Chapter 9 Production and Operation Management

steps used in PERT

(1) analyzing and sequencing tasks that need to be done, (2) estimating the time needed to complete each task, (3) drawing a PERT network illustrating the information from steps 1 and 2, and (4) identifying the critical path.

3 basic requirements of production

(1) to build and deliver products in response to the demands of the customer at a scheduled delivery time, (2) to provide an acceptable quality level, and (3) to provide everything at the lowest possible cost.

Deming Cycle (PDCA)

(after the late W. Edwards Deming, the "father" of the movement toward quality). Its steps are Plan, Do, Check, Act (PDCA). Again, the idea is to find potential errors before they happen

Gannt Chart

(named for its developer, Henry L. Gantt) is a bar graph, now also prepared by computer, that clearly shows what projects are being worked on and how much has been completed at any given time. Using a Gantt-like computer program, a manager can trace the production process minute by minute to determine which tasks are on time and which are behind, so that adjustments can be made to allow the company to stay on schedule.

Production methods to make US companies more competitive

1) computer-aided design and manufacturing, (2) flexible manufacturing, (3) lean manufacturing, (4) mass customization, (5) robotics, and (6) 3D printing.

computer-aided design (CAD)

3D modeling software to create new products

ISO

ISO is a nongovernmental organization established to promote the development of world standards to facilitate the international exchange of goods and services. (ISO is not an acronym. It comes from the Greek word isos, meaning "oneness."

just-in-time (JIT) inventory control

JIT systems keep a minimum of inventory on the premises—and deliver parts, supplies, and other needs just in time to go on the assembly line. To work effectively, however, the process requires an accurate production schedule (using ERP) and excellent coordination with carefully selected suppliers, who are usually connected electronically so they know what will be needed and when.

Program Evaluation and Review Technique (PERT)

PERT users analyze the tasks to complete a given project, estimate the time needed to complete each task, and compute the minimum time needed to complete the whole project.

Quality control (at the end of production) and the concerns it caused

Products were completed first and then tested for quality. This resulted in several problems: The need to inspect work required extra people and resources. If an error was found, someone had to correct the mistake or scrap the product. This, of course, was costly. If the customer found the mistake, he or she might be dissatisfied and might even buy from another firm thereafter.

computer-integrated manufacturing (CIM)

The uniting of computer-aided design with computer-aided manufacturing.

Enterprise Resource Planning (ERP)

a newer version of MRP, combines the computerized functions of all the divisions and subsidiaries of the firm—such as finance, human resources, and order fulfillment—into a single integrated software program that uses a single database. The result is shorter time between orders and payment, less staff needed to do ordering and order processing, reduced inventories, and better customer service

mass customization (build-to-order)

a production method whereby products are not made until an order is placed by the customer; products are made according to customer specifications

continuous process

a production process in which long production runs turn out finished goods over time

intermittent process

a production process in which the production run is short and the machines are changed frequently to make different products

fixed position layout

allows workers to congregate around the product to be completed.

ITs effect on business

computers, WiFi, e-mail, voice mail, texting, and so forth—is giving firms and employees increased flexibility to choose locations while staying in the competitive mainstream

production process

consists of taking the factors of production (land, etc.) and using those inputs to produce goods, services, and ideas. Planning, routing, scheduling, and the other activities are the means to accomplish the objective—output.

production management

has described the activities that helped firms create goods.

operations management planning

helps solve many of the problems in the service and manufacturing sectors. These include facility location, facility layout, materials requirement planning, purchasing, inventory control, and quality control. The resources used may be different, but the management issues are similar.

Assembly Line Layout

in which workers do only a few tasks at a time

ISO 14001

is a collection of the best practices for managing an organization's impact on the environment. As an environmental management system, it does not prescribe a performance level. Requirements for certification include having an environmental policy, having specific improvement targets, conducting audits of environmental programs, and maintaining top management review of the processes.

Materials Requirement Planning (MRP)

is a computer-based operations management system that uses sales forecasts to make sure needed parts and materials are available at the right time and place.

Operations Management

is a specialized area in management that converts or transforms resources, including human resources like technical skills and innovation, into goods and services. It includes inventory management, quality control, production scheduling, follow-up services, and more

process layout

is one in which similar equipment and functions are grouped together. The order in which the product visits a function depends on the design of the item. This allows for flexibility

ISO 9001

is the common name given to quality management and assurance standards.

Production

is the creation of finished goods and services using the factors of production: land, labor, capital, entrepreneurship, and knowledge

purchasing

is the function that searches for high-quality material resources, finds the best suppliers, and negotiates the best price for quality goods and services.

facility layout

is the physical arrangement of resources, including people, to most efficiently produce goods and provide services for customers. Facility layout depends greatly on the processes that are to be performed.

facility location

is the process of selecting a geographic location for a company's operations. In keeping with the need to focus on customers, one strategy is to find a site that makes it easy for consumers to use the company's services and to communicate about their needs.Ex: Flower shops and banks have placed facilities in supermarkets so that their products and services are more accessible than in freestanding facilities. Starbucks has also set up operations in supermarkets and Target stores. You can find a McDonald's inside some Walmart stores or even in gas stations.

Statistical Process Control (SPC)

is the process of testing statistical samples of product components at each stage of production and plotting the test results on a graph. Managers can thus see and correct any deviation from quality standards.

Statistical Quality Control (SQC)

is the process some managers use to continually monitor all phases of the production process and ensure quality is being built into the product from the beginning

lean manufacturing

is the production of goods using less of everything than in mass production: less human effort, less manufacturing space, less investment in tools, and less engineering time to develop a new product. A company becomes lean by continuously increasing its capacity to produce high-quality goods while decreasing its need for resources.

critical path

is the sequence of tasks that takes the longest time to complete. We use the word critical because a delay anywhere along this path will cause the project or production run to be late.

Form utillity

is the value producers add to materials in the creation of finished goods and services, such as by transforming silicon into computer chips or putting services together to create a vacation package

Mass prouduction

make a large number of a limited variety of products at very low cost.

Nanomanufacturing

means being able to manipulate materials on a molecular or even atomic scale.

Maintaining Quality

means consistently producing what the customer wants while reducing errors before and after delivery.

flexible manufacturing

means designing machines to do multiple tasks so they can produce a variety of products

mass customization

means tailoring products to meet the needs of a large number of individual customers,

customize

means to make a unique product or provide a specific service to specific individuals.

Malcom Baldrige National Quality Award

named in honor of a former U.S. secretary of commerce. Companies can apply for these awards in each of the following areas: manufacturing, services, small businesses, nonprofit/government, education, and health care.

process manufacturing

physically or chemically changes materials. For example, boiling physically changes an egg. Similarly, process manufacturing turns sand into glass or computer chips.

Interfirm

process in which companies work closely together to design, produce, and ship products to customers.

assembly process

puts together components (eggs, toast, and coffee) to make a product (breakfast).

modular layout

teams of workers combine to produce more complex units of the final product.

Additive manufacturing (3D printing)

the production of physical items by adding layer upon layer, much in the same way an inkjet printer lays down ink

computer-aided manufacturing (CAM)

the use of computers in the manufacturing of products

Six Sigma Quality

which sets a benchmark of just 3.4 defects per million opportunities, detects potential problems to prevent their occurrence. That's important to a company that makes 4 million transactions a day, like some banks.

telecomuting

working from home via computer, is a major trend in business.