OM 300 Exam 1 Study Materials

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University of Alabama *

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300

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Management

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Feb 20, 2024

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OM 300 TEST 1 STUDY MATERIAL Excel What is a model? - A model is a purposeful representation of the key elements of an object or system and the relationships among those elements. - Models are abstract representations of something that is real. - Models have enough detail so that key elements and relationships are accurately represented. - Models omit unnecessary details. What are the 4 different types of models? - Mental models, Visual models, Physical models, and Mathematical models What are the ABCs of spreadsheet modeling? - A ll your work must B e C orrect, D ocumented, E ngineered, and F lexible. What is an influence chart? Why is it used? - An influence chart is a simple diagram to show the relationship between inputs and outputs in a spreadsheet model. - The goal of an influence chart is to define the problem structure while ignoring all available numerical data. - An influence chart identifies the main elements of a model and helps to define the assumptions of the model.

OM 300 TEST 1 STUDY MATERIAL Chapter 1: Operations & Productivity What is Operations Management? - Operations Management is the set of activities that create value in the form of goods and services by transforming inputs into outputs. - Challenges in OM: globalization, supply-chain partnering, sustainability, technological change, mass customization, lean operations What are the 3 main functions of any business? - Marketing: generates demand - Finance/Accounting: tracks how well the organization is doing, pays bills, collects the money - Production/Operations: creates the product What types of decisions do Operation Managers make? (there are 10) - The Base o people, product, process - The Place o location, layout - The Stuff o quality management, inventory management, supply chain management - The Face o scheduling, maintenance What are the differences between goods and services? - Goods: Manufacturers produce tangible products (cars, shoes, paper, etc.) - Services: Economic activities that typically produce an intangible product (education, entertainment, lodging, government, etc.) What is Productivity? How is it calculated? - Productivity is the ratio of outputs (goods and services) divided by the inputs (resources like labor and capital) - Productivity is a measure of process improvement; standard of living can only improve through productivity increases - Single- and Multi-factor productivity calculations Which 3 factors affect productivity? - Quality: may change while the quantity of inputs and outputs remains constant - External Elements: may cause an increase or decrease in productivity - Precise Units: of measure may be lacking

OM 300 TEST 1 STUDY MATERIAL Chapter 2: Operations Strategy in a Global Environment A Global View of Operations - Examples of global companies: o Apple, Microsoft, McDonald’s, Google, Starbucks, Amazon, etc. - Why do companies choose to expand globally? Expanding globally... o Improves supply chain o Reduces costs and exchange rate risks o Improves operations o Helps to understand markets o Improves products o Attracts and retains global talent Developing Mission and Supporting Strategies - Hierarchy of strategies (i.e., business strategy vs. operations strategy): - How do companies achieve competitive advantages? o Differentiation: better or different o Cost leadership: cheaper o Response: rapid response - Product life cycle implications: How do companies go about developing strategies? - Identify key success factors (KSF) - Build and staff the organization - Integrate Operations Management with other activities What is Outsourcing? What are the benefits/risks? - Outsourcing: transferring activities that traditionally been internal to external suppliers Benefits Risks - Cost savings - Increased logistics and inventory costs - Gaining outside expertise - Loss of control (quality, delivery, etc) - Improving operations and service - Potential creation of future competition - Maintaining a focus on core competencies - Negative impact on employees - Accessing outside technology - Risks may not manifest themselves for years

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OM 300 TEST 1 STUDY MATERIAL Chapter 3: Project Management What are the three primary activities involved in managing a project? - Planning: goal setting, defining the project, team organization - Scheduling: relate people, money, and supplies to specific activities and activities to each other - Controlling: monitor resources, costs, quality, and budgets; revise plans and shift resources to meet time and cost demands What are the responsibilities of a project manager? - making sure all necessary activities are finished in order and on time. - the project comes within budget - the project meets quality foals - the people assigned to the project receive motivation, direction, and information - they should also be good coaches, communicators, and be able to organize activities from a variety of disciplines What types of ethical issues could arise for a project manager? - offers of gifts from contractors - pressure to alter status reports to mask delays - false reports for charges of time and expenses - pressure to compromise quality to meet schedules What is the main difference between using a Gantt chart versus using the CPM techniques? - A Gantt chart shows the resources that you need for each task - A critical path analysis identifies which tasks you must complete in order to meet your project deadline What are the steps for using CPM techniques? - 1. Define the project - 2. Develop relationships among activities - 3. Draw the network connecting all the activities - 4. Assign time and/or cost estimates to each activity - 5. Compute the longest time path through the network (Critical Path) o draw a network diagram, forward pass, backward pass, calculate slack, and determine the critical path - 6. Use the network to help plan, schedule, monitor, and control the project

