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*Chapter Nine
Production And
Operations Management
Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin
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*Manufacturing and Services in Perspective
• From 2001 to 2009, manufacturing output in the U.S. rose 4% each year.
• The U.S. is still the world’s leading manufacturer.
MANUFACTURING in the U.S.
LG1
• Almost 25% of all goods produced each year come from the U.S.
9-2
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*From Production to Operations Management
• Production -- The creation of goods using land, labor, capital, entrepreneurship and knowledge (the factors of production).
PRODUCTION and PRODUCTION MANAGEMENT
LG2
• Production Management -- All the activities managers do to help firms create goods.
9-3
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*From Production to Operations Management
• Operations Management -- A specialized area in management that converts or transforms resources into goods and services.
• Operations management includes:• Inventory management• Quality control• Production scheduling• Follow-up services
OPERATIONS MANAGEMENT
LG2
9-4
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*Production Processes
• Form Utility -- The value producers add to materials in the creation of finished goods and services.
FORM UTILITY
LG3
9-5
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• Process Manufacturing -- The part of production that physically or chemically changes materials.
• Assembly Process -- The part of the production process that puts together components.
PROCESS and ASSEMBLY in PRODUCTION
LG3
Production Processes
9-6
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• Production processes are either continuous or intermittent.
• Continuous Process -- Long production runs turn out finished goods over time.
• Intermittent Process -- Production runs are short and the producer adjusts machines frequently to make different products.
KEY PRODUCTION PROCESSES
LG3
Production Processes
9-7
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*Mass CustomizationMASS CUSTOMIZATION
LG3
• Mass Customization -- Tailoring products to meet the needs of a large number of individual customers.
• More manufacturers are learning to customize.
• Mass customization exists in the service sector too.
9-8
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*Operations Management Planning
• Operations management planning helps solve problems like:
- Facility location
- Facility layout
- Materials requirement planning
- Purchasing
- Inventory control
- Quality control
OPERATIONS MANAGEMENT
LG4
9-9
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*Quality Control
• Quality -- Consistently producing what the customer wants while reducing errors before and after delivery.
• Six Sigma Quality -- A quality measure that allows only 3.4 defects per million opportunities.
QUALITY CONTROL
LG4
9-10
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*Control Procedures: PERT and GANTT Charts
• Program Evaluation and Review Technique (PERT) -- A method for analyzing the tasks involved in completing a given project and estimating the time needed.
PERT
LG5
9-11
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*Control Procedures: PERT and GANTT Charts
1. Analyzing and sequencing tasks
2. Estimating the time needed to complete each task
3. Drawing a PERT network illustrating the first two steps
4. Identifying the critical path
• Critical Path -- The sequence of tasks that takes the longest time to complete.
STEPS INVOLVED in PERT
LG5
9-12
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*Control Procedures: PERT and GANTT Charts
• Gantt Chart – A bar graph that shows what projects are being worked on and how much has been completed.
GANTT CHARTS
LG5
9-13