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Chapter 9
Production and Operations Management
BCEN 1400Introduction to Business
Hit by the recessionHousing and manufacturing hit hardUS still the largest manufacturer in the world
25% of the world’s goods!US producers still have much to learn about
efficiency
No longer majority-comprised of manufacturing
70% of US GDP and 85% of US jobs are in the service sector
US services: legal, medical, entertainment, broadcasting, business services
The U.S. Economy
Developed out of productionFocused on manufacturing activities
Converts or transforms resources into goods and services
Includes inventory management, quality control, production scheduling, follow-up services, etc.
Operations Management
Adds form utility: the difference in value between raw materials and a finished product
The Production Concept
INPUTSLandLabor
CapitalEntrepreneurs
hipKnowledge
PROCESSESPlanningRouting
SchedulingDispatchingFollow-Up
OUTPUTS
Goods Services
Ideas
Process Manufacturing versus AssemblyProcess: physically or chemically changing a
materialAssembly: putting together pieces to make a
product
Intermittent versus Continuous ProductionIntermittent: production stops and starts to
make different variations of productContinuous: production continually runs to
make large batches
Types of Production
Computer-Aided Design (CAD)Allows innovators to design products on
computer (architectural designs for new buildings)
Computer-Aided Manufacturing (CAM)Allows companies to produce using computer
software and equipment (robots that make steel parts)
Computer Integrated Manufacturing (CIM)CAD programs tell CAM programs and
equipment what to make (prototypes from waterjets)
Using Technology in Production
Flexible manufacturing – using machinery that can be switched out in short time to product new product on the same production line
Using Technology in Production
Nissan’s Flexible Manufacturing PlantIn Canton, MS
Mass CustomizationTailoring an assembly process to customize for
individuals
Custom M&Ms
Dell Computers
Custom Nikes
Using Technology in Production
Critical Issues:Convenience for those doing business with
youCustomersSuppliers
Availability of Resources
Labor Costs
Access to Transportation
Locating Your Production Facility
Layout refers to the physical arrangement of resources and equipment to most efficiently produce the product or service
Assembly line layoutModular layoutProcess layoutFixed layout
Facility Layout
Seamless software system that moves an order through all of a company’s departments at once
Finance, production, purchasing (very important), customer service can all know the status of an order as it moves through to being produced.
Quicker invoicing (billing)
Less “dropping the ball”
Enterprise Resource Planning (ERP)
Six Sigma programsExtreme dedication to working out the
opportunities for defects within the process of production itself (BEFORE output is made)
Malcolm Baldrige awardGiven to organizations who have worked quality
into their culture and procedures.High customer satisfaction is a criterion.
ISO 9000 and 14000 standards for quality and environmental impact
Quality: A Critical Part of the Process
Production and Project ManagementPERT Charts
Program Evaluation and Review Technique
Consists of outline a project in task squares and estimating the time for completion
Gantt ChartA series of bard
representing tasks and their length for completion, as well as their estimated start dates.