Professional Documents
Culture Documents
Management
James Kaconco
0772 653191
Chapter 1 Objectives
• By end of the chapter students should be in position to:
1. Define Operations (Production) activity and define Operations
(Production) Management
2. Explain the Productive system elements
a. List and explain inputs to a productive system
b. List and explain common transformation processes
c. List and explain common outputs of a productive system
3. Explain the common production environments
4. Explain roles and objectives of production / Operations management
5. Explain the responsibilities of Production / Operations Managers
6. Explain the 10 key decision areas in Production / Operations
Management
7. Explain the challenges and new trends in production / operations
management
Definitions
• Production / Operation:
– The part of a business organization responsible for producing goods or
services; transforms inputs into outputs that are of greater value
Can be stored
ALUMINIUM SMELTING Production precedes
consumption
SPECIALIST MACHINE TOOL
Low customer
contact
MANUFACTURER
Can be transported
Quality is evident
RESTAURANT
COMPUTER SYSTEMS
SERVICES
PSYCHOTHERAPY CLINIC
CONSULTANCY
MANAGEMENT
Intangible
Cannot be stored
Production and
consumption are
simultaneous
High customer contact
Cannot be transported
Quality difficult to judge
PURE SERVICES
Source: Slack, 2001
Production / Operations Management Control
• Control is all about comparing actual against set goals or standards, and involves
1.Determining goals or standards to be achieved
2.Measuring actual performance and comparing to set goals or standards
3.Corrective action
• Production / Operations Control is a mechanism to monitor the execution of the production /
operations plans, and then provide feedback.
Feedback measurements taken at various points in the production or operations system or
process
Control is performed at key points (areas) since it is costly
Control is exercised at the input, transformation and output stages
Control is achieved through use of:
•Behavioral Models: Help managers in knowing how to deal with staff
•Mathematical models: Tools used for decision making in production / operations management
• The factors that affect execution or achievement of production or operations goals are:
1.Non-availability of materials (due to shortage, etc.);
2.Plant, equipment and machine breakdown;
3.Changes in demand and rush orders;
4.Absenteeism of workers; and
5.Lack of coordination and communication between various functional areas of business.
Product and Service Productive Systems:
Similarities
1. All use technology
2. Both have quality, productivity, & response
issues
3. All must forecast demand
4. Each will have capacity, layout, and location
issues
5. All have customers, suppliers, scheduling and
staffing issues
Product and Service Productive Systems:
Differences
• Make-to-order
– Means that the manufacturer does not start to manufacture
the product until a customer order is received. Sometimes this
strategy requires design engineering and is then called
engineer-to-order. In this case, the cumulative lead time is
increased by the time needed to design the product.
– Forecasts may be used to plan for predictable raw materials
with long lead times and the capacity that will be needed.
Detailed materials planning and production are performed after
receiving an order.
– Management concern is the due date or delivery date; and
volume of the common components to keep in stock.
Production Environments Cont’
• Assemble-to-order
– Means that the product is made from standard components
that the manufacturer can inventory and assemble according
to a customer order. The subassemblies or components are
planned and possibly stocked in anticipation of customer
order.
– Assemble to order is useful where a large number of end
products can be assembled from common components.
– Management concern is the accuracy of the forecast in terms
of quantity and timing of the common components; as
forecasts below or above demand have serious consequences
to the firm.
Functions and Responsibility of
Production / Operations Management
Controlling
– Inventory
Planning – Quality
– Capacity, utilization
–
– Costs
Location
– Choosing products or services
Organization
– Make or buy – Degree of standardization
– Layout – Subcontracting
– Projects – Process selection
– Scheduling Staffing
– Market share – Hiring/lay off
– Plan for risk reduction, plan – Use of overtime
B?
– Forecasting – Incentive plans
Figure 1.3