Lecture Business: A changing world - Chapter 9: Production and operations management

After reading this chapter, you will be able to: Define operations management and differentiate between operations and manufacturing; explain how operations management differs in manufacturing and service firms; describe the elements involved in planning and designing an operations system; specify some techniques managers may use to manage the logistics of transforming inputs into finished products; assess the importance of quality in operations management; evaluate a business''s dilemma and propose a solution.

Chapter Nine Production and Operations Management     © 2003 McGraw­Hill Ryerson Limited Operations Management 9-1 The development and administration of  the activities involved in transforming  resources into goods and services     © 2003 McGraw­Hill Ryerson Limited The Transformation Process Inputs land  labor  capital  raw  materials  time  information  energy 9-2 Transformation or Conversion procedures  equipment  facilities  technology  knowledge Control standards Customer     © 2003 McGraw­Hill Ryerson Limited Outputs goods  services  ideas (Feedback) Inputs, Outputs, and Transformation  Processes in the Manufacture of Oak Furniture 9-3 Inputs  oak trees  labour  information/  knowledge  stain or varnish  router/saw  warehouse  space/time   Transformation  cutting or  sawing  routing  measuring  assembling  staining/varnishing  storing   © 2003 McGraw­Hill Ryerson Limited Outputs  oak furniture Operations in Service  Businesses • Service providers use human and mechanical  processes to provide products that are  intangible • The transformation process requires inputs  such as employees, equipment and supplies • Outputs provide a benefit from a  performance,eventortypeofinvolvement withtheserviceprovider 9-4 â2003McGrawưHillRyersonLimited DifferencesbetweenManufacturers andServiceProviders • • • 9-5   Nature and consumption of output Uniformity of inputs Uniformity of outputs Labour required Measurement of productivity   © 2003 McGraw­Hill Ryerson Limited Steps in Planning and Designing  Operations Systems 9-6a Planning the product Designing the operations process a standardization b modular design c customization Planning capacity     © 2003 McGraw­Hill Ryerson Limited Steps in Planning and Designing  Operations Systems 9-6b   Planning facilities a facility location b facility layout fixed position layout process layout product layout c technology CAD CAM flexible manufacturing CIM   © 2003 McGraw­Hill Ryerson Limited Facility Layouts 9-7   Fixed­position layout All resources needed for a  product are brought to a  central location Process layout Layout is organized into departments that group related  processes Product layout Production is broken down into relatively simple tasks assigned to workers positioned along a line   © 2003 McGraw­Hill Ryerson Limited Logistics Purchasing 9-8 Inventory Control RoutingandScheduling Distribution â2003McGrawưHillRyersonLimited ManagingInventory 9-11 Economicorderquantity(EOQ) model Justưinưtimeinventorymanagement (JIT) Materialưrequirementsplanning(MRP) â2003McGrawưHillRyersonLimited 9-12 RoadwayAssists with Transportation and  Inventory Management     © 2003 McGraw­Hill Ryerson Limited A Hypothetical PERT Diagram  for a McDonald’s Big Mac 9-13 Start Grill beef  patties  (120) Remove buns,  2 beef patties,  cheese,  sauce,  lettuce,  onions,  pickle  (20) Place  cooked  patties  on bun  (5) Apply  sauce  to bun  (10) Critical path   Activity   © 2003 McGraw­Hill Ryerson Limited Top  with  cheese  and  vegetables  (15) Place  Big Mac in  package  (5) Event Place  package  in heated  bin  (5) E  n  d Serve to  customer  (5) (185) Time to complete           event (seconds) National Quality Institute Principles of Business Excellence 9-14a Leadership through involvement Primary focus on stakeholders/customers  and the market place Cooperation and teamwork Prevention based on process management     © 2003 McGraw­Hill Ryerson Limited National Quality Institute Principles of Business Excellence 9-14b   5. Factual approach to decision making 6. Continuous learning and people  involvement 7. Focus on continuous improvement 8. Fulfillment of obligations to all  stakeholders and society   © 2003 McGraw­Hill Ryerson Limited Total Quality Management 9-15   A philosophy and set of guiding  principles that provide a foundation  for the continuous improvement of an  enterprise   © 2003 McGraw­Hill Ryerson Limited Enterprise Resource Planning 9-16   The integration of all departments  and functions of a company into one  computer system   © 2003 McGraw­Hill Ryerson Limited IS0 9000 Internal Organization for Standardization 9-17   • Designed to ensure consistent quality • Requires documenting record keeping on  training, testing and responding to defects • Independent auditor must verify standards  required by ISO • ISO 9002 certification has been established  for service providers   © 2003 McGraw­Hill Ryerson Limited Solve the Dilemma 9-18   What mistake did McKing make in  approaching the introduction of pizza? How  could this product introduction have been  coordinated to avoid the problems that were  encountered? If you were an executive at  McKing, how would you proceed with the  introduction of pizza into the restaurants?   © 2003 McGraw­Hill Ryerson Limited Explore Your Career Options 9-19   How can an understanding of total  quality management (TQM) or ISO 9000  series certification assist in developing a  career?   © 2003 McGraw­Hill Ryerson Limited Additional Discussion  Questions and Exercises 9-20a What is the purpose of inventory control? PERT charts can show a sequence of activities in days rather than seconds.  Draw a PERT chart for the chairperson of a banquet committee showing the  most efficient path for these projected events:   January 5 Confirm banquet room reservation January 6 Publicize banquet January 19 Count number of banquet reservations; phone in total to hotel January 20 Phone chairpersons of banquet decorating committee and  hospitality committee to review preparations for banquet.    © 2003 McGraw­Hill Ryerson Limited Additional Discussion  Questions and Exercises 9-20b   Question 2 continued January 27 Decorating committee places decorations on tables (2­4 p.m.) Hospitality committee prepares registration table and banquet  booklets January 27 (6 p.m.) Banquet January 30 Send thank­you notes to all committee persons and hotel staff.    © 2003 McGraw­Hill Ryerson Limited Additional Discussion  Questions and Exercises 9-20c 3.PrepareaGantChartforthe sequenceofactivitiesdescribedin question#2 â2003McGrawưHillRyersonLimited Chapter9Quiz 9-21a An assembly line is an example of a a product layout b a process layout c a fixed­position layout d an intermittent organization Which of the following identifies the optimum number of items to order to  minimize the cost of ordering them? a just­in­time (JIT) b material­requirements planning (MRP) c economic­order quantity model d program evaluation and review technique (PERT)     © 2003 McGraw­Hill Ryerson Limited Chapter 9 Quiz 9-20b Which of the following characteristics is most typical of a continuous  manufacturing organization? a The firm manufactures customized products b The firm has a low volume of production c The firm has a relatively low unit cost of production d The firm creates many different products with many different  characteristics Inspection is concerned with a standards of quality b labor and energy c routing and scheduling d modular design and customization     © 2003 McGraw­Hill Ryerson Limited ... Steps in Planning and Designing  Operations Systems 9-6 b   Planning facilities a facility location b facility layout fixed position layout process layout product layout c technology CAD CAM flexible manufacturing... Economic order quantity (EOQ) model Justưinưtimeinventorymanagement (JIT) Materialưrequirementsplanning(MRP) â2003McGrawưHillRyersonLimited 9-1 2 RoadwayAssists with Transportation and Inventory Management. .. Steps in Planning and Designing  Operations Systems 9- 6a Planning the product Designing the operations process a standardization b modular design c customization Planning capacity     © 2003 McGraw­Hill Ryerson Limited