PRODUCTION
AND
OPERATIONS
MANAGEMENT
OBJECTIVE: DESCRIBE OPERATIONS MANAGEMENT PLANNING
ISSUES INCLUDING FACILITY LOCATION, FACILITY LAYOUT,
MATERIALS REQUIREMENT PLANNING , PURCHASING , JUST-INTIME INVENTORY CONTROL, AND QUALITY CONTROL.
FACILITY LOCATION
The process of selecting
a geographic location for
a company’s operations.
• Rising numbers of Internet businesses means
brick-and-mortar retailers must find great
locations.
FACILITY LOCATION
• Inexpensive labor
• Labor with the right kind of skills
• Availability of natural resources
• Access to transportation that can reduce time to market
• Proximity to suppliers
• Proximity to customers
• Tax rates
• Quality of life for employees
• Need to train or retrain the workforce
FACILITY LOCATION
• Information technology gives firms increased
flexibility in terms of location.
• Telecommuting -- Working from home via
computer.
9-4
The physical arrangement of resources, including
people, to most efficiently produce goods and provide
services.
• Service: Help customers find products
• Manufacturing: Improve efficiency
FACILITY LAYOUT
ASSEMBLY LINE LAYOUT
WORKERS DO ONLY A FEW TASKS AT A TIME.
9-6
MODULAR LAYOUT
TEAMS OF WORKERS PRODUCE MORE
COMPLEX UNITS OF THE FINAL PRODUCT.
9-7
PROCESS LAYOUT
SIMILAR EQUIPMENT AND FUNCTIONS ARE
GROUPED TOGETHER.
9-8
FIXED-POSITION LAYOUT
ALLOWS WORKERS TO CONGREGATE AROUND
THE PRODUCT.
MRP AND ERP
• Materials Requirement Planning (MRP) -- A
computer-based operations management system that
uses sales forecasts to make sure parts and
materials are available when needed.
• Enterprise Resource Planning (ERP) -- A newer
version of MRP, combines computerized functions
into a single integrated software program using a
single database.
9-10
PURCHASING
• Purchasing -- The function
that searches for high-quality
material resources, finds the
best suppliers and negotiates
the best price for goods and
services.
9-11
INVENTORY CONTROL
• Just-in-Time (JIT)
Inventory Control -- The
production process in which a
minimum of inventory is kept
and parts, supplies and other
needs are delivered just in
time to go on the assembly
line.
9-12
QUALITY CONTROL
Quality control done by
quality control
department by testing
products after
production.
• Used more resources
than necessary
• Incurred higher costs
to correct problems
• Resulted in
dissatisfied customers
Quality -- Consistently
producing what the
customer wants while
reducing errors before
and after delivery.
• Never ending
process
• Continuous
improvement
• Measuring quality
along the production
process reduces the
need for quality
control at the end.
QUALITY CONTROL
• Six Sigma Quality -- A
quality measure that allows
only 3.4 defects per million
opportunities.
• Statistical Quality Control -- A process used to
continually monitor all phases of the production
process.
• Statistical Process Control -- A process of
testing statistical samples of product components
at each stage of production.
THE BALDRIGE AWARDS
• Quality in key areas:
- Leadership
- Strategic planning
- Customer focus
- Information analysis
- Human Resources focus
- Process management
- Business results
QUALITY CONTROL
The International Organization
for Standardization (ISO)
• ISO 9000 -- The common name given to quality
management and assurance standards.
• ISO 14000 -- A collection of the best practices for
managing an organization’s impact on the
environment.