Production and Operations Management

Chapter 10

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

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

Mass, Flexible, and Customer-Driven Production

Flexible Production

Mass, Flexible, and Customer-Driven Production

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.

Petroleum refining breaks down crude oil into several

marketable products, including gasoline, heating oil, and

aviation fuel.

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.

Canon’s assembly line produces a camera by assembling

various parts such as a shutter or a lens cap.

Production Processes

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

The steel industry provides a classic example. Its blast furnaces

never completely shut down except for malfunctions.

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

machines frequently or changing their configurations to produce

different products.

Most services result from intermittent production systems. For

instance, accountants, plumbers, and dentists traditionally have

not attempted to standardize their services because each

service provider confronts different problems that require

individual approaches.

Production Processes

Robot- a reprogrammable machine capable of performing a variety of

tasks that require the repeated manipulation of materials and tools.

Technology and the Production Process

Green Production

Firms are pouring resources into the development of

manufacturing processes that result in a reduction of

waste, energy use, and pollution.

Production & Environment

Green Production: ŠKODA is Investing in a Greener Future

Production & Environment

The Location Decision

• Automobile

assembly plants are

located near major rail

lines.

• Inputs—such as

engines, plastics, and

metal parts—arrive by

rail, and the finished

vehicles are shipped

out by rail.

The Location Decision

• Government incentives

The Location Decision

The Location Decision

• Theme parks

• Shopping malls are often located next to major

streets and freeways in suburban areas, because

most customers arrive by car.

The Location Decision

Oversee the work of people and machinery

to

convert inputs (materials and resources)

into

finished goods and services

What Production Managers Do?

Choose what goods or services to offer customers.

Convert original product ideas into final specifications.

Design the most efficient facilities to produce those products.

Plann the Production Process

Process Layout

groups machinery and

equipment according to

their functions.

Select the Layout

Facilitates production of

a variety of

nonstandard items in

relatively small batches.

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.

Select the Layout

Fixed-position Layout places the product in one

spot, and workers, materials, and equipment come to

it.

Select the Layout

Customer-oriented Layout arranges facilities to

enhance the interactions between customers and a

service.

Select the 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.

Implement the Production Plan

Criteria For Selection of Suppliers

Price

Quality

Reliability

Credit terms

Shipping costs

Implement the Production Plan

• Planning: determines the amount of resources

(including raw materials and other

components) an organization needs to

produce a certain output.

• Routing: determines the sequence of work

throughout the facility and specifies who will

perform each aspect of the work at what

location.

• Scheduling: managers develop timetables that

specify how long each operation in the

production process takes and when workers

should perform it.

Control the Production Process

Gantt Chart

Gantt chart tracks projected and actual work

progress over time.

Gantt Chart

PERT Diagram PERT (program evaluation and review technique) chart seeks to

minimize delays by coordinating all aspects of the production

process.

Critical path: The sequence of operations that requires the longest

time for completion. In this case, the project cannot be completed in

fewer than 17 weeks.

A good or service free of deficiencies.

Quality matters because fixing, replacing, or

redesigning deficient products is costly.

Quality control is measuring goods and services

against established quality standards.

Ensure the Quality

International Organization for Standardization

(ISO)- mission is to promote the development of

standardized products to facilitate trade and

cooperation across national borders.

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.

Ensure the Quality