BUSINESS 101 CHAPTER 8:Producing Quality Goods & Services

Lakukan tugas rumah & ujian kamu dengan baik sekarang menggunakan Quizwiz!

How Do Managers Plan for Production?

1. Design & Planning 2. Facilities Planning 3. Human Resources 4. Plant Layout

Once Research and Development identifies an idea that meets customer needs, three additional steps are used to convert the idea to an actual good or service.

1. Design planning develops a plan to convert the idea into a new good or service. 2. Facilities planning identifies a site where the good or service can be produced. 3. Operational planning decides on the amount of goods or services that will be produced within a specific time period.

Operations Control: Inventory Control Methods

1. Materials requirements planning (MRP) 2. Manufacturing resource planning (MRP II) 3. Enterprise resource planning (ERP) 4. Just-in-time inventory system

Statistical process control (SPC)

A system that uses sampling to obtain data that are plotted on control charts and graphs to identify and pinpoint problems in the production process

Development and implementation

Activities undertaken to put new or existing knowledge to use in producing goods and services

Describe how research and development leads to new products and services.

Operations management often begins with product research and development and often referred to as R&D. The results of R&D may be entirely new products or services or extensions and refinements of existing products or services. R&D activities are classified as basic research (aimed at uncovering new knowledge), applied research (discovering new knowledge with some potential use), and development and implementation (using new or existing knowledge to produce goods and services). If a firm sells only one product or provides only one service, when customers quit buying the product or service, the firm will die. To stay in business, the firm must, at the very least, find ways to refine or extend the want-satisfying capability of its product or service.

Careers in Operations Management

Operations managers must appreciate the manufacturing process • Mass production • Analytical process • Synthetic process

Where Do New Products and Services Come From?

Research and Development (R&D) Product Extension and Refinement

Capacity

The amount of products or services that an organization can produce in a given time Required capacity must meet product demand

Productivity

The average level of output per worker per hour

Use of Technology

The degree of automation and technology must be determined based on the trade off between high initial investment costs with lower operating costs (for automation) and low initial with high operating costs (for human labor)

Quality Control Inspection

The examination of the quality of work in process

Product life cycle

The rise and fall pattern of sales associated with the introduction and acceptance of a product in the market place

Six Sigma

a disciplined approach that relies on statistical data and improved methods to eliminate defects for a firm's products and services

product line

a group of similar products that differ only in relatively minor characteristics

continuous process

a manufacturing process in which a firm produces the same product(s) over a long period of time

intermittent process

a manufacturing process in which a firm's manufacturing machines and equipment are changed to produce different products

just-in-time inventory system

a system designed to ensure that materials or supplies arrive at a facility just when they are needed so that storage and holding costs are minimized

Quality circle

a team of employees who meet on company time to solve problems of product quality

quality circle

a team of employees who meet on company time to solve problems of product quality

A manufacturing facility may employ one or more than one production process. a. True b. False

a. True

A process layout of a factory floor performs each operation in its own particular area. a. True b. False

a. True

One of the great advantages of an MRP system is its ability to juggle delivery schedules and lead times effectively. a. True b. False

a. True

Operations management refers to all activities required to produce goods and services. a. True b. False

a. True

Services, unlike manufactured goods, cannot be stored. a. True b. False

a. True

The ISO 14000 incorporates environmental concerns to existing standards. a. True b. False

a. True

The network of national standards develops standards for quality products and services that extend to over 160 different countries. a. True b. False

a. True

A synthetic process of manufacturing is the opposite of a mass production process. a. True b. False

b. False

A _______ manufacturing system combines electronic machines and computer-integrated manufacturing in a single-production system. continuous analytic synthetic flexible automation

flexible

One worker in Department A produces 45 units of work per day on a computer, whereas a co-worker produces only 40 units of work per day on a computer. Since the first worker produces more units, that worker has a lower capacity to use technology. higher productivity rate. desire to help the co-worker. computer-integrated system. computer-aided system

higher productivity rate.

fixed position layout

is used in producing a product that is too large to move

product layout (assembly line)

is used when all products undergo the same operations in the same sequence

Procter & Gamble uses ______ production to produce household products. efficient order demand supply order mass effective

mass

Two important components of scheduling are lead time and planning. designing and arranging. monitoring and controlling. place and time. logistics and flow.

place and time.

