1. Define operations management and explain the transformation and conversion process. Draw the diagram?

Operations management teams design the method of conversion of inputs (materials, labor, proprietary information, etc.) into outputs (goods, services, value-added products, etc.) that is most beneficial to the organization. Operations management teams attempt to balance costs with revenue to achieve the highest net operating profit possible.

Operations management involves the systematic direction and control of the processes that transform resources (inputs) into finished goods or services for customers or clients (outputs). This basic transformation model applies equally in manufacturing and service organizations and in both the private and not-for-profit sectors. 2. Give an example of each process category? Upper-management processes. These govern the operation of the entire organization. Examples include organizational governance and organizational strategy. Operational processes. These are the core processes that make up the value stream. Examples include purchasing, production and/or service, marketing, and sales. Supporting processes. These support the core processes. Examples include accounting, human resources, and IT (information technology). 3. Write the equation for each term: Utilization rate: is a measure of efficiency. It measures the percentage of products/services that the process is producing what it is designed (suppose) to do. Utilization rate formula = Throughput rate (Capacity used)/Capacity Efficiency rate

The efficiency formula is (Work output / Work input) x 100% The work output in this definition is considered to be the useful amount of work output - that is, all scrap, spoilage, and waste is excluded from the numerator. The efficiency formula can be used in a variety of areas, such as to examine the efficiency of motors and in quantifying energy utilization. 4. Define productivity and explain its importance? Productivity can be defined as a common measure of how well a country, industry, or business unit is using its resources. See the equation below for the mathematical relationships used to define productivity. Productivity (P) = Outputs or Goods and Services produced Inputs All Resources Used Expanding on results in: Productivity = Output t Labor + Capital + Materials These equations allow productivity to be defined in terms of relative measure. Importance of productivity in operations management This allows a business to compare current productivity levels against previous productivity levels, or against their competition's productivity. The company defines what total or partial factors will be considered as output and input in these equations and then uses these values to calculate an initial productivity value. The value by itself is not important but it allows the company to make changes in the business model or operations and see how it affects the productivity of that company. 5. What are the major factors that affect productivity and what are steps that can be taken to improve productivity? Factors that affect the productivity and the steps to be taken to improve productivity Technical factors: Productivity largely depends on technology. Technical factors are the most important ones. These include proper location, layout and size of the plant and machinery, correct design of machines and equipment, research and development, automation and computerization, etc. If the organization uses the latest technology, then its productiveness will be high. Production factors: Productivity is related to the production-factors. The production of all departments should be properly planned, coordinated and controlled. The right quality of raw-materials should be used for production. The production process should be simplified and standardized. If everything is well it will increase the productiveness. Organizational factor: Productivity is directly proportional to the organizational factors. A simple type of organization should be used. Authority and Responsibility of every individual and department should be defined properly. The line and staff relationships should also be clearly defined. So, conflicts between line and staff should be avoided. There should be a division of labor and specialization as far as possible. This will increase organization's productiveness.

Personnel factors: Productivity of organization is directly related to personnel factors. The right individual should be selected for suitable posts. After selection, they should be given proper training and development. They should be given better working conditions and work-environment. They should be properly motivated; financially, non-financially and with positive incentives. Incentive wage policies should be introduced. Job security should also be given. Opinion or suggestions of workers should be given importance. There should be proper transfer, promotion and other personnel policies. All this will increase the productiveness of the organization. Finance factors: Productivity relies on the finance factors. Finance is the life-blood of modem business. There should be a better control over both fixed capital and working capital. There should be proper Financial Planning. Capital expenditure should be properly controlled. Both over and underutilization of capital should be avoided. The management should see that they get proper returns on the capital which is invested in the business. If the finance is managed properly the productiveness of the organization will increase. Management factors: Productivity of organization rests on the management factors. The management of organization should be scientific, professional, future-oriented, sincere and competent. Managers should possess imagination, judgment skills and willingness to take risks. They should make optimum use of the available resources to get maximum output at the lowest cost. They should use the recent techniques of production. They should develop better relations with employees and trade unions. They should encourage the employees to give suggestions. They should provide a good working environment, and should motivate employees to increase their output. Efficient management is the most significant factor for increasing productiveness and decreasing cost. Government factors: Productivity depends on government factors. The management should have a proper knowledge about the government rules and regulations. They should also maintain good relations with the government. Location factors: Productivity also depends on location factors such as Law and order situation, infrastructure facilities, nearness to market, nearness to sources of raw-materials, skilled workforce, etc. 6. What are the different forecast errors? Briefly explain and present the formula? Forecasts are vital to every business organization and for every significant management decision. While a forecast is never perfect due to the dynamic nature of the external business environment, it is beneficial for all levels of functional planning, strategic planning, and budgetary planning. Decision-makers use forecasts to make many important decisions regarding the future direction of the organization. Hence Error= Actual-Forecast Et = At Ft Where t y given time period.

