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Operations Control

Operations Control. 3. Chapter 12. Learning Objectives. Understand the basic requirements for controlling operating costs. Define quality from the perspective of an operations manager. Explain the concept of Total Quality Management (TQM).

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Operations Control

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  1. Operations Control 3 Chapter 12

  2. Learning Objectives • Understand the basic requirements for controlling operating costs. • Define quality from the perspective of an operations manager. • Explain the concept of Total Quality Management (TQM). • Define the following terms: continuous improvement, kaizen, six sigma, lean manufacturing, and quality at the source. • Explain the purpose of the Malcolm Baldrige Award. • Explain the concept for just-in-time (JIT) inventory.

  3. Operations Control • Two aspects • Design • Control • Effective operations

  4. Controlling Operations Costs • One of primary jobs of the operations manager • Variable overhead expenses • Fixed overhead expenses • Monthly budgets for each costs area • System indicates when costs are out of control • Simple inspection

  5. Quality Management • Operations manager and quality • Quality can affect in many ways • Loss of business, liability, costs, and productivity • Customer response program Quality Assurance • Past versus present • W. Edwards Deming

  6. Total Quality Management • 5 summary actions • A philosophy Implementing TQM • 3 most popular approaches • Deming, Juran, and Crosby methods • Initiative for successful implementation • Barriers

  7. Specific Approaches for Improving Quality • Continuous improvement • Kaizen • Quality at the source • Six sigma • Lean manufacturing Reengineering • One-time concerted effort

  8. Other Quality Standards • ISO 9000 • Promoting the development of standardization and facilitating the international exchange of goods and services • Five standards • New standards • ISO 14000 • Goal – To provide international environmental standards that are compatible • Compliance in four areas • Zero defects – Program characteristics

  9. The Malcolm Baldrige National Quality Award • Promotes excellence • Six types of organizations are eligible • Seven criteria categories

  10. Types of Quality Control • Product quality control • Acceptance sampling procedures • Process quality control • Process is halted • Acceptance sampling • Random sample • Process control chart • Whether, not why

  11. Inventory Control • 3 categories • Raw material • In process • Finished goods • Inventories add flexibility • Costly • Management must continually balance costs

  12. Just-in-Time Inventory Control • Philosophy • Smaller but more frequent orders • To eliminate waste • Applies to production • Potential hazard • Not a quick fix • New twist from Tom Peters

  13. Tracking Inventory • Tedious • Frequent mistakes Bar-Code Technology • Reduced errors • Automatic Physical Inventory • Actual inventory

  14. Independent versus Dependent Demand Items • Sold or shipped as opposed to being used in making another product ABC Classification System • ABC accounts • Appropriate control • Shortcomings • Advantage • Additional value

  15. Safety Stocks • Optimal size • Out-of-stock-cost The Order Quantity • Optimal units • Ordering costs • Carrying costs • EOQ • Weaknesses

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