Copyright © 2004 South-Western. All rights reserved.9–1 Learning Goals Key resources used for...

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.


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)


Resources Used in Resources Used in ProductionProduction

Exhibit 9.1


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


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


Factors Affecting Design and Factors Affecting Design and LayoutLayout

•Site characteristics– Cost

•Production process– Product layout– Fixed-position layout – Flexible manufacturing


Production ControlProduction Control

•Purchasing materials• Inventory control•Routing•Scheduling•Quality control


Effects of DisintegrationEffects of Disintegration

Exhibit 9.3


Inventory ControlInventory Control

•Minimizes costs by: Just-in-Time (JIT) inventory Materials requirements planning (MRP)

– Controlling work-in-process and finished goods inventories.


Illustration of IBM’s Efforts Illustration of IBM’s Efforts to Minimize Inventoryto Minimize Inventory

Exhibit 9.4


Routing and SchedulingRouting and Scheduling

•Routing•Scheduling•Gantt chart .•Program evaluation and review technique (PERT)

Critical path


Example of a Gantt ChartExample of a Gantt Chart

Exhibit 9.5


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


Quality ControlQuality Control

•Quality control– A process of determining whether product

quality meets the desired quality level.

•Total quality management (TQM)


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)


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.


Relationship Relationship between between

Production Production Volume and Volume and

CostsCosts

Exhibit 9.9b


Relationship between Volume Relationship between Volume and Profitabilityand Profitability

Exhibit 9.10a


Improving Production Improving Production EfficiencyEfficiency

•Bench marking•Restructuring•Reengineering


QuizQuiz


Next TimeNext Time

•Read chapter 4• In text study guide•Rough Drafts due at BEGINNING of class (10% off if late – even 1 minute…)

•Evaluations due (include yourself and all group members)

Copyright © 2004 South-Western. All rights reserved.9–1 Learning Goals Key resources used for...

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