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Enterprise ResourceEnterprise Resource
Planning (ERP)Planning (ERP)Organizes and manages aOrganizes and manages a
companys business processes bycompanys business processes bysharing information across functionalsharing information across functional
areasareas
Connects with supply-chain andConnects with supply-chain andcustomer management applicationscustomer management applications
Largest ERP provider SAPLargest ERP provider SAP
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ERP ModulesERP Modules
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ERPs Central DatabaseERPs Central DatabaseFinance &Accounting
Sales& Marketing
HumanResources
Production &Materials
ManagementERP DataRepository
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ERP ImplementationERP Implementation First step is to analyze businessFirst step is to analyze business
processesprocesses
Which processes have the biggestWhich processes have the biggest
impact on customer relations?impact on customer relations? Which process would benefit the mostWhich process would benefit the most
from integration?from integration?
Which processes should beWhich processes should be
standardized?standardized?
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Customer RelationshipCustomer Relationship
Management (CRM)Management (CRM) Plans and executes businessPlans and executes business
processes that involve customerprocesses that involve customerinteractioninteraction Changes focus from managingChanges focus from managing
products to managing customersproducts to managing customers
Point-of-sale data is analyzed forPoint-of-sale data is analyzed forpatterns used to predict futurepatterns used to predict future
behaviorbehavior
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Supply Chain ManagementSupply Chain Management
Supply chain planningSupply chain planning
Supply chain executionSupply chain executionSupplier relationshipsSupplier relationshipsDistinctions between ERP and SCMDistinctions between ERP and SCM
are becoming increasingly blurredare becoming increasingly blurred
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Material RequirementsMaterial Requirements
PlanningPlanning
Computerized inventory control &Computerized inventory control &
production planning systemproduction planning system
Schedules component items whenSchedules component items when
they are needed - no earlier and nothey are needed - no earlier and no
laterlater
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When to Use MRPWhen to Use MRPDependent and discrete itemsDependent and discrete items
Complex productsComplex products Job shop productionJob shop productionAssemble-to-order environmentsAssemble-to-order environments
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MaterialMaterial
RequirementsRequirementsPlanningPlanning
Materialrequirements
planning
Plannedorder
releases
Workorders
Purchaseorders
Reschedulingnotices
Itemmaster
file
Productstructure
file
Masterproductionschedule
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Master ProductionMaster Production
ScheduleSchedule Drives MRP process with a schedule ofDrives MRP process with a schedule of
finished productsfinished products
Quantities represent production not demandQuantities represent production not demand
Quantities may consist of a combination ofQuantities may consist of a combination of
customer orders & demand forecastscustomer orders & demand forecasts
Quantities represent what needs to beQuantities represent what needs to beproduced, not what can be producedproduced, not what can be produced
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Basic MRPBasic MRPProcessesProcesses
1.1. Exploding the bill of materialExploding the bill of material
2.2. Netting out inventoryNetting out inventory
3.3. Lot sizingLot sizing
4.4. Time-phasing requirementsTime-phasing requirements
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MRP OutputsMRP Outputs
Planned ordersPlanned ordersWork ordersWork orders
Purchase ordersPurchase orders
Changes to previous plans orChanges to previous plans or
existing schedulesexisting schedulesAction noticesAction notices
Rescheduling noticesRescheduling notices
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Capacity TermsCapacity Terms
Load profileLoad profileCompares released and planned ordersCompares released and planned orders
with work center capacitywith work center capacity
CapacityCapacityProductive capability; includes utilizationProductive capability; includes utilization
and efficiencyand efficiency
UtilizationUtilization% of available working time spent% of available working time spent
workingworking
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More Capacity TermsMore Capacity Terms
Efficiency how well the machineEfficiency how well the machine
or worker performs compared toor worker performs compared to
a standard outputa standard outputLoadLoad
The standard hours of workThe standard hours of work
assigned to a facilityassigned to a facilityLoad percentLoad percent
The ratio of load to capacityThe ratio of load to capacity
Load % =Load % = ((load/capacityload/capacity)x100%)x100%
