Chapter 11 Production and Operations Management

1. Chapter 11 Production and Operations Management Learning Goals Compare alternative layouts for production facilities. List the steps in the purchasing process. Outline the advantages and disadvantages of maintaining large inventories. Identify the steps in the production control process. Explain the benefits of quality control. 5 Outline the importance of production and operations management. Explain the roles of computers and related technologies in production. Identify the factors involved in a plant location decision. Explain the major tasks of production and operations managers. 1 6 7 2 3 8 4 9

2. ProductionApplication of resources such as people and machinery to convert materials into finished goods and services. • Production and operations managementManaging people and machinery in converting materials and resources into finished goods and services.

4. STRATEGIC IMPORTANCE OF THE PRODUCTION FUNCTION • • A vital function necessary for generating money to pay employees, lenders, and stockholders. • • Effective production and operations management can: • • Lower a firm’s costs of production. • • Boost the quality of its goods and services. • • Allow it to respond dependably to customer demands. • • Enable it to renew itself by providing new products.

5. Mass Production • • A system for manufacturing products in large amounts through effective combinations of employees with specialized skills, mechanization, and standardization. • Assembly lineManufacturing technique that carries the product on a conveyor system past several workstations where workers perform specialized tasks. • • Applied by Henry Ford to improve the efficiency of automobile manufacturing. • • Before assembly line, produced one car per worker per 12-hour workday. • • After assembly line, produced eight cars per worker per 12-hour workday. • • Efficient method for making mass quantities of similar items. • • Not flexible.

6. Flexible Production • • Produces smaller batches of goods cost-effectively with information technology. • • Information technology to share the details of customer orders. • • Programmable equipment to fulfill the orders. • • Skilled people to carry out whatever tasks are needed to fill a particular order. • Customer-Driven Production • • Evaluates customer demands to link what a manufacturer makes with what customers want to buy. • • Link computers in factories to retail scanners to create short-term forecasts and design production schedules. • • Make product only after customer orders it. • • Example: Dell

7. PRODUCTION PROCESSES • • Analytic production system Reduces a raw material to its component parts in order to extract one or more marketable products. • • Example: Petroleum refining • • Synthetic production system Combines a number of raw materials or parts or transforms raw materials to produce finished products. • • Example: Dell’s assembly line • • Continuous production process Generates finished products over a lengthy period of time. • • Example: Steel industry • • Intermittent production process Generates products in short production runs, shutting down machines frequently or changing their configurations to produce different products. • • Example: Most services

8. TECHNOLOGY AND THE PRODUCTION PROCESS • • Technology has dramatically changed production. • • Boosts efficiency • • Enhances flexibility • Robots • RobotReprogrammable machine capable of performing numerous tasks that require manipulation of materials and tools. • • Pick-and-place robot Moves in only two or three directions as it picks up something from one spot and places it in another. • • Field robot Use vision systems, infrared sensors, and othertechnologies to move parts or products from one place to another.

9. Computer-Aided Design and Manufacturing • Computer-aided design (CAD)System for interactions between a designer and a computer to create a product, facility, or part that meets predetermined specifications. • Computer-aided manufacturing (CAM)Electronic tools to analyze CAD output and determine necessary steps to implement the design, followed by electronic transmission of instructions to guide the activities of production equipment. • Flexible Manufacturing Systems • • A production facility that workers can quickly modify. Computer-controlled machining centers produce metal parts. Remote-controlled carts deliver materials. Robots handle the parts. All linked by electronic controls.

10. Computer-Integrated Manufacturing • • A production system in which computers help workers design products, control machines, handle materials, and control the production function in an integrated fashion • • Key is a centralized computer system running software that integrates and controls separate processes and functions.

11. THE LOCATION DECISION

12. THE JOB OF PRODUCTION MANAGERS • • Oversee the work of people and machinery to convert inputs (materials and resources) into finished goods and services. • • Four main tasks:

13. Planning the Production Process • • Begins by choosing what goods or services to offer customers. • • Convert original product ideas into final specifications. • • Design the most efficient facilities to produce those products.

14. Determining the Facility Layout • • Common layout designs: • • Process layout groups machinery and equipment according to their functions. • • Facilitates production of a variety of nonstandard items in relatively small batches.

15. Determining the Facility Layout • • Common layout designs: • • Product layout sets up production equipment along a product-flow line, and the work in process moves along this line past workstations. • • Efficiently produces large numbers of similar items.

16. Determining the Facility Layout • • Common layout designs: • • A fixed-position layout places the product in one spot, and workers, materials, and equipment come to it.

17. Determining the Facility Layout • • Common layout designs: • • Customer-oriented layout arranges facilities to enhance the interactions between customers and a service.

18. Implementing the Production Plan • Make, Buy, or Lease Decision • • Choosing whether to manufacture a needed product or component in house, purchase it from an outside supplier, or lease it. • • Factors in the decision include cost, availability of reliable outside suppliers, and the need for confidentiality. • Selection of Suppliers • • Based on comparison of quality, prices, dependability of delivery, and services offered by competing companies.

19. Inventory Control • • Perpetual inventory Systems continuously monitor the amounts and locations of stocks. • •  Vendor-managed inventory Inventory control functions handed over to suppliers. • Just-in-Time Systems • • Management philosophy aimed at improving profits and return on investment by minimizing costs and eliminating waste through cut- ting inventory on hand. • Materials Requirement Planning • • Computer-based production planning system by which a firm can ensure that it has needed parts and materials available at the right time and place in the correct amounts.

20. Controlling the Production Process • • Production control Creates a well-defined set of procedures for coordinating people, materials, and machinery to provide maximum production efficiency. • Production Planning • • Determining the amount of resources (including raw materials and other components) an organization needs to produce a certain output. • Routing • • Determining the sequence of work throughout the facility and specifying who will perform each aspect of the work at what location.

21. Scheduling • Scheduling Development of timetables that specify how long each operation in the production process takes and when workers should perform it. • • Useful tools for scheduling include a Gantt chart and a PERT (Program Evaluation and Review Technique) chart.

24. Dispatching • • Manager instructs each department on what work to do and the time allowed for its completion. • Follow-Up • • Employees and their supervisors spot problems in the production process and determine needed changes.

25. IMPORTANCE OF QUALITY • • Best defined as a good or service free of deficiencies. • • In some companies, costs of poor quality amount to 20 percent of revenue. • BenchmarkingProcess of determining other companies’ standards and best practices. • Quality Control • Quality control Measuring goods and services against established quality standards. • • Many companies evaluate quality using the Six Sigma concept. • • A company tries to make error-free products 99.9997 percent of the time, a tiny 3.4 errors per million opportunities.

27. ISO Standards • International Organization for Standardization (ISO) Organization whose mission is to promote the development of standardized products to facilitate trade and cooperation across national borders. • • Includes representatives from more than 146 nations. • • ISO 9000 family series of standards sets requirements for quality processes. • • Nearly half a million ISO 9000 family certificates have been awarded to companies around the world. • • ISO 14000 series sets standards for operations that minimize harm to the environment.