BUSN101 Ch.09 Production and Operations Management of Goods and Services

14000

A firm eishing to go global should considerpassing ISO ( ) standards in order to demonstrate a commitment to best practices in terms of impacting the environment to international business.

producing large quantities of a few types of products

An assembly line or product layout is used in production when:

information technology

Choosing facility location has become more flexible for both companies and employees throught the use of ( ) ( ) such as texting, teleconferencing, cell phones, and emails

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

Computer- integrated manufacturing (CIM)

services and goods

DEveloping countries are providing new markets for companies that can provide them with needed:

A worldwide federation of national standards bodies from more than 140 countries that set global measures for the quality of individual products. ISO is a nongovernmental organization established in 1947 to promote the development exchange of standards to facilitate the international exchange of goods and services.

Describe the International Organization for Standardization.

Companies are creating new relationships with suppliers over Internet so that operations management is becoming and "interfirm" process is in which companies work closely together to design, produce, and ship products to customers. Many manufacturing companies are developing new Internet-focused strategies that will enable them and others to compete more effectively. The changes are having a dramatic effect on operations managers who have to adjust from a one-firm system to an interfirm environment.

Describe the concept of "interfirm process", as it relates to operations management.

Jobs in manufacturing have been declining in the last years, and unemployment could reach double digits in the manufacturing sector. However, from 2001 until the collapse in 2007, manufacturing output rose 4 percent per year, and the United States was still the world's leading manufacturer, accounting for 25 percent of all goods produced in the world each year. The U.S. is no longer manufacturing based. About 70 percent of G.D.P. and 85 percent of jobs now come from the service sector.

Describe the current state of manufacturing in the U.S. compared to the beginning of this decade. is the U.S. still a manufacturing based economy?

Allows workers to congregate around the product to be completed. Used when working on a major project, such as a bridge or an airplane.

Describe: A fixed position layout:

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.

Describe: A process layout:

A newer version of materials requirement planning (MRP) that combines the computerized functions of all the divisions and subsidiaries of the firms such as finance, human resources, and order fulfillment-into a single integrated software program that uses a single database.

Enterprise resource planning (ERP)

The physical arrangement of resources (including people) in the production process.

Facility layout

The process of selecting a geographic location for a company's operations.

Facility location

Products are made without any labor, this means machines are designed to do multiple tasks so they can produce a variety of products.

How can flexible manufacturing reduce labor costs?

In manufacturing facilities layout depends on the processes that are to be performed. The physical arrangement must be designed to most efficiently produce goods and services for customers. For services, the layout is designed to help the consumer find and buy what they need. Often this means helping consumers to find and buy things on the Internet. Some stores have added kiosks that enable customers to search for goods on the Internet and place the order from the store.

How do manufacturing and services differ with respect to facilities layout?

A company becomes lean by continuously increasing its capacity to produce high-quality goods while decreasing it's need for resources.

How does a company become "lean"?

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. ERP is 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.

How is ERP different from MRP?

In the past, manufacturers dealt with many suppliers so that if one couldn't deliver, the firm could get materials from someone else. Today, however, manufacturers rely more heavily on just one or two suppliers, because the relationship between suppliers and manufactures is much closer than before.

How is purchasing function different today from the past?

A production process in which a minimum of inventory is kept on the premises and parts, supplies, and other needs are delivered just in time to go on the assembly line.

Just-in-time (JIT) inventory control

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 4) identifying the critical path

List the four steps in designing a PERT chart:

a) labor costs b) availability of resources c) cost of living d) access to transportation that can reduce time to market e) proximity to suppliers and customers f) the need to train or retrain the local workforce g) proximity to customers h) crime rates i) quality of life for employees

List the major considerations in the site selection process.

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

Materials requirement planning (MRP)

Inexpensive resources are another major reason for moving production facilities. Often the most important resource is people, so companies tend to cluster where smart and talented people are. Time-to-market is another decision making factor. Access to highways, rail lines, waterways, and airports is thus critical.

Other key reasons that firms move their production facilities include:

The term used to describe all the activities managers do to help their firms create goods.

Production management

Assembly

Production process that puts components together:

A method for analyzing tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the total project.

Program evaluation and review technique (PERT)

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

Purchasing

Consistently producing what the customer wants while reducing errors before and after delivery to the customer.

Quality

facility

Quality of life issues for employees should be considered by a company when choosing a proper location for its...

A quality measure that allows only 3.4 defects per million opportunities.

Six Sigma quality

potential problems to prevent their occurrence.

Six Sigma quality detects...

