Chapter Eighteen

1
Chapter Eighteen

• Operations Management

2
Chapter Objectives (1 of 2)

• Describe the role of the transformation process
  in operations management
• Explain what factors determine organizational
  productivity
• Discuss what re-engineering of work processes
  involves
• Describe how adding a manufacturing focus to
  organizational strategy affects an organization
• Identify the four key decisions that provide the
  long-term strategic direction for operations
  planning

3
Chapter Objectives (2 of 2)

• Describe the three decisions that make up
  tactical operations planning
• Identify the three approaches to maintenance
  control
• Explain the contingency factors that affect the
  implementation of TQM
• Discuss the advantages and potential problems of
  just-in-time (JIT) inventory systems
• Explain how flexible manufacturing systems could
  give an organization a competitive advantage
• Describe how speed can be a competitive advantage

4
The Operations System
Inputs
Outputs

• People
• Technology
• Capital
• Equipment
• Material
• Information

• Goods
• Services

Transformation process
Figure 19-1
5
Demings 14 Points for Improving Managements
Productivity

• 1. Plan for the long-term future, not for next
  month or next year.
• 2. Never be complacent concerning the quality of
  your product.
• 3. Establish statistical control over your
  production processes and require your suppliers
  to do so as well.
• 4. Deal with the fewest number of suppliers - the
  best ones, of course.
• 5. Find out whether your problems are confined to
  particular parts of the production process or
  stem from the overall process itself.

Table 19-1a
6
Demings 14 Points for Improving Managements
Productivity

• 6. Train workers for the job that you are asking
  them to perform.
• 7. Raise the quality of your line supervisors.
• 8. Drive out fear.
• 9. Encourage departments to work closely together
  rather than to concentrate on departmental or
  divisional distinctions.
• 10. Do not be sucked into adopting strictly
  numerical goals, including the widely popular
  formula of zero defect.

Table 19-1b
7
Demings 14 Points for Improving Managements
Productivity

• 11. Require your workers to do quality work, not
  just to be at their stations from 9 to 5.
• 12. Train your employees to understand
  statistical methods.
• 13. Train your employees in new skills as the
  need arises.
• 14. Make top managers responsible for
  implementing these principles.

Table 19-1c
8
Characteristics of Services
Intangible
Cant be stored in inventory
Service Organizations
Produce
Services
Involve customer or client in actual production
Figure 19-2
9
Decisions Made in Planning Operations
Strategic Operations Plans
Facilities Location Planning
Facilities Layout Planning
Capacity Planning
Process Planning
What is to be produced?
Which production methods are to be used?
How should equipment and workstations be arranged?
How many are to be produced?
Where are they to be produced?
Aggregate Planning
Tactical Operations Plans
Master Scheduling
Whats the over- all production plan for all
products? (Typically for the year)
Materials Requireemnts Planning
How many units of each product will be
produced? (Typically for the month)
Compre- hensive Operations Plans
What materials are needed to satisfy the master
schedule?
Figure 19-3
10
A Process Layout at a Medical Clinic
Laboratory Tests
Neurology
Obstetrics/Gynecology
Rest Rooms
X-ray
Patient Waiting Area
Reception room
Plastic and Recon- structive Surgery
Pediatrics
Pharmacy
Patient enters clinic
Patient exits clinic
Figure 19-4
11
A Product Layout in an Aluminum Tubing Plant
Raw Alum. Ingot
Receiving Dept.
Casting Dept.
Press Dept.
Tube Dept.
Finishing Dept.
Inspection Dept.
Packing Dept.
Shipping Dept.
Shipped to plant
Ingot accepted
Ingot melted
Metal pressed into large tubes
Large tubes stretched into various dimensions
Finished tubing is cleaned
Finished tubes inspected
Finished tubes packed
Finished tubes shipped to customers
Figure 19-5
12
Developing a Master Schedule from an Aggregate
Plan
From the Aggregate Plan (units per month)
Months
July
August
September
October
November
Heavy-Duty Transmission
100 75 75
125 80 45
120 70 60
130 100 70
120 100 80
Standard Transmission
Economy Transmission
Total
250
250
250
300
300
Master Schedule for Heavy-Duty Transmission
(units)
July
August
Weeks
1
2
3
4
5
6
7
8
1176
0
10
0
15
0
0
20
0
1177
0
10
0
10
0
5
10
0
Heavy-Duty Models
1178
0
5
10
0
0
15
0
10
1179
10
0
5
0
10
15
0
0
1180
15
0
10
0
20
0
0
20
Total 100
Total 125
13
Inventory Cycle with Safety Stock
300 250 200 150 100 50 0
Quantity on Hand (in units)
Reorder point
Safety stock level
4 8 12 16 20 24 28 32 36 40
44 48 52
Time (in weeks)
Figure 19-7
14
Example of an ABC Inventory System
100
90
80
70
A items
60
50
B items
Total Dollar Value ()
40
C items
30
20
10
0
10 20 30 40 50 60 70
80 90 100
Total Number of Items ()
Figure 19-8