All entries for Sunday 21 October 2007

October 21, 2007

Operations Management Lesson 4 Exercise

Create a new entry in your Blog using the subject ‘Operations Management Lesson 4 Exercise’.
For a product or service of your own choice, complete a QFD matrix that relates customer requirements to design characteristics. Justify your entry.

The product that I decided to analyze through the QFD matrix are the palmtop computer (HCT).

This is a "new" market sector that is growing faster year after year, eroding market share to the mobile phones.


“The Whats”

The first step in a QFD analysis is to define the “What” alias the customer requirements

· Easy to use: it needs to be easy to use with an intuitive software
it needs to be easy to synchronized with the PC.

· Design : it need to have a winning design

· Portability: it need to be light with a compact overall dimensions

· Price: it important to have a competitive price

· Connectivity: it need to be able to connect with all the network.

· Camera: there must be a camera

· Long battery: it need to have a long time battery


“The Hows”

The second step in a QFD analysis is to define the “Hows”; In this area we represent the technical requirements of the product needed to meet the needs of customers; the technical requirements may affect more than one requirement and influence each other.

· Microsoft Windows Mobile; this software allow you an easy management and synchronization of the mobile device

· Material; we can use different kind of material, normally plastic and aluminium

· High network connectivity: to be able to connect the device in all the situation, it’s very important that the device has got all the possible connection from GSM to UMTS, Wifi and Wired

· New CMOS chipset: all the mobile phone including the palmtop have the camera on board, especially now the new CMOS chipset are space saving and low power demand, even if the quality of the photo is increase

· Lithium battery: a long battery life is very important, and now this is possible thanks to the new technology.



If we analyse the relationship between the “whats” and the “hows”, it’s evident that all the ‘hows’ are related with the price and quite all with the battery.
It’s also very important the R&D that continuously research new upgrade to the aim to improve the products. 

Looking to the roof of the QFD House we can analyse the relationship between the ‘hows’: there is a strong negative relationship between the battery and the mobile connection, as most powerful are the connections and shorter is the battery life.

Another important observation is that Windows mobile has got a positive relationship with the connectivity, CMOS chipset and the battery, in fact if thanks to this sw that the HTC could repair to “small HW defect”.

Its products are recognized from all for the quality and the innovation; moreover they are easy to use, in fact they are developing new interfaces to place side by side to Microsoft in order to simplify the management and the utilization of the telephone

HTC ranking its products in the high part of the market and it’s the “best in class”.

Zoe Radnor (2007); «Operation Management »;Warwick Business school

N. Slack, S. Chsmbers, R. Johnston, A. Betts; «Operation and Process Management »; Prentice Hall

Operations Management Lesson 7 Exercise

Create a new entry in your Blog using the subject ‘Operations Management Lesson 7 Exercise’.
Take a look at a material processing operation. What types of stock control methodologies (re-order point, MRP, ERP etc.) are used? Comment on the possible reasons for the choice of method. If you can, conduct a sample Pareto (80/20) analysis of stock levels and stock usage (by value). How effective is the stock management?

I’ve chosen the material processing operation of VIP Garden, a shop of orchids, sited in Rome.

This shop works a high quantity of orchids and accessories related to the orchids' world, the decision about the products and especially the quantities of orchids to keep in stock (within the greenhouse) is taken by the principal (the owner of the shop) and it is based on the popularity of orchids and of the level of stock.

2 years ago they have bought a software that supports them in the management of the warehouse by linking the stock to sales. Before the arrival of this software, the system they used was the re-ordering point (ROP) system.

They identified in advance two factors:
1) the minimum number of orchids to acquire (relatively to the price of orchids and the cost of management)
2) the minimum value (re-order point) at which they had to do the new order, for not remain without orchids (normally their supplier takes from 4 to 5 days to supply)

blog lesson7 img2(grafico)

So, when the ROP is achieved they entered a new order.

Now with the new SW they’ve moved from ROP to MRP; they have added additional information:
• the seasonality, the increased number of marriages, in Rome corresponds to the months of May-June and September-October, (they are called for setting up weddings flower ornament).
• the rankings of orchids more sold
• the price at which were sold
•The maximum capacity of the warehouse (previously was happened, that once bedridden from low-price, unknowingly they bought more orchids that the greenhouse could contain)

The SW indicates the levels of stocks, the different influence factors, when and the quantity to be acquired by running an alarm, which is analysed by the principal and normally turned in order to the supplier.

For simplicity of management, method MRP has been applied only to the low price orchids, while for the high price (rare) orchid and the accessories, the principal is still continuing to use the ROP method.

Let’s apply the Pareto Analysis; we can divide the items in:

  • A. High value items: 15- 20% of items that account for 75-80% of the total annual inventory value (low price orchid).
  • B. Medium value items: are 30 -40% of the items that account for approximately 20% of the total annual inventory value (high price rare orchid, for which they cannot predict forecast).
  • C. Low value items: are 40-50% of the total number of items and account for 10-15% of the annual inventory value (garden accessories).

blog lesson7 img3

It is plain that the VIP Garden decided to use both methods: MRP, as we saw, was used to calculate demand for high value items (low cost orchids), while they continue to use ROP for the high cost orchid and the garden accessories.

The fundamental factor with the implementation of the new SW is that they have discovered that the profitability of glass vessels linked to the selling of orchids is very high, especially if tailored; in fact now they normally sell the combination of orchids and glass vase (doubling the price of sale).

Furthermore as there is a huge request of orchids for weddings they have implemented an Excel spreadsheet (MRP order record sheet), where mark all the waiting period and processing of the various components for the creation of floral compositions. In order to have the perfect delivery time.

These components are:
glass vases (7 days of dispatch, in packs of 10)
Plastic vessels (2 days of dispatch, in packs of 20)
bark for orchids (4 days, in packs of 20 sacks)

to prepare a beautiful composition they take 20 to 40 minutes.

blog lesson7 img3(orchidea in vaso

Zoe Radnor (2007); «Operation Management »;Warwick Business school

N. Slack, S. Chsmbers, R. Johnston, A. Betts; «Operation and Process Management »; Prentice Hall

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  • the packing plant it's not a real problem, as they use 2 automatic packing machines that could pack … by on this entry
  • Type A is normal orchid that represent close to the 80% of the total annual inventory, while Type B … by on this entry
  • I liked your example. However, I also see some possible misunderstandings. Type 'A' items are those … by on this entry
  • This blog was great. I loved your example of salt manufacture. I suppose, however, that the process … by on this entry
  • Another good analysis of a familiar situation. However, I think you also need to say a bit more abou… by on this entry

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