Operations Management

1. Operations Management 2002 South-Western

2. Operations Strategy • Part of a strategic plan that defines: • The role • Capabilities • Expectations of operations 2002 South-Western

3. Operational Problems for Producers of Goods and Services • Each is concerned with converting resources into something saleable. • Each must acquire materials or supplies to achieve that conversion. • Each must schedule the process of conversion. • Each must control processes and ensure quality. 2002 South-Western

4. Inputs • Raw Materials • Human Resources • Land, Buildings • Information • Technology Flow of Operations Transformation Processes • Outputs • Products • Services Feedback to Provide Control 2002 South-Western

5. Role of Operations Strategy and Operations Management Operations Strategy Operations Management Products, Facilities, and Processes Product or Service Design Facilities Layout Production Processes and Technology Facilities Location Capacity Planning Productivity Quality Implementation Structures Scheduling Relationships Decentralization Teams Productivity Quality Control Processes Design Control Purchasing Control Inventory Control Scheduling Control Product Control Productivity Quality Inputs Outputs 2002 South-Western

6. Operations Management Embraces Facilities Process design Product Implementation structure Control processes 2002 South-Western

7. The Planning Stage of an Organization’s Operations • Involves decisions about: • Product or service design • Facilities layout • Production processes and technology • Facilities location • Capacity planning 2002 South-Western

8. Two Design Concepts 1. Design for manufacturability and assembly (DFM/A) • Calls for design teams consisting of designers, manufacturers, and assemblers. • all have a say in product design and actual production of the product. • DFM/A product design involves four criteria: • Producibility • Cost • Quality • Reliability 2. Design for disassembly (DFD) • The goal is to conceive, develop, and build a product with a long-term view of how its components can be refurbished and reused–or disposed of safely. 2002 South-Western

9. Major Benefits of the DFMA Approach, Against Which GM Evaluates New Designs Excellence of the car, including serviceability. Quality The degree to which the car fulfills its intended purpose. Reliability Durability The degree to which the car withstands performance demands. Mass The total weight of the car. Safety The degree to which the car increases the protection of occupants. Manufacturability The degree to which the car can be manufactured and assembled within existing operational capacity. Time to market The time from product design until the car is ready for sale to the consumer. Total cost The total amount of materials, labor, transportation, design, and overhaul expenses associated with the design. 2002 South-Western

10. Process Layout Equipment or machines that perform a similar task or function are located together. A product is moved from process to process as needed. Major advantage is potential for reducing costs. Requires fewer people and pieces of equipment. Limits the need to move the product through several different processes. 2002 South-Western

11. (a) Process Layout Receiving Dept. Molding Welding Assembly Storage Wiring Insulation Painting Testing Product C Product A Product B Four Options of Facilities Layout 2002 South-Western

12. Product Layout Machines and tasks are arranged according to the progressive steps by which the product is made. Efficient when the business produces large volumes of identical products. 2002 South-Western

13. (b) Product Layout Receiving Dept. Receiving Dept. Molding Welding Testing Molding Wiring Painting Assembly Molding Insulating Painting Assembly Product C Product A Product B Four Options of Facilities Layout 2002 South-Western

14. Cellular Layout Combines some of the characteristics of process and product layouts. All the equipment required for a sequence of operations on the same product is placed together. Allows efficient handling of materials and inventory. Workers are physically close enough to work together to solve problems. 2002 South-Western

15. (c) Cellular Layout Welding Painting Wiring Testing Assembly Molding Product C Product A Product B Four Options of Facilities Layout 2002 South-Western

16. Fixed-Position Layout Used because of size or bulk. The product remains in one location. Tools, equipment, and human skill are brought to the product. 2002 South-Western

17. Four Options of Facilities Layout (d) Fixed-Position Layout Labor Supplies Machines Product Equipment Materials 2002 South-Western

18. Technologies Responsible for Revolutionizing Manufacturing Processes Computer- integrated manufacturing Flexible manufacturing systems Robotics CAD/CAM Agile manufacturing Soft manufacturing systems 2002 South-Western

19. Should the firm have one or two large plants, or several smaller ones? Where should the facilities be located? Placement of FacilitiesTwo Questions 2002 South-Western

20. Facility Location Depends on Labor costs Proximity to suppliers Tax rates Availability of labor skills The location of the market where the product will be sold Quality of life for employees Construction expenses Utility rates 2002 South-Western

21. To Increase Capacity Create additional shifts and hire new staff Build new facilities Pay present staff overtime Refit existing plants Subcontract work to outside firms 2002 South-Western

22. Specific Plans for the Overall Production Activities Involve Aggregate planning Master scheduling Structuring for operations 2002 South-Western

23. Aggregate Plan (Units per Month) January February March April May Electric Ranges 1,000 100 1,200 100 100 50 100 1,300 50 100 1,200 1,250 Gas Ranges 100 1,000 50 750 100 100 100 100 100 1,000 700 800 Total 150 150 1,900 150 150 2,300 2,200 50 100 100 1,750 2,050 Master Schedule for Electric Ranges (Units per Week) January February 1 2 3 4 5 6 7 8 3,600 3,665 50 3,670 50 100 January Total February Total 1,000 1,300 Note: Another master schedule will be developed for the gas ranges. Development of a Master Schedule from an Aggregate Plan 2002 South-Western

24. Operational Controls Materials Inventory Control of design Scheduling Products 2002 South-Western

25. Design Control Focuses on creating new products engineered for reliability. Functionality Serviceability 2002 South-Western

26. Purchasing is Critical for the Following Reasons • If the materials are not on hand, nothing can be produced. • If the right quantity of materials is not available, the organization cannot meet demand. • If the materials are of inferior quality, producing quality products is difficult or costly. 2002 South-Western

27. Goals of Purchasing Control Ensure availability of material Balance costs Ensure acceptable quality of material 2002 South-Western

28. Inputs Transformation Processes Outputs Raw Materials Inventory Work-in-Process Inventory Finished Goods Inventory Three Types of Inventory 2002 South-Western

29. Four Specific Techniques for Inventory Management Economic order quantity Manufacturing resource planning Materials requirement planning Just-in-time inventorysystems 2002 South-Western