9-1 Business in a Changing World Chapter Production and Operations Management McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc All rights 9-3 Goya Foods: Quality Operations and Products Goya Foods offers a wide range of products As their product lines have expanded, management of operations has become a major priority 9-4 Operations Management Importance of Production & Operations Management The planning and designing of the processes that transform resources into finished products; managing the transformation process; ensuring high quality of finished goods 9-5 Operations Management Operations Management (OM) Development and administration of the activities involved in transforming resources into goods and services 9-6 Operations Management Operations Management (OM) •Historically called production or manufacturing •Change to operations = focus on goods & services •Emphasis on viewing the operations function as a whole 9-7 Production & Operations Management Manufacturing – activities and processes used in making tangible products (production) Production – activities and processes used in making tangible products (manufacturing) Operations – the activities and processes used in making both tangible and intangible products 9-8 Production & Operations Management Transformation Process of operations management 9-9 Transformation Process Inputs – •Labor •Money •Materials •Energy Outputs •Goods •Services •ideas 9-10 Managing the Supply Chain Managing Inventory Inventory – all raw materials, components, completed or partially completed products, and pieces of equipment that a firm uses 9-34 Managing the Supply Chain Managing Inventory Inventory control – process of determining how many supplies and goods are needed and keeping track of quantities on hand, where each item is, and who is responsible for it 9-35 Managing the Supply Chain EOQ model Economic order quantity model – a model that identifies the optimum number of items to order to minimize the costs for managing them (ordering storing, and using) 9-36 Managing the Supply Chain JIT Just-in-Time inventory management – eliminates waste by using smaller quantities arriving “just in time” for use in the transformation process 9-37 Managing the Supply Chain MRP Material-requirements planning – planning system that schedules the precise quantity of materials needed to make the product 9-38 Managing the Supply Chain Outsourcing Outsource aspects of operations to companies that provide products more efficiently, at lower cost, greater customer satisfaction 9-39 Managing the Supply Chain Routing – sequence of operations through which the product must pass Scheduling – the assignment of required tasks to departments or specific machines, workers, or teams 9-40 Managing Quality Quality – critical element of operations management Degree to which a good or service meets the demands and requirements of customers 9-41 Managing Quality Hypothetical PERT Diagram for a McDonald’s Big Mac 9-42 Managing Quality Quality complaints from Air Travelers 2007 9-43 Managing Quality Malcolm Baldrige National Quality Award Criteria -• • • • • • • Leadership Information and analysis Strategic planning Human resource development Process management Business results Customer focus & satisfaction 9-44 Managing Quality Quality Control – processes an organization uses to maintain its established quality standards Total Quality Management (TQM) – philosophy that uniform commitment to quality will promote a culture that meets customers’ perceptions of quality 9-45 Managing Quality Statistical process control – system to collect and analyze information about production processed to pinpoint quality problems in the system ISO 9000 – International Organization for Standardization (ISO) system of quality management standards designed to ensure the customer’s quality standards are met 9-46 Managing Quality Inspection – reveals whether a product meets quality standards Sampling – how many items should be inspected Depends on potential costs of product flaws in terms of human lives and safety 9-47 Communications in Organizations Informal Communication – separate from management’s formal, official communication channels •Grapevine 9-48 ... packages 9-23 Planning Capacity Capacity – maximum load that an organizational unit can carry or operate •Hershey’s production capacity •33 million Hershey’s kisses per day •12 billion per year.. .Business in a Changing World Chapter Production and Operations Management McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc All rights 9-3 Goya Foods: Quality Operations and... Operations Management Operations Management (OM) Development and administration of the activities involved in transforming resources into goods and services 9-6 Operations Management Operations Management