Operations Management in Manufacturing and Service

1. CHAPTER 18 Operations Management

2. Learning Objectives • List the elements of an operating system • Describe how manufacturers and service providers use operations management • Explain how to measure productivity • Recount the methods of scheduling operations • Discuss the role of quality in operations management • Identify the three ways to control operations

3. List the elements of an operating system LO - 18.1

4. Elements of an operating system Inputs(physical and intangible) Transformation(value-adding)processes Outputs(tangible and intangible) Control systems(monitor and correct problems) Feedback(communication tools) Operations Management

5. Figure 18.1 - Control Systems

6. Describe how manufacturers and service providers use operations management LO - 18.2

7. Operations Management • Production • Broadly describes what businesses of all types do in creating goods and services • Productivity: Measure of production • Way to determine the efficiency of a business

8. Types of manufacturing system Analytic systems Synthetic systems Operations Management Manufacturing system that reduces inputs into component parts to extract products Manufacturing system that combines inputs to create a finished product or change it into a different product

9. Types of production processes Continuous process Intermittent process Operations Management Operates for long periods of time without interruption Operates in short cycles so that it can change products

10. Automation

11. Operations Management for Service Businesses • Operations’ processes differ from one product and service to another, and some overlap • Service businesses are viewed as intermittent-process businesses • Hair salons • Accounting firms • Auto service centers

12. Operations Management for Service Businesses • Certain service businesses adopt continuous processes to increase productivity • Difference between service and manufacturing operations is the amount of customer contact involved

13. Table 18.1 - Product and Service Operations Systems

14. Explain how to measure productivity LO - 18.3

15. What is Productivity?

16. Ways to Measure Manufacturing Productivity • Total productivity = Total outputs Total inputs = Outputs Labor + capital + raw materials + all other inputs • Materials productivity = Outputs Materials

17. Sources of manufacturing productivity improvements Employees accomplishing more Technology that speeds production Changing processes used by the business Productivity

18. Technological innovation Ways to measure service productivity Ergonomics Management style Service Productivity

19. Recount the methods of scheduling operations LO - 18.4

20. Scheduling methods Forward scheduling Backward scheduling Scheduling Operations Materials and resources are allocated for production when a job order comes in Arranging production activities around the due date for the product

21. Scheduling Routing Sequencing Dispatching Scheduling Operations Information showing the steps required to produce a product Order in which the steps need to occur to produce a product Allocating resources and beginning the steps to produce a product

22. Figure 18.2 - Gantt Chart

23. Discuss the role of quality in operations management LO - 18.5

24. Quality Customer perspective Business perspective Quality-Centered Management How well a good or service satisfies their needs Degree to which a product conforms to established tolerance standards

25. Quality-Centered Management • Six sigma: Tolerance range in which only 3.4 defects per million are allowed • Signifies the quality movement in manufacturing and entire organizations • Defect rate: Number of goods produced that are outside the company’s boundaries of acceptable quality • Used to measure the quality of a product • Tolerance range: Boundaries that managers set in determining acceptable product quality

26. Table 18.2 - Sigma Levels and Defect Rates

27. Basic Components of a Six-Sigma Program • Define products and services by describing the actual products or services that are provided to customers • Identify customer requirements for products or services by stating them in measurable terms • Compare products with requirements by identifying gaps between what the customer expects and what the customer is actually receiving

28. Basic Components of a Six-Sigma Program • Describe the process by providing explicit details • Improve by simplification and mistake-proofing • Measure quality and productivity by establishing baseline values and then tracking improvement

29. Six-Sigma Program Measurements • Statistical analysis • Descriptive statistics • Inferential statistics • Statistical tools • Analysis of variance (ANOVA) • Regression analysis

30. Six-Sigma Quality Activities and Tools

31. Six-Sigma Quality Activities and Tools

32. Six sigma goals Improved manufacturing Increased customer satisfaction Ultimate Goals of Six-Sigma

33. Quality-Centered Management

34. Identify the three ways to control operations LO - 18.6

35. Types of controls Feedforward quality control(inputs) Concurrent quality control(process) Feedback quality control(output) Control Operations

36. Concurrent Quality Control

37. Negotiate consultant prices Request customer subsidies Handling ISO certification costs Look for consultant alternatives Consider the need for full certification Concurrent Quality Control

38. Concurrent Quality Control

39. Figure 18.3 - Control Charts

40. Benchmarking Opportunities