The process some managers use to continually monitor all phases of the production process is being built into the product from the beginning.

Statistical quality control (SQC)

Facility location

The process of selecting a geographica location for a company's operations is referred to as ( ) ( ) .

moving products quickly to customers at the lowest cost

Time-to-market means:

1) Focusing more on customers 2) Maintaining closer relationships with suppliers and other companies to satisfy customer needs 3) Practicing continuous improvement 4) Focusing on quality 5) Saving on costs through site selection 6) Relying on the Internet to unite companies that work together 7) Adopting production techniques such as enterprise resource planning computer integrated manufacturing, and lean manufacturing

What are 7 areas American manufacturers and service organizations do to maintain a competitive edge in the world marketplace?

Companies in both the manufacturing and the service sector are using mass customization. GNC stores for example feature machines that allow shoppers to custom design several products. Other companies provide custom made books, custom greeting cards and custom fitted shoes and clothes. In the service sector there are customized insurance policies, fitness programs, and vacation packages.

What are some examples of how companies have used mass customization?

a) They take half the human effort b) They have half the defects in the finished product or service c) They require one-third the engineering effort d) They use half the floor space for the same output e) They carry 90 percent less inventory

What are the characteristics of lean companies?

Having an environmental policy, having specific improvement targets, conducting audits of environmental programs, and maintaining top management review of the process.

What are the requirements for ISO 14000 certification?

Shorter time between orders and payment, less staff needed to do ordering and order processing, reduced inventories, and better customer service.

What are the results from using ERP?

1) leadership 2) strategic planning 3) customer and market focus 4) information and analysis 5) human resources focus 6) process management 7) business results

What are the seven key areas in which a company must show quality in order to qualify for the Baldrige Awards?

1) computer-aided design and manufacturing 2) flexible manufacturing 3) lean manufacturing 4) mass customization

What four major developments have radically changed the production process in the United States?

The first thing computers did was help in the design of products through the CAD process. This system allows designers to work in 3D. The use of both CAD/CAM makes it possible to custom design products to meet the needs of small markets with very little increase in cost.

What is made possible with the use of CAD/CAM?

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. JIT runs into problems when suppliers are farther away. Weather may delay shipments.

What is required in order for JIT (just-in-time) program to work effectively What problems could be encountered?

The benefit for companies to locate close to their suppliers is that it cuts cost of distribution and makes communication easier.

What is the benefit, for companies, of locating close to their suppliers?

A PERT chart analyzes the tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the total project. It is a complex project that is done by computer. A Gantt chart is used to measure production progress using a bar chart that shows what projects are being worked on and how much has been completed at any given time.

What is the difference between Gantt Chart and a PERT Chart?

ISO 9000 is the common name given to quality management and assurance standards. ISO 14000 is a collection of the best practices for managing, an organization's impact on the environment.

What is the difference between ISO 9000 and ISO 14000?

A continuous process is one in which long production runs turn out finished goods over time. Intermittent process the production run is short and the producer adjusts machines frequently to make different products.

What is the difference between a continuous production process and an intermittent process, in manufacturing?

Production has historically meant manufacturing, and the term production management has described the management activities that helped firms create goods. Operations management is a term that is used in both manufacturing and service organization. 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.

What is the difference between production management and operations management?

Operations management in the service industry is all about creating a good experience for those who use the service.

What is the focus of operations management in the service sector?

Availability of low-cost labor or the right kind of skilled labor remains a key reason many producers mover their plants.

What is the key reason why firms move their plants?

a) The need to inspect work required extra people and resources. b) If an error was found, someone had to correct the mistake or scrap the product. This, of course, was costly. c) If the customer found the mistake, he or she might be dissatisfied and might even buy from another firm thereafter.

What problems resulted when quality control was conducted at the end of the production line?

Process manufacturing physically or chemically changes materials. The assembly process puts together components and makes a product.

What us the difference between process manufacturing and assembly process?

Assembly line layouts workers do only a few tasks at a time, to a modular layout, in which teams of workers combine to produce more complex units of the final product.

What's the difference between an assembly line layout and a modular layout?

analyzing and sequencing taks estimating time for tasks

Which is a step used in PERT?

Many businesses are building factories in foreign countries to get closer to their international customers. When U.S. firms select foreign sites, they consider whether they are near airports, waterways, and highways so that raw and finished goods can move quickly and easily.

Why do businesses build factories in foreign countries? What do U.S. firms consider in choosing a site in a foreign country?