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Capacity RequirementsCapacity Requirements
PlanningPlanningMRP plannedorder
releases
Routingfile
Capacityrequirements
planning
Openorders
file
Load profile foreach machine center
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Initial Load ProfileInitial Load Profile
Hourso
fcap
ac
ity
Hourso
fcapac
ity
11 22 33 44 55 66
Time (weeks)Time (weeks)
NormalNormalcapacitycapacity
120120
110110
100100
9090
8080 7070
6060
5050
4040
3030
2020
1010
00
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Remedies for UnderloadsRemedies for Underloads
1.1. Acquire more workAcquire more work
2.2. Pull work ahead that is scheduled forPull work ahead that is scheduled forlater time periodslater time periods
3.3. Reduce normal capacityReduce normal capacity
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Remedies for OverloadsRemedies for Overloads
1.1. Eliminate unnecessary requirementsEliminate unnecessary requirements
2.2. Reroute jobs to alternative machines or workReroute jobs to alternative machines or work
centerscenters
3.3. Split lots between two or more machinesSplit lots between two or more machines
4.4. Increase normal capacityIncrease normal capacity
5.5. SubcontractSubcontract
6.6. Increase the efficiency of the operationIncrease the efficiency of the operation
7.7. Push work back to later time periodsPush work back to later time periods
8.8. Revise master scheduleRevise master schedule
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Adjusted Load ProfileAdjusted Load Profile
Hoursofcap
ac
ity
Hoursofcapac
ity
11 22 33 44 55 66
Time (weeks)Time (weeks)
NormalNormalcapacitycapacity
120120
110110
100100
9090
8080 7070
6060
5050
4040
3030
2020
1010
00
Pull aheadPull aheadPush backPush back
Push backPush backOvertime
Workan
extrashift
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ManufacturingManufacturing
ResourceResourcePlanningPlanning(MRP II)(MRP II)
Forecast Aggregateproduction
plan
Customerorders
Feasible?
Master productionschedule
Material requirementsplanning
Capacity requirementsplanning
Feasible?
Purchaseorders
Workorders
InventoryShop floor
control
Manufacture
NoNo
YesYes
FeedbackFeedback
NoNo
YesYes
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Chapter 16Chapter 16
SchedulingScheduling
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SchedulingScheduling
Specifies when labor, equipment,Specifies when labor, equipment,facilities are needed to produce afacilities are needed to produce a
product or provide a serviceproduct or provide a service
Last stage of planning beforeLast stage of planning before
production occursproduction occurs
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Scheduling byScheduling by
Process TypeProcess Type Process IndustryProcess Industry
Linear programmingLinear programming
EOQ with noninstantaneous replenishmentEOQ with noninstantaneous replenishment
Mass ProductionMass ProductionAssembly line balancingAssembly line balancing
ProjectProject Project -scheduling techniques (PERT, CPM)Project -scheduling techniques (PERT, CPM)
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Objectives in SchedulingObjectives in Scheduling
Meet customer due datesMeet customer due dates Minimize job latenessMinimize job lateness
Minimize response timeMinimize response time Minimize completion timeMinimize completion time Minimize time in the systemMinimize time in the system
Minimize overtimeMinimize overtime
Maximize machine or labor utilizationMaximize machine or labor utilization Minimize idle timeMinimize idle time
Minimize work-in-process inventoryMinimize work-in-process inventory
EfficiencyEfficiency
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Shop Floor ControlShop Floor Control
1.1. Loading - Check availability ofLoading - Check availability ofmaterial, machines & labormaterial, machines & labor
2.2. Sequencing - Release work orders toSequencing - Release work orders toshop & issue dispatch lists forshop & issue dispatch lists forindividual machinesindividual machines
3.3. Monitoring - Maintain progress reportsMonitoring - Maintain progress reportson each job until it is completeon each job until it is complete
Scheduling and monitoring day to day production of a jobScheduling and monitoring day to day production of a job
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LoadingLoading
Allocate work to machinesAllocate work to machines
(resources)(resources)
Perform work on most efficientPerform work on most efficientresourcesresources
Use assignment method of linearUse assignment method of linear
programming to determine allocationprogramming to determine allocation
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SequencingSequencing
Prioritize jobs assigned to a resourcePrioritize jobs assigned to a resource
If no order specified use first-comeIf no order specified use first-come
first-served (FCFS)first-served (FCFS)
Many other sequencing rules existMany other sequencing rules exist
Each attempts to achieve to anEach attempts to achieve to an
objectiveobjective
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Sequencing RulesSequencing Rules
