1. Modern Management 9th edition
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Modern Management 9th edition .

2. Ü Objectives Definitions of production, productivity, and quality
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Ü Objectives
Definitions of production, productivity, and quality
An understanding of the importance of operations and production strategies, systems, and processes
Insights into the role of operations management concepts in the workplace
An understanding of how operations control procedures can be used to control production
Insights into operations control tools and how they evolve into a continual improvement approach to production management and control .

3. PRODUCTION Defining Production Productivity productivity = outputs
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PRODUCTION
Defining Production
Productivity
productivity =
outputs
inputs
Traditional strategies for increasing productivity:
1. Improving effectiveness of organizational workforce through training
2. Improving production process through automation
3. Improving product design to make products easier to assemble
4. Improving production facility by purchasing more modern equipment
5. Improving quality of workers hired to fill open positions .

4. PRODUCTION Quality and Productivity Automation
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PRODUCTION
Quality and Productivity
Focus on Continual Improvement
Focus on Quality and Integrated Operations
Quality Assurance
Statistical Quality Control
"No Rejects" Philosophy
Quality Circles
Automation
Strategies, Systems, and Processes .

5. Deming’s flow diagram for improving product quality
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PRODUCTION
Deming’s flow diagram for improving product quality
Figure 20.1 .

6. The quality circle problem-solving process
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PRODUCTION
The quality circle problem-solving process
Figure 20.2 .

7. OPERATIONS MANAGEMENT
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OPERATIONS MANAGEMENT
Defining Operations Management
Operations Management Considerations
Key notions:
Involves managers
Takes place within context of objectives and policies
Criteria are standards for effectiveness and efficiency
Operations strategies .

8. OPERATIONS MANAGEMENT
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OPERATIONS MANAGEMENT
Major activities performed to manage production
Figure 20.3 .

9. OPERATIONS MANAGEMENT
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OPERATIONS MANAGEMENT
Operations Management Considerations (con’t)
Capacity Strategy
Capacity flexibility
Steps in Capacity Decisions:
1. Measure capacity of currently available facilities
2. Estimate future capacity needs on basis of demand forecasts
3. Compare future capacity needs and available capacity
4. Identify ways to accommodate long-range capacity changes
5. Select best alternative based on quantitative and qualitative evaluation .

10. OPERATIONS MANAGEMENT
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OPERATIONS MANAGEMENT
Operations Management Considerations (con’t)
Location Strategy
Factors in a Good Location
Nearness to market and distribution centers
Nearness to vendors and resources
Requirements of federal, state, and local governments
The character of direct competition
The degree of interaction with the rest of the corporation
The quality and quantity of labor pools
The environmental attractiveness of the area
Taxes and financing requirements
Existing and potential transportation
The quality of utilities and services .

11. OPERATIONS MANAGEMENT
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OPERATIONS MANAGEMENT
Operations Management Considerations (con’t)
Product Strategy
Process Strategy
Types of Processes
Continuous process
Repetitive process
Job-shop process
Layout Strategy
Basic types for manufacturing facilities:
1. Product
2. Process (functional)
3. Fixed-position .

12. OPERATIONS MANAGEMENT
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OPERATIONS MANAGEMENT
The three basic layout patterns
Figure 20.4 .

13. OPERATIONS MANAGEMENT
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OPERATIONS MANAGEMENT
Operations Management Considerations (con’t)
Human Resources Strategy
Human resource imperatives:
1. Optimize individual, group, and organizational effectiveness
2. Enhance quality of organizational life
Operational Tools in Human Resources Strategy
Manpower planning
Job design
Work methods analysis
Motion-study techniques
Work measurement methods
Operational tools to establish labor standards .

14. Just-in-Time Inventory Control
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OPERATIONS CONTROL
Just-in-Time Inventory Control
Best Conditions for JIT
Advantages of JIT
Characteristics of JIT
1. Closeness of suppliers
2. High quality of materials purchased from suppliers
3. Well-organized receiving and handling of materials
4. Strong management commitment
Maintenance Control
Pure-preventive maintenance policy
Pure-breakdown policy .

15. OPERATIONS CONTROL Cost Control Stages in Cost Control
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OPERATIONS CONTROL
Cost Control
Stages in Cost Control
1. Establishing standard or planned cost amounts
2. Measuring actual costs incurred
3. Comparing planned costs to incurred costs
4. Making changes to reduce actual costs to planned costs
Following above stages:
Establish planned costs for labor, materials, and overhead
Measure or calculate costs incurred for these activities
Compare actual operations costs to planned operations costs
Take steps to reduce actual operations costs to planned levels .

