Enhancing Operations Control and Quality Management

1. Operations Control 3 Chapter 12

2. Learning Objectives • Understand the basic requirements for controlling operating costs. • Define quality from the perspective of an operations manager. • Explain the concept of Total Quality Management (TQM). • Define the following terms: continuous improvement, kaizen, six sigma, lean manufacturing, and quality at the source. • Explain the purpose of the Malcolm Baldrige Award. • Explain the concept for just-in-time (JIT) inventory.

3. Operations Control • Two aspects • Design • Control • Effective operations

4. Controlling Operations Costs • One of primary jobs of the operations manager • Variable overhead expenses • Fixed overhead expenses • Monthly budgets for each costs area • System indicates when costs are out of control • Simple inspection

5. Quality Management • Operations manager and quality • Quality can affect in many ways • Loss of business, liability, costs, and productivity • Customer response program Quality Assurance • Past versus present • W. Edwards Deming

6. Total Quality Management • 5 summary actions • A philosophy Implementing TQM • 3 most popular approaches • Deming, Juran, and Crosby methods • Initiative for successful implementation • Barriers

7. Specific Approaches for Improving Quality • Continuous improvement • Kaizen • Quality at the source • Six sigma • Lean manufacturing Reengineering • One-time concerted effort

8. Other Quality Standards • ISO 9000 • Promoting the development of standardization and facilitating the international exchange of goods and services • Five standards • New standards • ISO 14000 • Goal – To provide international environmental standards that are compatible • Compliance in four areas • Zero defects – Program characteristics

9. The Malcolm Baldrige National Quality Award • Promotes excellence • Six types of organizations are eligible • Seven criteria categories

10. Types of Quality Control • Product quality control • Acceptance sampling procedures • Process quality control • Process is halted • Acceptance sampling • Random sample • Process control chart • Whether, not why

11. Inventory Control • 3 categories • Raw material • In process • Finished goods • Inventories add flexibility • Costly • Management must continually balance costs

12. Just-in-Time Inventory Control • Philosophy • Smaller but more frequent orders • To eliminate waste • Applies to production • Potential hazard • Not a quick fix • New twist from Tom Peters

13. Tracking Inventory • Tedious • Frequent mistakes Bar-Code Technology • Reduced errors • Automatic Physical Inventory • Actual inventory

14. Independent versus Dependent Demand Items • Sold or shipped as opposed to being used in making another product ABC Classification System • ABC accounts • Appropriate control • Shortcomings • Advantage • Additional value

15. Safety Stocks • Optimal size • Out-of-stock-cost The Order Quantity • Optimal units • Ordering costs • Carrying costs • EOQ • Weaknesses