Ch. 14 Outline

1. Ch. 14 Outline • Understanding Production and Operations Management • Designing the Production Process • Improving Production Through Technology • Managing and Controlling the Production Process • Outsourcing the Manufacturing Function

2. Production • Production is the transformation of resources into goods and services that people want or need.

3. What is the Conversion Process? Synthetic Systems Inputs Transformation Outputs Analytic Systems

4. Conversion Conversion is of two types: • Analytic system—breaks raw materials into one or more distinct product(s). • Synthetic system—combines two or more materials to form a single product.

5. System Inputs Transformation Components Transformation Function Typical Desired Output Hospital Patients, medical supplies MDs, nurses, equipment Health care Healthy individuals Restaurant Hungry customers, food Chef, waitress, environment Well-prepared & well-served food Satisfied customers Automobile Factory Sheet steel, engine parts Tools, equipment, workers Fabrication & assembly of cars High-quality cars College or University High School graduates, books Teachers, classrooms Impart knowledge & skills Educated individuals Department Store Shoppers, stock of goods Displays, sales clerks Attract customers, promote products, fill orders Sales to satisfied customers Input-Transformation-Output Relationships for Typical Systems

6. Forecast Demand Plan for Capacity Choose Facility Site Design Facility Layout Schedule Work Production Process Design

7. Forecasting Demand Customer Feedback Market Research Sales Figures Industry Analyses Educated Guesses Business Resources Planning Scheduling Budgeting

8. Facility Location Local Taxes Construction Labor Land Energy Raw Materials Transportation Living Standards

9. Types of Facility Layout Process Product Cellular Fixed-Position

10. Process Layout

11. Product Layout

12. Fixed-Position Layout

13. 3 2 4 6 5 ID Paint Assemble Sand Drill Cut tops Task Name Start Date 8/22/04 8/29/04 9/5/04 9/12/04 9/19/04 9/25/04 9/4/04 9/11/04 End Date 9/25/04 8/28/04 10d 5d 5d 5d Duration 5d 2004 August September 1 Make legs 8/1/04 8/28/04 20d The Gantt Chart

14. Identify activities Determine sequence Establish time frame Diagram activity network Identify critical path Refine timing Program Evaluation and Review Technique (PERT)

15. PERT Diagram for Manufacturing Shoes

16. The Production Process Operations Managers Inputs Transformation Outputs Inventory Control Quality Control

17. Inventory Management Raw Materials Purchasing Place the Order Lead Time Receive the Order Components Supplies Finished Products

18. Just-In-Time (JIT) Material Requirements Planning (MRP) Manufacturing Resource Planning (MRP) Inventory Control

19. JIT (Just In Time) Systems • The goal is to have only the right amounts of materials arrive at precisely the times they are needed. • Inventories are eliminated and waste is reduced. • The manufacturer achieves lean production—it can do more with less.

20. JIT (Just In Time) Systems Benefits of JIT • Reduction of stocks to practically nothing • Encourages factories to keep production flowing smoothly • Constant production flow encourages and demands good teamwork

21. JIT (Just In Time) Systems Risks involved with JIT—Companyis exposed to greater risk due to disruptions because: • Poor quality cannot be tolerated in a stockless manufacturing environment • Defective parts can bring the entire operation to a halt • Suppliers must be able to meet the production schedules of their customers

22. Supply Chain Management The Supply Chain Suppliers Manufacturers Distributors Retailers Facilities Functions Activities Production of Goods and Services

23. Supply Chain Management • Supply Chain—the group of firms that provide all the various processes required to make a finished product • Supply Chain Management—attempting to integrate all of the facilities, functions and activities involved in production from suppliers to customers. • Supply Chain Management is based on the belief that because one company’s output is another company’s input, all companies involve will benefit from working together more closely.