Quick Revision | OM Midterm

UNIT 1 — Introduction & Productivity

Core idea: OM designs, runs, and controls the transformation of inputs into goods/services. Productivity compares output to input.

Productivity = Output / Input

Key points

Operations = "technical core" of the firm; links marketing, finance, HR.
Goods = tangible/storable; Services = intangible/simultaneous — most offerings are a continuum.
Single-factor vs multifactor vs total-factor productivity.
Transformation types: physical, locational, exchange, physiological, psychological, informational.
Design issues (long-term constraints) vs operational control issues (short-term optimisation).
Challenges: growing customer expectations + environmental/sustainability pressure.

Exam keywords

transformation processtechnical coregoods-service continuummultifactor productivity

UNIT 2 — Operations Strategy

Core idea: A firm picks a primary task, core competency, and one or two competitive priorities (cost/speed/quality/flexibility), then deploys that choice through the whole organisation.

Key points

Order qualifier = gets you considered; Order winner = gets you the sale.
Positioning: Cost, Speed (time-based), Quality, Flexibility (mass customisation).
Policy deployment (hoshin kanri) cascades strategy; Balanced Scorecard measures Finance/Customer/Process/Learning.
Nine decision areas: products, services, processes & technology, capacity, HR, quality, facilities, sourcing, operating systems — they must fit like puzzle pieces.

Exam keywords

order winner/qualifiercore competencypositioningbalanced scorecard

UNIT 3 — Process Analysis

Core idea: Map a process to see where time/waste hides, then diagnose flow problems using buffer/bottleneck/throughput vocabulary.

WIP = Throughput Rate × Flow Time (Little's Law)

Key points

Flowchart symbols: Operation○ Inspection□ Transport⇒ Delay-D Storage▽ — only Operation adds value.
Buffer = storage between stages; Blocking = can't discharge output; Starving = no input to work on.
Bottleneck = slowest stage, sets process capacity; Utilization = Output ÷ Capacity. An hour lost at the bottleneck costs the system an hour; at a non-bottleneck it may cost nothing.
Make-to-stock = build before the order, serve from finished-goods inventory (efficient, low flexibility). Make-to-order = order first, then produce (flexible, slower).
Operation time = setup + run time. Process velocity = value-added time ÷ flow time.

Exam keywords

process flowchartblocking/starvingbottleneckLittle's Law

UNIT 4 — Location Decisions

Core idea: Location factors differ by facility type; three quantitative techniques compare candidate sites.

Factor rating: Σ(weight×score) | Centre-of-gravity: x*=Σ(xᵢWᵢ)/ΣWᵢ | Load-distance: Σ(lᵢ·dᵢ), pick lowest

Key points

Heavy manufacturing → raw materials/land; Light industry → transport/markets; Retail/service → customer proximity.
Factor rating combines qualitative + quantitative factors; highest weighted score wins.
Centre-of-gravity finds a new coordinate; Load-distance ranks given candidate sites.
Location breakeven: each site has its own FC and VC — low FC wins at low volume, low VC wins at high volume; crossover found by equating the two cost lines.

Exam keywords

factor ratingcentre of gravityload-distanceGIS

UNIT 5 — Layout & Capacity Planning

Core idea: Layout type must match volume/variety; capacity strategy times expansion against demand growth.

Cycle time Cd = Time available / Output needed | Efficiency = Σtᵢ / (n × Ca)

Key points

Process layout = flexible, group by function; Product layout = efficient, sequenced; Fixed-position = product can't move.
Cellular layout / FMS / mixed-model = hybrids combining flexibility + efficiency.
Service layouts: free-flow (browsing), grid (familiarity), loop/spine (exposure).
Capacity: Lead (ahead of demand), Lag (after demand confirmed), Average (middle ground).
Economies of scale ↓ cost to the best operating level (rarely 100% capacity); Diseconomies ↑ cost beyond it. Capacity cushion = reserve held back.
Block diagramming (quantitative): load summary chart → composite movements → grid → minimise nonadjacent loads.
Muther's grid (qualitative): A absolutely necessary, E especially important, I important, O okay, U unimportant, X undesirable → relationship diagram; good layout = short heavy lines, no zigzags.
Layout's basic objective: smooth flow of work, material, people and information.

