Chapter 17 ©2001 South-Western College Publishing Pamela S. Lewis Stephen H. Goodman Patricia M. Fandt Slides Prepared by Bruce R. Barringer University

Chapter 17Chapter 17

©2001 South-Western College Publishing©2001 South-Western College Publishing©2001 South-Western College Publishing©2001 South-Western College Publishing

Pamela S. LewisPamela S. LewisStephen H. GoodmanStephen H. Goodman

Patricia M. FandtPatricia M. Fandt

Slides Prepared bySlides Prepared byBruce R. BarringerBruce R. Barringer

University of Central FloridaUniversity of Central Florida

Pamela S. LewisPamela S. LewisStephen H. GoodmanStephen H. Goodman

Patricia M. FandtPatricia M. Fandt

Slides Prepared bySlides Prepared byBruce R. BarringerBruce R. Barringer

University of Central FloridaUniversity of Central Florida

Productivity and Quality in Operations

Productivity and Quality in Operations

Transparency 17-2Transparency 17-2© 2001 South-Western Publishing© 2001 South-Western Publishing

Learning ObjectivesSlide 1 of 4


1.Identify the major differences between manufacturing and service organizations.

2.Describe the volume/variety continuum for identifying different operating system configurations and identify the different types of manufacturing and service organizations that might exist, as well as their locations on the volume/variety continuum.




3.Identify the two broad categories of decision-making areas within operating systems, and describe some of the important decisions in each category.

4.Define the concept of productivity, and identify the three approaches to improving productivity.




5.Provide definitions of quality from both a consumer perspective and a producer perspective.

6.Identify factors that can be used to assess the quality of products and services.

7.Describe the four categories of quality-related costs.




8.Identify the various areas of concentration and commitment for a program of total quality management.

9.Describe the major contributions of the most prominent contemporary quality philosophers.


What is Operations Management?

What is Operations Management?

Operations management is concerned with the design, planning, and control of the factors

that enable us to provide the product or service outputs of the organization.


Importance of Making the Right Decisions

Importance of Making the Right Decisions

• Decision Making is Critical to Operations Management– Operational managers must make decisions to

ensure that the firm’s product or service output happens:

• In the amount demanded.

• At the right time.

• With the appropriate quality level.

• In a manner that is compatible with the organization's goals.


Manufacturing vs. Service Operating Systems

Manufacturing vs. Service Operating Systems

Distinctive characteristics of manufacturing vs. service

Manufacturing Service

Output often lacks physical qualities

Cannot stockpile inventories of finished products

Production and consumption usually is simultaneous

Quality is more difficult to access

Output is a physical product

Can stockpile inventories of finished products

Production and consumption is not simultaneous

Quality is relatively easy to access


Structural Differences Among Operating Systems

Structural Differences Among Operating Systems

• Volume/Variety Continuum– Individual operating systems can be categorized

along a volume/variety continuum, as illustrated in the next slide.


Classification Scheme for Different Operating Systems

Classification Scheme for Different Operating Systems

Low variety/High volume (Specific purpose)

High variety/Low volume (Flexible purpose)

Product orientation

Manufacturing:

- Repetitive, assembly line

- Continuous-flow systems

Service:

- Standard service systems

Process orientation

Manufacturing:

- Job-shop production system

- Project systems

Service:

- Custom service systems

Volume/variety continuumVolume/variety continuum


Types of Manufacturing Systems Slide 1 of 2


• Repetitive, Assembly Line, or Mass- Production Systems– Produces a high volume of discrete items.

• Continuous-Flow Production System– Produces high volume of a continuous product

or nondiscrete item.

• Job-Shop Production System– Produces small quantities of a wide variety of

specialized items.




• Project Production System– Produces large scale, unique items.


Types of Service SystemsTypes of Service Systems

• Standard Service Systems– Service systems (like a college dormitory

cafeteria line) that are “assembly line” in nature.

• Custom Service Systems– Service systems that are designed to provide

different services to clients that have different needs.


Operations Management Decision Areas

Operations Management Decision Areas

To operate any business organization, a number of decisions must be made. Based

upon the time frame involved, these decisions can be conveniently categorized as long-term

system design decisions or as short-term operating and control decisions.


Long-Term System Design Decisions Slide 1 of 4


• Choice of a Product or Service

• Product or Service Design

• System Capacity

• Process Selection

• Facility Location




• Issues Pertaining to Facility Layout– Process layout

• A configuration flexible enough to accommodate a wide diversity of products or customers.

– Product layout• A configuration set for a specific purpose, with all

product or service demands essentially identical.




• Issues Pertaining to Facility Layout (cont.)– Hybrid layout

• A configuration containing some degree of flexibility, lying between the extremes of process and product layouts.

– Fixed position layout• A configuration used for large or bulky items that

remain stationary in the manufacturing process.


Long-Term System Design Decisions: Slide 4 of 4

Long-Term System Design Decisions: Slide 4 of 4

Concept development

Preliminarydesign

Make versusbuy decision

Transformationprocess design

Seek suppliers

Steps in Product Design


Short-Term Operating and Control Decisions

Slide 1 of 4


Slide 1 of 4

• Aggregate Planning– Link between the more general business

planning activities and the more specific master planning activities.