OM 300 TEST 1 STUDY MATERIAL Chapter 3: Project Management - Continued How do you crash a project? - Step 1: Compute the crash cost per time period - Step 2: Using current activity times, find the critical path and identify the critical activities - Step 3: If there is only 1 critical path, select the activity on the critical path that can be crashed AND has the smallest crash cost per period. If there is >1 critical path, then you select either one activity from each path that can be crashed and has the lowest crash cost. If it is more cost-effective to crash 1 node on both passes, you would select to crash that node. - Step 4: REPEAT the drawing of the network, forward pass, backward pass, slack calculation, and critical path determination, then return to Step 3 if your desired due date is not met after completing this step. What are the advantages of CPM techniques? - Useful when scheduling and controlling large projects - Not mathematically complex - Graphical network highlights the relationship among the project activities - CPM and slack time help pinpoint the activities that need to be closely watched - Point out who is responsible for various activities - Applicable to a wide variety of projects - Useful in monitoring costs What are the disadvantages of CPM techniques? - Projects require clear definitions with independent relationships that are stable - Precedence relationships must be specified and networked together - Time estimates tend to be subjective to the person creating them - Too much emphasis is put on the critical path

OM 300 TEST 1 STUDY MATERIAL Chapter 4: Forecasting What is forecasting? - Forecasting is the process of predicting future events. Discuss differences between 3 forecasting time horizons. - Short-Range (less than 3 months): more accurate than long-term forecasts; purchasing, job scheduling, workforce levels, job assignments, production levels - Medium-Range (3 months to 3 years): comprehensive issues and support management decisions; sales and production planning - Long-Range (3+ years): new product planning, facility location, research and development Product Lifecycle - Introduction, Growth, Maturity, Decline - Introduction and Growth require longer forecasts than Maturity and Decline How does forecasting affect human resources, capacity planning, and the supply chain? - HR includes hiring, training, and laying off workers - Capacity shortages can result in undependable delivery, loss of customers, and loss of market share - SCM includes good supplier relationships, price advantages, product innovation, and speed to market 7 steps to forecasting: - 1. Use: determine use of forecast - 2. Items: select items to be forecasted - 3. Time Horizon: determine time horizon of forecast - 4. Model: select the forecasting model(s) - 5. Data: gather data needed to make forecast - 6. Make: make the forecast - 7. Validate: and implement the results Qualitative vs. Quantitative forecasting approaches - Qualitative Forecasting Approaches include Jury of Executive Opinion, Delphi Method, Salesforce Composite, and Consumer Market Survey o Used when situation is vague and little data exists; new products, new technology o Involves intuition, emotions, personal experiences, and value system

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OM 300 TEST 1 STUDY MATERIAL Chapter 4: Forecasting - Continued Qualitative vs. Quantitative forecasting approaches - Quantitative Forecasting Approaches include Naïve Method, Move Average, Weight Moving Average, Exponential Smoothing, Least Squares Method, and Linear Regression. o Used when situation is stable and historical data exists, involves mathematical techniques; current products, current technology Compare the four main qualitative forecasting approaches and the pros and cons of each. - Jury of Executive Opinion: pools opinions of high-level experts, sometimes augmented by statistical models. o Disadvantage: groupthink - Delphi Method: Panel of experts, queries iteratively o Disadvantages: timeliness and based on opinions - Sales Force Composite: estimates from individual salespersons are reviewed for reasonableness, then aggregated o Disadvantage: tends to be overly optimistic - Consumer Market Survey: asks the customer o Disadvantage: what consumers say, and what they do are different What is time-series forecasting? - Set of evenly spaced numerical data that is obtained by observing response variables at regular time periods. The forecasts are only based on past values and assume that factors influencing past, and present will continue to influence in the future. What are the components of a time-series forecast? - Trend, seasonality, cycles, random variation Demonstrate ability to calculate forecasts based on each time-series forecasting approach - Naïve, moving averages/weighted moving averages, exponential smoothing, trend projection

OM 300 TEST 1 STUDY MATERIAL Chapter 4: Forecasting - Continued How is forecast error measured and compared across multiple forecasts? - To obtain the most accurate forecast no matter the technique, you select the model that returns the lowest forecast error according to: o Mean Absolute Deviation (MAD) o Mean Squared Error (MSE) o Mean Absolute Percent Error (MAPE) Calculate a forecast for data with seasonal variation - Step 1: Find the average historical demand for each period - Step 2: Compute the average demand over all periods - Step 3: Compute a seasonal index for each period - Step 4: Estimate next year’s total demand (this could be week, month, quarter, or year) - Step 5: Divide the estimate of total demand by the number of periods, then multiply it by the seasonal index for that period What is associative forecasting? - Used when changes in one or more independent variables can be used to predict the changes in the dependent variables Use regression analysis to calculate forecast - Applied the same as the Least Squares Method Challenges of forecasting in the Service Sector - Special need for short term records, needs differ greatly as function of industry and product, holidays and other calendar events, and unusual events

OM 300 Exam 1 Study Materials

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