Chapter 9

Operations and Production Management

9-2

0 100 200 Miles

WASHINGTON

OREGON

IDAHO

MONTANA

WYOMING

NEVADA

CALIFORNIA

UTAH

ARIZONA

COLORADO

NEW MEXICO

KANSAS

OKLAHOMA

MISSOURI

ARKANSAS

TEXAS

LOUISIANA

MISSISSIPPI

ILLINOIS

NORTH DAKOTA

SOUTH DAKOTA

MINNESOTA

WISCONSIN

IOWA

NEBRASKA

MICHIGAN

MICHIGAN

INDIANA

OHIO

WESTVIRGINIA

PENNSYLVANIA

NEW YORK

VIRGINIA

DC

KENTUCKY

VTNH

MAINE

RI

MASS

CONN

NEWJERSEY

DELAWARE

MARYLAND

NORTH CAROLINA

TENNESSEE

ALABAMA GEORGIA

SOUTHCAROLINA

FLORIDA

HAWAII

ALASKA

0 600 Miles0 200 Miles

CaliforniCaliforniaa

New YorkNew York

IllinoisIllinois

OhiOhioo

PennsylvaniPennsylvaniaa

TexaTexass

MichigaMichigann

Source: Britannica Student Encyclopedia, 2006Source: Britannica Student Encyclopedia, 2006

Production

The creation of value using factors of production (land, labor, capital, knowledge, and entrepreneurship)

Operations Management

Overseeing the transformation of capital into goods and services

9-3

1. ExxonMobil2. Chevron 3. General Motors

4. ConocoPhillips 5. Ford Motor

6. General Electric7. Altria Group8. IBM Corp.9. Hewlett-Packard10. Valero Energy

9-4

Source: Industry Week, June 1, 2006

The U.S. has been regainingits lead in manufacturing – why?

Focus on customers Maintain close relationships Continuous improvement Focus on quality Save costs Rely on the Internet New production techniques

9-5

Ford – 35.79 hoursFord – 35.79 hours

Daimler/Chrysler – Daimler/Chrysler – 33.71 hours33.71 hours

GM – 33.19 hoursGM – 33.19 hours

Honda – 32.51 hoursHonda – 32.51 hours

Toyota – 29.4 hoursToyota – 29.4 hours

Nissan – 28.46 hoursNissan – 28.46 hours

9-6Source: Detroit Free Press, June 2, 2006Source: Detroit Free Press, June 2, 2006

Ford – ($590)Ford – ($590)

Daimler/Chrysler – Daimler/Chrysler – $223$223

GM – ($2496)GM – ($2496)

Honda – >$1200Honda – >$1200

Toyota – >$1200Toyota – >$1200

Nissan – >$1200Nissan – >$1200

9-7Source: Detroit Free Press, June 2, 2006Source: Detroit Free Press, June 2, 2006

Ford – 79%Ford – 79%

Daimler/Chrysler – Daimler/Chrysler – 94%-106%94%-106%

GM – 90%GM – 90%

Honda – 91%Honda – 91%

Toyota – 94%-106%Toyota – 94%-106%

Nissan – 94%-106%Nissan – 94%-106%

9-8Source: Detroit Free Press, June 2, 2006Source: Detroit Free Press, June 2, 2006

Form Utility The value we pay for that

comes from changing a good

Process Manufacturing Making physical changes

in a good

Assembly Putting component parts

together

9-9

Can be done using: Continuous Process

Long production runs Turn out same thing

every time

Intermittent Process Production runs shorter Lines get changed out to

produce different things

9-10

1. Quick response to the demands of the customer

2. Acceptable quality level

3. Lowest possible cost

9-11

Krispy Kreme Doughnuts – 5,208 a minute

Twinkies – 972 a minute

LifeSavers 5 Flavor Roll – 100 rolls a minute

Jell-O Gelatin Boxes – 764 a minute

Chips Ahoy! – 4,000 a minute

9-12

Source: World Features SyndicateSource: World Features Syndicate

9-13

Source: 2005 National Innovation Survey, Council on CompetitivenessSource: 2005 National Innovation Survey, Council on Competitiveness

Computer-Aided Design - CAD

Computer-Aided Manufacturing - CAM

Computer-Integrated Manufacturing - CIM

9-14

Flexible Manufacturing

Lean Manufacturing

Mass Customization

9-15

Facility Location

Facility Layout

Materials Requirement Planning

Purchasing

J-I-T Inventory Control

Quality Control

9-16

Six Sigma Quality Statistical Quality Control

(SQC) Statistical Process Control

(SPC) The Baldrige Award ISO 9000 ISO 14000

9-17

Program Evaluation & Review Techniques (PERT)

Gantt Chart

9-18

1. Analyzing and sequencing tasks that need to be done

2. Estimating the time needed to complete each task

3. Drawing a PERT network illustrating the information from steps 1 and 2

4. Identifying the critical path

9-19

Formalize forums for analyzing failure Move the goalposts Share personal stories Bring in outsiders Prove yourself wrong, not right Celebrate smart failures

9-20

Source: Business Week Online, July 10, 2006Source: Business Week Online, July 10, 2006