Business Chapter 11

How does labor affect location decisions?

-Skilled labor—finding an area with an abundance of workers who possess the necessary skills -Affordable labor—finding employees who are both highly skilled and affordable -Living conditions

How Does a Company Decide Which Supplier to Use?

A vast collection of resources is available to help businesses connect with suppliers, such as the Better Business Bureau, local chambers of commerce, exhibitions, trade magazines, the Internet, and recommendations from friends and business acquaintances.

What is the ISO certification process?

Certification is usually done by a third-party registrar that conducts an assessment of a company's quality-assurance manuals and practices.

How important is manufacturing in the United States?

Manufacturing remains a fundamental component of the U.S. economy; in fact, it was the largest contributor to the U.S. real gross domestic product (GDP) in 2012.

Gantt chart

One method for keeping tabs on the progress of a given project

How does manufacturing affect the global economy?

Outsourcing has contributed to the decline in U.S. manufacturing and the increase in unemployment. However, on a global basis, offshoring to Third World countries has helped to improve their standards of living and contributed to the world's economic growth.

mass production

Producing large quantities of goods at a low cost

Where do businesses decide to locate their facilities?

Proximity to market Proximity to raw materials Proximity to utilities Proximity to hazardous waste disposal

How important are services to the U.S. economy?

Services make up nearly three-fourths of the U.S. GDP, and more than 75 percent of jobs are in the service sector.

Reserve stock system

Stock is set aside in reserve so that it cannot be used. When the company has to dip into the reserve stock, it knows it is time to reorder that item.

How is TQM carried out?

TQM involves ongoing improvement of products, services, and processes, which can be accomplished by undertaking a plan-do-check-act (PDCA) cycle.

Stock book solution

The stock on hand is tallied along with what has been ordered and what has been sold.

quality control

The techniques, activities, and processes used to guarantee that a certain good or service meets a specified level of quality

Can mass customization be used in service industries?

The technologies of mass customization have also enabled many service-based organizations to meet the individual needs of their customers.For example, Burger King is famous for its "Have It Your Way" method of production, which allows customers to "tweak" their hamburger toppings to meet their specific tastes.

Why is production a critical component of any business?

To increase their profits and decrease production costs, businesses must find the most efficient production process possible.

What changes in production will keep the United States competitive?

To produce better products more economically and faster, U.S. manufacturers are utilizing newer practices such as enterprise resource planning, computer integrated manufacturing, flexible manufacturing, and lean manufacturing.

Visual assessment

When the supply is low, it's time to reorder.

just-in-time (JIT) inventory management

a firm keeps the smallest amount possible of inventory possible, with inventory being ordered as it is actually needed.

continuous flow production

a method that produces discrete units of products in large numbers, continuously and rapidly.

radio frequency identification (RFID)

allowing a computer to keep track of the status and quantity of each item.

total quality management (TQM)

approach involves everyone involved in the production process, including management, customers, employees, and suppliers.

Industrial robots

can work around the clock, with accuracy, and in potentially hazardous conditions.

supply chain

consists of all of the suppliers, business partners, service providers, as well as sourced manufacturers, distributors, retailers, and transporters that take part in producing a product and delivering it to the customer.

Statistical quality control (SQC)

describes the set of statistical tools used to analyze each stage of the production process to ensure that quality standards are being met.

flexible manufacturing system (FMS)

enables manufacturers to produce large quantities of customized products

ISO 9001

implements a quality management system.

ISO 14001

implements an environmental management system.

Inventory control

includes the receiving, storing, handling, and tracking of everything in a company's stock, including raw materials, unfinished products, finished products, and consumables.

Statistical process control (SPC)

inspects a random sampling of products at every phase of production to show any variations that need to be corrected throughout the process.

Materials requirement planning (MRP)

is a computer-based program used for inventory control and production planning

assembly line

is a mass production process

Lean production

is a set of principles concerned with reducing waste and improving flow

The International Organization for Standardization (ISO)

is an organization dedicated to creating worldwide standards of quality for goods and services.

Loading

is assigning a job to a specific machine or an entire work center.

Sequencing

is assigning the order in which jobs are processed.

make-or-buy decision

is determining if the company will make the entire product or if the product will be assembled from a combination of parts manufactured in-house and parts manufactured or purchased outside the organization.

Operations management

is the administration and planning of business operations to produce and distribute goods as efficiently as possible

Backward scheduling

is the exact opposite.

Supply chain management

is the management of activities from all organizations involved in the production process to maximize value and achieve a sustainable competitive advantage

Capacity planning

is the process of determining how much of a product an organization can produce to meet its demand

Production

is the process of getting a good or a service to the customer; it is a series of related activities, with value being added as each activity or stage is completed.

Mass customization

is the production of goods or services tailored to meet customers' individual needs cost effectively

Purchasing

is the task of acquiring the materials and services needed in the production process.

program evaluation and review technique (PERT)

maps out the various steps involved in a project, differentiating tasks that must be completed in a certain order from tasks that may be completed simultaneously

intermittent processes

production runs are shorter, so machinery can be changed over between them to accommodate product changes.

Scheduling

refers to the efficient organization of equipment, facilities, labor, and materials.

Facility layout

refers to the physical arrangement of resources and people in the production process and how they interact.

Production management

refers to the planning, implementation, and control measures used in the process to convert resources into finished products.

Computer-aided design (CAD)

refers to using a computer and software to create two-dimensional or three-dimensional models of parts or products.

Six Sigma

seeks to virtually eliminate defects by implementing a quality focus in every aspect of the organization. It strives for continuous improvement.

Cellular layout

small teams of workers are grouped together in work stations and handle all aspects of assembly of a product

Computer-integrated manufacturing (CIM)

systems combine design and manufacturing functions with other automated functions, such as order taking, shipment, and billing for the complete automation of a manufacturing plant.

Enterprise resource planning (ERP)

systems manage the same inventory control and process scheduling that MRP systems manage, but they can integrate these functions with other aspects of the business, such as finance, marketing, and human resources.

Product layout

used mostly for high-volume, standardized products made sequentially on an assembly line

Process layout

used mostly to produce low-volume, or batches, of customized products

Fixed position layout

used to manufacture large items, the product stays in one place, and the workers move around the product to complete its assembly

computer-aided manufacturing (CAM)

uses the design data to control the machinery used in the manufacturing process.

forward scheduling

you start with the date that materials are available, create the most efficient production schedule, and then determine a shipping date based on that schedule.