Production and Operations Management

Chapter 10

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Learning Objectives

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Explain the strategic importance of the production.

Identify and describe the production processes.

Explain the role of technology in the production process.

Identify the factors involved in a location decision.

Explain the job of production managers.

Discuss controlling the production process.

Determine the importance of quality.

Production: Use of resources, such as workers and

machinery, to convert materials into finished goods and

services.

Production and Operations Management: Oversee the

production process by managing people and machinery in

converting materials and resources into finished goods and

services.

Production & Operations Management

Production Systems

A vital function is necessary for generating

money to pay employees, lenders, and

stockholders.

Production is a vital function.

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.

Strategic Importance of the Production Function

Mass Production– a system for manufacturing

products in large quantities through effective

combinations of employees, with specialized

skills, mechanization, and standardization

Flexible Production– more cost-effective for

producing smaller batches using information

technology, communication, and cooperation

Customer-Driven Production– evaluating

customer demands in order to make the

connection between products manufactured and

products bought

Mass, Flexible, and Customer-Driven Production

Analytic production system reduces a raw material to its component parts in order to extract

one or more marketable products.

Synthetic production system Is the reverse of an analytic system. It combines a number of

raw materials or parts or transforms raw materials to produce

finished products.

Continuous production process generates finished products over a lengthy period of time.

An intermittent production process generates products in short production runs, shutting down

machines frequently or changing their configurations to produce

different products.

Production Processes

Robot- a reprogrammable machine capable of performing a variety of

tasks that require the repeated manipulation of materials and tools.

Computer-Aided Design– allows engineers to design components

as well as entire products on computer screens faster and with fewer

mistakes than they could achieve working with traditional drafting

systems.

Computer-Aided Manufacturing- computer tools to analyze CAD

output and enable a manufacturer to analyze the steps that a

machine must take to produce a needed product or part.

Flexible Manufacturing Systems– a production facility that workers

can quickly modify to manufacture different products.

Computer-Integrated Manufacturing– production system in which

computers help workers design products, control machines, handle

materials, and control the production function in an integrated fashion.

Technology and the Production Process

The Location Decision

Oversee the work of people and machinery to

convert inputs (materials and resources) into

finished goods and services.

The Job of Production Managers

Choose what goods or services to offer customers.

Convert original product ideas into final specifications.

Design the most efficient facilities to produce those

products.

Planning the Production Process

Planning

the

Production

Process

Selecting

the Most

Appropriate

Layout

Implementing the

Production

Plan

Controlling

the

Production

Process

Process layout groups

machinery and

equipment according to

their functions.

Facilitates production of

a variety of

nonstandard items in

relatively small batches.

Process Layout

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.

Product Layout

A fixed-position layout places the product in one spot,

and workers, materials, and equipment come to it.

Fixed-Position Layout

Customer-oriented layout arranges facilities to

enhance the interactions between customers and a

service.

Customer-Oriented Layout

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, duration of the firm’s

supply needs, and the need for confidentiality.

Selection of Suppliers

Based on comparison of quality, prices,

dependability of delivery, and services offered by

competing companies.

Implementing the Production Plan

Inventory Control

function requiring production and operations managers to

balance the need to keep stock on hand to meet demand

against the costs of carrying inventory

Perpetual inventory

Vendor-managed inventory

Just-in-Time Systems

broad management philosophy that reaches beyond the

narrow activity of inventory control to influence the entire

system of production and operations management.

Materials Requirement Planning

computer-based production planning system that lets a firm

ensure that it has all the parts and materials it needs to

produce its output at the right time and place and in the right

amounts.

Inventory Control

Production control creates a well-defined set of procedures for coordinating people, materials, and machinery to provide maximum production efficiency.

1. Planning

2. Routing

3. Scheduling

4. Dispatching

5. Follow-up

Controlling the Production Process

Gantt Chart

PERT Diagram

A good or service free of deficiencies.

Poor quality can account for 20% loss in revenue.

Benchmarking is the process of analyzing other

firms’ best practices.

Quality control is 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%

of the time, a tiny 3.4 errors per million opportunities.

Importance of Quality

International Organization for Standardization

(ISO)- mission is to promote the development of

standardized products to facilitate trade and

cooperation across national borders.

Representatives from more than 146 nations.

ISO 9000 series of standards sets requirements for

quality processes.

Nearly half a million ISO 9000 certificates have been

awarded to companies around the world.

ISO 14000 series also sets standards for operations

that minimize harm to the environment.

ISO Standards