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Operations and MaterialsOperations and MaterialsManagement: Managing theManagement: Managing theProduction and Flow of GoodsProduction and Flow of Goods

and Servicesand Services

2007 The McGraw-Hill Companies, Inc., All Right Reser e!.

McGraw-Hill/IrwinIntroduction to Business

Chapter 11

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Operations and Materials Management

another vital role in the organization (inaddition to Marketing)Value-creation activities that convert andchange inputs into finished goods andservicesTechnology : The combination of skills,kno ledge, abilities, techni!ues, methods,tools, machines, computers, and othere!uipment that are used to bring aboutchange to some source and add value to it

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Material managementMaterial management : "et of activities

involved in controlling the flo ofresources into and out of the operatingsystem#ncludes the activities necessary to find

and purchase high-!uality ra materialsor lo -cost components and deliverthem to operations as efficiently aspossible

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Operations and MaterialsManagement Process

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Operations and Materials ManagementProcess

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Increase productivity$etter ays to use resources%o er inventory holding costs&educe time to process customer ordersIncrease Innovation

'ind ays to improve product !uality'ind ays to reduce production costs'ind ays to sell product at a lo er cost

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#ncrease responsiveness to customersigh-!uality customer service

"atisfying shopping e perience*ood after-sales service

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Materials Management Methods#ncrease +uality

umber of orders correctly processedonsistent reliable products

.nsure supply of high !uality inputs

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Operations and Materials Management

Costs

&a materials and components costs/lant costs%abor costs#nventory costs0istribution costs

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Three types of inventory

#nput "tage 1 inputs and resourcesonversions "tage 1 ork in progress

2utput "tage 1 finished products

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Three Types of Operating Systems"mall $atch /roduction/roduction'le ible production

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Small batch production

"mall batch production is designed toprovide one of a kind or small !uantities ofcustomized products

ustomized product are products that aredesigned and made to more closely matchand satisfy the needs of particular users

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Mass ProductionMass production is based on the use ofautomated machines and "2/3s to controlthe ork process

ompanies operate mass productionsystems to manufacture large !uantities ofstandardized products to reduce operatingcosts

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Flexible production syste ms'le ible production is an advanced,computer-based operating system thatallo s mass production to achieve thebenefits of small- batch production but ata much lo er cost

osts are reduced by the use of computerintegrated manufacturing and fle ibleemployees and ork teams

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Total Quality Management

4n operations techni!ue for continuousimprovement to increase !uality andreduce costsT+M can be used to improve the efficiencyand effectiveness of any operating system

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To build competitive advantage -

omputer aided materials management*lobal supply chain management

5ust-in-time inventory systems