AAOM Handbook

uses repeated random sampling, of defined probability distributions for each of the variables, plus the mathematical and logical connections between the variables, to compute results.

Performance Model

A simplified statistical representation of a process – used to make predictions about the performance of that process. Within the OPERATING MODEL such models are used at the Company, Region, Operation, Process and Productive unit level of the Business Structure. Two types of model are used with the OPERATING MODEL. One is based on a value driver tree of the hierarchical relationships between the Operations, Regions and Company, and the other based on a flowchart of the steps for each Process and Productive Unit. Value driver tree models are used to predict the effect of variation in the individual Operation and Region performance, over a nominated time period, on aggregate goods/service volumes and costs. Process flow sheet models are used to predict the effect on goods/service flow and costs of the interacting effects of variation in the performance of each step of the Process/Productive Unit. The specific, measurable objectives for a the success of a process. Performance Targets should typically consider characteristics such as • Effectiveness - the delivery of the required output (which should include quantity, quality and time). • Efficiency - the resources used in producing the output. • Sustainability - the confidence, or time, that the level of process performance is can be sustained. Each Performance Target should include a Specification, Confidence Level and Time interval over which the performance is required to meet the Specification and Confidence level. Performance Targets

PERTValue Function

Uses three input parameters (minimum, most likely and maximum) to describe the betaPERT distribution that can be used in Monte Carlo simulation to model expert opinion, in which the Most Likely value has more credence than the minimum and maximum values. An optional Weight parameter can be used to increase or decrease the impact of the Most Likely value.

Process

An element within an Operation that performs a distinct transformation, transfer or store function on goods or services. For example:

© McAlear Management Consultants 2004

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