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Production and Operations Management

Chapter 11

Outline the importance of production and operations management.

Explain the roles of computers and related technologies in production.

Identify the factors involved in a plant location decision.

Explain the major tasks of production and operations managers.

Compare alternative layouts for production facilities.

List the steps in the purchasing process.

Outline the advantages and disadvantages of maintaining large inventories.

Identify the steps in the production control process.

Explain the benefits of quality control.

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Learning

Goals

Production &

Operations

Management

• Production: Application of resources such as people and machinery to convert materials into finished goods and services.

• Production and Operations Management: Managing people and machinery in converting materials and resources into finished goods and services.

Production Systems

• A vital function is necessary for generating money to pay employees, lenders, and stockholders.

• 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, Flexible and

Customer-Driven

Production

• Mass Production – manufacturing products in large amounts through standardization, mechanization and specialized skills.

• Flexible Production – producing smaller batches using information technology, communication and cooperation.

• Customer-Driven Production – evaluating customer demands to link with manufacturer.

Technology and The

Production Process

• Robots – reprogrammable machines capable of performing routine jobs and manipulating material

• Computer-Aided Design and Manufacturing – enables engineers to design parts and buildings on computer screens faster and with fewer mistakes.

• Flexible Manufacturing Systems – a production facility that workers can quickly modify to manufacture different products.

• Computer-Integrated Manufacturing – integrates robots, computers and other technologies to help workers design products, control machines, handle materials, and control the production function.

The Location

Decision

The Job of Production

Managers

Oversee the work of people and machinery to convert inputs (materials and resources) into finished goods and services.

Planning the Production

Process

• Choose what goods or services to offer customers.• Convert original product ideas into final specifications.• Design the most efficient facilities to produce those products.

• 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, 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 – Perpetual inventory – Vendor-managed inventory

Just-in-Time Systems • Improving profits and return on investment by minimizing costs and eliminating waste through cutting inventory on hand.

Materials Requirement Planning

• Computer-based production planning system by which a firm can ensure that it has the correct materials for production.

Inventory Control

Controlling the

Production Process

• Production control creates a well-defined set of procedures for coordinating people, materials, and machinery.

1) Planning

2) Routing

3) Scheduling

4) Dispatching

5) Follow-up

Gantt Chart

PERT Diagram

Dispatching

Manager instructs each department on what work to do and the time allowed for its completion.

Dispatching & Follow-

up

Follow-Up Employees and their supervisors spot problems in the production process and determine needed changes.

• 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