© Prentice Hall, 2005Business In Action 3eChapter 8 - 1 Producing Quality Goods and Services

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 1

Producing Quality Producing Quality Goods and ServicesGoods and Services

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 2

What Is Production?What Is Production?

• Production Operations Management

–Planning

–Leading

–Organizing

–Controlling

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 3

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

• Inputs

• Transformation

• Outputs

© Prentice Hall, 2005 Business In Action 3e 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

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 5

Challenges of the Service Challenges of the Service IndustryIndustry

• Customer involvement

• Delivery timing

• People-intensive activities

• Production and location

• Subjective quality

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 6

Manufacturing GoodsManufacturing Goods

• Mass production

• Mass customization

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 7

Outsourcing the Outsourcing the Manufacturing FunctionManufacturing Function• Advantages

–Capital and resources

–Economies of scale

• Disadvantages

–Job displacement

–Lost wages

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 8

Production Process Production Process DesignDesign

• Forecast demand

• Plan for capacity

• Choose facility site

• Design facility layout

• Schedule work

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 9

The Supply ChainThe Supply Chain

• Suppliers

• Manufacturers

• Distributors

• Retailers

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 10

Forecasting DemandForecasting Demand

• Customer feedback

• Market research

• Sales figures

• Industry analyses

• Educated guesses

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 11

Capacity PlanningCapacity Planning

• Level of resources

• Customer demand

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 12

Facility LocationFacility Location

• Land

• Construction

• Labor

• Local taxes

• Energy

• Living standards

• Transportation

• Raw materials

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 13

Types of Facility LayoutTypes of Facility Layout

• Process

• Product

• Cellular

• Fixed-position

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 14

Process LayoutProcess Layout

• Made-to-order products

• Process arrangement

–Specialized employees

–Specialized materials

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 15

Product LayoutProduct Layout

• Mass production of few items

• Process arrangement

–Continuous sequence

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 16

Cellular LayoutCellular Layout

• Mass customization

• Process arrangement

–Work centers

–Teamwork

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 17

Fixed-Position LayoutFixed-Position Layout

• Immovable product

• Process arrangement

–Employee go to the site

–Materials are brought to the site

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 18

Production ScheduleProduction Schedule

• Scheduling

• Dispatching

• Contingencies

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 19

The Gantt ChartThe Gantt Chart

• ID Number

• Task name

• Start date

• End date

• Duration

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 20

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

1. Identify activities

2. Determine sequence

3. Establish time frame

4. Diagram activity network

5. Calculate longest completion path

6. Refine timing

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 21

PERT Time EstimatesPERT Time Estimates

• Optimistic

• Pessimistic

• Most likely

• Expected

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 22

PERT Diagram for PERT Diagram for Manufacturing ShoesManufacturing Shoes

• Critical path– Receiving– Cutting the pattern– Dyeing the leather– Sewing the tops– Sewing tops to soles and heels– Finishing– Packaging– Shipping

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 23

Production RoboticsProduction Robotics

• Precision functions

• Repetitive tasks

• Hazardous jobs

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 24

Computerized ProductionComputerized Production

• Computer-aided design (CAD)

• Computer-aided engineering (CAE)

• Computer-aided manufacturing (CAM)

• Computer-integrated manufacturing (CIM)

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 25

Manufacturing Manufacturing SystemsSystems

TraditionalTraditional FlexibleFlexible

Mass Production

Resistant to Change

High Set-Up Costs

Specialty Operations

Conducive to Change

Minimal Set-Up Costs

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 26

Supply Chain Data Supply Chain Data InterchangeInterchange

• Electronic Data Interchange (EDI)

• Extensible Markup Language (XML)

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 27

The Production ProcessThe Production Process

• Inventory management

• Quality assurance

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 28

Inventory ManagementInventory Management

• Inventory

• Purchasing

• Lead time

• Inventory control

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 29

Inventory ControlInventory Control

• Just-in-time (JIT)

• Materials requirements planning (MRP)

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 30

Manufacturing Resource Manufacturing Resource PlanningPlanning

• Input of data

• Computer processing

• Output of data

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 31

Supply Chain Supply Chain

ManagementManagement• Manage risks

• Manage relationships

• Manage trade-offs

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 32

Maintaining QualityMaintaining Quality

• Quality control

• Quality assurance

© Prentice Hall, 2005 Business In Action 3e Chapter 8 - 33

Global Quality StandardsGlobal Quality Standards

• ISO Certification

• Deming Prize

• Malcolm Baldrige Award