The process of acquiring materials, supplies, components, and parts from other firms is known as acquisition. planning. purchasing. inventory requisition. materials requirements planning.

purchasing.

The American economy is now characterized as a(n) economy. civilized stagnant service bureaucratic industrialized

service

Utility

the ability of a good or service to satisfy a human need

plant layout

the arrangement of machinery, equipment, and personnel within a production facility. Is used when small batches of different products are created or worked on in a different operating sequence

design planning

the development of a plan for converting an idea into an actual product or service

inspection

the examination of the quality of work-in-process

planning horizon

the period during which an operational plan will be in effect

automation

the total or near-total use of machines to do work

computer-aided design (CAD)

the use of computers to aid in the development of products

computer-aided manufacturing (CAM)

the use of computers to plan and control manufacturing processes

Robotics

the use of programmable machines to perform a variety of tasks by manipulating materials and tools

The goal of basic research is to uncover new knowledge without regard for its potential use. discover new knowledge with regard for potential use in development. discover knowledge for potential use. put new or existing knowledge to use. combine ideas.

uncover new knowledge without regard for its potential use.

Form Utility

utility created by people converting raw materials, finances, and information into finished products

Successful operations managers must:

• Be able to motivate and lead people • Understand how technology can make a manufacturer more productive and efficient • Appreciate the control processes that lower production costs and improve product quality • Understand the relationship between the customer, the marketing of a product, and the production of a product

How Do Managers Plan for Production? Human Resources

• Human resources manager and operations manager must work together • The appropriate skills must be identified • Employees with the right skills must be recruited • Or training programs must be developed

Where Do New Products and Services Come From? Product Extension and Refinement

• Product life cycle • Product refinement • Product extension

How Do Managers Plan for Production? Design & Planning

• Product line • Product design • Capacity • Use of technology • Labor-intensive technology • Capital-intensive technology

How Do Managers Plan for Production? Facilities Planning

• The process of determining where products or services are to be produced • Factors influencing the decision either to use an existing facility or to construct a new facility ----Does the existing facility have the capacity to handle the increased demand for production? ----Is the cost of refurbishing or expanding the existing facility less than constructing a new facility? • Factors influencing the location decision for a production facility ---- Locations of major customers ---- Availability of skilled and unskilled labor ---- Quality of life for employees and management ---- Cost of land and construction ---- Taxes, environmental regulations, zoning laws ---- Financial incentives from local and state governments ---- Special requirements for resources

Operations Control: Quality Control Improving quality through employee participation

-Quality circle -Total Quality Management (TQM) -Six Sigma

The impact of computers and robotics on productivity

1. Automation The total or near total use of machines to do work 2. Robotics - The use of programmable machines to perform a variety of tasks by manipulating materials and tools - Robots work quickly, accurately, and steadily - Robots are effective in tedious, repetitious, and hazardous tasks 3. Computer manufacturing systems Computer-aided design (CAD) Computer-aided manufacturing (CAM) Computer-integrated manufacturing (CIM) 4. Continuous Process A manufacturing process in which a firm produces the same product(s) over a long period of time 5. Flexible manufacturing systems (FMS) A single production system that combines electronic machines and computer-integrated manufacturing. 6. Intermittent process A manufacturing process in which a firm's manufacturing machines and equipment are changed to produce different products 7. Technological displacement Automation cuts manufacturing time, reduces error, and simplifies retooling procedures -Many robots work with humans to make jobs safer and easier -Automation will bring change to many jobs; many workers will have to retrain or seek jobs in other sectors of the economy

Causes of U.S. productivity small increase

1. Economic crisis; reduction in investment in new equipment and technology 2. Growth of the service sector without a corresponding increase in the rate of productivity growth 3. Increased government regulation

Improving productivity growth rates

1. Eliminate or modify government policies hindering productivity growth 2. Increase employee motivation and participation 3. Increase cooperation between labor and management 4. More investment by business in facilities, equipment, technology and automation, and employee training

The Conversion Process: Manufacturing Using a Conversion Process

1. Focus The resource or resources that make up the major or most important input; financial, material, information, people 2. Magnitude of change The degree to which the resources are physically changed 3. Number of production processes The number of production processes employed varies from one or a few for small firms to many for larger firms

Operations Control: For complex products, many operations managers prefer Gantt Chart & PERT

1. Gantt chart Graphic scheduling device that displays the tasks to be performed and the time required for each 2. PERT (Program Evaluation and Review Technique) A scheduling technique that identifies the major activities necessary to complete a project and sequences them based on the time required to perform each one

What Is Production?

