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Chapter 09           Production              and           Operations          ManagementMcGraw-Hill/Irwin       Copyright...
Chapter Nine                  LEARNING GOALS     1. Describe the current state of U.S. manufacturing        and what manuf...
Chapter Nine                   LEARNING GOALS     4. Describe operations management planning issues        including facil...
Profile              SAMUEL J. PALMISANO                             IBM      • Palmisano, CEO and President of IBM, start...
Chapter Nine                NAME that COMPANY     This company’s robots manufacture, test, and        package motor starte...
Manufacturingand Services inPerspective                  MANUFACTURING in the U.S.     LG1     • The U.S. is still the wor...
Manufacturingand Services inPerspective            WHAT’S MADE in the USA?     LG1                               Leading U...
Manufacturingand Services inPerspective                 Exporters Extraordinaire     LG1               Top Ten States that...
Manufacturingand Services inPerspective          MASSIVE MANUFACTURERS     LG1                                    The Top ...
KEY WORD:              SUSTAINABILITY                     (Thinking Green)• The market for new green products and services...
Manufacturingand Services inPerspective                  TOP-PAYING SERVICE JOBS     LG1     • The U.S. economy is no long...
Manufacturersand ServiceOrganizationsBecome More                REMAINING COMPETITIVE inCompetitive     LG1            GLO...
LEARNING from GERMANY                 (Reaching Beyond Our Borders)• Ten years ago, Germany’s economy was much like  ours ...
From Productionto OperationsManagement                  PRODUCTION and     LG2      PRODUCTION MANAGEMENT     • Production...
From Productionto OperationsManagement                  OPERATIONS MANAGEMENT     LG2     • Operations Management -- A spe...
OperationsManagement inthe Service Sector   OPERATIONS MANAGEMENT      LG2              in the SERVICE SECTOR      • All a...
OperationsManagement inthe Service Sector         THERE’S an APP for THAT      LG2                                        ...
ProgressAssessment   PROGRESS ASSESSMENT    • What have U.S. manufacturers done to regain a      competitive edge?    • Wh...
ProductionProcesses    The PRODUCTION PROCESS     LG3                                      9-19
ProductionProcesses            FORM UTILITY     LG3     • Form Utility --        The value producers        add to materia...
ProductionProcesses    GROVE’S BASIC PRODUCTION     LG3                  REQUIREMENTS     1. To build and deliver products...
ProductionProcesses    PROCESS and ASSEMBLY in     LG3          PRODUCTION     • Process       Manufacturing --        The...
ProductionProcesses    KEY PRODUCTION PROCESSES     LG3     • Production processes are either continuous or       intermit...
ProductionProcesses                       MINUTE MADE     LG3     Production of Some of America’s Favorite Products       ...
The Need toImprove ProductionTechniques andDEVELOPMENTS MAKING U.S.Cut Costs      LG3    COMPANIES MORE COMPETITIVE      1...
Computer-AidedDesign andManufacturing             COMPUTER-AIDED DESIGN and     LG3         MANUFACTURING     • Computer-A...
Computer-AidedDesign andManufacturing                 COMPUTER-INTEGRATED     LG3           MANUFACTURING     • Computer-I...
FlexibleManufacturing   FLEXIBLE MANUFACTURING    LG3     • Flexible Manufacturing -- Designing machines        to do mult...
LeanManufacturing      LEAN MANUFACTURING    LG3     • Lean Manufacturing -- Using less of everything        than in mass ...
MassCustomization   MASS CUSTOMIZATION    LG3     • Mass Customization -- Tailoring products to        meet the needs of a...
MASS CUSTOMIZATION              of CANDY                (Spotlight on Small Business)• Chocomize lets customers customize ...
ProgressAssessment   PROGRESS ASSESSMENT    • What’s form utility?    • Define and differentiate the following: process   ...
OperationsManagementPlanning              OPERATIONS MANAGEMENT    LG4    • Operations management planning helps solve    ...
FacilityLocation           FACILITY LOCATION     LG4     • Facility Location       -- The process of           selecting a...
STAY or LEAVE                (Making Ethical Decisions)• Potential of low-cost labor is very attractive to  companies hopi...
