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Production and Operations Management
Chapter 10
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 & Operations Management
Production Systems
Production Systems
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.
Strategic Importance of the Production Function
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
Mass, Flexible, and Customer-Driven Production
Flexible Production
Mass, Flexible, and Customer-Driven Production
Customer-Driven Production– evaluating
customer demands in order to make the
connection between products manufactured and
products bought
Mass, Flexible, and Customer-Driven Production
Analytic production system reduces a raw material to its component parts in order to extract
one or more marketable products.
Petroleum refining breaks down crude oil into several
marketable products, including gasoline, heating oil, and
aviation fuel.
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.
Canon’s assembly line produces a camera by assembling
various parts such as a shutter or a lens cap.
Production Processes
Continuous production process generates finished products over a lengthy period of time.
The steel industry provides a classic example. Its blast furnaces
never completely shut down except for malfunctions.
An intermittent production process generates products in short production runs, shutting down
machines frequently or changing their configurations to produce
different products.
Most services result from intermittent production systems. For
instance, accountants, plumbers, and dentists traditionally have
not attempted to standardize their services because each
service provider confronts different problems that require
individual approaches.
Production Processes
Robot- a reprogrammable machine capable of performing a variety of
tasks that require the repeated manipulation of materials and tools.
Technology and the Production Process
Green Production
Firms are pouring resources into the development of
manufacturing processes that result in a reduction of
waste, energy use, and pollution.
Production & Environment
Green Production: ŠKODA is Investing in a Greener Future
Production & Environment
The Location Decision
• Automobile
assembly plants are
located near major rail
lines.
• Inputs—such as
engines, plastics, and
metal parts—arrive by
rail, and the finished
vehicles are shipped
out by rail.
The Location Decision
• Government incentives
The Location Decision
The Location Decision
• Theme parks
• Shopping malls are often located next to major
streets and freeways in suburban areas, because
most customers arrive by car.
The Location Decision
Oversee the work of people and machinery
to
convert inputs (materials and resources)
into
finished goods and services
What Production Managers Do?
Choose what goods or services to offer customers.
Convert original product ideas into final specifications.
Design the most efficient facilities to produce those products.
Plann the Production Process
Process Layout
groups machinery and
equipment according to
their functions.
Select the Layout
Facilitates production of
a variety of
nonstandard items in
relatively small batches.
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.
Select the Layout
Fixed-position Layout places the product in one
spot, and workers, materials, and equipment come to
it.
Select the Layout
Customer-oriented Layout arranges facilities to
enhance the interactions between customers and a
service.
Select the Layout
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.
Implement the Production Plan
Criteria For Selection of Suppliers
Price
Quality
Reliability
Credit terms
Shipping costs
Implement the Production Plan
• Planning: determines the amount of resources
(including raw materials and other
components) an organization needs to
produce a certain output.
• Routing: determines the sequence of work
throughout the facility and specifies who will
perform each aspect of the work at what
location.
• Scheduling: managers develop timetables that
specify how long each operation in the
production process takes and when workers
should perform it.
Control the Production Process
Gantt Chart
Gantt chart tracks projected and actual work
progress over time.
Gantt Chart
PERT Diagram PERT (program evaluation and review technique) chart seeks to
minimize delays by coordinating all aspects of the production
process.
Critical path: The sequence of operations that requires the longest
time for completion. In this case, the project cannot be completed in
fewer than 17 weeks.
A good or service free of deficiencies.
Quality matters because fixing, replacing, or
redesigning deficient products is costly.
Quality control is measuring goods and services
against established quality standards.
Ensure the Quality
International Organization for Standardization
(ISO)- mission is to promote the development of
standardized products to facilitate trade and
cooperation across national borders.
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.
Ensure the Quality