1. Operations management All activities managers engage in to produce goods and services 2. Operations manager A person who manages systems that convert resources into goods and services Managers concern themselves with the control of operations to ensure that the organization's goals are achieved 3. Planning Planning takes place before anything is produced and during the production process

Improving Productivity with Technology

1. Productivity 2. Productivity Trends 3. Causes of U.S. Productivity small increase 4. Improving productivity growth rates 5. The impact of computers and robotics on productivity

How American Manufacturers Compete in the Global Marketplace

1. The U.S. was the most productive country after World War II 2. Competitors in European and Asian countries eventually recovered and began to compete with the U.S. firms 3. Productivity has increased due to • Innovation • Highly skilled workers • Previously work outsourced to foreign nations returning to the U.S. 4. The most successful U.S. firms have focused on: • Motivating employees to improve productivity • Reducing costs by carefully selecting suppliers • Using computer-aided and flexible manufacturing systems • Improving control procedures to lower manufacturing costs • Building foreign manufacturing facilities where labor costs are lower • Using green manufacturing to conserve natural resources

4 Types of Utility

1. form 2. place 3. time 4. possession

Outline how the conversion process transforms raw materials, labor, and other resources into finished goods or services.

A business transforms resources into goods and services in order to provide utility to customers. Utility is the ability of a good or service to satisfy a human need. Form utility is created by people converting raw materials, finances, and information into finished products. Conversion processes vary in terms of the major resources used to produce goods and services (focus), the degree to which resources are changed (magnitude of change), and the number of production processes that a business uses.

Product Line

A group of similar products that differ only in relatively minor characteristics

Statistical quality control (SQC)

A set of techniques used to monitor all aspects of the production process to ensure that both work in progress and finished products meet the firm's quality standards

Enterprise resource planning (ERP)

A sophisticated software system that can monitor inventory and production and also quality, sales, and supplier information

Operations Control: Purchasing

All the activities involved in obtaining required materials, components, supplies, and parts from other firms Objective: to ensure that the required materials are available when needed, in the proper amounts, and at minimum cost Factors affecting the choice of suppliers -Price -Quality -Reliability -Credit terms -Shipping costs

Product design

Creating a set of specifications from which a product can be produced

Applied research

Discovering new knowledge with some potential use

Manufacturing resource planning (MRP II)

Extends planning to the entire organization by providing a single common set of facts to be used by all managers to make decisions

A purchasing agent need not worry about a tiny difference in price when a large quantity is being bought.

False

Capacity is the degree to which input resources are physically changed by the conversion process.

False

For a food-processing plant such as Kraft Foods, capacity refers to the number of employees working on an assembly line.

False

Operations management is the process of creating a set of specifications from which the product can be produced.

False

When work stations are arranged to match the sequence of operations, a process layout is being used.

False

Work-in-process inventories are raw materials and supplies waiting to be processed.

False

Costs of inventory

Holding Costs Stock-Out Costs

Operations Control: Quality Control World quality standards: International Organization for Standardization (ISO)

ISO 9000: certification for meeting quality control standards in procedures in design, production processes, product testing ISO 14000: certification for incorporating environmental concerns into operations and product standards

4 Aspects of Operations Control

Implementing the operations control system in any business requires the effective use of purchasing, inventory control, scheduling and quality control. 1. Purchasing 2. Inventory Control 3. Scheduling 4. Quality Control

Product refinement

Improving a product's performance characteristics to increase its utility to consumers

Product extension

Improving and adding additional performance features that extend the want-satisfying capability of the product and its life cycle in the market

Explain the nature of production.