TakingOperations            OPERATIONS MANAGEMENTManagement tothe Internet    LG4         on the INTERNET    • Sometimes b...
Facility Locationin the Future  FUTURE FACILITY LOCATION      LG4      • Information technology gives firms increased     ...
Facility Layout                  SETTING UP the FACILITY     LG4     • Facility Layout -- The physical arrangement of     ...
Facility Layout                  FACILITY LAYOUT OPTIONS     LG4     1. Assembly Line Layout – Workers do only a few      ...
Facility Layout                  ASSEMBLY LINE LAYOUT     LG4                                         9-40
Facility Layout                  MODULAR LAYOUT     LG4                                   9-41
Facility Layout                  PROCESS LAYOUT     LG4                                   9-42
Facility Layout                  FIXED-POSITION LAYOUT     LG4                                          9-43
MaterialsRequirementPlanning                    MRP and ERP    LG4    • Materials Requirement Planning (MRP) --       A co...
Purchasing                    PURCHASING    LG4    • Purchasing -- The        function that searches for        high-quali...
Just-in-TimeInventory Control   INVENTORY CONTROL     LG4     • Just-in-Time (JIT) Inventory Control -- The         produc...
Quality Control                  QUALITY CONTROL     LG4     • Quality -- Consistently         producing what the customer...
Quality Control                  STATISTICAL QUALITY CONTROL                     & STATISTICAL PROCESS     LG4            ...
The BaldrigeAwards          The BALDRIGE AWARDS     LG4     • Companies can apply for awards in these areas:           - M...
The BaldrigeAwards                                THE WINNERS ARE…     LG4                                  2010 Baldrige ...
ISO 9000 andISO 14000Standards           WHAT is ISO?    LG4    • The International Organization for Standardization      ...
ProgressAssessment   PROGRESS ASSESSMENT    • What are the major criteria for facility location?    • What’s the differenc...
ControlProcedures:PERT and GanttCharts                            PERT    LG5     • Program Evaluation and Review Techniqu...
ControlProcedures:PERT and GanttCharts                 STEPS INVOLVED in PERT    LG5     1. Analyzing and sequencing tasks...
ControlProcedures:            PERT CHART for a MUSIC VIDEOPERT and GanttCharts    LG5                                     ...
ControlProcedures:PERT and GanttCharts                   GANTT CHARTS    LG5     • Gantt Chart – A bar graph that shows wh...
ControlProcedures:PERT and Gantt   GANTT CHART for aCharts    LG5            DOLL FACTORY                                 ...
ProgressAssessment   PROGRESS ASSESSMENT    • Draw a PERT chart for making breakfast of three-      minute eggs, buttered ...
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Chap009

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Chap009

  1. 1. Chapter 09 Production and Operations ManagementMcGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved.
  2. 2. Chapter Nine LEARNING GOALS 1. Describe the current state of U.S. manufacturing and what manufacturers have done to become more competitive. 2. Describe the evolution from production to operations management. 3. Identify various production processes and describe techniques that improve productivity, including computer-aided design and manufacturing, flexible manufacturing, lean manufacturing and mass customization. 9-2
  3. 3. Chapter Nine LEARNING GOALS 4. Describe operations management planning issues including facility location, facility layout, materials requirement planning, purchasing, just-in-time inventory control and quality control. 5. Explain the use of PERT and Gantt charts to control manufacturing processes. 9-3
  4. 4. Profile SAMUEL J. PALMISANO IBM • Palmisano, CEO and President of IBM, started in the company in 1973. • The company’s earnings have quadrupled under Palmisano. •Switching the company’s 9-4
  5. 5. Chapter Nine NAME that COMPANY This company’s robots manufacture, test, and package motor starters - all untouched by human hands. The machines can fill special orders, even for a single item, without slowing down the process. Name that company! 9-5
