Production and Control

1. Definitions of production, productivity, and quality

2. An understanding of the importance of operations and production strategies, systems, and processes

3. Insights into the role of operations management concepts in the workplace

4. An understanding of how operations control procedures can be used to control production

5. Insights into operations control tools and how they evolve into a continual improvement approach to production management and control

Defining Production

Productivity

Productivity = Outputs / Inputs

Traditional strategies for increasing productivity by improving:

1. Effectiveness of the organizational workforce through training

2. Production process through automation

3. Product design to make products easier to assemble

4. Production facility by purchasing more modern equipment

5. Quality of workers hired to fill open positions

Defining Operations Management

Performance of managerial activities that involve:

Selecting

Designing

Operating

Controlling

Updating production systems

Operations Management Considerations

Involves managers

Takes place within the context of objectives and policies

Standards for effectiveness and efficiency

Operations Management Considerations (continued)

• Capacity Strategy

• Five Steps in Capacity Decisions

1. Measure the capacity of currently available facilities

2. Estimate future capacity needs on the 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

• Location Strategy

• Factors in a Good LocationNearness to market and distribution centersNearness to vendors and resourcesRequirements of federal, state, and local governmentsThe character of direct competitionThe degree of interaction with the rest of the corporationThe quality and quantity of labor poolsThe environmental attractiveness of the areaTaxes and financing requirementsExisting and potential transportationThe quality of utilities and services

• Product Strategy

• Process Strategy

• Types of Processes1) Continuous process2) Repetitive process3) Job-shop process

• Layout Strategy1. Product layout2. Process (functional) layout3. Fixed-position layout

• Human Resources Strategy

Human resource imperatives:

1. Optimize individual, group and organizational effectiveness

2. Enhance the quality of organizational life

Operational Tools in Human Resources Strategy

Labor force planning

Job design

Work methods analysis

Motion-study techniques

Work measurement methods

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 purchased

4. Strong management commitment

Maintenance Control

Pure-preventive maintenance policy

Pure-breakdown (repair) policy

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

Budgetary Control• Potential Pitfalls of Budgets

1. Placing too much emphasis on relatively insignificant expenses

2. Increasing budgeted expenses without adequate information

3. Ignoring the fact that budgets must be changed periodically

• Human Relations Considerations in Using Budgets

• Reducing Human Relations Problems

Ratio Analysis1. Liquidity ratios2. Leverage ratios3. Activity ratios4. Profitability ratios

• Using Ratios to Control OrganizationsEvaluate all ratios simultaneouslyCompare computed values with industry averagesIncorporate trend analysis

Materials Control• Procurement of Materials• Receiving, Shipping and Trafficking• Inventory and Shop-Floor Control

Using Control Tools to Control Organizations

Inspection

• To Inspect or Not to Inspect

1. Actual vs. Estimated weekly labor costs

2. Actual vs. Estimated dollars spent

Management by Exception

• Establishing Rules

Management by Objectives

Break-Even Analysis

• Basic Ingredients of Break-Even Analysis

1. Fixed costs

2. Variable costs

3. Total costs

4. Total revenue

5. Profits

6. Loss

7. Break-even point

Break-Even Analysis (continued)

• 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

Other Broad Operations Control Tools

• Decision Tree Analysis

• Process Control

• Value Analysis

• Computer-Aided Design

• Computer-Aided Manufacturing

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Production and Control

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