1-1 chapter one production and operations management production/operations management sixth edition...
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENTPRODUCTION/OPERATIONS
MANAGEMENTSIXTH EDITION
WILLIAM J. STEVENSONRochester Institute of Technology
Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENTINTRODUCTION
PART ONE
• Chapter One• Production and Operations Management
• Chapter Two• Productivity, Competitiveness, and Strategy
Irwin/McGraw-Hill © The McGraw-Hill Companies, Inc., 1999
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Operations Management
Operations function consists of all activities directlyrelated to producing goods or providing services.
Organization
Finance Production/Operations
Marketing
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Business Operations Overlap
Marketing
Production/Operations
Finance
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Types of Operations
Operations ExamplesGoods Producing Farming, mining, construction,
manufacturing, power generationStorage/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 televisionnewscasts, telephone, satellites
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Value-Added• The difference between the cost of inputs
and the value or price of outputs.
Inputs Land Labor Capital
Transformation/Conversion
process
Outputs Goods Services
Control
Feedback
FeedbackFeedback
Value added
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Food Processor
Inputs Processing OutputsRaw Vegetables Cleaning Canned vegetablesMetal Sheets Making cansWater CuttingEnergy CookingLabor PackingBuilding LabelingEquipment
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Hospital Process
Inputs Processing OutputsDoctors, nurses Examination Healthy patientsHospital SurgeryMedical Supplies MonitoringEquipment MedicationLaboratories Therapy
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Accounting
IndustrialEngineering
Operations
Maintenance
Public Relations
PersonnelPurchasing
Distribution
Operations Interfaces
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Decision Making
• System Design– capacity– location– arrangement of departments– product and service planning– acquisition and placement of
equipment
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Decision Making
• System operation– personnel– inventory– scheduling– project
management– quality assurance
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Major Characteristics of Production Systems
• Degree of standardization• Type of operation– project– job shop– repetitive production– continuous processing
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Manufacturing or Service?
Tangible Act
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Key Differences
• Customer contact
• Uniformity of input
• Labor content
• Uniformity of output
• Measurement of productivity
• Quality assurance
These differences are beginning to fadein many cases
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Manufacturing vs Service
CharacteristicOutput
Customer contact
Uniformity of input
Labor content
Uniformity of output
Measurement of productivity
Opportunity to correct
ManufacturingTangible
Low
High
Low
High
Easy
High
ServiceIntangible
High
Low
High
Low
Difficult
Lowquality problems
High
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Responsibilities of Operations Management
Products and services
• Planning– Capacity– Location–
– 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
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Models
• A model is an abstraction of reality.– Physical– Schematic– Mathematical
What are the pros and cons of models?
Tradeoffs
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Systems Approach
“The whole is greater than the sum of the parts.”
Suboptimization
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Quantitative Approaches
• Linear programming
• Queuing Techniques• Inventory models• Project models• Statistical models
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Pareto Phenomenon
• A vital few things are important for reachingan objective or solving a problem.
• 80/20 Rule - 80% of problems are caused by20% of the activities.
How do we identify the vital few?
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Recent Trends
• Global competition
• Operations strategy
• Total quality management (TQM)
• Flexibility
• Time reduction Technology
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CHAPTER ONEPRODUCTION AND OPERATIONS MANAGEMENT
Recent Trends (Continued)
• Worker involvement
• Reengineering
• Environmental issues
• Service