  6. 6. Manufacturingand Services inPerspective MANUFACTURING in the U.S. LG1 • The U.S. is still the world’s leading manufacturer. • Manufacturing has continued to grow since 1970. In fact, U.S. manufacturing is 2x bigger than in 1970. • Almost 25% of all goods produced each year come from the U.S. 9-6
  7. 7. Manufacturingand Services inPerspective WHAT’S MADE in the USA? LG1 Leading U.S. Manufactured Goods Source: Parade Magazine, www.parade.com, accessed June 2011. 9-7
  8. 8. Manufacturingand Services inPerspective Exporters Extraordinaire LG1 Top Ten States that Manufacture Goods for Export Source: CNBC, www.cnbc.com, accessed June 2011. 9-8
  9. 9. Manufacturingand Services inPerspective MASSIVE MANUFACTURERS LG1 The Top Ten U.S. Manufacturers Source: Industry Week, www.industryweek.com, accessed June 2011. 9-9
  10. 10. KEY WORD: SUSTAINABILITY (Thinking Green)• The market for new green products and services is almost endless.• Given the rate of population growth, it’s important to plan ahead for a world with limited resources.• Companies like DuPont, Michelin, Chevron and Nokia are working on sustainability projects.• Procter & Gamble and Kaiser Permanente issue their own mandatory sustainability scorecards to their supply chains. 9-10
  11. 11. Manufacturingand Services inPerspective TOP-PAYING SERVICE JOBS LG1 • The U.S. economy is no longer manufacturing based. • 85% of jobs are in the service sector. • The top-paying service jobs in the U.S. are in: - Legal services - Medical services - Entertainment - Accounting - Finance - Management consulting 9-11
  12. 12. Manufacturersand ServiceOrganizationsBecome More REMAINING COMPETITIVE inCompetitive LG1 GLOBAL MARKETS • U.S. is still the leader in nanotechnology and biotechnology. • How can U.S. businesses maintain a competitive edge? - Focusing on customers - Maintaining close relationships with suppliers - Practicing continuous improvement - Focusing on quality - Saving on costs through site selection - Relying on the Internet to unite companies - Adopting new production techniques 9-12
  13. 13. LEARNING from GERMANY (Reaching Beyond Our Borders)• Ten years ago, Germany’s economy was much like ours today.• Stihl invested in highly trained workers.• Stihl remained competitive in the manufacturing world.• German companies poured money into research and stayed away from high tech products. 9-13
  14. 14. From Productionto OperationsManagement PRODUCTION and LG2 PRODUCTION MANAGEMENT • Production -- The creation of goods using land, labor, capital, entrepreneurship and knowledge (the factors of production). • Production Management -- All the activities managers do to help firms create goods. 9-14
  15. 15. From Productionto OperationsManagement OPERATIONS MANAGEMENT LG2 • Operations Management -- A specialized area in management that converts or transforms resources into goods and services. • Operations management includes: - Inventory management - Quality control - Production scheduling - Follow-up services 9-15
  16. 16. OperationsManagement inthe Service Sector OPERATIONS MANAGEMENT LG2 in the SERVICE SECTOR • All about creating a good experience for those who use the service. • In hotels, like Ritz- Carlton, operation management includes fine dining, fresh flowers, and training for every employee. 9-16
  17. 17. OperationsManagement inthe Service Sector THERE’S an APP for THAT LG2 Top Productivity Apps for iPad Source: Entrepreneur, February 2011. 9-17
  18. 18. ProgressAssessment PROGRESS ASSESSMENT • What have U.S. manufacturers done to regain a competitive edge? • What must U.S. companies do to continue to strengthen the country’s manufacturing base? • What led companies to focus on operations management rather than production? 9-18
  19. 19. ProductionProcesses The PRODUCTION PROCESS LG3 9-19
  20. 20. ProductionProcesses FORM UTILITY LG3 • Form Utility -- The value producers add to materials in the creation of finished goods and services. 9-20
  21. 21. ProductionProcesses GROVE’S BASIC PRODUCTION LG3 REQUIREMENTS 1. To build and deliver products in response to the demands of the customer at the scheduled delivery time. 2. To provide an acceptable quality level. 3. To provide everything at the lowest possible cost. 9-21
  22. 22. ProductionProcesses PROCESS and ASSEMBLY in LG3 PRODUCTION • Process Manufacturing -- The part of production that physically or chemically changes materials. • Assembly Process -- The part of the production process that puts together components. 9-22
