Post on 20-Dec-2015
Copyright © 2004 South-Western. All rights reserved. 9–1
Learning GoalsLearning Goals
•Key resources used for production.
•Plant site decision.
•Design and layout decision.
•Production control.
•Production efficiency.
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Resources Used for Resources Used for ProductionProduction
• Production– A series of tasks in which resources are used
to produce a product or service.
• Production (or operations) management– Focuses on developing efficient and high-
quality production process by determining the proper amount and mix of production resources to use: Human resources , materials and other
assets (buildings, machinery, equipment)
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Resources Used in Resources Used in ProductionProduction
Exhibit 9.1
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Selecting a SiteSelecting a Site
•Location of a factory or office•Site location decision factors
– Cost of workplace space– Cost and supply of labor– Tax incentives– Source of demand– Access to transportation
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Design and LayoutDesign and Layout
•Design– Dictates the eventual size and structure of
the plant or office
•Layout– The arrangement of machinery and
equipment within the plant or office
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Factors Affecting Design and Factors Affecting Design and LayoutLayout
•Site characteristics– Cost
•Production process– Product layout– Fixed-position layout – Flexible manufacturing
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Production ControlProduction Control
•Purchasing materials• Inventory control•Routing•Scheduling•Quality control
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Effects of DisintegrationEffects of Disintegration
Exhibit 9.3
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Inventory ControlInventory Control
•Minimizes costs by: Just-in-Time (JIT) inventory Materials requirements planning (MRP)
– Controlling work-in-process and finished goods inventories.
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Illustration of IBM’s Efforts Illustration of IBM’s Efforts to Minimize Inventoryto Minimize Inventory
Exhibit 9.4
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Routing and SchedulingRouting and Scheduling
•Routing•Scheduling•Gantt chart .•Program evaluation and review technique (PERT)
Critical path
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Example of a Gantt ChartExample of a Gantt Chart
Exhibit 9.5
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Determining the Critical Path Based Determining the Critical Path Based
on a Sequence of of Production on a Sequence of of Production TasksTasks
Exhibit 9.6
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Quality ControlQuality Control
•Quality control– A process of determining whether product
quality meets the desired quality level.
•Total quality management (TQM)
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Total Quality ManagementTotal Quality Management• 1940’s US War Dept• 1950’s Dr. Edward Deming in Japan• 1960’s Taguchi publishes “Total Quality Control”• 1970’s Japanese successfully compete inside US•1980’s Deming @ Ford, Baldridge award•1990’s TQM integrated into business (ISO 9000)
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Measuring Production Measuring Production EfficiencyEfficiency
•Economies of scaleFixed costs.
Variable costs.
– Break-even point Reflects the total quantity of units sold at
which total revenue equals total costs (fixed and variable) and profitability begins.
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Relationship Relationship between between
Production Production Volume and Volume and
CostsCosts
Exhibit 9.9b
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Relationship between Volume Relationship between Volume and Profitabilityand Profitability
Exhibit 9.10a
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Improving Production Improving Production EfficiencyEfficiency
•Bench marking•Restructuring•Reengineering