18 - 1 © 2012 cengage learning. all rights reserved. may not be scanned, copied or duplicated, or...

18 - 1© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

CHAPTER 18 Operations Management

18 - 2© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.© 2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.

After reading this chapter,you should be able to:

• List the elements of an operating system.• Describe how manufacturers and service providers

use operations management.• Explain how to measure productivity.• Recount the methods of scheduling operations.• Discuss the role of quality in operations

management.• Identify the three ways to control operations.


Basic Elements ofOperations Management

Inputs(Physical and

Intangible)

Control Systems(Problem

Identification)

Transformation(Value-Adding)

Processes

Operations Management

Outputs(Tangible and

Intangible)

Feedback(Communication

Tools)


Figure 18.1: Control Systems


Types of Operations Management

• Production• Broadly describes what

businesses of all types do in creating goods and services

• Productivity• Is the measure of outputs

according to the inputs needed to product them; a way to determine the efficiency of a business

• Is measured in output per worker

Digital Vision at Getty Images®



Analytic Systems Synthetic Systems

Types of Manufacturing

Operations

Manufacturing system that reduces inputs into component parts to extract products.

Manufacturing system that combines inputs to create a finished product or change it into a different product.


Output Per Hour

• According to the Bureau of Labor Statistics, productivity changes for 2009 were:-3.3 percent in wholesale trade+1.5 percent in retail trade+1.0 percent in foodservice and drinking places

Source: http://www.bls.gov/news.release/pdf/prin1.pdf



Continuous Process Intermittent Process

Types of Production Processes

A production process that operates for long periods of time without interruption.

A production process that operates in short cycles so that it can change products.


Automation


Small Business Mass Customization

• ShirtsMyWay- Peter Crawfurd and Michael Young- Offers more than 7 trillion designs for men’s dress shirts

• Smart Furniture- Stephen Culp- Custom shelves, entertainment centers, and furniture

• 1154 LILL Studio- Jennifer Velarde- Custom handbag retailer

Source: http://www.entrepreneur.com/startingabusiness/businessideas/article203510.html


Operations Managementfor Service Businesses


Table 18.1: Product andService Operations Systems


What Is Productivity?


What Is Productivity? (cont’d)

•Measurement of Productivity• Total productivity

• Total Productivity Ratio = Total Outputs Total Inputs

• OutputsLabor + Capital + Raw Materials + All Other Inputs

• Materials productivity• Materials Productivity = Outputs

Materials


What Is Productivity? (cont’d)

Changing processes used by

the business

Technology that speeds production

Sources of Manufacturing Productivity

Improvements

Employees accomplishing

more


Service Productivity

Technological Innovation

Ergonomics

Management Style

Ways to Measure Service

Productivity


What About Scheduling Operations?

Forward Scheduling Backward Scheduling

Scheduling Methods

Materials and resources are allocated for production when a job order comes in.

Arranging production activities around the due date for the product.


Figure 18.2: The Gantt Chart


What AboutScheduling Operations? (cont’d)

Routing Dispatching

Scheduling

Sequencing


Quality Centered Management

Customer Perspective Business Perspective

What Does Quality Mean?

How well a good or service satisfies their needs.

The degree to which a firm’s product conforms to the standards you have set.


Quality Centered Management (cont’d)

• Six Sigma• The tolerance range in which only 3.4 defects per million

are allowed (99.99966% in specification) • The term that has come to signify the quality movement

• Defect Rate• The number of goods produced that were out of the firm’s

accepted tolerance range • Tolerance Range

• The boundaries that managers set in determining acceptable product quality


Table 18.2: Sigma Levels and Defect Rates


Basic Componentsof a Six-Sigma Program

1. Define products and services by describing the actual products or services that are provided to customers.

2. Identify customer requirements for products or services by stating them in measurable terms.

3. Compare products with requirements by identifying gaps between what the customer expects and what the customer is actually receiving.

4. Describe the process by providing explicit details.5. Improve by simplification and mistake-proofing.6. Measure quality and productivity by establishing baseline

values and then tracking improvement.


Six-Sigma Program Measurements

• Statistical Analysis• Descriptive stats (mean,

median, mode)• Inferential stats

• Statistical Tools• Analysis of variance

(ANOVA)• Regression analysis

• Challenge is implementation

Digital Vision at Getty Images®


Six-Sigma Quality Activities and Tools

• Management Processes• Participative management• Short-cycle manufacturing• Designing for manufacturing benchmarking• Statistical process control• Supplier qualification


Six-Sigma QualityActivities and Tools (cont’d)

• Improvement Tools and Analytical Techniques• Flowcharts• Pareto charts• Histograms• Cause-and-effect diagrams• Experimental design

• Quality Circles


Six-Sigma Program Ultimate Goals

Improved Manufacturing

Increased Customer Satisfaction

Six Sigma Goals


How Do You Control Operations?

Feedforward Quality Control(Inputs)

Feedback Quality Control(Output)

Types of Controls

Concurrent Quality Control

(Process)


Concurrent Quality Controls

• Compliance with ISO 9000 Standards• Certifies that a business is using processes and principles

in order to ensure the production of quality products • Does not address the quality of specific products • Shows customers how a firm tests its products, how its

employees are trained, how it keeps records, and how it fixes defects


Concurrent Quality Controls (cont’d)

Negotiate consultant prices.

Request customer subsidies.

Look for consultant alternatives.

Consider the need for full certification.

Handling ISO Certification

Costs



• Statistical Process Control (SPC)• The process of gathering, plotting, and analyzing data to

isolate problems in a specified sample of products • Uses statistical analysis to determine the probability of a

deviation’s being a simple, random, unimportant variation or a sign of a problem in the production process that must be corrected



Customer Service• Goods and services availability• Returns, repair, and replacement• Warranties and guarantees• Feedback mechanisms (surveys, toll-

free numbers)• Cost considerations

Production Process• Methodology• Facility needs• Equipment needs• Personnel needs• Assembly time• Quality control• Inspection• Cost considerations• Parts availability• Repair and returns

• Benchmarking– The process of comparing key points within your business

with comparable points in another external entity

• Benchmarking Opportunities


Figure 18.3: The Control Chart

18 - 1 © 2012 cengage learning. all rights reserved. may not be scanned, copied or duplicated, or...

Documents