  23. 23. ProductionProcesses KEY PRODUCTION PROCESSES LG3 • Production processes are either continuous or intermittent. • Continuous Process -- Long production runs turn out finished goods over time. • Intermittent Process -- Production runs are short and the producer adjusts machines frequently to make different products. 9-23
  24. 24. ProductionProcesses MINUTE MADE LG3 Production of Some of America’s Favorite Products 9-24
  25. 25. The Need toImprove ProductionTechniques andDEVELOPMENTS MAKING U.S.Cut Costs LG3 COMPANIES MORE COMPETITIVE 1. Computer-aided design and manufacturing 2. Flexible manufacturing 3. Lean manufacturing 4. Mass customization 9-25
  26. 26. Computer-AidedDesign andManufacturing COMPUTER-AIDED DESIGN and LG3 MANUFACTURING • Computer-Aided Design (CAD) -- The use of computers in the design of products. • Computer-Aided Manufacturing (CAM) -- The use of computers in the manufacturing of products. 9-26
  27. 27. Computer-AidedDesign andManufacturing COMPUTER-INTEGRATED LG3 MANUFACTURING • Computer-Integrated Manufacturing (CIM) -- The uniting of computer- aided design with computer- aided manufacturing. • CIM is expensive but it cuts as much as 80% of the time needed to program machines to make parts. 9-27
  28. 28. FlexibleManufacturing FLEXIBLE MANUFACTURING LG3 • Flexible Manufacturing -- Designing machines to do multiple tasks so they can produce a variety of products. • Allen-Bradley uses flexible manufacturing to build motor starters. • 26 machines and robots build, test and package parts. 9-28
  29. 29. LeanManufacturing LEAN MANUFACTURING LG3 • Lean Manufacturing -- Using less of everything than in mass production. • Compared to others, lean companies: - Take half the human effort. - Have half the defects in finished products. - Require one-third the engineering effort. - Use half the floor space. - Carry 90% less inventory. 9-29
  30. 30. MassCustomization MASS CUSTOMIZATION LG3 • Mass Customization -- Tailoring products to meet the needs of a large number of individual customers. • More manufacturers are learning to customize. • Mass customization exists in the service sector too. 9-30
  31. 31. MASS CUSTOMIZATION of CANDY (Spotlight on Small Business)• Chocomize lets customers customize their chocolate bars.• Co-founder, Eric Heinbockel, sought funding help from his family.• Chocomize now has three full-time chocolate makers and is expected to be a success. 9-31
  32. 32. ProgressAssessment PROGRESS ASSESSMENT • What’s form utility? • Define and differentiate the following: process manufacturing, assembly process, continuous process and intermittent process. • What do you call the integration of CAD and CAM? • What’s mass customization? 9-32
  33. 33. OperationsManagementPlanning OPERATIONS MANAGEMENT LG4 • Operations management planning helps solve problems like: - Facility location - Facility layout - Materials requirement planning - Purchasing - Inventory control - Quality control 9-33
  34. 34. FacilityLocation FACILITY LOCATION LG4 • Facility Location -- The process of selecting a geographic location for a company’s operations. • Rising numbers of Internet businesses means brick-and-mortar retailers must find great locations. 9-34
  35. 35. STAY or LEAVE (Making Ethical Decisions)• Potential of low-cost labor is very attractive to companies hoping to remain competitive.• However, shuttering operations and moving can often cause severe economic problems in dependent areas.• What would you do if you were the CEO of ChildrenWear Industries faced with this problem? 9-35
  36. 36. TakingOperations OPERATIONS MANAGEMENTManagement tothe Internet LG4 on the INTERNET • Sometimes businesses outsource engineering, design and manufacturing to other companies. • Often these relationships are managed through the Internet. • Many companies are developing Internet-focused strategies. 9-36
  37. 37. Facility Locationin the Future FUTURE FACILITY LOCATION LG4 • Information technology gives firms increased flexibility in terms of location. • Telecommuting -- Working from home via computer. 9-37
  38. 38. Facility Layout SETTING UP the FACILITY LG4 • Facility Layout -- The physical arrangement of resources, including people, to most efficiently produce goods and provide services. • Facility layout depends on the processes performed: - Service: Help customers find products - Manufacturing: Improve efficiency 9-38