Exam keywords

process vs product layoutcellular layoutline balancingcapacity lead/lageconomies of scale

UNIT 6 — Product-Process Matrix

Core idea: Match process type to product volume/standardisation; best fit lies on the matrix diagonal.

Breakeven volume v* = Fixed Cost / (Price − Variable cost)

Key points

Project → Batch → Mass → Continuous, in increasing volume/standardisation.
Product-Process Matrix: Volume (y-axis) vs Standardisation (x-axis); best strategy on the diagonal.
Off-diagonal = poor process choice OR a competitive advantage via technology (mass customisation).
Breakeven analysis compares fixed/variable cost trade-offs between process alternatives.
Process planning = sourcing decisions + process selection. Make-or-buy factors: cost, capacity, quality, speed, reliability, expertise.
Sourcing continuum: single contract → strategic alliance → joint venture.

Exam keywords

product-process matrixdiagonal fitbreakeven analysis

UNIT 7 — Inventory Management

Core idea: Inventory buffers uncertainty; classify demand type, know the three cost types, and prioritise control effort (ABC).

Key points

Dependent demand = derived/calculated; Independent demand = forecast from market.
Carrying cost ↑ with inventory; Ordering cost ↑ with number of orders; Shortage cost = cost of stockouts.
Continuous (Q) system: fixed quantity, variable timing; Periodic (P) system: fixed timing, variable quantity.
ABC: A items = ~15% of items, ~80% of value → tight control; C items = bulk of items, little value → loose control.

Exam keywords

dependent/independent demandcarrying/ordering/shortage costP system / Q systemABC classification

UNIT 8 — Inventory Control Models

Core idea: Find the order size that minimises total ordering + carrying cost — with variations for in-house production and price discounts.

EOQ: Qopt = √(2·Co·D/Cc) | EBQ: Qopt = √(2·Co·D / [Cc(1−d/p)]) | Discount TC = CoD/Q + CcQ/2 + PD

Key points

EOQ assumes instantaneous receipt; EBQ (production quantity model) relaxes this for in-house production.
Quantity discounts: check TC at Qopt AND at every cheaper bracket's minimum quantity — pick the lowest.

Exam keywords

EOQEBQ / production quantity modelquantity discount

UNIT 9 — Reorder Point & Quantity Discounts

Core idea: Decide exactly when to trigger a new order, accounting for demand uncertainty and system type (P vs Q).

R = dL (constant) | R = dL + zσd√L (variable demand) | Q = d(tb+L) + zσd√(tb+L) − I (periodic)

Key points

Safety stock = zσd√L; higher service level → higher z → more safety stock → higher cost.
Periodic system order quantity must cover the review period AND lead time, then subtract stock on hand.

Exam keywords

reorder pointsafety stockservice levelperiodic order quantity

UNIT 10 — Job Sequencing & Scheduling

Core idea: Assign work to resources (loading), decide the order jobs are processed (sequencing), and track progress (monitoring).

SLACK = (due date − today) − processing time | CR = (due date − today) / remaining processing time

Key points

Assignment method: row reduction → column reduction → cover zeros → assign (minimises cost/time).
SPT minimises mean flow time; DDATE minimises mean tardiness — no rule optimises both.
Johnson's Rule (2 processes): smallest time at Process 1 → sequence early; at Process 2 → sequence late.
Gantt chart = planned vs. actual progress; Input/Output control = tracks both ends of a work centre.

Exam keywords

loadingassignment methodSPT/DDATE/SLACK/CRJohnson's RuleGantt chart