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Modern Management 9 th edition

. Modern Management 9 th edition. Ü Objectives. Definitions of production, productivity, and quality An understanding of the importance of operations and production strategies, systems, and processes Insights into the role of operations management concepts in the workplace

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Modern Management 9 th edition

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  1. . Modern Management9th edition

  2. . Ü Objectives • Definitions of production, productivity, and quality • An understanding of the importance of operations and production strategies, systems, and processes • Insights into the role of operations management concepts in the workplace • An understanding of how operations control procedures can be used to control production • Insights into operations control tools and how they evolve into a continual improvement approach to production management and control

  3. PRODUCTION . Defining Production Productivity productivity = outputs inputs • Traditional strategies for increasing productivity: • 1. Improving effectiveness of organizational workforce through training • 2. Improving production process through automation • 3. Improving product design to make products easier to assemble • 4. Improving production facility by purchasing more modern equipment • 5. Improving quality of workers hired to fill open positions

  4. PRODUCTION . • Quality and Productivity • Focus on Continual Improvement • Focus on Quality and Integrated Operations • Quality Assurance • Statistical Quality Control • "No Rejects" Philosophy • Quality Circles • Automation • Strategies, Systems, and Processes

  5. PRODUCTION . Deming’s flow diagram for improving product quality Figure 20.1

  6. PRODUCTION . The quality circle problem-solving process Figure 20.2

  7. OPERATIONS MANAGEMENT . • Defining Operations Management • Operations Management Considerations • Key notions: • Involves managers • Takes place within context of objectives and policies • Criteria are standards for effectiveness and efficiency • Operations strategies

  8. OPERATIONS MANAGEMENT . Major activities performed to manage production Figure 20.3

  9. OPERATIONS MANAGEMENT . • Operations Management Considerations (con’t) • Capacity Strategy • Capacity flexibility • Steps in Capacity Decisions: • 1. Measure capacity of currently available facilities • 2. Estimate future capacity needs on basis of demand forecasts • 3. Compare future capacity needs and available capacity • 4. Identify ways to accommodate long-range capacity changes • 5. Select best alternative based on quantitative and qualitative evaluation

  10. OPERATIONS MANAGEMENT . • Operations Management Considerations (con’t) • Location Strategy • Factors in a Good Location • Nearness to market and distribution centers • Nearness to vendors and resources • Requirements of federal, state, and local governments • The character of direct competition • The degree of interaction with the rest of the corporation • The quality and quantity of labor pools • The environmental attractiveness of the area • Taxes and financing requirements • Existing and potential transportation • The quality of utilities and services

  11. OPERATIONS MANAGEMENT . • Operations Management Considerations (con’t) • Product Strategy • Process Strategy • Types of Processes • Continuous process • Repetitive process • Job-shop process • Layout Strategy • Basic types for manufacturing facilities: • 1. Product • 2. Process (functional) • 3. Fixed-position

  12. OPERATIONS MANAGEMENT . The three basic layout patterns Figure 20.4

  13. OPERATIONS MANAGEMENT . • Operations Management Considerations (con’t) • Human Resources Strategy • Human resource imperatives: • 1. Optimize individual, group, and organizational effectiveness • 2. Enhance quality of organizational life • Operational Tools in Human Resources Strategy • Manpower planning • Job design • Work methods analysis • Motion-study techniques • Work measurement methods • Operational tools to establish labor standards

  14. OPERATIONS CONTROL . • Just-in-Time Inventory Control • Best Conditions for JIT • Advantages of JIT • Characteristics of JIT • 1. Closeness of suppliers • 2. High quality of materials purchased from suppliers • 3. Well-organized receiving and handling of materials • 4. Strong management commitment • Maintenance Control • Pure-preventive maintenance policy • Pure-breakdown policy

  15. OPERATIONS CONTROL . • Cost Control • Stages in Cost Control • 1. Establishing standard or planned cost amounts • 2. Measuring actual costs incurred • 3. Comparing planned costs to incurred costs • 4. Making changes to reduce actual costs to planned costs • Following above stages: • Establish planned costs for labor, materials, and overhead • Measure or calculate costs incurred for these activities • Compare actual operations costs to planned operations costs • Take steps to reduce actual operations costs to planned levels