FCFS - first-come, first-servedFCFS - first-come, first-served LCFS - last come, first servedLCFS - last come, first served DDATE - earliest due dateDDATE - earliest due date CUSTPR - highest customer priorityCUSTPR - highest customer priority SETUP - similar required setupsSETUP - similar required setups SLACK - smallest slackSLACK - smallest slack
CR - critical ratioCR - critical ratio SPT - shortest processing timeSPT - shortest processing time LPT - longest processing timeLPT - longest processing time
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Critical Ratio RuleCritical Ratio Rule
CR considers both time and work remainingCR considers both time and work remaining
CR = =CR = =
If CR > 1, job ahead of scheduleIf CR > 1, job ahead of schedule
If CR < 1, job behind scheduleIf CR < 1, job behind scheduleIf CR = 1, job on scheduleIf CR = 1, job on schedule
time remainingtime remaining due date - todays datedue date - todays datework remainingwork remaining remaining processing timeremaining processing time
Ties scheduling to Gantt Chart or PERT/CPMTies scheduling to Gantt Chart or PERT/CPM
and project crashingand project crashing
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Sequencing Jobs ThroughSequencing Jobs Through
Many Machines/ProcessesMany Machines/ProcessesFacility is dynamic, new jobs addedFacility is dynamic, new jobs added
Develop global sequencing rulesDevelop global sequencing rulesFirst-in-system, first-served (FISFS)First-in-system, first-served (FISFS)
Work-in-next-queue (WINQ)Work-in-next-queue (WINQ)
Fewest # remaining operations (NOPN)Fewest # remaining operations (NOPN)
Slack per remaining operation (S/OPN)Slack per remaining operation (S/OPN)Remaining work (RWK)Remaining work (RWK)
Study system via simulationStudy system via simulation
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MonitoringMonitoring
Gantt ChartGantt ChartShows both planned and completedShows both planned and completed
activities against a time scaleactivities against a time scale
Input / Output ControlInput / Output Control
Monitors the input and output fromMonitors the input and output fromeach work centereach work center
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Advanced Planning andAdvanced Planning and
Scheduling SystemsScheduling Systems Infinite - assumes infinite capacityInfinite - assumes infinite capacity
Loads without regard to capacityLoads without regard to capacity
Then levels the load and sequences jobsThen levels the load and sequences jobs
Finite - assumes finite (limited) capacityFinite - assumes finite (limited) capacity Sequences jobs as part of the loadingSequences jobs as part of the loading
decisiondecisionResources are never loaded beyond capacityResources are never loaded beyond capacity
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Advanced Planning andAdvanced Planning and
Scheduling SystemsScheduling SystemsAdvanced planning and scheduling (APS)Advanced planning and scheduling (APS)
Add-ins to ERP systemsAdd-ins to ERP systems
Constraint-based programming (CBP) identifies aConstraint-based programming (CBP) identifies a
solution space and evaluates alternativessolution space and evaluates alternatives
Genetic algorithms based on natural selectionGenetic algorithms based on natural selection
properties of geneticsproperties of geneticsManufacturing execution system (MES) monitorsManufacturing execution system (MES) monitors
status, usage, availability, qualitystatus, usage, availability, quality
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Theory of ConstraintsTheory of Constraints
Not all resources are used evenlyNot all resources are used evenly
Concentrate on the bottleneckConcentrate on the bottleneck
resourceresource
Synchronize flow through theSynchronize flow through the
bottleneckbottleneck
Use process and transfer batch sizes toUse process and transfer batch sizes to
move product through facilitymove product through facility
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Theory of ConstraintsTheory of Constraints
What to Change
What to Change to
How to cause the change
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Chapter 4Chapter 4
QualityQuality
ManagementManagementQuality is a measure of goodness that is
inherent to a product or service.
Bottom line: perspective has to be from the
Customer fitness for use
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Out of the CrisisOut of the Crisis
Failure of management to plan for
the future and to foresee problems
has brought about waste ofmanpower, of materials, and of
machine-time, all of which raise the
manufacturers cost and price thatthe purchaser must pay.
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More DemingMore Deming
The consumer is not always willing to subsidize this
waste. The inevitable result is loss of market. Loss
of market begets unemployment. Performance of
management should be measured by potential tostay in business, to protect investment, to ensure
future dividends and jobs through improvement of
product and service for the future, not by the
quarterly dividend.
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Demings solutionDemings solution
The basic cause of sickness in American
industry and resulting unemployment is
failure to top management to manage.He that sells not can buy not.
The job of management is inseparable
from the welfare of the company.
