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Operations Management
8th edition
Chapter 5
The Structure and
Scope of Operations
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Key questions
In Chapter 5 â?? The structure and scope of operations â??
Slack et al. identify the following key questionsâ?¦
 What do we mean by the â??structureâ?? and â??scopeâ?? of
operationsâ?? supply networks?
 What configuration should a supply network have?
 How much capacity should operations plan to have?
 Where should operations be located?
 How vertically integrated should an operationâ??s network
be?
 How do operations decide what to do in-house and what
to outsource?
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Operations performance should be seen as a
whole supply chain issue
Benefits of looking at the whole supply chain include:
It helps an understanding of competitiveness.
It helps to identify the significant links in the network.
It helps focus on long-term issues.
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
One wind turbine company’s vertical integration
position (1 of 3)
Blades
Nacelle details
Parts of the supply chain
owned by this company
Company A
Tower
Design
Manufacture
tower/blades
Manufacture
nacelle parts
Assemble
nacelle
Install
Operate
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
One wind turbine company’s vertical integration
position (2 of 3)
Blades
Nacelle details
Parts of the supply chain
owned by this company
Company B
Tower
Design
Manufacture
tower/blades
Manufacture
nacelle parts
Assemble
nacelle
Install
Operate
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
One wind turbine company’s vertical integration
position (3 of 3)
Blades
Nacelle details
Parts of the supply chain
owned by this company
Company C
Tower
Design
Manufacture
tower/blades
Manufacture
nacelle parts
Assemble
nacelle
Install
Operate
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
How outsourcing may affect performance
objectives (1 of 3)
Performance
â??Do it yourselfâ??
objective
In-house supply
Quality
The origins of any quality
problems usually easier to
trace in-house and
improvement can be more
immediate but can be some
risk of complacency.
Speed
Can mean synchronized
schedules which speeds
throughput of materials and
information, but if the operation
has external customers,
internal customers may be low
priority.
â??Buy it inâ??
Outsourced supply
Supplier may have specialized
knowledge and more
experience, also may be
motivated through market
pressures, but communication
more difficult.
Speed of response can be built
into the supply contract where
commercial pressures will
encourage good performance,
but there may be significant
transport/delivery delays.
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
How outsourcing may affect performance
objectives (2 of 3)
Performance
â??Do it yourselfâ??
objective
In-house supply
Dependability Easier communications can
help dependability, but, if the
operation also has external
customers, internal customers
may receive low priority.
Flexibility
Closeness to the real needs of
a business can alert the inhouse operation to required
changes, but the ability to
respond may be limited by the
scale and scope of internal
operations.
â??Buy it inâ??
Outsourced supply
Late delivery penalties in the
supply contract can encourage
good delivery performance, but
organizational barriers may
inhibit in communication.
Outsource suppliers may be
larger with wider capabilities
than in-house suppliers and
more ability to respond to
changes, but may have to
balance conflicting needs of
different customers.
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
How outsourcing may affect performance
objectives (3 of 3)
Performance
â??Do it yourselfâ??
objective
In-house supply
Cost
In-house operations do not
have to make the margin
required by outside suppliers
so the business can capture
the profits which would
otherwise be given to the
supplier, but relatively low
volumes may mean that it is
difficult to gain economies of
scale or the benefits of process
innovation.
â??Buy it inâ??
Outsourced supply
Probably the main reason why
outsourcing is so popular.
Outsourced companies can
achieve economies of scale
and they are motivated to
reduce their own costs
because it directly impacts on
their profits, but costs of
communication and
coordination with supplier need
to be taken into account.
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Figure 5.11
The decision logic of outsourcing
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
The direction, extent and balance of an
operationâ??s vertical integration
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
The balance of capacity
Capacity can either lead or lag demand.
Inventory can be used to smooth out the peaks.
Spare capacity can be used to supply other
operations.
The danger of this is that the original operation
may receive a lower level of service.
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Figure 5.7
(a) Capacity-leading and capacity-lagging
strategies
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Figure 5.7
(b) Smoothing with inventories means using the excess
capacity in one period to produce inventory that supplies
the under-capacity period
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Operations Management
8th edition
Chapter 9
People in Operations
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Figure 9.1
This chapter examines people in operations
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Key questions
In Chapter 9 â?? People in operations â?? Slack et al. identify the
following key questionsâ?¦
 Why are people so important in operations management?
 How do operations managers contribute to human
resource strategy?
 How can the operations function be organized?
 How do we go about designing jobs?
 How are work times allocated?
