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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?