BUSM 530

• 1. Service is an intangible process
• 2. Service requires interaction with the customer
• 3. Service is heterogeneous, vary from day to day
• 4. Service can't be stored
• 5. Service specifications are defined and evaluated as a package of features that affect the five senses (supporting facility, facilitating goods, explicit services, implicit services)

• Pure goods
• Core goods
• Core services
• Pure services

building service activities into a company's product offering for current users

• Efficiency: doing something at the lowest possible cost
• Effectiveness: doing things to creat the most value for the company
• Value: Quality/Price

outputs/inputs = productivity

• Partial measure = all output/one input
• Multifactor measure = all output/multiple inputs
• total measure = all output/all input

• economic: prosperity, shareholders
• social: responsibility, fair labor, community
• environmental: stewardship, natural resources, etc.

• Cost or price: make the product or deliver service cheap (only one per competitive market)
• Quality: make a great product or great service (design quality-set of features, process quality-reliability/defect free)
• Delivery speed
• Delivery Reliability
• Coping with changes in demand
• Flexibility and new-product introduction speed
• Other product-specific criteria: technical support, meeting launch date, supplier support, environment

occurs when a compnay seeks to match the benefits of a successful position while maintaining its existing position

a criterion that differentiates the products or services, what makes the product win the purchase

a screening criterion that permits a product to be considered as a possible candidate for purchase

10%

• money/greed
• influence and power

Maslow's hierarchy of needs

• how close a firm is to its best operating level
• capacity used / best operating level

• focus factory - production facility works best when it focuses on a fairly limited set of production objectives or competitive dimensions (cost, quality, delivery, etc.)
• Plant within a plant - focused factory may have several PWPs. Stand-alone factories within the entire factory as a whole

• having the ability to rapidly increase or decrease production levels, or to shift production capacity quickly from one product or service to another
• Flexible Plants (easy to install, tear down and move) (think of the circus)
• Flexible processes (Flexible equipment) (economies of scope - exist when multiple products can be produced from same process at a lower cost than separately)
• Flexible Workers - workers are cross-trained

• more time- and location-dependent than manufacturing
• Time: Services cannot be stored; time is a supplier
• Location: Service must be at customer demand point (in a convenient location)
• Volatility of Demand
• --Inventory cannot smooth demand because you can’t store services
• --Customers needs differ. May require multiple transactions.
• --Directly affected by consumer behavior

• Little's Law
• LT relationship between the inventory, throughput, and flow time of a production system in steady state
• Inventory = throughput rate * flow time (aka units/time * time)

Total Average Value of Inventory = sum of raw materials, WIP, and finished goods at cost (FMV)

COGS/ Average inventory value

• Time it takes a unit to flow through the process from beginning to end
• inventory / throughput

attempt to achieve high customer service with minimum levels of inventory investment

Product (like a house) remains in a fixed location and manufacturing equipment is moved to the product

sometimes called a job shop, similar equipment or functions are grouped together. A part being worked on travels according to the established sequence from work center to work center

A single product or similar group of products are processed in a dedicated area

Work processes are arranged according to progressive steps the product must go through. Creates discrete products

Processes are organized by the sequence of steps like an assembly line, but the flow is continuous. Usually highly automated, and may operate 24 hours / day

• Split the task - complete units processed in two workstations
• Share the task - adjacent workstation does part of the work
• Parallel workstations - two different workstations operate in parallel
• More skilled worker
• Work overtime
• Redesign (if it takes more than one of the above, you should generally redesign the process)

• Independent Interaction - acting on entity’s owned/controlled resources
• Surrogate Interaction - acting on customer or supplier resources
• Direct Interaction - with the customer or supplier

• Create a constant purpose towards improvement
• Adopt the new philosophy
• Stop depending on inspections
• Use a single supplier for any one item
• Improve constantly and forever
• Use training on the job
• Implement leadership
• Eliminate fear
• Get rid of unclear slogans
• Break down between departments
• Eliminate management by objectives
• Remove barriers to pride of workmanship
• Implement education and self improvement
• Make “transformation” everyone’s job
• **focus on process, not people

• Managing the entire organization so it excels on all dimensions of products and services that are important to the customer
• Two fundamental operational goals:
• 1. Careful design of the product or service
• 2. Ensuring the organization’s systems can consistently produce the design

• Performance: Primary product or service characteristics
• Features: Added touches, bells and whistles, secondary characteristics
• Reliability/durability: Consistency of performance over time, probability of failing, useful life
• Serviceability: Ease of repair
• Aesthetics: Sensory characteristics (sound, feel, look...)
• Perceived quality: Past performance and reputation

• Define
• Measure
• Analyze
• Improve
• Control

• Pure Project: A team (composed of people from any functional group) work on a single project full-time until it is completedGreatest challenge: organizational goals and policies are ignored, the individuals on the team are removed (physically and psychologically) from headquarters, individuals become pigeon-holed
• Functional Project: A single functional group is in charge of running one or more projects in their entirety, Greatest limitation: little to no cross utilization of resources
• Matrix Project: Each project utilizes people from functional groups as needed and availableGreatest challenge: Agreement on the strength of the relationship or who owns the human resource. People have to report to two bosses - one for the project and one for the functional group.

• Technique for measuring project progress in an objective manner
• Has ability to combine measurements of scope, schedule and cost in a project
• Provides method for evaluating relative success of project in a point of time
• Does NOT measure Quality

• no need early start schedule and late start schedule
• critical path is the longest

• Step1: p = total defectives / total observations
• Step 2: standard deviation SQRT(((P value)(1 - P value))/n)
• Step 3: UCL, LCL = p +/- z*s (z=3)
• Step 4: plot