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1ISM - © 2010 Houman Younessi
Lecture 4
Convener:
Houman Younessi
1-860-548-7880
youneh@rpi.edu
Information SystemsSpring 2011
2ISM - © 2010 Houman Younessi
Lecture 4
Element Concept Information Category Information System
Cost Production Process capabilityTechnology
Forecasting EstimatingOptimizationControl
3ISM - © 2010 Houman Younessi
Lecture 4
Production Function:
Production function is the specification of the (usually minimum) input requirements needed to produce designated quantities of output, given a certain production technology.
4ISM - © 2010 Houman Younessi
Lecture 4
Isoquant: Isocost:
A function that shows all possible quantities of inputs that result in the same level of output with a given production function.
All combinations of inputs (e.g. labor and capital) into the production function that can be obtained for a fixed outlay.
5ISM - © 2010 Houman Younessi
Lecture 4
Objective One:
Minimization of cost for a given output
Short run
Long run
6ISM - © 2010 Houman Younessi
Lecture 4
Understand:
• Definition of cost
• Time frames
• Nature of change of cost over time
• Cost time and output time matching
• Relationship of cost to output
• Production Control
• Technology Impact
• Economies of scope
7ISM - © 2010 Houman Younessi
Lecture 4
Sources of Data:
Historical -Time series
Cross-sectional - Others in the sector or industry
Model-based or Predictive - Based on scientific observation
8ISM - © 2010 Houman Younessi
Lecture 4
Relationship of cost to output:
Production Control (to be discussed later)
Technology Impact
Production Technology Change - Innovation
Process Technology Change - Process Maturity
Process Improvement
Common Cause Special Cause
9ISM - © 2010 Houman Younessi
Lecture 4
Production Control:
Eliminating Waste
The six wastes:
Over-production
Inventory
Motion
Time (wait-time)
Processing
Rework
Objective Two: Minimization of cost for total output
10ISM - © 2010 Houman Younessi
Lecture 4
Some Examples:
Lot size optimization – interplay between set-up cost and inventory carrying costs
Return to scale – Form of the relationship between input and output
- Sub-linear
- Linear
- Super-linear
Output Elasticity
11ISM - © 2010 Houman Younessi
Lecture 4
Various Key terms:
• Lean
• Six Sigma
• Kaizan
• TQM
• CMMI
• ISO 9000
• BPR
12ISM - © 2010 Houman Younessi
Lecture 4
Design:
Principles of Good Design
Specific characteristics for each artifact would be different but they need to be identified and measured.
Example: CMM/CMMI
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