• Master Production Schedule– A detailed statement of projected production

quantities for each item in each time period.



Slide 2 of 4


Slide 2 of 4

• Inventory Management– One of the most studied of the short-term

decisions deals with the control of inventories.– Items in inventory may exist in any of four

forms:• Raw materials, work-in process, finished

goods, supplies.



Slide 3 of 4


Slide 3 of 4

• Materials Requirements Planning– Methodology that uses the production schedule

for the finished products to derive demand and production schedules for component items that make up the final product.

• Just-in-Time Inventory Management– A philosophy that advocates eliminating waste,

solving problems, and striving for continual improvement in operations.



Slide 4 of 4


Slide 4 of 4

• Supply Chain Management– Management and control of the sequence of

suppliers, warehouses, operations, and retail outlets for an organization.


The Role of Productivity and Quality in Operations

The Role of Productivity and Quality in Operations

• Productivity– A measure of the efficiency with which a firm

transforms inputs into outputs, calculated as output divided by input.

– In the broadest sense, productivity is defined as follows:

Productivity = system outputs

system inputs


Improving ProductivityImproving Productivity

Productivity Improvement Through Productivity Improvement Through TechnologyTechnology

Productivity Improvement Through Productivity Improvement Through TechnologyTechnology

Productivity Improvement Through Productivity Improvement Through a Diverse Work Forcea Diverse Work Force

Productivity Improvement Through Productivity Improvement Through a Diverse Work Forcea Diverse Work Force

Productivity Improvement Through Productivity Improvement Through DesignDesign

Productivity Improvement Through Productivity Improvement Through DesignDesign


Fundamentals of Quality Slide 1 of 3


• Consumer Perspective– Quality can be defined as the degree to which

the product or service meets the expectations of the customer.

• Producer Perspective– Quality can be defined as the degree to which

the product or service conforms to design specifications.




• Quality Control (QC)– Focuses on the actual measurement of output to

see if specifications have been met.

• Quality Assurance (QA)– Focuses on any activity that influences the

maintenance of quality at the desired level.




• Total Quality Management (TQM)– A systematic approach for enhancing products,

services, processes, and operational quality control.


Factors for Assessing QualityFactors for Assessing Quality

• Product Factors– Aesthetics, features, performance, reliability,

serviceability, durability, conformance, and perceived quality.

• Service Factors– Responsiveness, reliability, assurance,

empathy, and tangibles.


Cost of QualityCost of Quality

• Prevention Costs

• Appraisal Costs

• Internal-Failure Costs

• External-Failure Costs


TQM as a Tool for Global Competitiveness

Slide 1 of 4


Slide 1 of 4

• The Emphasis on Quality is Crucial for Two Reasons:– Customers are becoming increasingly

conscious of quality in their choice of products and services.

– Increased quality leads to increased productivity and its associated benefits.



Slide 2 of 4


Slide 2 of 4

• Customer-Driven Standards– External customer

• User of an item who is not a part of the organization that supplies the item.

– Internal customer• User of an item who is a member of, or employee

of, the organization that supplies the item.



Slide 3 of 4


Slide 3 of 4

• Management and Labor Commitment

• Organization and Coordination of Effects– Benchmarking

• The process of comparing one’s own products, services, or processes against those of industry leaders for the purpose of improvement.

– Kaizen• Japanese term referring to the total quality

management principle of continuous improvement.



Slide 4 of 4


Slide 4 of 4

• Employee Participation– Quality Circle

• A work team that meets regularly to identify, analyze, and solve problems related to its work area.

– Special-Purpose Team• A temporary team formed to solve a special or

nonrecurring problem.


Prominent Quality Management Philosophers

Slide 1 of 2


Slide 1 of 2

• W. Edwards Deming– Perhaps the most prominent quality philosopher,

he devised a 14-point plan to summarize his philosophy on quality improvement.

• Joseph Juran– Observed that over 80 percent of quality defects

are caused by factors controllable by management.– Developed a trilogy of planning, control, and

implementation.



Slide 2 of 2


Slide 2 of 2

• Others– Armand Feigenbaum

• Introduced the concept of total quality control.

– Kaoru Ishikawa• Introduced quality control circles.

– Philip Crosby• Introduced the philosophy that “quality is

free.”


Concerning Operations Management, Tomorrow’s Managers

Must: Slide 1 of 2


Must: Slide 1 of 2

• Be prepared to make the tough decisions that commit to a long-term design for the operating system.

• Strive for perfection in making the recurring short-term operating and control decisions.

• Focus on achieving continuous improvement as these operating and control decisions are made repeatedly throughout the life of the organization.



Must: Slide 2 of 2


Must: Slide 2 of 2

• Be aware of the importance of productivity to organizational success, and understand the ways in which productivity can be improved.

• Recognize the links between productivity and quality.

• Focus on improving the quality of the product or service provided.

Documents

Chapter 17 ©2001 South-Western College Publishing Pamela S. Lewis Stephen H. Goodman Patricia M. Fandt Slides Prepared by Bruce R. Barringer University