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Pareto phenomenon (ABC analysis)

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long term forecasting, product design, capacity planning, inventory management. ... forecasting, production planning, quality assurance, inventory management ... – PowerPoint PPT presentation

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Title: Pareto phenomenon (ABC analysis)


1
Pareto phenomenon (ABC analysis)
  • Classifying items, activities, or tasks according
    to some measure of importance and allocating
    efforts and resources accordingly
  • A vital few things are important for reaching an
    objective or solving a problem
  • 80/20 rule 80 of the problems are caused by
    20 of the activities

How do we identify the vital few?
2
Pareto phenomenon, ABC analysis, Recognition of
Priorities
  • Acknowledging the fact that certain aspects of
    any management situation are more important than
    others is called Recognition of Priorities.

3
Models
  • A model is an abstraction of reality
  • Physical
  • Schematic
  • Mathematical

4
Quantitative approach
  • Linear programming
  • Transportation model
  • Inventory models
  • Waiting line models
  • Statistical models

5
Recent Trends
  • Global Competition
  • Operations Strategy
  • Flexibility
  • Cycle Time Reduction
  • Business Process Re-engineering
  • Supply Chain Management
  • Workers Involvement
  • Lean Manufacturing
  • Total Quality Management

6
Recent Trends
  • Global Competition
  • Global Market
  • Global Suppliers
  • Operations Strategy
  • Quality based
  • Time based
  • Flexibility
  • Variety of products
  • High Volume as well as Low Volume
  • Cycle Time Reduction
  • The less time RM (Raw Material), WIP (Work In
    Process), FG (Finished Goods) spend in the
    Manufacturing and Logistics process, the less
    opportunity they have to absorb costs.

7
Recent Trends
  • Business Process Re-engineering
  • Value added and NVA activities
  • Supply Chain Management
  • NOT from RM storage to FG warehouse
  • From the original suppliers to final consumers
  • Workers Involvement
  • Workers are not costs, they are assets
  • Lean Manufacturing
  • Inventory is waste
  • Total Quality Management

8
Examples of Exam Questions
  • 1. The following activities are all a part of
    system operations as opposed to system design
  • long term forecasting, product design, capacity
    planning, inventory management.
  • short term forecasting, product design, capacity
    planning, inventory management
  • short term forecasting, production planning,
    capacity planning, inventory management
  • short term forecasting, production planning,
    quality assurance, inventory management
  • none of the above
  • 2. Pareto Phenomenon is the same as
  • ABC analysis
  • analysis of trade-off
  • systems analysis
  • quantitative approaches
  • none of the above

9
Review Questions (cont.)
  • 3. In ABC analysis
  • 25 of items form 25 of the measure of
    importance
  • 10 of items form 10 of the measure of
    importance
  • 90 of items form 90 of the measure of
    importance
  • 50 of items form 50 of the measure of
    importance
  • 15 of items form 75 of the measure of
    importance
  • 4. Given
  • (I) Lean operations, (II) Operations strategy,
    (III) Business process re-engineering
  • (A) Inventory is waste, (B) Time based
    operations, (C) High Volume as well as Low
    Volume,
  • (D) Value-added and NVA activities
  • Which of the following selections is correct?
  • (I) matches with (D), (II) matches with (C),
    (III) matches with (B)
  • (I) matches with (A), (II) matches with (B),
    (III) matches with (C)
  • (I) matches with (A), (II) matches with (B),
    (III) matches with (D)
  • (I) matches with (A), (II) matches with (D),
    (III) matches with (C)
  • (I) matches with (C), (II) matches with (D),
    (III) matches with (B)

10
Review Questions (cont.)
  • 5. Given
  • (I) supply chain management, (II) Flexibility,
    (III) Operations strategy
  • (A) Quality based operations, (B) Workers are
    asset, (C) Value added and NVA activities,
  • (D) from suppliers to consumers, (E) High Volume
    as well as low volume
  • Which of the following selections is correct?
  • (I) matches with (D), (II) matches with (E),
    (III) matches with (C)
  • (I) matches with (D), (II) matches with (E),
    (III) matches with (A)
  • (I) matches with (A), (II) matches with (E),
    (III) matches with (D)
  • (I) matches with (C), (II) matches with (D),
    (III) matches with (E)
  • (I) matches with (E), (II) matches with (B),
    (III) matches with (D)
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