Chapter 09 Production and Operations Management





Chapter Outline:


  1. Define operations management and differentiate between operations and manufacturing.
    1. Operations Management (OM) is the "core" of most organizations because it is responsible for the creation of the organization’s products.
    2. Manufacturing (and production) -- refer to physical activities and processes used in making tangible goods and services.
    3. Operations -- refers to all the activities (including production) involved in producing both tangible and intangible products.
    4. Transformation Process
      1. Inputs
      2. Outputs

  2. Explain how operations management differs in manufacturing and service firms
    1. The transformation process is at the heart of operations management. Different types of transformation processes take place in organizations that provide services. Manufacturers and service providers often perform similar activities but they also differ in several respects.
        1. Nature and consumption of output
        2. Uniformity of inputs
        3. Uniformity of output
        4. Labor required
        5. Measurement of productivity
    2. For manufacturers straightforward – tangibility of output
    3. For service providers more difficult – intangibility of the product.

  3. Describe the elements involved in planning and designing an operations system.
    1. Planning the product
        1. Determine what consumers want and design a product to satisfy that want
          1. Use of marketing research
        2. Management then plans on how to produce the product
          1. Materials
          2. Skills and quantity of labor
          3. Processes
    2. Designing the operations process
        1. Standardization
          1. Manufacture of products in large quantities
        2. Modular design
          1. Used by many automobile manufacturers
        3. Customization
          1. Produces generally unique products
    3. Planning capacity
        1. Capacity – refers to the maximum load that an organizational unit can carry or operate.
        2. Emphasis on efficiency in planning capacity
        3. Capacity decision – once implemented, very difficult (and costly) to change.
    4. Planning facilities
        1. Facility location
        2. Facility layout
          1. Fixed-position layout
            1. Project organization (e.g. construction)
          2. Process layout
            1. Intermittent organizations (customer specification – few units)
          3. Product layout
            1. Continuous manufacturing organization (continuous processes, many products, similar characteristics).
        3. Technology
          1. Computer –assisted design (CAD)
          2. Computer-assisted manufacturing (CAM)
          3. Flexible manufacturing
          4. Computer-integrated manufacturing (CIM)

  4. Specify some techniques managers may use to manage the logistics of transforming inputs into finished products
    1. Logistics – refers to all the activities involved in obtaining and managing raw materials and component parts, managing finished products, packaging them, and getting them to customers.
    2. Purchasing – buying all raw materials needed by the organization.
    3. Managing Inventory
        1. Three types of inventory
          1. Finished-goods inventory
          2. Work-in-process inventory
          3. Raw materials inventory
        2. 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.
          1. Approaches Include:
            1. Economic order quantity (EOQ) model
            2. Just-in-time (JIT) inventory management
            3. Material-requirements planning (MRP)
    4. Routing and Scheduling
        1. Routing – sequence of operations
        2. Scheduling – assigning work
          1. PERT (Program Evaluation and Review Technique)

  5. Assess the importance of quality in operations management.
    1. Managing quality is a critical element of operations management.
    2. Quality – degree to which a good or service meets the demand and requirements of customers.
    3. Quality Control
        1. Total quality management (TQM)
        2. Statistical process control (SPC)
        3. ISO 9000
        4. Inspection of product/processes
        5. Sampling