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Intro bus 110 chapter 9

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  1. 1. * * Chapter Nine Production and Operations Management of Goods and Services Copyright © 2010 by the McGraw-Hill Companies, Inc. All rights reserved. McGraw-Hill/Irwin
  2. 2. WHERE ARE WE IN MFG SECTOR ?? <ul><li>1. MANUFACTURING IS AT AN ALL TIME LOW </li></ul><ul><li>2. UNEMP IS AT LOWEST POINT IN YEARS </li></ul><ul><li>**this chapter focuses on what manufacturers and service providers can do to revive economy </li></ul>
  3. 3. <ul><li>Services are replacing true manufacturing </li></ul><ul><li>Service sector is growing </li></ul><ul><li>Managers will become more occupied with service productivity </li></ul><ul><li>Focus will become on blending services and true manufacturing </li></ul>
  4. 4. PRODUCTION and PRODUCTION MANAGEMENT * * From Production to Operations Management <ul><li>Production -- The creation of goods using land, labor, capital, entrepreneurship and knowledge (the factors of production). </li></ul>LG2 <ul><li>Production Management -- All the activities managers do to help firms create goods. </li></ul>9-
  5. 5. PRODUCTION PROCESS <ul><li>RAW MATERIALS ---WORK IN PROCESS---FINISHED GOODS </li></ul><ul><li>****** IF production historically meant this manufacturing process then production mgt would help firms make goods </li></ul><ul><li>Transitional time : NOW production includes goods and services </li></ul>
  6. 6. OPERATIONS MANAGEMENT * * From Production to Operations Management <ul><li>Operations Management -- A specialized area in management that converts or transforms resources into goods and services. </li></ul><ul><li>Operations management includes: </li></ul><ul><ul><li>Inventory management </li></ul></ul><ul><ul><li>Quality control </li></ul></ul><ul><ul><li>Production scheduling </li></ul></ul><ul><ul><li>Follow-up services </li></ul></ul>LG2 9-
  7. 7. The PRODUCTION PROCESS * * Production Processes LG3 9-
  8. 8. FORM UTILITY * * Production Processes <ul><ul><li>Form Utility -- The value producers add to materials in the creation of finished goods and services. </li></ul></ul>LG3 9-
  9. 9. PROCESS and ASSEMBLY in PRODUCTION * * <ul><ul><ul><li>Process Manufacturing -- The part of production that physically or chemically changes materials. </li></ul></ul></ul><ul><ul><ul><li>Assembly Process -- The part of the production process that puts together components. </li></ul></ul></ul>LG3 Production Processes 9-
  10. 10. KEY PRODUCTION PROCESSES * * <ul><ul><ul><li>Production processes are either continuous or intermittent. </li></ul></ul></ul><ul><ul><ul><li>Continuous Process -- Long production runs turn out finished goods over time . </li></ul></ul></ul><ul><ul><ul><li>Intermittent Process -- Production runs are short and the producer adjusts machines frequently to make different products. </li></ul></ul></ul>LG3 Production Processes 9-
  11. 11. DEVELOPMENTS MAKING U.S. COMPANIES MORE COMPETITIVE * * The Need to Improve Production Techniques and Cut Costs LG3 <ul><ul><ul><li>Computer-aided design and manufacturing </li></ul></ul></ul><ul><ul><ul><li>Flexible manufacturing </li></ul></ul></ul><ul><ul><ul><li>Lean manufacturing </li></ul></ul></ul><ul><ul><ul><li>Mass customization </li></ul></ul></ul>9-
  12. 12. COMPUTER-AIDED DESIGN and MANUFACTURING * * Computer-Aided Design and Manufacturing LG3 <ul><ul><ul><li>Computer-Aided Design (CAD) -- The use of computers in the design of products. </li></ul></ul></ul><ul><ul><ul><li>Computer-Aided Manufacturing (CAM) -- The use of computers in the manufacturing of products. </li></ul></ul></ul>9-
  13. 13. FLEXIBLE MANUFACTURING * * Flexible Manufacturing LG3 <ul><ul><ul><li>Flexible Manufacturing -- Designing machines to do multiple tasks so they can produce a variety of products. </li></ul></ul></ul>9-
  14. 14. LEAN MANUFACTURING * * Lean Manufacturing LG3 <ul><ul><ul><li>Lean Manufacturing -- Using less of everything than in mass production. </li></ul></ul></ul><ul><ul><ul><li>Compared to others, lean companies: </li></ul></ul></ul><ul><ul><ul><ul><li>Take half the human effort. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Have half the defects in finished products. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Require one-third the engineering effort. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Use half the floor space. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>Carry 90% less inventory. </li></ul></ul></ul></ul>9-