  39. 39. Facility Layout FACILITY LAYOUT OPTIONS LG4 1. Assembly Line Layout – Workers do only a few tasks at a time. 2. Modular Layout – Teams of workers produce more complex units of the final product. 3. Fixed-Position Layout – Allows workers to congregate around the product. 4. Process Layout – Similar equipment and functions are grouped together. 9-39
  40. 40. Facility Layout ASSEMBLY LINE LAYOUT LG4 9-40
  41. 41. Facility Layout MODULAR LAYOUT LG4 9-41
  42. 42. Facility Layout PROCESS LAYOUT LG4 9-42
  43. 43. Facility Layout FIXED-POSITION LAYOUT LG4 9-43
  44. 44. MaterialsRequirementPlanning MRP and ERP LG4 • Materials Requirement Planning (MRP) -- A computer-based operations management system that uses sales forecasts to make sure parts and materials are available when needed. • Enterprise Resource Planning (ERP) -- A newer version of MRP, combines computerized functions into a single integrated software program using a single database. 9-44
  45. 45. Purchasing PURCHASING LG4 • Purchasing -- The function that searches for high-quality material resources, finds the best suppliers and negotiates the best price for goods and services. • The Internet has transformed purchasing. 9-45
  46. 46. Just-in-TimeInventory Control INVENTORY CONTROL LG4 • 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. • To work effectively, the process requires excellent coordination with suppliers. 9-46
  47. 47. Quality Control QUALITY CONTROL LG4 • Quality -- Consistently producing what the customer wants while reducing errors before and after delivery. • Six Sigma Quality -- A quality measure that allows Photo Courtesy of: Argonne National Laboratory only 3.4 defects per million opportunities. 9-47
  48. 48. Quality Control STATISTICAL QUALITY CONTROL & STATISTICAL PROCESS LG4 CONTROL • Statistical Quality Control -- A process used to continually monitor all phases of the production process. • Statistical Process Control -- A process of testing statistical samples of product components at each stage of production. • Measuring quality along the production process reduces the need for quality control at the end. 9-48
  49. 49. The BaldrigeAwards The BALDRIGE AWARDS LG4 • Companies can apply for awards in these areas: - Manufacturing - Services - Small Businesses - Non-Profit/Government - Education - Healthcare 9-49
  50. 50. The BaldrigeAwards THE WINNERS ARE… LG4 2010 Baldrige Award Recipients Source: National Institute of Standards and Technology, www.quality.nist.gov, accessed June 2011. 9-50
  51. 51. ISO 9000 andISO 14000Standards WHAT is ISO? LG4 • The International Organization for Standardization (ISO) is a worldwide federation of national standards bodies. • ISO 9000 -- The common name given to quality management and assurance standards. • ISO 14000 -- A collection of the best practices for managing an organization’s impact on the environment. 9-51
  52. 52. ProgressAssessment PROGRESS ASSESSMENT • What are the major criteria for facility location? • What’s the difference between MRP and ERP? • What’s just-in-time inventory control? • What are Six Sigma quality, the Baldrige Award, ISO 9000 and ISO 14000? 9-52
  53. 53. ControlProcedures:PERT and GanttCharts PERT LG5 • Program Evaluation and Review Technique (PERT) -- A method for analyzing the tasks involved in completing a given project and estimating the time needed. 9-53
  54. 54. ControlProcedures:PERT and GanttCharts STEPS INVOLVED in PERT LG5 1. Analyzing and sequencing tasks 2. Estimating the time needed to complete each task 3. Drawing a PERT network illustrating the first two steps 4. Identifying the critical path • Critical Path -- The sequence of tasks that takes the longest time to complete. 9-54
  55. 55. ControlProcedures: PERT CHART for a MUSIC VIDEOPERT and GanttCharts LG5 9-55
  56. 56. ControlProcedures:PERT and GanttCharts GANTT CHARTS LG5 • Gantt Chart – A bar graph that shows what projects are being worked on and how much has been completed. 9-56
  57. 57. ControlProcedures:PERT and Gantt GANTT CHART for aCharts LG5 DOLL FACTORY 9-57
  58. 58. ProgressAssessment PROGRESS ASSESSMENT • Draw a PERT chart for making breakfast of three- minute eggs, buttered toast and coffee. Define the critical path. • How could you use a Gantt chart to keep track of production? 9-58

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