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The degree of excellence of a thingThe degree of excellence of a thing
(Websters Dictionary)(Websters Dictionary)
The totality of features andThe totality of features andcharacteristics that satisfy needscharacteristics that satisfy needs
(ASQ)(ASQ)
Fitness for useFitness for useQuality of designQuality of design
What Is Quality?What Is Quality?
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QualityQuality
Quality Management not owned by
any functional area cross
functional Measure of goodness that is inherent
to a product or service
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FedEx and QualityFedEx and Quality
Digitally Assisted Dispatch System communicate with 30K couriers
1-10-100 rule
1 if caught and fixed as soon as itoccurs, it costs a certain amount of timeand money to fix 10 if caught later in different
department or location = as much as 10Xcost 100 if mistake is caught by the
customer = as much as 100X to fix
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Dimensions of Quality (Garvin)Dimensions of Quality (Garvin)
1.1. PerformancePerformance
Basic operating characteristicsBasic operating characteristics1.1. FeaturesFeatures Extra items added to basic featuresExtra items added to basic features
1.1. ReliabilityReliability Probability product will operate over timeProbability product will operate over time
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Dimensions of Quality (Garvin)Dimensions of Quality (Garvin)
4.4. ConformanceConformance Meeting pre-established standardsMeeting pre-established standards
4.4. DurabilityDurability Life span before replacementLife span before replacement
4.4. ServiceabilityServiceability Ease of getting repairs, speed &Ease of getting repairs, speed &
competence of repairscompetence of repairs
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Dimensions of Quality (Garvin)Dimensions of Quality (Garvin)
7.7.AestheticsAesthetics Look, feel, sound, smell or tasteLook, feel, sound, smell or taste
7.7. SafetySafety Freedom from injury or harmFreedom from injury or harm
7.7. Other perceptionsOther perceptions Subjective perceptions based onSubjective perceptions based on
brand name, advertising, etcbrand name, advertising, etc
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1.1. Time & TimelinessTime & Timeliness Customer waiting time, completed onCustomer waiting time, completed on
timetime
1.1. CompletenessCompleteness Customer gets all they asked forCustomer gets all they asked for
1.1. CourtesyCourtesy Treatment by employeesTreatment by employees
Service QualityService Quality
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Quality ofQuality of
ConformanceConformanceEnsuring product or serviceEnsuring product or service
produced according to designproduced according to design
Depends onDepends onDesign of production processDesign of production process
Performance of machineryPerformance of machineryMaterialsMaterials
TrainingTraining
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Quality PhilosophersQuality Philosophers
Walter Shewhart Statistical Process ControlWalter Shewhart Statistical Process Control
W. Edwards DemingW. Edwards Deming
Joseph Juran strategic and planning basedJoseph Juran strategic and planning basedArmand Fiegenbaum total quality controlArmand Fiegenbaum total quality control
entire business must be involved in qualityentire business must be involved in quality
improvementimprovement
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Demings 14 PointsDemings 14 Points1.1. Create constancy of purposeCreate constancy of purpose
2.2. Adopt philosophy of preventionAdopt philosophy of prevention
3.3. Cease mass inspectionCease mass inspection4.4. Select a few suppliers based onSelect a few suppliers based on
qualityquality
5.5. Constantly improve system andConstantly improve system andworkersworkers
6.6. Institute worker trainingInstitute worker training
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Demings 14 PointsDemings 14 Points
7.7. Instill leadership among supervisorsInstill leadership among supervisors
8.8. Eliminate fear among employeesEliminate fear among employees9.9. Eliminate barriers betweenEliminate barriers between
departmentsdepartments
10.10. Eliminate slogansEliminate slogans
11.11. Remove numerical quotasRemove numerical quotas
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Demings 14 PointsDemings 14 Points
12.12. Enhance worker prideEnhance worker pride
13.13. Institute vigorous training andInstitute vigorous training andeducation programseducation programs
14.14. Develop a commitment from topDevelop a commitment from top
management to implement these 13management to implement these 13pointspoints
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Six SigmaSix Sigma
Quality management program that
measures and improves the
operational performance of acompany by identifying and
correcting defects in the companys
processes and products
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Malcolm BaldrigeMalcolm Baldrige
National Quality AwardNational Quality Award Category 3 determine
requirements, expectations,
preferences of customers andmarkets
Category 4 what is important to the
customer and the company; howdoes company improve
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Total Quality ManagementTotal Quality Management