Computers, robots, and flexible manufacturing processes allow firms to turn out custom-made goods almost as fast as mass-produced goods were once produced.

Why do many manufactures today use intermittent process?

The European Union (EU) demands that companies want to do business with the EU be certified by ISO standards. Some major U.S. companies are also demanding suppliers meet these standards.

Why is ISO certification so important for U.S. firms?

Because a delay anywhere along this path will cause the project or production run to be late.

Why is it "critical" to identify the critical path?

telecommuting

Working from home using information technology such as computer and modem is called:

Form

An example of ( ) utility is when a butcher produces a specific cut of beef.

That part of the production process that puts together components.

Assembly process

Shorter time between orders and payment Less staff is required to process orders Any department can see the status of an order at any time

Benefits of enterprise resources planning (ERP):

they use half the floor space they cary less inventory

Characteristics of a lean company:

The use of computer in the design of products

Computer-aided design (CAD)

The use of computers in the manufacturing of products

Computer-aided manufacturing (CAM)

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

Continuous process

In a PERT network, the sequence of tasks that takes the longest time to complete.

Critical path

Designing machines to do multiple tasks so that they can produce a variety of products.

Flexible manufacturing

The value producers add to materials in the creation of finished goods and services.

Form utility

Bar graph showing production managers what projects are being worked on and what stage they are in at any given time.

Gantt chart

With a Gantt chart, 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 stay on schedule.

How can a manager use a Gantt Chart?

The common name given to quality management and assurance standards.

ISO 9000

A collection of the best practices for managing an organization's impact on the environment.

ISO I4000

Are good schools nearby? Is the weather nice? Is the crime rate low? Does the local community welcome new business? Do the chief executive and other key managers want to live there?

Identify the quality of life questions that firms consider in the facilities location process.

Access to highways, rail lines, waterways, and airports is thus critical.

In reducing time to market, what do manufacturers need?

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

Intermittent process

right materials are at the right place at the right time at the cheapest cost to meet both customer and production needs.

JIT systems make sure the:

The production of goods using less of everything compared to mass production.

Lean manufacturing

less resources less time

Lean manufacturing uses:

Tailoring products to meet the needs of individual customers.

Mass customization

a limited varitey of products

Mass production focuses on producing:

Major criteria for earning the award include whether customer wants and needs are being met and whether customer satisfaction ratings are better than those of competitors.

Name the two major criteria for earning the Baldrige Awards.

makes it easy for consumers to use the company's services and to communicate about their needs.

One strategy in selection a facility location is to find a location that...

A specialized area in management that converts or transforms resources (including human resources) into goods and services.

Operations management

Critical path

PERT charts allow managers to identify the ( ) ( ) of a project by illustrating the sequence of tasks that takes the longest to complete.

That part of the production process that physically or chemically changes materials.

Process manufacturing

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

Production

value

Production adds ( ) , or utility, to materials or processes.

The process of testing statistical samples of product components at each stage of the production process and plotting those results on a graph. Any variances from quality standards are recognized and can be corrected if beyond the set standards.

Statistical process control (SPC)

a quality-control inspection at the end because mistakes are caught much earlier in the process.

Statistical process control reduces the need for...

continually monitor all phases of the production process and assure quality is being built into the product from the beginning.

Statistical quality control is the process used to...

Working from home via computer

Telecommuting

minimum inventory us kept on hand

The basic premise of just-in-time inventory is:

provide high-quality goods and services instantaneously in response to customer demand.

The ultimate goal of operations management is to...

a) Facility location b) Facility layout c) Materials requirement planning d) purchasing e) inventory control f) quality control

What are the problems solved by operations management planning?

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 3) to provide everything at the lowest possible cost

What are the three basic requirements of production, according to Andrew Grove?

For brick-and-mortar retailers to beat such competition, they have to choose good locations and offer outstanding service.

What do brick and mortar stores have to do to compete with services offered over the internet?

A company determine what customer needs are, including regulatory and legal requirements, and make communication arrangements to handle issues such as complaints. Other standards cover process control, product testing, storage, and delivery.

What do the new ISO 9004: 2000 standards require?

value

What does the production process add to materials?

Delighting customers by anticipating their needs has become the quality standard for luxury hotels, as it has for most other service businesses.

What has become the quality standard in the services industry?

Technology gives firms and employees increased flexibility to choose locations while staying in the competitive mainstream.

What impact is technology having on facilities location?

Computer-integrated manufacturing, unites CAD and CAM. It's benefit cuts as much as 80 percent of the time needed to program machines to make parts.

What is CIM and what is the benefit?