Operations management consists of all the activities that managers engage in to create goods and services. Operations are as relevant to service organizations as to manufacturing firms. Today, U.S. companies are forced to compete in an ever-smaller world to meet the needs of more-demanding customers. As a result, U.S. manufacturers have used innovation to improve productivity. Because of innovation, fewer workers are needed, but those workers who are needed possess the skills to use automation and technology. In an attempt to regain a competitive edge, manufacturers have taken another look at the importance of improving quality and meeting the needs of their customers. They also have used new techniques to motivate employees, reduced costs, used computer-aided and flexible manufacturing systems, improved control procedures, and used green manufacturing. Competing in the global economy is not only profitable but also an essential activity that requires the cooperation of everyone within an organization. A number of career options are available for employees in operations management.

Discuss the components involved in planning the production process.

Planning for production involves three major phases: design planning, site selection and facilities planning, and operational planning. First, design planning is undertaken to address questions related to the product line, required production capacity, and the use of technology. Then production facilities, human resources, and plant layout must be considered. Operational planning focuses on the use of production facilities and resources. The steps for operational planning include selecting a planning horizon, estimating market demand, comparing market demand with capacity, and adjusting production of products or services to meet demand.

Summarize how technology can make American firms more productive and competitive in the global marketplace.

Productivity is the average level of output per worker per hour. From 1979 to 2011, U.S. productivity growth averaged a 4.2% increase. More specifically, productivity in 2011 increased 2%. Although a 2% increase was lower when compared to our average productivity growth over the 1979 to 2011 time period, 11 other nations that the U.S. Bureau of Labor Statistics tracks each year had larger growth in productivity than the United States. Several factors must be considered if U.S. firms are going to increase productivity and their ability to compete in the global marketplace. Automation, the total or near-total use of machines to do work, has for some years been changing the way work is done in factories. A growing number of industries are using programmable machines called robots. Computer-aided design, computer-aided manufacturing, and computer-integrated manufacturing use computers to help design and manufacture products. A flexible manufacturing system (FMS) combines electronic machines and CIM to produce smaller batches of products more efficiently than on the traditional assembly line. Instead of having to spend vast amounts of time and effort to retool the traditional mechanical equipment on an assembly line for each new product, an FMS is rearranged simply by reprogramming electronic machines. An FMS is sometimes referred to as an intermittent process.

Types of Inventory

Raw Materials Work-In Process Finished Goods

Productivity trends

Recently the U.S. rate of productivity growth compares favorably with other nations

Where Do New Products and Services Come From? Research and Development (R&D)

Research and Development A set of activities intended to identify new ideas that have the potential to result in new goods and services • Basic research • Applied research • Development and implementation

The Conversion Process: The Increasing Importance of Services

Service Economy An economy in which more effort is devoted to the production of services than to the production of goods The production of services varies from the production of goods - Services are consumed immediately and cannot be stored - Services are provided when and where the customer desires - Services are usually labor intensive - Services are intangible, making it difficult to evaluate customer satisfaction The growth of service firms has increased so dramatically that we are now live in what is referred to as a service economy.

Four steps in operational planning

Step 1: Selecting a planning horizon The period during which a plan will be in effect; commonly one year Step 2: Estimating market demand The quantity that customers will purchase at the going price Demand is estimated for the planning horizon Step 3: Comparing market demand with capacity If market demand and the facility's capacity are not equal, adjustments may be necessary Step 4: Adjusting products or services to meet demand Increase capacity to meet demand Ignore excess demand Eliminate excess capacity

Understand the importance of service businesses to consumers, other business firms, and the nation's economy.

The application of the basic principles of operations management to the production of services has coincided with the growth and importance of service businesses in the United States. Today of American workers are employed in the service industry. In fact, the American economy is now characterized as a service economy. For a service firm, planning often begins with determining who the customer is and what needs the customer has. After customer needs are identified the next step is to develop a plan that will enable the firm to deliver the services that their customers want or need. Although it is often more difficult to measure customer satisfaction, today's successful service firms work hard at providing the services customers want. For example, compared with manufacturers, service firms often listen more carefully to customers and respond more quickly to the market's changing needs.