16. OPERATIONS CONTROL Budgetary Control Potential Pitfalls of Budgets
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OPERATIONS CONTROL
Budgetary Control
Potential Pitfalls of Budgets
1. Placing too much emphasis on insignificant expenses
2. Increasing expenses without adequate information
• Zero-base budgeting
3. Ignoring fact that budgets must be changed periodically
• Variable budget
Human Relations Considerations in Using Budgets
Reducing Human Relations Problems .

17. OPERATIONS CONTROL Ratio Analysis
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OPERATIONS CONTROL
Ratio Analysis
1. Liquidity ratios
2. Leverage ratios
3. Activity ratios
4. Profitability ratios
Using Ratios to Control Organizations
Evaluate all ratios simultaneously
Compare computed values with industry averages
Incorporate trend analysis .

18. Four Categories of Ratios
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OPERATIONS CONTROL
Table 20.1
Four Categories of Ratios
Type Example Calculation Interpretation
Profitability Return on investment (ROI) Profit after taxes Productivity of assets
Total assets
Liquidity Current ratio Current assets Short-term solvency
Current liabilities
Activity Inventory turnover Sales Efficiency of inventory
Inventory management
Leverage Debt ratio Total debt How a company finances itself .

19. OPERATIONS CONTROL Materials Control Procurement of Materials
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OPERATIONS CONTROL
Materials Control
Procurement of Materials
Receiving, Shipping, and Trafficking
Receiving activities include:
•Unloading •Identifying •Inspecting •Reporting •Storing inbound shipments
Shipping and distribution activities include:
•Preparing documents •Packaging •Labeling •Loading •Directing out shipments
Shipping and receiving are organized as one unit
Traffic manager’s main responsibilities are:
•Selection of the transportation mode
•Coordination of the arrival and departure of shipments
•Auditing freight bills .

20. Materials Control (con’t)
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OPERATIONS CONTROL
Materials Control (con’t)
Inventory and Shop-Floor Control
Inventory control subsystems:
•Work-in-process •Finished-goods inventory
Inventory control specifies:
•What •When •How much to buy
Shop-floor control activities include:
•Input/output control •Routing
•Scheduling •Dispatching
•Sequencing •Expediting .

21. SELECTED OPERATIONS CONTROL TOOLS
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SELECTED OPERATIONS CONTROL TOOLS
Using Control Tools to Control Organizations
Inspection
To Inspect or Not to Inspect
Management by Exception
Establishing Rules
Examples of rules based on exception principle:
A department manger must immediately inform the plant manager if actual:
1. Weekly labor costs exceed estimated weekly labor costs by more than 15%
2. Dollars spent on a special project exceed funds approved by more than 10% .

22. SELECTED OPERATIONS CONTROL TOOLS
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SELECTED OPERATIONS CONTROL TOOLS
Management by Objectives
Break-Even Analysis
Basic Ingredients of Break-Even Analysis
Break-even analysis typically involves:
•Reflection •Discussion •Reasoning •Decision making
Relative to major aspects of production:
1. Fixed costs 3. Total costs 5. Profits 7. Breakeven
2. Variable costs 4. Total revenue 6. Loss point
Types of Break-Even Analysis
Algebraic Break-even Analysis BE = FC
(P – VC)
Graphic Break-even Analysis
Advantages of Using the Algebraic and Graphic Break-even Methods
Control and Break-even Analysis .

23. SELECTED OPERATIONS CONTROL TOOLS
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SELECTED OPERATIONS CONTROL TOOLS
Table 20.2
Fixed costs and Variable Costs for a Book Publisher
Fixed Costs (Yearly Basis) Variable Costs per Book Sold
1. Real estate taxes on property $1, Printing $2.00
2. Interest on loan to purchase equipment 5, Artwork 1.00
3. Building maintenance 2, Sales commission .50
4. Insurance Author royalties 1.50
5. Salaried labor 80, Binding 1.00
Total fixed costs $88,800 Total variable costs per book $6.00 .

24. SELECTED OPERATIONS CONTROL TOOLS
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SELECTED OPERATIONS CONTROL TOOLS
Break-even analysis for a book publisher
Figure 20.5 .

25. SELECTED OPERATIONS CONTROL TOOLS
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SELECTED OPERATIONS CONTROL TOOLS
Other Broad Operations Control Tools
Decision Tree Analysis
Process Control
Value Analysis
Computer-Aided Design (CAD)
Computer Graphics
Computer-aided engineering (CAE)
Computer-Aided Manufacturing (CAM) .

26. 4/8/2017
Chapter Twenty ?
Questions