Production and Operations Management

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Chapter 11 Production and Operations Management
Learning Goals
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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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.
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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.
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STRATEGIC IMPORTANCE OF THE PRODUCTION
FUNCTION  A vital function necessary for
generating money to pay employees, lenders, and
stockholders.  Effective production and
operations management can Lower a firms
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.
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Mass Production  A system for manufacturing
products in large amounts through effective
combinations of employees with specialized
skills, mechanization, and standardization. Assemb
ly line Manufacturing technique that carries the
product on a conveyor system past several
workstations where workers perform specialized
tasks.  Applied by Henry Ford to improve the
efficiency of automobile manufacturing.  Before
assembly line, produced one car per worker per
12-hour workday.  After assembly line, produced
eight cars per worker per 12-hour
workday.  Efficient method for making mass
quantities of similar items. Not flexible.
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Flexible Production  Produces smaller batches of
goods cost-effectively with information
technology. Information technology to share
the details of customer orders.  Programmable
equipment to fulfill the orders.  Skilled
people to carry out whatever tasks are needed to
fill a particular order. Customer-Driven
Production  Evaluates customer demands to link
what a manufacturer makes with what customers
want to buy.  Link computers in factories to
retail scanners to create short-term forecasts
and design production schedules.  Make product
only after customer orders it.  Example Dell
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PRODUCTION PROCESSES  Analytic production system
Reduces a raw material to its component parts in
order to extract one or more marketable products.
 Example Petroleum refining Synthetic
production system Combines a number of raw
materials or parts or transforms raw materials to
produce finished products.  Example Dells
assembly line Continuous production process
Generates finished products over a lengthy period
of time.  Example Steel industry
Intermittent production process Generates
products in short production runs, shutting down
machines frequently or changing their
configurations to produce different products.
 Example Most services
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TECHNOLOGY AND THE PRODUCTION PROCESS
Technology has dramatically changed
production.  Boosts efficiency  Enhances
flexibility Robots Robot Reprogrammable machine
capable of performing numerous tasks that require
manipulation of materials and tools.
Pick-and-place robot Moves in only two or three
directions as it picks up something from one spot
and places it in another. Field robot Use
vision systems, infrared sensors, and
othertechnologies to move parts or products from
one place to another.
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Computer-Aided Design and Manufacturing Computer-
aided design (CAD) System for interactions
between a designer and a computer to create a
product, facility, or part that meets
predetermined specifications. Computer-aided
manufacturing (CAM) Electronic tools to analyze
CAD output and determine necessary steps to
implement the design, followed by electronic
transmission of instructions to guide the
activities of production equipment. Flexible
Manufacturing Systems A production facility
that workers can quickly modify.
Computer-controlled machining centers produce
metal parts.
Remote-controlled carts deliver materials.
Robots handle the parts.
All linked by electronic controls.
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Computer-Integrated Manufacturing A production
system in which computers help workers design
products, control machines, handle materials, and
control the production function in an integrated
fashion Key is a centralized computer system
running software that integrates and controls
separate processes and functions.
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THE LOCATION DECISION
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THE JOB OF PRODUCTION MANAGERS Oversee the work
of people and machinery to convert inputs
(materials and resources) into finished goods and
services. Four main tasks
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Planning the Production Process Begins by
choosing what goods or services to offer
customers.  Convert original product ideas into
final specifications. Design the most efficient
facilities to produce those products.
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Determining the Facility Layout Common layout
designs  Process layout groups machinery and
equipment according to their functions.  Facili
tates production of a variety of nonstandard
items in relatively small batches.
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Determining the Facility Layout Common layout
designs  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.
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Determining the Facility Layout Common layout
designs  A fixed-position layout places the
product in one spot, and workers, materials, and
equipment come to it.
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Determining the Facility Layout Common layout
designs  Customer-oriented layout arranges
facilities to enhance the interactions between
customers and a service.
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Implementing the Production Plan 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.
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Inventory Control  Perpetual inventory Systems
continuously monitor the amounts and locations of
stocks.   Vendor-managed inventory Inventory
control functions handed over to
suppliers. Just-in-Time Systems  Management
philosophy aimed at improving profits and return
on investment by minimizing costs and eliminating
waste through cut- ting inventory on
hand. Materials Requirement Planning
 Computer-based production planning system by
which a firm can ensure that it has needed parts
and materials available at the right time and
place in the correct amounts.
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Controlling the Production Process Production
control Creates a well-defined set of procedures
for coordinating people, materials, and machinery
to provide maximum production efficiency. Producti
on Planning Determining the amount of
resources (including raw materials and other
components) an organization needs to produce a
certain output. Routing Determining the
sequence of work throughout the facility and
specifying who will perform each aspect of the
work at what location.
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Scheduling Scheduling Development of timetables
that specify how long each operation in the
production process takes and when workers should
perform it. Useful tools for scheduling include
a Gantt chart and a PERT (Program Evaluation and
Review Technique) chart.
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Dispatching Manager instructs each department
on what work to do and the time allowed for its
completion. Follow-Up Employees and their
supervisors spot problems in the production
process and determine needed changes.
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IMPORTANCE OF QUALITY Best defined as a good
or service free of deficiencies.  In some
companies, costs of poor quality amount to 20
percent of revenue. Benchmarking Process of
determining other companies standards and best
practices. Quality Control Quality control
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 percent
of the time, a tiny 3.4 errors per million
opportunities.
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ISO Standards International Organization for
Standardization (ISO) Organization whose mission
is to promote the development of standardized
products to facilitate trade and cooperation
across national borders. Includes
representatives from more than 146 nations.
 ISO 9000 family series of standards sets
requirements for quality processes.  Nearly
half a million ISO 9000 family certificates have
been awarded to companies around the world.
 ISO 14000 series sets standards for operations
that minimize harm to the environment.