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Chap21
- 2. Objectives
1. Definitions of production, productivity, and quality
2. An understanding of the importance of operations and production strategies,
systems, and processes
3. Insights into the role of operations management concepts in the workplace
4. An understanding of how operations control procedures can be used to
control production
5. Insights into operations control tools and how they evolve into a continual
improvement approach to production management and control
© Prentice Hall, 2005 1-2
- 3. Production
Defining Production
Productivity
Productivity = Outputs / Inputs
Traditional strategies for increasing productivity by improving :
1. Effectiveness of the organizational workforce through training
2. Production process through automation
3. Product design to make products easier to assemble
4. Production facility by purchasing more modern equipment
5. Quality of workers hired to fill open positions
© Prentice Hall, 2005 1-3
- 4. Production
Quality and Productivity
Focus on Continual Improvement
Focus on Quality and Integrated Operations
Quality Assurance
Statistical Quality Control
“No Rejects” Philosophy
Quality Circles
Automation
Strategies, Systems, and Processes
© Prentice Hall, 2005 1-4
- 7. Operations Management
Defining Operations Management
Performance of managerial activities entailed in:
Selecting
Designing
Operating
Controlling
Updating production systems
© Prentice Hall, 2005 1-7
- 9. Operations Management
Operations Management Considerations
Involves managers
Takes place within the context of objectives and policies
Standards for effectiveness and efficiency
© Prentice Hall, 2005 1-9
- 10. Operations Management
Operations Management Considerations (continued)
Capacity Strategy
Five Steps in Capacity Decisions
1. Measure the capacity of currently available facilities
2. Estimate future capacity needs on the basis of demand forecasts
3. Compare future capacity needs and available capacity
4. Identify ways to accommodate long-range capacity changes
5. Select best alternative based on quantitative and qualitative evaluation
© Prentice Hall, 2005 1 - 10
- 11. Operations Management
Operations Management Considerations (continued)
Location Strategy
Factors in a Good Location
Nearness to market and distribution centers
Nearness to vendors and resources
Requirements of federal, state, and local governments
The character of direct competition
The degree of interaction with the rest of the corporation
The quality and quantity of labor pools
The environmental attractiveness of the area
Taxes and financing requirements
Existing and potential transportation
The quality of utilities and services
© Prentice Hall, 2005 1 - 11
- 12. Operations Management
Operations Management Considerations (continued)
Product Strategy
Process Strategy
Types of Processes
1) Continuous process
2) Repetitive process
3) Job-shop process
Layout Strategy
1. Product layout
2. Process (functional) layout
3. Fixed-position layout
© Prentice Hall, 2005 1 - 12
- 14. Operations Management
Operations Management Considerations (continued)
Human Resources Strategy
Human resource imperatives:
1. Optimize individual, group, and organizational effectiveness
2. Enhance the quality of organizational life
Operational Tools in Human Resources Strategy
Manpower planning
Job design
Work methods analysis
Motion-study techniques
Work measurement methods
© Prentice Hall, 2005 1 - 14
- 15. Operations Control
Just-in-Time Inventory Control
Just-in-time (JIT)
Best Conditions for JIT
Advantages of JIT
Characteristics of JIT
1. Closeness of suppliers
2. High quality of materials purchased from suppliers
3. Well-organized receiving and handling of materials purchased
4. Strong management commitment
© Prentice Hall, 2005 1 - 15
- 16. Operations Control
Maintenance Control
Pure-preventive maintenance policy
Pure-breakdown (repair) policy
Cost Control
Stages in Cost Control
1. Establishing standard or planned cost amounts
2. Measuring actual costs incurred
3. Comparing planned costs to incurred costs
4. Making changes to reduce actual costs to planned costs
© Prentice Hall, 2005 1 - 16
- 17. Operations Control
Budgetary Control
Potential Pitfalls of Budgets
1. Placing too much emphasis on relatively insignificant expenses
2. Increasing budgeted expenses without adequate information
3. Ignoring the fact that budgets must be changed periodically
Human Relations Considerations in Using Budgets
Reducing Human Relations Problems
© Prentice Hall, 2005 1 - 17
- 18. Operations Control
Ratio Analysis
1. Liquidity ratios
2. Leverage ratios
3. Activity ratios
4. Profitability ratios
Using Ratios to Control Organizations
Evaluate all ratios simultaneously
Compare computed values with industry averages
Incorporate trend analysis
Materials Control
Procurement of Materials
Receiving, Shipping, and Trafficking
Inventory and Shop-Floor Control
© Prentice Hall, 2005 1 - 18
- 20. Selected Operations Control Tools
Using Control Tools to Control Organizations
Inspection
To Inspect or Not to Inspect
Management by Exception
Establishing Rules
Management by Objectives
© Prentice Hall, 2005 1 - 20
- 21. Selected Operations Control Tools
Break-Even Analysis
Basic Ingredients of Break-Even Analysis
1. Fixed costs
2. Variable costs
3. Total costs
4. Total revenue
5. Profits
6. Loss
7. Break-even point
© Prentice Hall, 2005 1 - 21
- 22. Selected Operations Control Tools
Break-Even Analysis (continued)
Types of Break-Even Analysis
Algebraic Break-Even Analysis
BE = FC / ( P - VC )
Graphic Break-Even Analysis
Advantages of Using the Algebraic and Graphic Break-Even Methods
Control and Break-Even Analysis
© Prentice Hall, 2005 1 - 22
- 25. Selected Operations Control Tools
Other Broad Operations Control Tools
Decision Tree Analysis
Process Control
Value Analysis
Computer-Aided Design
Computer-Aided Manufacturing
© Prentice Hall, 2005 1 - 25