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Figure 9.2
People in operations
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Figure 9.3
(a) U-form organizations give prominence to functional
groupings of resources
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Figure 9.3
(b) The M-form separates the organization’s resources into
separate divisions
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Figure 9.3
(c) Matrix form structures the organization’s resources so
that they have two (or more) levels of responsibility
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Figure 9.3
(d) N-form organizations form loose networks internally
between groups of resources and externally with other
organizations
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Figure 9.4
A typology of the â??operations developerâ?? role
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Some of the influences on job design
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
The objectives of job design
quality
speed
dependability
Job
design
impacts on
flexibility
cost
health and safety
quality of working life
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Division of labour
Dividing the total task down into smaller parts, each of which
is accomplished by a single person or team.
Promotes faster learning.
Advantages
Makes automation easier.
Ensures that non-productive work is reduced.
Leads to monotony.
Disadvantages
Can result in physical injury.
Is not particularly robust.
Can reduce flexibility.
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Work study
Work study
A generic term for those techniques, particularly method study and work
measurement, which are used in the examination of human work in all its
contexts, and which lead systematically to the investigation of all the factors
which affect the efficiency and economy of the situations being reviewed in
order to effect improvement.
Method study
Method study is the systematic
recording and critical examination
of existing and proposed methods
of doing work, as a means of
developing and applying easier
and more effective methods and
reducing costs.
Work measurement
The application of techniques
designed to establish the time
for a qualified worker to carry
out a specified job at a defined
level of performance.
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Resources and flow: Job design
Method Study: SREDIM
Method study seeks to improve methods of production â??
it embraces layout, environment, material and labour
usage
Select task to be studied
Record present method â?? using five charting
symbols
Examine the facts critically
Develop best method
Install the new method
Maintain by regular checks
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Standard performance is the rate of
output which qualified workers will achieve
without over-exertion as an average over
the working day provided they are
motivated to apply themselves to their
work.
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
A qualified worker is one who is
accepted as having the necessary
physical attributes, intelligence, skill,
education and knowledge to perform the
task to satisfactory standards of safety,
quality and quantity.
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Work measurement
Standard times are the building blocks of process
design â?? they represent the time needed for a qualified
worker to carry out specific jobs at defined levels of
performance
Basic time allowances = standard time
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
The stages in work measurement (1 of 2)
Observed
time for
element
â??Ratingâ?? to adjust for effort
Basic
time for
element
Basic
Observed
Rating
=
Ã?
time
time
Standard rating
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
The stages in work measurement (2 of 2)
Standard
Basic
Allowances
=

time
time
Basic
time for
element
â??Allowancesâ?? for relaxation, etc.
Standard
time for
element
Standard
time for job
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Build up of standard times
Element
Basic time
A
B
C
D
0.6
0.4
0.8
0.3
2.1
Allowances
min
%
17
12
10
17
0.10
0.05
0.08
0.05
0.28
Standard
time
0.70
0.45
0.88
0.35
2.38
Basic time
2.10
Allowance
0.28
Standard time = 2.38
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
The â??standardâ?? unit of work
A standard unit of work,
e.g. 1 standard minute
Light job
90% work
10% relaxation
Average job
84% work
16% relaxation
Heavy job
68% work
32% relaxation
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Ergonomics (1 of 5)
Ergonomics is concerned primarily with the physiological
aspects of job design â?? that is, with the human body and how
it fits into its surroundings
Ergonomics
How the person
interfaces with the
physical aspects of
his or her
workplace
How the person
interfaces with the
environmental conditions
prevalent in his or her
immediate working area
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Ergonomics (2 of 5)
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Ergonomics (3 of 5)
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Ergonomics (4 of 5)
Forearms
approximately
horizontal
Seat back
adjustability
Good
lumbar
support
Seat height
adjustability
No excess pressure on
underside of thighs
and backs of knees
Leg room and
clearance to allow
postural changes
Foot
support
if needed
Space for
postural change,
no obstacles
under desk
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Ergonomics (5 of 5)
Screen: stable
image,
adjustable,
readable
glare/
reflection-free
Adequate
lighting
Adequate
contrast,
no glare or
distracting
reflections
Window
covering
Keyboard
usable,
adjustable,
detachable,
legible
Distracting
noise
minimized
Work surfaces:
allow flexible
arrangements,
spacious, glare-free
Software appropriate to
task, adapted to user, no
undisclosed monitoring
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Behavioural approaches â?? Job enlargement and
enrichment
More tasks
which give
increased
responsibility
autonomy or
decisionmaking
Job
enrichment
Original
job
tasks
Job
enlargement
More tasks of the
same type
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
Control versus commitment
Emphasis on
commitment and
engagement of staff
Emphasis on
managerial control
Staff treated
as a cost
Division of labour
Self-managed
method study
Scientific
management
Ergonomics
Behavioural
approaches
Empowerment
Team working
Staff treated
as a resource
Flexible working
Copyright © 2016, 2013, 2010 Pearson Education, Inc. All Rights Reserved
ITS 631: Paper #3
Summer 2018 IG
Dr. Ward
______________________________________________________________________________
Chapter 5: The Structure and Scope of Operations & Chapter 9: People in Operations
Any company, regardless of size, product or service, is one to which you can apply the principles
of operational excellence. The basis for this paper will be either a factual case from your own
work experience or a published case. For this paper, you will describe the situation in the case
and then apply appropriate principles of the structure and scope of operations (Ch. 5) and
people in operations (Ch. 9). The case should be treated as a problem presented to you by your
companyâ??s top management for analysis and a recommended course of action. In the paper,
you will discuss and make a recommendation for improvement in the operations of the
company based on the concepts you learned in chapters five and nine.
