© 2006 Pearson Education Canada Inc.Chapter 8 - 1 Chapter 8 Producing Quality Goods and Services

© 2006 Pearson Education Canada Inc. Chapter 8 - 1

Chapter 8Chapter 8

Producing Quality Producing Quality Goods and Goods and ServicesServices

© 2006 Pearson Education Canada Inc. Chapter 8 - 2

What Is Production?What Is Production?

LeadingLeading

Plan

ning

Plan

ning

Organizing

Organizing

Production OperationsProduction OperationsManagement Management

(POM)(POM)

Production OperationsProduction OperationsManagement Management

(POM)(POM)

ControllingControlling

© 2006 Pearson Education Canada Inc. Chapter 8 - 3

What Is the What Is the Conversion Process?Conversion Process?

TransformationTransformation OutputsOutputsInputsInputs

Analytic Systems

Synthetic Systems

© 2006 Pearson Education Canada Inc. Chapter 8 - 4

Input-Transformation-Output Input-Transformation-Output Relationships for Typical SystemsRelationships for Typical Systems

Department Store

Shoppers, stock of goods

Displays, sales clerks

Attract customers, promote products,

fill orders

Sales to satisfied customers

College or University

High School graduates, books

Teachers, classrooms

Impart knowledge & skills

Educated individuals

Automobile Factory

Sheet steel, engine parts

Tools, equipment, workers

Fabrication & assembly of cars High-quality cars

Restaurant Hungry customers, food

Chef, waitress, environment

Well-prepared & well-served food

Satisfied customers

Hospital Patients, medical supplies

MDs, nurses, equipment Health care Healthy

individuals

Typical Desired Output

Transformation Function

Transformation Components

InputsSystem

© 2006 Pearson Education Canada Inc. Chapter 8 - 5

Manufacturing Manufacturing GoodsGoods

MassMassProductionProduction

MassMassCustomizationCustomization

© 2006 Pearson Education Canada Inc. Chapter 8 - 6

Production Process Production Process DesignDesign

Plan for Capacity

Choose Facility Site

Design Facility Layout

Forecast Demand

Schedule Work

© 2006 Pearson Education Canada Inc. Chapter 8 - 7

Forecasting DemandForecasting Demand

CustomerCustomerFeedbackFeedback

MarketMarketResearchResearch

SalesSalesFiguresFigures

IndustryIndustryAnalysesAnalyses

EducatedEducatedGuessesGuesses

BusinessBusinessResourcesResources

PlanningPlanning BudgetingBudgetingSchedulingScheduling

© 2006 Pearson Education Canada Inc. Chapter 8 - 8

Capacity PlanningCapacity Planning

Level ofLevel ofResourcesResourcesLevel ofLevel of

ResourcesResourcesCustomerCustomerDemandDemand

CustomerCustomerDemandDemand

© 2006 Pearson Education Canada Inc. Chapter 8 - 9

LabourLabourLabourLabourLandLandLandLand

TransportationTransportationTransportationTransportation EnergyEnergyEnergyEnergy

Local TaxesLocal TaxesLocal TaxesLocal TaxesRawRawMaterialsMaterials

RawRawMaterialsMaterials

ConstructionConstructionConstructionConstruction

LivingLivingStandardsStandards

LivingLivingStandardsStandards

FacilityFacilityLocationLocationFacilityFacility

LocationLocation

© 2006 Pearson Education Canada Inc. Chapter 8 - 10

Types of Facility Types of Facility LayoutLayout

• Process (functional)– concentrates everything needed to complete one phase of the

production process in one place

• Product (assembly line)– the production process occurs along a line– products move from one workstation to the next

• Cellular – groups dissimilar machines into work centers (or cells) to process

parts that have similar shapes and processing requirements

• Fixed-Position– labour, materials, and equipment are brought to the location where the good

is being produced or the customer is being served– i.e.: buildings, roads, bridges, airplanes

