PRODUCTION OPERATION PRODUCTION AND OPERATIONS MANAGEMENT CHAPTER ONE SIXTH

PRODUCTION/OPERATION PRODUCTION AND OPERATIONS MANAGEMENT CHAPTER ONE SIXTH EDITION WILLIAM J. STEVENSON Rochester Institute of Technology Irwin/Mc. Graw-Hill ©The Mc. Graw-Hill Companies, Inc. , 1999 1 -1

PART ONE CHAPTER ONE INTRODUCTION PRODUCTION AND OPERATIONS MANAGEM • Chapter One • Production and Operations Management • Chapter Two • Productivity, Competitiveness, and Strategy Irwin/Mc. Graw-Hill 1 -2 ©The Mc. Graw-Hill Companies, Inc. , 1999

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Operations Management Operations function consists of all activities directly related to producing goods or providing services. Organization Finance Production/ Operations Marketing 1 -3

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Business Operations Overlap Production/ Operations Marketing Finance 1 -4

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Types of Operations Examples Goods Producing Farming, mining, construction, manufacturing, power generation Storage/Transportation Warehousing, trucking, mail service, moving, taxis, buses, hotels, airlines Exchange Retailing, wholesaling, banking, renting, leasing, library, loans Entertainment Films, radio and television, concerts, recording Communication Newspapers, radio and television newscasts, telephone, satellites 1 -5

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Value-Added • The difference between the cost of inputs and the value or price of outputs. Value added Inputs Land Labor Capital Outputs Goods Services Transformation/ Conversion process Feedback Control Feedback 1 -6

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Food Processor Inputs Raw Vegetables Metal Sheets Water Energy Labor Building Equipment Processing Outputs Cleaning Making cans Cutting Cooking Packing Labeling Canned vegetables 1 -7

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Hospital Process Inputs Doctors, nurses Hospital Medical Supplies Equipment Laboratories Processing Examination Surgery Monitoring Medication Therapy Outputs Healthy patients 1 -8

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Operations Interfaces 1 -9

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Decision Making • System Design – capacity – location – arrangement of departments – product and service planning – acquisition and placement of equipment 1 -10

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Decision Making • System operation – personnel – inventory – scheduling – project management – quality assurance 1 -11

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Major Characteristics of Production Systems • Degree of standardization • Type of operation – project – job shop – repetitive production – continuous processing 1 -12

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Manufacturing or Service? Tangible Act 1 -13

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Key Differences • • • Customer contact Uniformity of input Labor content Uniformity of output Measurement of productivity Quality assurance These differences are beginning to fade in many cases 1 -14

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Manufacturing vs Service Characteristic Manufacturing Service Output Tangible Customer contact Low High Uniformity of input High Low Labor content Low High Uniformity of output High Low Measurement of productivity Easy Difficult Opportunity to correct quality problems High Low Intangible High 1 -15

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Responsibilities of Operations Management • Planning – Capacity – Location – Products and services – Make or buy – Layout – Projects – Scheduling • Controlling – Inventory – Quality • Organizing – Degree of centralization – Subcontracting • Staffing – Hiring/laying off – Use of Overtime • Directing – Incentive plans – Issuance of work orders – Job assignments 1 -16

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Models • A model is an abstraction of reality. – Physical – Schematic – Mathematical Tradeoffs What are the pros and cons of models? 1 -17

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Systems Approach “The whole is greater than the sum of the parts. ” Suboptimization 1 -18

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Quantitative Approaches • Linear programming • • Queuing Techniques Inventory models Project models Statistical models 1 -19

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Pareto Phenomenon • A vital few things are important for reaching an objective or solving a problem. • 80/20 Rule - 80% of problems are caused by 20% of the activities. How do we identify the vital few? 1 -20

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Recent Trends • Global competition • Operations strategy • Total quality management (TQM) • Flexibility • Time reduction Technology 1 -21

CHAPTER ONE PRODUCTION AND OPERATIONS MANAGEM Recent Trends (Continued) • Worker involvement • Reengineering • Environmental issues • Service 1 -22