Explain how purchasing, inventory control, scheduling, and quality control affect production.

The major areas of operations control are purchasing, inventory control, scheduling, and quality control. Purchasing involves selecting suppliers. The choice of suppliers should result from careful analysis of a number of factors, including price, quality, reliability, credit terms, and shipping costs. Inventory control is the management of stocks of raw materials, work-in-process, and finished goods to minimize the total inventory cost. Scheduling ensures that materials and other resources are at the right place at the right time. Quality control guarantees that products and services are produced in accordance with design specifications. The major objective of quality control is to see that the organization lives up to the standards it has set for itself on quality. A number of different activities including quality circles, inspection, total quality management, and six sigma can be used to encourage employee participation and to improve quality.

Operations Control: Quality Control

The process of ensuring that goods and services are produced in accordance with specifications Objective is to see that the organization, lives up to the standards it has set for itself • Statistical process control (SPC) A system that uses sampling to obtain data that are plotted on control charts and graphs to identify and pinpoint problems in the production process • Statistical quality control (SQC) A set of techniques used to monitor all aspects of the production process to ensure that both work in progress and finished products meet the firm's quality standards • Inspection The examination of the quality of work in process

Operations Control: Scheduling

The process of ensuring that materials and other resources are at the right place at the right time 1. Routing of materials: The sequence of work stations that the materials will follow 2. Timing of materials When the materials will arrive at each work station and how long they will stay there 3. Follow-up Monitoring by managers to ensure timely work flows

Operations Control: Inventory Control

The process of managing inventories in such a way as to minimize inventory costs, including both holding costs and potential stock-out costs Types of inventory -Raw materials: materials that will become part of the product during the production process -Work-in-process: partially completed products -Finished-goods: completed goods Costs of inventory -Holding costs: the investment and storage costs of inventory -Stock-out costs: the costs of not having inventory available when needed

The Conversion Process

The purpose of manufacturing is to provide utility to customers The conversion process converts ideas and resources into useful goods and services. The ability to create ideas and to produce products and services is a crucial step in the economic development of any nation

A synthetic process combines raw materials or components to create a finished product.

True

Labor-intensive technology is accompanied by low initial costs and high operating costs.

True

Reshoring is sometimes referred to as onshoring or insourcing

True

The purpose of research and development is to identify new ideas that have the potential to result in new goods and services.

True

Basic research

Uncovering new knowledge; scientific advancement without regard for its potential use

computer-integrated manufacturing (CIM)

a computer system that not only helps to design products but also controls the machinery needed to produce the finished product

materials requirements planning (MRP)

a computerized system that integrates production planning and inventory control

lean manufacturing

a concept built on the idea of eliminating waste from all of the activities required to produce a product or service

mass production

a manufacturing process that lowers the cost required to produce a large number of identical or similar products over a long period of time

International Organization for Standardization (ISO)

a network of national standards institutes and similar organizations from over 160 different countries that is charged with developing standards for quality products and services that are traded throughout the globe

analytical process

a process in operations management in which raw materials are broken into different component parts

synthetic process

a process in operations management in which raw materials or components are combined to create a finished product

Capital-Intensive Technology

a process in which machines and equipment do most of the work

capital-intensive technology

a process in which machines and equipment do most of the work

Labor-Intensive Technology

a process in which people must do most of the work

labor-intensive technology

a process in which people must do most of the work

Analytical process

a process that breaks raw materials into different component parts

Synthetic process

a process that combines raw materials or components to create a finished product

Mass production

a process that lowers the cost required to produce a large number of identical or similar products over a long period of time

PERT (Program Evaluation and Review Technique)

a scheduling technique that identifies the major activities necessary to complete a project and sequences them based on the time required to perform each one. A PERT diagram identifies the activities necessary to complete a given project and arranges the activities based on the total time required for each to become an event. The activities on the critical path determine the minimum time required.

research and development (R&D)

a set of activities intended to identify new ideas that have the potential to result in new goods and services

flexible manufacturing system (FMS)

a single production system that combines electronic machines and CIM

reshoring

a situation in which U.S. manufacturers bring manufacturing jobs back to the United States

