. CostofProject: Direct,
Indirect Penalty. MinimumCostSchedule:determined by
starting with the normal time schedule and “crashing”
activies along the critical path.Crashing:on CP reduces
project duration but also minimize project
cost.NormalTime(NT) the time necessary to complete an
activity under normal conditions.NormalCost(NC):activity
cost associated with the normal
time.CrashTime(CT):shortest possible time to complete
an activity.CrashCost(CC):activity cost associated with the
crash time. Determine the Minimum Cost Schedule:1.
Determine the project’s critical path(s).2. Find the activity
or activities on the critical path(s) with the lowest cost of
crashing per week.3. Reduce the time for this activity
until…a. It cannot be further reduced or b. Another path
becomes critical, or c. The increase in direct costs exceeds
the indirect and penalty cost savings that result from
shortening the project.4. Repeat this procedure until the
increase in direct costs is larger than the savings
generated by shortening the project.
Ex: What if takes X more time than original time? 1)
Calculate time = EF – ES. Then subtract from X to
find time increased. 2) Calculate Slack = LS – ES. 3)
Subtract time increased from slack to find project-
delayed time.If alpha=0 f.cast never change. If alpha =1 f.cast =
naiveIf values are increasing each period WMA forecast will be higher
than the SMA f.cast. It is possible to have very large forecast errors,
yet a CFE equal to zero.
Dt:actual demand in period t
Ft:forecast for period t
n:observtions
Ft+1:f.cast for period t +1
Tt:last trend estimate
SF: Seasonal Factor
Naïve Ft=Dt-1
F.Cast Error: Et=Dt -Ft
Time:Weeks, Quarters
SMA:Ft+1=sum of last n demands/n
WMA:Ft+1=W1D1+W2D2+…+WnDt-n+1
EXP.S:Ft+1=alpha(Demand this period)+(1-alpha)(f.cast calculated last period)
Trend Patterns: using regression  Ft+1=At + Tt, Last Average (At)+ Last Trend Estimate(Tt), Avg this period, is your calc.
At=alpha(demand this period)+(1-alpha)(last avg. +LastTrendEstimate)
Tt=Beta(Avg.this period – avg. last)+(1-beta)(LastTrendEstimate)
TrendAnalysisTabel: Time|Dt|At|Tt|Ft|Et
MultipleSeasonalMethod Tables: Step1: Q|Y1|Y2|Y3|Y4|(Y5empty)|(sum all years/ n of years= avg. of all
years)Step2: Time(Q)|Demand|(SF): Demand/Y1Avg.|Step3:Time(Q)|Avg. SF| F.cast Y5 = Avg.SF x avg. of
all years). Note: Do step 2 for all years to get avg. SF
Cumulatetive F.Cast Error(CFE)=
Avg.Fcast Error(E-Bar)=CFE/n
MeanSquareError(MSE)=Sum of Et2/n … variance
StandardDev. MeanAbsoluteDev. MeanAbsolute%Error

Error Table: Time|Demand|F.Cast|Error|Error2|AbsoluteError|MeanAbsolute%Error|

Tracking Signals: CFE/MAD
Earliest finish: EF=ES + t| Latest Finish: LF=LF-t| Slack: S=LS-ES or LF-EF|Table: Activity|LF|EF|Slack
FreeSlackTable:Activity|Slack|FreeSlack FreeSlack= ES-EF. Total Cost=direct+indirect+pentaly
Direct Cost:Sum of normal cost
Crash to Cost = CC – NC / NT -CT |Cost to Crash per period = slope of direct cost vs time plate
Direct Cost and Time DateTable: Activity|NT|NC|CT|CC|MaxTimeReduction (NT-CT)|Cost of crashing|
Table: Paths|Durations Activity|Slack
Saving = (wk reduct)(penalty) + (wk reduct)(Indirect Cost) – (wk reduct)(crash cost)
New cost = orginal (or new cost from prev) – savings

ES EF

LS LF
Quatr Year A Year A AVG SF Year C
(Q’s) Dmnd Seas Quart.
Ft+1 Dt Ft
Fctr Forecast
A J J
X B B/avg Sum (Total given
S A A
Y C C/avg each yr divided by #of
SF per Q to find Avg)x O S S
Total Sum
quarter, (avg sf), do for N O O
AVG Sum/# quarter
divide by all Q’s
# of SF