© 2006 Pearson Education Canada Inc. Chapter 8 - 11

Process LayoutProcess Layout

© 2006 Pearson Education Canada Inc. Chapter 8 - 12

Product LayoutProduct Layout

© 2006 Pearson Education Canada Inc. Chapter 8 - 13

Cellular LayoutCellular Layout

© 2006 Pearson Education Canada Inc. Chapter 8 - 14

Fixed-Position LayoutFixed-Position Layout

© 2006 Pearson Education Canada Inc. Chapter 8 - 15

Production Production ScheduleSchedule

SchedulingScheduling

DispatchingDispatching

ContingenciesContingencies

© 2006 Pearson Education Canada Inc. Chapter 8 - 16

The Gantt ChartThe Gantt Chart

ID Task Name Start Date End Date DurationAugust September

2006

1 Make legs 8/1/06 8/28/06 20d

2 Cut tops 8/22/06 8/28/06 5d

3 Drill 8/29/06 9/4/06 5d

4 Sand 9/5/06 9/11/06 5d

5 Assemble 9/12/06 9/25/06 10d

6 Paint 9/19/06 9/25/06 5d

© 2006 Pearson Education Canada Inc. Chapter 8 - 17

Program Evaluation and Program Evaluation and Review Technique (PERT)Review Technique (PERT)

• Identify activities

• Determine sequence

• Establish time frame

• Diagram activity network

• Calculate longest completion path

• Refine timing

© 2006 Pearson Education Canada Inc. Chapter 8 - 18

PERT Time PERT Time EstimatesEstimates

OptimisticOptimistic

PessimisticPessimistic

Most LikelyMost Likely

ExpectedExpected

© 2006 Pearson Education Canada Inc. Chapter 8 - 19

PERT Diagram PERT Diagram for Manufacturing Shoesfor Manufacturing Shoes

© 2006 Pearson Education Canada Inc. Chapter 8 - 20

Improving Production Improving Production Through TechnologyThrough Technology

• Robots

• Computer-aided design

• Computer-aided engineering

• Computer-aided manufacturing

• Computer-integrated manufacturing

© 2006 Pearson Education Canada Inc. Chapter 8 - 21

Electronic Electronic Information Information

SystemsSystemsResponsiveness

Service

Communication

© 2006 Pearson Education Canada Inc. Chapter 8 - 22

Manufacturing Manufacturing SystemsSystems

TraditionalTraditionalManufacturingManufacturing

FlexibleFlexibleManufacturingManufacturing

Mass Production

Resistant to Change

High Set-Up Costs

Specialty Operations

Conducive to Change

Minimal Set-Up Costs

© 2006 Pearson Education Canada Inc. Chapter 8 - 23

The Production The Production ProcessProcess

InventoryInventoryManagementManagement

QualityQualityAssuranceAssurance

© 2006 Pearson Education Canada Inc. Chapter 8 - 24

Inventory Inventory ManagementManagement

InventoryInventory

InventoryInventoryControlControl

InventoryInventoryControlControlLead TimeLead TimeLead TimeLead Time

PurchasingPurchasingPurchasingPurchasing

© 2006 Pearson Education Canada Inc. Chapter 8 - 25

Inventory ControlInventory Control

Just-In-Time (JIT)

Material RequirementsPlanning (MRP)

ManufacturingResource Planning (MRP II)

© 2006 Pearson Education Canada Inc. Chapter 8 - 26

Manufacturing Resource Manufacturing Resource Planning Planning

© 2006 Pearson Education Canada Inc. Chapter 8 - 27

Maintaining QualityMaintaining Quality

Statistical Quality ControlStatistical Quality Control

Statistical Process ControlStatistical Process Control

Continuous ImprovementContinuous Improvement

Quality ControlQuality Control Quality AssuranceQuality Assurance

© 2006 Pearson Education Canada Inc. Chapter 8 - 28

Global Quality Global Quality StandardsStandards

ISO CertificationISO Certification

CAE Quality AwardsCAE Quality Awards

Malcolm Malcolm Baldrige AwardBaldrige Award

© 2006 Pearson Education Canada Inc. Chapter 8 - 29

Supply Chain Supply Chain ManagementManagement

Suppliers Manufacturers Distributors Retailers

The Supply Chain

Production of Goods and Services

Facilities Functions Activities

© 2006 Pearson Education Canada Inc. Chapter 8 - 30

Manufacturing Manufacturing TrendsTrends

OutsourcingOutsourcing Supplier InvolvementSupplier Involvement

Redirect Resourcesand Capital

Increase ProductionEfficiencies

Access State-of-the-ArtFacilities

Improve Overall Quality

Maximize the Use of Time

Reduce Work-in-ProcessInventory