  15. 15. MASS CUSTOMIZATION * * Mass Customization LG3 <ul><ul><ul><li>Mass Customization -- Tailoring products to meet the needs of a large number of individual customers. </li></ul></ul></ul><ul><ul><ul><li>More manufacturers are learning to customize. </li></ul></ul></ul><ul><ul><ul><li>Mass customization exists in the service sector too. </li></ul></ul></ul>9-
  16. 16. OPERATIONS MANAGEMENT * * Operations Management Planning <ul><li>Operations management planning helps solve problems like: </li></ul><ul><ul><li>Facility location </li></ul></ul><ul><ul><li>Facility layout </li></ul></ul><ul><ul><li>Materials requirement planning </li></ul></ul><ul><ul><li>Purchasing </li></ul></ul><ul><ul><li>Inventory control </li></ul></ul><ul><ul><li>Quality control </li></ul></ul>LG4 9-
  17. 17. FACILITY LOCATION * * Facility Location <ul><li>Facility Location -- The process of selecting a geographic location for a company’s operations. </li></ul>LG4 <ul><li>Rising numbers of Internet businesses means brick-and-mortar retailers must find great locations. </li></ul>9-
  18. 18. FUTURE FACILITY LOCATION * * Facility Location in the Future <ul><li>Information technology gives firms increased flexibility in terms of location. </li></ul><ul><li>Telecommuting -- Working from home via computer and modem. </li></ul>LG4 9-
  19. 19. SETTING UP the FACILITY * * Facility Layout <ul><li>Facility Layout -- The physical arrangement of resources, including people, to most efficiently produce goods and provide services. </li></ul><ul><li>Facility layout depends on the processes performed: </li></ul><ul><ul><li>Service: Help customers find products </li></ul></ul><ul><ul><li>Manufacturing: Improve efficiency </li></ul></ul>LG4 9-
  20. 20. FACILITY LAYOUT OPTIONS * * Facility Layout <ul><li>Assembly Line Layout – Workers do only a few tasks at a time. </li></ul><ul><li>Modular Layout – Teams of workers produce more complex units of the final product. </li></ul><ul><li>Fixed-Position Layout – Allows workers to congregate around the product. </li></ul><ul><li>Process Layout – Similar equipment and functions are grouped together. </li></ul>LG4 9-
  21. 21. MRP and ERP * * Materials Requirement Planning <ul><li>Materials Requirement Planning (MRP) -- A computer-based operations management system that uses sales forecasts to make sure parts and materials are available when needed. </li></ul><ul><li>Enterprise Resource Planning (ERP) -- A newer version of MRP, combines computerized functions into a single integrated software program using a single database. </li></ul>LG4 9-
  22. 22. PURCHASING * * Purchasing <ul><li>Purchasing -- The function that searches for high-quality material resources, finds the best suppliers and negotiates the best price for goods and services. </li></ul>LG4 <ul><li>The Internet has transformed purchasing. </li></ul>9-
  23. 23. INVENTORY CONTROL * * Just-in-Time Inventory Control <ul><li>Just-in-Time (JIT) Inventory Control -- The production process in which a minimum of inventory is kept and parts, supplies and other needs are delivered just in time to go on the assembly line. </li></ul><ul><li>To work effectively, the process requires excellent coordination with suppliers. </li></ul>LG4 9-
  24. 24. QUALITY CONTROL * * Quality Control <ul><li>Quality -- Consistently producing what the customer wants while reducing errors before and after delivery. </li></ul><ul><li>Six Sigma Quality -- A quality measure that allows only 3.4 defects per million opportunities. </li></ul>LG4 9-
  25. 25. WHAT is the ISO? * * ISO 9000 and ISO 14000 Standards <ul><li>The International Organization for Standardization (ISO) is a worldwide federation of national standards bodies. </li></ul><ul><li>ISO 9000 -- The common name given to quality management and assurance standards. </li></ul><ul><li>ISO 14000 -- A collection of the best practices for managing an organization’s impact on the environment. </li></ul>LG4 9-
  26. 26. PERT * * Control Procedures: PERT and GANTT Charts <ul><li>Program Evaluation and Review Technique (PERT) -- A method for analyzing the tasks involved in completing a given project and estimating the time needed. </li></ul>LG5 9-
  27. 27. STEPS INVOLVED in PERT * * Control Procedures: PERT and GANTT Charts <ul><ul><li>Analyzing and sequencing tasks </li></ul></ul><ul><ul><li>Estimating the time needed to complete each task </li></ul></ul><ul><ul><li>Drawing a PERT network illustrating the first two steps </li></ul></ul><ul><ul><li>Identifying the critical path </li></ul></ul><ul><ul><li>Critical Path -- The sequence of tasks that takes the longest time to complete. </li></ul></ul>LG5 9-
  28. 28. GANTT CHARTS * * Control Procedures: PERT and GANTT Charts <ul><li>Gantt Chart – A bar graph that shows what projects are being worked on and how much has been completed. </li></ul>LG5 9-