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High Contact Services
Customer is an essence in the productionof services.
Scheduling is difficult as customer demandvaries.
Work force attitude effects the customers
view of the services.
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LOW CONTACT SERVICES
Customer cannot strongly influence theprocess by which the service is provided.
Standardization makes managerial controleasy and straightforward.
Low contact service firms tend to have a
systematic and predictable operation.
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PRODUCT LIFE CYCLE
The pattern of changing rates of salesgrowth, product standardization and
competitive pressure exhibited by mostproducts and product families is called theproduct life cycle.
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Product Life Cycle
Product Life Cycle (PLC): Each product may have a different life cycle
PLC determines revenue earned Contributes to strategic marketing planning May help the firm to identify when a product
needs support, redesign, reinvigorating,withdrawal, etc.
May help in new product development planning May help in forecasting and managing cash flow
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Product Life Cycles
The Stages of the Product LifeCycle:
Introduction/Launch
Growth
Maturity
Decline
Withdrawal
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Product Life Cycles Introduction/Launch:
Start with the market introduction of first brandand ends when sales start to increase
Key factors are uncertainty ,lack of knowledge andsome time poor product performance
length is function of Rate of Diffusion. Relative advantage.
Compatibility. Communicability. ROD is negatively related to Complexity and
Perceived Risk.
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Some factors are fixed. Complexity can be reduced.
Risks can be reduced.Value of one product may be the function
of the complimentary products.e.g
Automobiles, comp. tapes.
Adopter Categories.
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GROWTH STAGE
The stage begins when sales start to increaseand ends when growth slows.
Rapid growth can be sparked by emergence of adominant design, value of product, Riskreduction.
The growth period may be prolonged throughintroduction of new models.
Most important cause of increasing sales in thegrowth stage is the addition of new users.
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Maturity Stage When sales are fairly stable At this stage most products are repeat, replacement or
additional purchases.
It is possible that sales will increase after a period of stablesales e.g wood burning stoves. There is a tendency for products to become more similar over
time. Maturity stage continues until sales of the product start on a
permanent decline, e.g cigarettes and hats.
Other reasons may be the substitution of product, demographicfactors A product class could remain in the maturity stage indefinitely
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Product Life Cycles
Decline and Withdrawal: Product outlives/outgrows its usefulness/value
Fashions change Technology changes
Sales decline
Decision to withdraw may be dependent on
availability of new products and whetherfashions/trends will come around again?
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OPERATIONS STRATEGY
Is concerned with setting broad policiesand plans for using the resources of a firm
to best support its long term competitivestrategy.
Operation strategy involves decisions that
relate to the design of the process and theinfrastructure needed to support thatprocess
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Operations StrategyExampleStrategy ProcessCustomer Needs
Corporate Strategy
Operations Strategy
Decisions on Processes
and Infrastructure
MoreProduct
Increase Org. Size
Increase Production Capacity
BuildNew Factory
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Competitive Dimensions Cost Product Quality and Reliability
Delivery Speed Delivery Reliability Coping with Changes in Demand
Flexibility and New Product IntroductionSpeed
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Dealing with Trade-offs
Cost
QualityDeliveryFlexibility
For example, if we
improve customer serviceproblem solving by cross-
training personnel to deal
with a wider-range of
problems, they maybecome less efficient at
dealing with commonly
occurring problems.
For example, if we reduce costs by reducing product
quality inspections, we might reduce product quality.
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Order Qualifiers andWinnersOrder qualifiers?They are the basic criteria that permit thefirms products to be considered as candidates
for purchase by customers.
Order winners?
They are the criteria that differentiates theproducts and services of one firm from another.
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Service Breakthroughs
A brand name carcan be an order
qualifier
Repair services can be order winners
Examples: Warranty, Roadside Assistance,
Leases, etc.
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Total Measure Productivity Total measure Productivity = Outputs
Inputs
or
=Goods and services produced
All resources used
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Partial Measure Productivity Partial measures of productivity =
Output or Output or Output or OutputLabor Capital Materials Energy
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Multifactor MeasureProductivity
Multifactor measures of productivity =
Output .Labor + Capital + Energy
or
Output .Labor + Capital + Materials
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Example of ProductivityMeasurement
You have just determined that your serviceemployees have used a total of 2400 hours oflabor this week to process 560 insurance forms.Last week the same crew used only 2000 hours of
labor to process 480 forms. Is productivity increasing or decreasing? Answer: Last weeks productivity = 480/2000 =
0.24, and this weeks productivity is = 560/2400 =
0.23. So, productivity is decreasing slightly.
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LEARNING CURVES
A Learning curve is a line displaying therelationship between unit production time
and the cumulative number of unitsproduced.
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Principles of Learning Curves
Each time you perform a task it takesless time than the last time you
performed the same task2. The unit time will decrease at a
decreasing rate.
3. The reduction in time will follow apredictable pattern
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Plotting theLearning Curve
90 % Learning Curve
0
20
40
60
80
100
120
0 1000 2000 3000 4000 5000
Unit
Production
Time(Minutes)
All learning curves have this downward sloping curve.
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From Learning Curves toPerformance Improvement
Proper selection of workers
Proper training
Motivation
Work specialization
Do one or very few jobs at a time
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Use tools or equipment that assistsor supports performance
Provide quick and easy access forhelp
Allow workers to help redesign theirtasks
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There are two ways to think about theimproved performance from learning
curves. 1- Time per unit vs unit number progress
Curves)
2-Output per time period vs Time(Industry Learning)
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Question
Learning improvement that takes placewhen people repeat a process and gainskill or efficiency from their own
experience can be characterized bywhich of following terms?a. Organizational learningb. Individual learning
c. Knowledge learningd. All of the abovee. None of the above
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Question
The first time a student types up a 15 pageterm paper it takes 40 minutes. Thesecond time the student types up a term
paper it only takes 36 minutes. Whatunit improvement factor learning curveshould be used in this example?
a. 95%b. 0.4564
c. 90%d. 88%e. None of the above
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Question BowlUse the Unit Improvement Factor
table for this problem. If it takes 1hour to complete the 1strepetition a
job and a 75% learning curve applies
to this situation, what is the expectedtime of the 40threpetition of this job?a. 0.2163b. 20 minutesc. 12.978 minutesd. 40 minutese. None of the above
Answer:
c. 12.978 minutes(0.2163x60 minutes)
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Question BowlUse the Unit Improvement Factor table for
this problem. If it takes 20 minutes toperform a brake job on an automobile the1sttime and a 95% learning curve appliesto this situation, what is the expected time
of the 100threpetition of this job?a. 15.533 minutesb. 14.224 minutesc. 13.978 minutes
d. 10 minutese. None of the above
Answer:
b. 14.224 minutes
(0.7112x20 minutes)
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QUESTION
A company has produced the first unit of anew line of car at a cost of Rs 500,000.
200,000 for materials and 300,000 forlabor. It has agreed to accept a 10percent profit , based on the cost and it iswilling to contract on the basis of a 70percent learning curve. What will be thecontract price for three cars?
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