  16. OPERATIONS CONTROL . • Budgetary Control • Potential Pitfalls of Budgets • 1. Placing too much emphasis on insignificant expenses • 2. Increasing expenses without adequate information • • Zero-base budgeting • 3. Ignoring fact that budgets must be changed periodically • • Variable budget • Human Relations Considerations in Using Budgets • Reducing Human Relations Problems

  17. OPERATIONS CONTROL . • Ratio Analysis • 1. Liquidity ratios • 2. Leverage ratios • 3. Activity ratios • 4. Profitability ratios • Using Ratios to Control Organizations • Evaluate all ratios simultaneously • Compare computed values with industry averages • Incorporate trend analysis

  18. OPERATIONS CONTROL . Four Categories of Ratios Table 20.1 Type Example Calculation Interpretation Profitability Return on investment (ROI) Profit after taxes Productivity of assets Total assets Liquidity Current ratio Current assets Short-term solvency Current liabilities Activity Inventory turnover Sales Efficiency of inventory Inventory management Leverage Debt ratio Total debt How a company finances itself Total assets

  19. OPERATIONS CONTROL . • Materials Control • Procurement of Materials • Receiving, Shipping, and Trafficking • Receiving activities include: • •Unloading •Identifying •Inspecting •Reporting •Storing inbound shipments • Shipping and distribution activities include: • •Preparing documents •Packaging •Labeling •Loading •Directing out shipments • Shipping and receiving are organized as one unit • Traffic manager’s main responsibilities are: • •Selection of the transportation mode • •Coordination of the arrival and departure of shipments • •Auditing freight bills

  20. OPERATIONS CONTROL . • Materials Control (con’t) • Inventory and Shop-Floor Control • Inventory control subsystems: • •Work-in-process •Finished-goods inventory • Inventory control specifies: • •What •When •How much to buy • Shop-floor control activities include: • •Input/output control •Routing • •Scheduling •Dispatching • •Sequencing •Expediting

  21. SELECTED OPERATIONSCONTROL TOOLS . • Using Control Tools to Control Organizations • Inspection • To Inspect or Not to Inspect • Management by Exception • Establishing Rules • Examples of rules based on exception principle: • A department manger must immediately inform the plant manager if actual: • 1. Weekly labor costs exceed estimated weekly labor costs by more than 15% • 2. Dollars spent on a special project exceed funds approved by more than 10%

  22. SELECTED OPERATIONSCONTROL TOOLS . • Management by Objectives • Break-Even Analysis • Basic Ingredients of Break-Even Analysis • Break-even analysis typically involves: • •Reflection •Discussion •Reasoning •Decision making • Relative to major aspects of production: • 1. Fixed costs 3. Total costs 5. Profits 7. Breakeven • 2. Variable costs 4. Total revenue 6. Loss point • Types of Break-Even Analysis • Algebraic Break-even Analysis BE = FC (P – VC) • Graphic Break-even Analysis • Advantages of Using the Algebraic and Graphic Break-even Methods • Control and Break-even Analysis

  23. SELECTED OPERATIONSCONTROL TOOLS . Fixed costs and Variable Costs for a Book Publisher Table 20.2 Fixed Costs (Yearly Basis) Variable Costs per Book Sold 1. Real estate taxes on property $1,000 1. Printing $2.00 2. Interest on loan to purchase equipment 5,000 2. Artwork 1.00 3. Building maintenance 2,000 3. Sales commission .50 4. Insurance 800 4. Author royalties 1.50 5. Salaried labor 80,000 5. Binding 1.00 Total fixed costs $88,800 Total variable costs per book $6.00

  24. SELECTED OPERATIONSCONTROL TOOLS . Break-even analysis for a book publisher Figure 20.5

  25. SELECTED OPERATIONSCONTROL TOOLS . • Other Broad Operations Control Tools • Decision Tree Analysis • Process Control • Value Analysis • Computer-Aided Design (CAD) • Computer Graphics • Computer-aided engineering (CAE) • Computer-Aided Manufacturing (CAM)

  26. Chapter Twenty ? Questions

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