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Operations Management: Location Strategies
Operations Management: Location Strategies
Management
Location Strategies
Chapter 8
Learning Objectives
When you complete this chapter, you should be
able to :
Identify or Define:
– Objective of location strategy
– International location issues
– Clustering
– Geographic Information Systems
Describe or explain:
– Three methods of solving the location problem
• Factor-rating method
• Locational breakeven analysis
• Center -of-gravity method
– Describe the factors affecting location decisions
Federal Express
• Stresses “hub” concept
• Advantages:
– enables service to more locations with fewer
aircraft
– enables matching of aircraft flights with package
loads
– reduces mishandling and delay in transit because
there is total control of packages from pickup to
delivery
Objective of Location Strategy
Site
© 1995
Corel Corp. © 1995 Corel Corp.
© 1995
Corel Corp.
Factors That Affect Location Decisions
Factors Affecting Country
• Government rules, attitudes,
political risk, incentives
• Culture & economy
• Market location
• Labor availability, attitudes,
productivity, and cost
• Availability of supplies,
communications, energy
• Exchange rates and currency risks
Region Location Decisions
• Corporate desires
• Attractiveness of region (culture,
taxes, climate, etc.)
• Labor, availability, costs, attitudes
towards unions
• Costs and availability of utilities
• Environmental regulations of state
and town
• Government incentives
• Proximity to raw materials &
customers
• Land/construction costs
© 1995 Corel Corp.
Factors Affecting Site
• Site size and cost
• Air, rail, highway,
and waterway
systems
• Zoning restrictions
• Nearness of
services/supplies
needed
• Environmental
impact issues
© 1995 Corel Corp.
Location Decision Example
BMW decided to
build its first major
manufacturing plant
outside Germany in
Spartanburg, South
Carolina.
Layout Strategy
Chapter 9
Learning Objectives
When you complete this chapter, you should be
able to :
Identify or Define:
– Fixed-position layout
– Process-oriented layout
– Work cells
– Focused work center
– Office layout
– Retail layout
– Warehouse layout
– Product-oriented layout
– Assembly-line factory
Learning Objectives
When you complete this chapter, you
should be able to :
Describe or explain:
– How to achieve a good layout for the process
facility
– How to balance production flow in a
repetitive or product-oriented facility
McDonald’s - New Kitchen Layout
– No food prepared ahead except patty
– Elimination of some steps, shortening of others
– New bun toasting machine (11 seconds vs 30 seconds)
– Repositioning condiment containers (one motion,
not two)
– Sandwiches assembled in order
– Production levels controlled by computer
– Discard only meat when sandwiches do not sell fast
enough
– Savings of $100,000,000 per year in food costs
Innovation at McDonald’s
• Indoor seating (1950’s)
• Drive-through window (1970s)
• Adding breakfast to the menu (1980s)
• Adding play areas (1990s)
Service Material
Areas Attributes
Layout
Work
Warehousing Strategy
Cell
Material
Safety
Flow
Operations
Management
Human Resources and
Job Design
Chapter 10
Learning Objectives
When you complete this chapter, you should be
able to :
Identify or Define:
– Job design
– Job specialization
– Job expansion
– Tools of methods analysis
– Ergonomics
– Labor standards
– Andon
Learning Objectives - Continued
When you complete this chapter, you
should be able to :
Describe or explain:
– Requirements of good job design
– The visual workplace
Southwest Airlines
Job Labor
Design Standards
Productivity in Relation to
Annual Turnover Rate
>20% $120,000
16-20% $125,000
11-15% $130,000
6-10% $150,000
3-5% $153,000
<3% $200,000
Job Design
• Specifying the tasks that make up
a job for an individual or group
• Involves determining
– What is to be done (i.e., responses)
– How it is to be done (i.e., tools etc.)
– Why it is to be done (i.e., purpose)
• Results in job description
– Shows nature of job in task-related behaviors
Components of Job Design
• Job specialization
• Job expansion – enrichment-enlargement
• Psychological components
• Self-directed teams
• Motivation and incentive systems
• Ergonomics and work methods
• Praise?
Job Expansion
• Process of adding more variety to jobs
• Intended to reduce boredom associated with
labor specialization
• Methods
– Job enlargement
– Job enrichment
– Job rotation
– Employee empowerment
Job Rotation
Pediatrics
Maternity
© 1995
Corel Corp.
© 1995 Corel
Corp.
© 1995
Geriatrics
Corel
Corp.
Employee Empowerment
Employee Empowerment
Decision-Making
Control
Planning
Psychological Components of
Job Design
• Individuals have values, attitudes,
and emotions that affect job results
– Example: Work is a social experience
that affects belonging needs
• Effective worker behavior comes mostly from
within the individual
– Scientific management argued for external
financial rewards
• First examined in ‘Hawthorne studies’
Self-Directed Teams
• Group of empowered individuals working
together for a common goal
• May be organized for short-term or
long-term objectives
• Reasons for effectiveness
– Provide employee empowerment
– Provide core job characteristics
– Meet psychological needs (e.g., belonging)
Motivation
• Worker performance depends on
– Motivation
– Ability
– Work environment
• Motivation is the set of forces that compel
behavior
• Money may serve as a psychological &
financial motivator
Motivation and Money
• Taylor’s scientific management (1911)
– Workers are motivated mainly by money
– Suggested piece-rate system
• Maslow’s theory (1943)
– People are motivated by hierarchy of needs, which
includes money
• Herzberg (1959)
– Money either dissatisfies or is neutral in its effect
Maslow’s Hierarchy of Needs
Self-Actualization
Use of abilities
Self-fulfillment
Ego
Self Respect
Social
Group Interaction
Job Status
Safety
Physical Safety
Job Security
Physiology
Food
Shelter
Ergonomics and Work Methods
• Worker performance depends on
– Motivation
– Ability
– Work environment
• Foundation laid by Frederick Taylor
– Match employees to task
– Develop work methods
– Establish work standards
Ergonomics
• Study of work
• Also called ‘human factors’
• Involves human-machine interface
• Examples
– Mouse
– Keyboard
What is Work Measurement?