Positive errors results when the forecast is too low, negative errors when the forecast is too high. Forecast errors influence decision in two somewhat different ways. One is making a choice between various forecasting alternatives, and the other is in evaluating the success or choice failure of technique in use. Three commonly used measures for summarizing historical errors are the mean absolute deviation (MAD), the Mean Squared Error (MSE), and the mean absolute percent error (MAPE). MAD is the

average absolute error, MSE is the average of squared errors, and MAPE is the average absolute percent error. The formula used to compute MAD, MSE, and MAPE are as follows [ Actualt - Forecastt] MAD= ---------------------------------n

( Actualt Forecastt)2 MSE= ---------------------------------n ( Actualt Forecastt)2 ---------------------------------------- X 100 Actual t

MSE=

--------------------------------------------------------------n

6. Explain why product or service design is strategically important and explain how global product design and be useful? The process of design has certain steps that include motivation, ideas for improvement, organizational capabilities, and forecasting. In the product process innovations, research and development play a significant role. Because of the influence a product and service design can have on an organization, the design process is encouraged to be tied in with the organization's strategy and take into account some key considerations. Computer-aided design (CAD) and Computer-aided manufacturing (CAM) are important tools in the design process because they can anticipate what the design will look like, as well as allow for better manufacturing. Businesses also must take in account environmental and legal concerns when designing a new product. Most importantly, the manufacturing process must ensure the product's safety. The advantages of global product design Organizations that operate globally are discovering advantages in global product design, which uses the combined efforts of a team of designers who work in different countries and even on different continents. Such virtual teams can provide a range of comparative advantages over traditional teams such as engaging the best human resources from around the world without the need to assemble them all in one place, and operating on a 24-hour basis, thereby decreasing the time-to-market. The use of global teams also allows for customer needs assessment to be done in more than one country with local resources, opportunities, and constraints to be taken

into account. Global product design can provide design outcomes that increase the marketability and utility of a product. 7. List the steps of capacity planning? Steps in the Capacity Planning Process Estimate future capacity requirements Evaluate existing capacity Identify alternatives Conduct financial analysis Assess key qualitative issues Select one alternative Implement alternative chosen

8. What are the key issues of supply chain management relative to matching supply and demand? Organizations must pursue the goal of matching supply with demand in a timely fashion through the most efficient use of cross-chain resources. Supply chain partners must work together to maximize resource productivity, develop standardized processes, eliminate duplicate efforts, and minimize inventory levels. Such steps will help the organization reduce waste, drive out costs, and achieve efficiencies in the supply chain. While companies have continued to work on improving their supply process, they also have renewed their efforts at demand management. 9. What is the A-B-C approach for inventory management? What is the typical measure of importance? The A-B-C classification process is an analysis of a range of objects, such as finished products, items lying in inventory or customers into three categories. It's a system of categorization, with similarities to Pareto analysis, and the method usually categorizes inventory into three classes with each class having a different management control associated : A - outstandingly important; B - of average importance; C - relatively unimportant as a basis for a control scheme. Each category can and sometimes should be handled in a different way, with more attention being devoted to category A, less to B, and still less to C. The ABC concept is derived from the Pareto's 80/20 rule curve. It is also known as the 80-20 concept. Here, Rupee / Dollar value of each individual inventory item is calculated on annual consumption basis. A typical measure A-B-C breakdown in relative annual dollar value of items and number of items category. 10. What are the EOQ models used for? The economic order quantity (EOQ) is a model that is used to calculate the optimal quantity that can be purchased or produced to minimize the cost of both the carrying inventory and the processing of purchase orders or production set-ups. Formula Following is the formula for the economic order quantity (EOQ) model:

Where Q = optimal order quantity

D = units of annual demand S = cost incurred to place a single order or setup H = carrying cost per unit This formula is derived from the following cost function: Total cost = purchase cost + ordering cost + holding cost Limitations of the economic order quantity model: It is necessary for the application of EOQ order that the demands remain constant throughout the year. It is also necessary that the inventory be delivered in full when the inventory levels reach zero.

References 1. 2. 3. 4. 5. Stevenson, William J. Operations management: Theory and practice. Mc Graw Hill: Glasglow. Mahdevan (2008). Operations Management: Theory and Practice Tata McGrawHill: India. http://www.icmi.com/Resources/QueueTips/2008/June/Utilization-Formula <http://catalog.flatworldknowledge.com/bookhub/7?e=collins-ch11_s01> http://productionandoperationsmanagement.blogspot.ae/2009/03/capacity-planning.html