> > > > > > > >
Production and Operations
Outline the importance of
production and operations
Explain the roles of computers and
related technologies in production.
Identify the factors involved in a
plant location decision.
Explain the major tasks of
production and operations
Compare alternative layouts for
List the steps in the purchasing
Outline the advantages and
disadvantages of maintaining large
Identify the steps in the production
Explain the benefits of quality control.
Production & Operations
• Production: Application of resources such as people and
machinery to convert materials into finished goods and services.
• Production and Operations Management: Managing people
and machinery in converting materials and resources into
finished goods and services.
• A vital function is necessary for generating money
to pay employees, lenders, and stockholders.
• Effective production and operations management
– lower a firm’s costs of production.
– boost the quality of its goods and services.
– allow it to respond dependably to customer demands.
– enable it to renew itself by providing new products.
Strategic Importance of
the Production Function
Mass, Flexible and
• Mass Production – manufacturing products in
large amounts through standardization,
mechanization and specialized skills.
• Flexible Production – producing smaller
batches using information technology,
communication and cooperation.
• Customer-Driven Production – evaluating
customer demands to link with manufacturer.
Technology and The
• Robots – reprogrammable machines capable of performing routine
jobs and manipulating material
• Computer-Aided Design and Manufacturing – enables engineers
to design parts and buildings on computer screens faster and with
• Flexible Manufacturing Systems – a production facility that
workers can quickly modify to manufacture different products.
• Computer-Integrated Manufacturing – integrates robots,
computers and other technologies to help workers design products,
control machines, handle materials, and control the production
The Job of Production
Oversee the work of people and machinery to convert inputs
(materials and resources) into finished goods and services.
Planning the Production
• Choose what goods or services to offer customers.
• Convert original product ideas into final specifications.
• Design the most efficient facilities to produce those products.
• Process layout groups
machinery and equipment
according to their functions.
• Facilitates production of a
variety of nonstandard
items in relatively small
• Product layout sets up production equipment along a product-
flow line, and the work in process moves along this line past
• Efficiently produces large numbers of similar items.
• A fixed-position layout places the product in one spot, and
workers, materials, and equipment come to it.
• Customer-oriented layout arranges facilities to enhance the interactions
between customers and a service.
Customer Oriented Layout
Make, Buy, or Lease Decision
• Choosing whether to manufacture a needed product
or component in-house, purchase it from an outside
supplier, or lease it.
• Factors in the decision include cost, availability of
reliable outside suppliers, and the need for
Selection of Suppliers
• Based on comparison of quality, prices, dependability
of delivery, and services offered by competing
– Perpetual inventory
– Vendor-managed inventory
• Improving profits and return on investment by minimizing
costs and eliminating waste through cutting inventory on
Materials Requirement Planning
• Computer-based production planning system by which a
firm can ensure that it has the correct materials for
Controlling the Production
• Production control creates a well-defined
set of procedures for coordinating
people, materials, and machinery.
Manager instructs each department on what work to do and the
time allowed for its completion.
Dispatching & Follow-up
Employees and their supervisors spot problems in the
production process and determine needed changes.
• A good or service free of deficiencies.
• Poor quality can account for 20% loss in revenue.
• Benchmarking is the process of analyzing other firms’ best
• Quality control is measuring goods and services against
established quality standards.
• Many companies evaluate quality using the Six Sigma concept.
– A company tries to make error-free products 99.9997% of the time,
a tiny 3.4 errors per million opportunities.
Importance of Quality
• International Organization for Standardization (ISO) - mission
is to promote the development of standardized products to
facilitate trade and cooperation across national borders.
• Representatives from more than 146 nations.
• ISO 9000 series of standards sets requirements for quality
• Nearly half a million ISO 9000 certificates have been awarded to
companies around the world.
• ISO 14000 series also sets standards for operations that
minimize harm to the environment.