Your paper should be at minimum 9 double-spaced paragraphs. Each paragraph should
contain at minimum 4 sentences.
Your paper will include the following.
Paragraph 1: Company Overview
Paragraph 2: Situation/Problem
Paragraphs 3-5: Recommendations from Ch. 5: The Structure and Scope of Operations
Paragraphs 6-8: Recommendations from Ch. 9: People in Operations
Paragraph 9: Conclusion
You must include at least one reference, at minimum the course textbook. All references
must be formatted in APA. Plagiarism will not be tolerated and will result in a zero grade.
Please review the Academic Dishonesty Policy outlined in the syllabus and in your student
handbook.
Rubric for
Criteria for Grading Papers 1-6
Criteria
A
B
C
F
Student showed depth
Student showed
Student showed
of knowledge of subject
Student showed little
knowledge of subject knowledge of subject
matter well beyond
knowledge of subject
matter beyond citing matter primarily limited
citing the textbook;
matter; writer may not
the textbook; writer
to the textbook; writer
writer cited more than
have cited the minimum
Knowledge
cited the minimum
cited the minimum
the minimum number of
number of references;
of Subject
number of references; number of references;
references; all
many statements and
Matter
most statements and some statements and
statements and
opinions were not
(40 pts)
opinions were
opinions were not
opinions were
supported by
supported by
supported by
supported by
appropriate citations
appropriate citations
appropriate citations
appropriate citations
from the literature.
from the literature.
from the literature.
from the literature.
27 points
35 â?? 32 points
31 â?? 28 points
40 â?? 36 points
Comments
Points
Earned
ITS 631: Paper #3
Summer 2018 IG
Dr. Ward
______________________________________________________________________________
Quality of
Research
(30 pts)
Student did an
exceptional job of
integrating course
readings with additional
research. Sources
listed were all scholarly
or practitioner journals,
newspapers, or
academic books from
the last ten years.
30 â?? 27 points
Student did a
satisfactory job of
integrating course
readings with additional
research. Sources
listed were primarily
scholarly or practitioner
journals, newspapers,
or academic books
from the last ten years.
26 â?? 24 points
Student did a less than
satisfactory job of
integrating course
readings with additional
research. Some
sources listed were not
scholarly or practitioner
journals, newspapers,
or academic books
from the last ten years.
23 â?? 21 points
Student did an
inadequate job of
integrating course
readings with additional
research. Many of the
sources listed were not
scholarly or practitioner
journals, newspapers,
or academic books
from the last ten years.
20 points
Comments
Student presented
Student presented
Student presented
Student presented
ideas in a poorly
ideas in a compelling
ideas presented in a
ideas in a coherent
organized or incoherent
manner with no
clear, coherent manner manner with several
Presentation
manner with many
distracting writing,
with few distracting
distracting writing,
of Ideas and
distracting writing,
grammar, or spelling
writing, grammar, or
grammar, or spelling
Mechanics
grammar, or spelling
problems; the page
spelling problems; the
problems; the page
(20 pts)
problems; the page
length requirement was
page length
length requirement may
length requirement may
met.
requirement was met.
not have been met.
not have been met.
20 â?? 19 points
18 â?? 16 points
15 â?? 14 points
13 points
Comments
Most citations,
All citations, quotations,
quotations, and
Some citations,
Most citations,
APA
and references were
references were
quotations, and
quotations, and
formatting
properly formatted or
properly formatted or
references were not
references were not
(10 pts)
contained one or two contained several minor properly formatted or
properly formatted or
minor errors.
errors.
contained major errors. contained many errors.
10 – 9 points
8 points
7 points
6 points
Comments
Total Points Earned
(100 points max)

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