R & D in a company refers to research and development. a. True b. False

a. True

The responsibility of purchasing is to secure required materials, supplies, components, and parts from other firms. a. True b. False

a. True

Utility can be defined as the satisfaction of a human need that a good or service provides. a. True b. False

a. True

purchasing

all the activities involved in obtaining required materials, supplies, components, and parts from other firms

operations management

all the activities required to produce goods and services

Malcolm Baldrige National Quality Award

an award given by the President of the United States to organizations judged to be outstanding in specific managerial tasks that lead to improved quality for both products and services

service economy

an economy in which more effort is devoted to the production of services than to the production of goods

Services differ from the production of manufactured goods in all ways except that services are consumed immediately and cannot be stored. aren't as important as manufactured products to the U.S. economy. are provided when and where the customer desires the service. are usually labor-intensive. are intangible, and it's more difficult to evaluate customer service.

aren't as important as manufactured products to the U.S. economy.

Capacity can be defined as the amount of a product that can be sold by one individual manufacturer. a. True b. False

b. False

Drawbacks to robotics include the slow pace of work and the inaccuracy of the production. a. True b. False

b. False

Holding costs are associated with finished-goods inventory and work-in-process inventory but not associated with raw-materials inventory. a. True b. False

b. False

Mass production is a manufacturing process that incrementally raises the cost required to produce larger quantities. a. True b. False

b. False

Since the 1980's, the number of Americans employed in the manufacturing industry has increased by 20%.. a. True b. False

b. False

The notion of capacity of an organization only applies to manufacturing facilities, not to service organizations. a. True b. False

b. False

The number of U.S. workers employed in the manufacturing sector has stayed steady for the past 20 years. a. True b. False

b. False

The only responsibility of the purchasing area is to purchase products at the lowest cost possible. a. True b. False

b. False

The product design comes before the product line can be clearly determined. a. True b. False

b. False

From ________ to ________ the United States was one of the most productive countries in the world with leadership in this area never threatened. a. 1960; 1990 b. the end of WWII; the late 1970s c. the early 1950s; the late 1970s d. the end of WWI; the late 1970s e. 1950; 1985

b. the end of WWII; the late 1970s

A(n) ________ manager is someone who manages the system in an organization that converts resources into goods and services. a. human resources b. Inventory c. operations d. Planning e. Activities

c. operations

After World War II, which country became the most productive country in the world for almost 30 years? a. Korea b. Japan c. Germany d. United States e. Taiwan

d. United States

Gantt Chart

graphic scheduling device that displays the tasks to be performed and the time required for each. This chart details the job of building three dozen electric golf carts

process layout

is used when small batches of different products are created or worked on in a different operating sequence

A common planning horizon for production activities is one day. a week. a month. six months. one year.

one year.

Six Sigma

relies on statistical data and improved methods to eliminate defects for products and services

capacity

the amount of products or services that an organization can produce in a given time

product design

the process of creating a set of specifications from which a product can be produced

quality control

the process of ensuring that goods and services are produced in accordance with design specifications

scheduling

the process of ensuring that materials and other resources are at the right place at the right time

inventory control

the process of managing inventories in such a way as to minimize inventory costs, including both holding costs and potential stock-out costs

Quality Control Objective

to see that the organization lives up to the standards it has set for itself

form utility

utility created by people converting raw materials, finances, and information into finished products

If a good or service satisfies a human need, it has form. value. focus. magnitude. utility.

utility.


Set pelajaran terkait

Biology of IR (Ligand Receptor Pairs involved in T cell Activation)

View Set

Layers of the Atmosphere Quizlet

View Set

AP Computer Science A- Primitive Types

View Set

MISSED Practice Exam Questions: Life and Health

View Set

Praxis 5206 Teaching Reading K-12

View Set

College Public Speaking USE THIS ONE

View Set

5.2 Present Value and Discounting

View Set

Geography Chapter 7 and 8 Review

View Set

Intellectual Property (Module #6)

View Set

Basic Anatomy and Circulation (Session 2)

View Set

Personal Finance Chapter 6- Consumer Purchasing Strategies and Wise Buying of Motor Vehicles

View Set