Chapter
10
Production and Operations
Management
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Learning Objectives
1
Explain the strategic importance of the
production.
2
Identify and describe the production
processes.
3 Explain the role of technology in the
production process.
4 Identify the factors involved in a location
decision.
5
Explain the job of production
managers.
6
Discuss controlling the production
process.
7
Determine the importance of quality.
Production & Operations
Management
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 Systems
Strategic Importance of the
Production Function
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.
Mass, Flexible, and
Customer-Driven Production
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
Customer-Driven Production– evaluating
customer demands in order to make the
connection between products manufactured and
products bought
Production Processes
Analytic production system
reduces a raw material to its component parts in order to extract
one or more marketable products.
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.
Continuous production process
generates finished products over a lengthy period of time.
An intermittent production process
generates products in short production runs, shutting down
machines frequently or changing their configurations to produce
different products.
Technology and the
Production Process
Robot- a reprogrammable machine capable of performing a variety of
tasks that require the repeated manipulation of materials and tools.
Computer-Aided Design– allows engineers to design components
as well as entire products on computer screens faster and with fewer
mistakes than they could achieve working with traditional drafting
systems.
Computer-Aided Manufacturing- computer tools to analyze CAD
output and enable a manufacturer to analyze the steps that a
machine must take to produce a needed product or part.
Flexible Manufacturing Systems– a production facility that workers
can quickly modify to manufacture different products.
Computer-Integrated Manufacturing– production system in which
computers help workers design products, control machines, handle
materials, and control the production function in an integrated fashion.
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.
Planning
the
Production
Process
Selecting
the Most
Appropriate
Layout
Implementing
the
Production
Plan
Controlling
the
Production
Process
Process Layout
Process layout groups
machinery and
equipment according to
their functions.
Facilitates production of
a variety of
nonstandard items in
relatively small batches.
Product 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.
Fixed-Position Layout
A fixed-position layout places the product in one spot,
and workers, materials, and equipment come to it.
Customer-Oriented Layout
Customer-oriented layout arranges facilities to
enhance the interactions between customers and a
service.
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, duration of the firm’s
supply needs, and the need for confidentiality.
Selection of Suppliers
Based on comparison of quality, prices,
dependability of delivery, and services offered by
competing companies.
Inventory Control
Inventory Control
function requiring production and operations managers to
balance the need to keep stock on hand to meet demand
against the costs of carrying inventory
Perpetual inventory
Vendor-managed inventory
Just-in-Time Systems
broad management philosophy that reaches beyond the
narrow activity of inventory control to influence the entire
system of production and operations management.
Materials Requirement Planning
computer-based production planning system that lets a firm
ensure that it has all the parts and materials it needs to
produce its output at the right time and place and in the right
amounts.
Controlling the Production
Process
Production control creates a well-defined set
of procedures for coordinating people,
materials, and machinery to provide maximum
production efficiency.
1. Planning
2. Routing
3. Scheduling
4. Dispatching
5. Follow-up
Gantt Chart
PERT Diagram
Importance of Quality
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.
ISO Standards
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.