Creating Value: Producing Quality Goods and Services

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 1

What Is Production?
Production Operations Management Planning Leading Organizing Controlling

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 2

What Is the Conversion Process?

Inputs
Transformation

Outputs

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 3

Input-Transformation-Output Relationships for Typical Systems

System Hospital Restaurant Automobile Factory College or University Department Store Inputs Patients, medical supplies Hungry customers, food Sheet steel, engine parts High School graduates, books Shoppers, stock of goods

Transformation Components
MDs, nurses, equipment Chef, waitress, environment Tools, equipment, workers Teachers, classrooms Displays, sales clerks

Transformation Function
Health care Well-prepared & well-served food Fabrication & assembly of cars Impart knowledge & skills Attract customers, promote products, fill orders

Typical Desired Output

Healthy individuals Satisfied customers High-quality cars Educated individuals Sales to satisfied customers
Chapter 9 - 4

Prentice Hall, 2007

Excellence in Business, 3e

Challenges of the Service Industry

Customer involvement Delivery timing People-intensive activities Production and location Subjective quality

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 5

Manufacturing Goods
Mass production Mass customization

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 6

Outsourcing the Manufacturing Function

Advantages Capital and resources Economies of scale Disadvantages Job displacement Lost wages
Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 7

Production Process Design

Forecast demand Plan for capacity Choose facility site Design facility layout Schedule work

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 8

The Supply Chain

Suppliers Manufacturers Distributors Retailers

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 9

Forecasting Demand
Customer feedback Market research Sales figures Industry analyses Educated guesses

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 10

Capacity Planning
Level of resources Customer demand

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 11

Facility Location
Land
Construction Labor Local taxes

Energy
Living standards Transportation Raw materials

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 12

Types of Facility Layout

Process Product Cellular Fixed-position

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 13

Process Layout
Made-to-order products Process arrangement Specialized employees Specialized materials

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 14

Product Layout
Mass production of few items Process arrangement Continuous sequence

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 15

Cellular Layout
Mass customization Process arrangement Work centers Teamwork

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 16

Fixed-Position Layout
Immovable product Process arrangement Employee go to the site Materials are brought to the site

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 17

Production Schedule
Scheduling Dispatching Contingencies

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 18

The Gantt Chart

ID Number Task name Start date End date Duration

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 19

Program Evaluation and Review Technique (PERT)

1. Identify activities 2. Determine sequence

3. Establish time frame

4. Diagram activity network 5. Calculate longest completion path

6. Refine timing
Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 20

PERT Time Estimates

Optimistic Pessimistic Most likely Expected

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 21

Industrial Robotics
Precision Diligence Stamina Speed

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 22

Computerized Production
Computer-aided design (CAD) Computer-aided engineering (CAE)

Computer-aided manufacturing (CAM)

Computer-integrated manufacturing (CIM)

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 23

Manufacturing Systems
Traditional
Mass Production Resistant to Change High Set-Up Costs
Prentice Hall, 2007

Flexible
Specialty Operations Conducive to Change Minimal Set-Up Costs
Chapter 9 - 24

Excellence in Business, 3e

Supply Chain Data Interchange

Electronic Data Interchange (EDI) Extensible Markup Language (XML)

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 25

The Production Process

Inventory management Quality assurance

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 26

Supply Chain Coordination

Inventory Purchasing Lead time Inventory control

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 27

Inventory Control
Just-in-time (JIT) Materials requirements planning (MRP)

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 28

Supply Chain Management

Manage risks
Manage relationships

Manage trade-offs

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 29

Maintaining Quality
Quality control Quality assurance

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 30

Total Quality Management

Management commitment to TQM Clear customer focus Employee employment Commitment to continuous improvement Partner with suppliers Meaningful performance measurements
Prentice Hall, 2007 Excellence in Business, 3e Chapter 9 - 31

Six-Sigma Approach
Define the problem Measure performance Analyze root causes Improve the process Control the process

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 32

Global Quality Standards

ISO 9000 ISO 14000

Prentice Hall, 2007

Excellence in Business, 3e

Chapter 9 - 33