1.1. Customer defined qualityCustomer defined quality
2.2. Top management leadershipTop management leadership
3.3. Quality as a strategic issueQuality as a strategic issue4.4. All employees responsible for qualityAll employees responsible for quality
5.5. Continuous improvementContinuous improvement
6.6. Shared problem solvingShared problem solving
7.7. Statistical quality controlStatistical quality control
8.8. Training & education for all employeesTraining & education for all employees
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Strategic Implications ofStrategic Implications of
TQMTQMQuality is key to effective strategyQuality is key to effective strategy
Clear strategic goal, vision, missionClear strategic goal, vision, mission
High quality goalsHigh quality goals
Operational plans & policiesOperational plans & policies
Feedback mechanismFeedback mechanismStrong leadershipStrong leadership
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TQM in Service CompaniesTQM in Service Companies
Inputs similar to manufacturingInputs similar to manufacturing
Processes & outputs are differentProcesses & outputs are differentServices tend to be labor intensiveServices tend to be labor intensiveQuality measurement is harderQuality measurement is harder
Timeliness is important measureTimeliness is important measureTQM principles apply to servicesTQM principles apply to services
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Cost of QualityCost of Quality
Cost of poor qualityCost of poor qualityInternal failure costsInternal failure costs
Scrap, Rework, Process failure,Scrap, Rework, Process failure,
Process downtime, Price-Process downtime, Price-downgradingdowngrading
External failure costsExternal failure costs
Customer complaints,Customer complaints,Product return,Product return,
Warranty, ProductWarranty, Product
liability, Lost salesliability, Lost sales
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Employees andEmployees and
Quality ImprovementQuality ImprovementEmployee involvementEmployee involvement
Quality circlesQuality circlesProcess improvement teamsProcess improvement teams
Employee suggestionsEmployee suggestions
C d Eff DiC d Eff t Di
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Cause-and-Effect DiagramCause-and-Effect Diagram
Quality
Problem
Quality
Problem
Out of adjustmentOut of adjustment
Tooling problemsTooling problems
Old / wornOld / worn
MachinesMachinesFaultyFaulty
testing equipmenttesting equipment
Incorrect specificationsIncorrect specifications
Improper methodsImproper methods
MeasurementMeasurement
Poor supervisionPoor supervision
Lack of concentrationLack of concentration
Inadequate trainingInadequate training
HumanHuman
DeficienciesDeficiencies
in product designin product design
Ineffective qualityIneffective quality
managementmanagement
Poor process designPoor process design
ProcessProcess
InaccurateInaccurate
temperaturetemperature
controlcontrol
Dust and DirtDust and Dirt
EnvironmentEnvironment
Defective from vendorDefective from vendor
Not to specificationsNot to specifications
Material-Material-handling problemshandling problems
MaterialsMaterials
Also known as Ishikawa Diagram or Fish BoneAlso known as Ishikawa Diagram or Fish Bone
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Hot House QualityHot House Quality
Lots of Hoopla and no
follow through
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ISO 9000:2000ISO 9000:2000
Customer focus
Leadership
Involvement of the people
Process approach
Systems approach to management
Continual process improvement GAO
Factual approach to decision making Mutually beneficial supplier relationships
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Implications Of ISO 9000Implications Of ISO 9000
Truly international in scopeTruly international in scope
Certification required by many foreign firmsCertification required by many foreign firms
U.S. firms export more thanU.S. firms export more than
$150 billion annually to Europe$150 billion annually to Europe
Adopted by U.S. Navy,Adopted by U.S. Navy,
DuPont, 3M, AT&T, and othersDuPont, 3M, AT&T, and others
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ISO AccreditationISO Accreditation
European registrationEuropean registration 3rd party registrar assesses quality program3rd party registrar assesses quality program
European Conformity (CE) mark authorizedEuropean Conformity (CE) mark authorized
United States 3rd party registrarsUnited States 3rd party registrarsAmerican National Standards Institute (ANSI)American National Standards Institute (ANSI)
American Society for Quality (ASQ)American Society for Quality (ASQ)
Registrar Accreditation Board (RAB)Registrar Accreditation Board (RAB)
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Upcoming EventsUpcoming Events
Final Exam due by Saturday
Harley/Cabelas Papers by Saturday
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Zen and Operations ManagementZen and Operations Management
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In your next assignmentIn your next assignment
remember the dead fish!remember the dead fish!
Zen and Operations ManagementZen and Operations Management
Even a dead fish canEven a dead fish can
swim down streamswim down stream
and give the illusion ofand give the illusion ofprogress!!!progress!!!