MultiMedia by Stephen M. Peters© 2002 South-Western Operations Management

MultiMedia by Stephen M. Peters© 2002 South-Western Operations Strategy  Part of a strategic plan that defines: –The role –Capabilities –Expectations of operations

MultiMedia by Stephen M. Peters© 2002 South-Western Operational Problems for Producers of Goods and Services  Each is concerned with converting resources into something saleable.  Each must acquire materials or supplies to achieve that conversion.  Each must schedule the process of conversion.  Each must control processes and ensure quality.

MultiMedia by Stephen M. Peters© 2002 South-Western Flow of Operations Raw Materials Human Resources Land, Buildings Information Technology Inputs Transformation Processes Outputs Products Services Feedback to Provide Control

MultiMedia by Stephen M. Peters© 2002 South-Western Role of Operations Strategy and Operations Management Operations Strategy Operations Management Products, Facilities, and Processes Product or Service Design Facilities Layout Production Processes and Technology Facilities Location Capacity Planning Productivity Quality Implementation Structures Scheduling Relationships Decentralization Teams Productivity Quality Control Processes Design Control Purchasing Control Inventory Control Scheduling Control Product Control Productivity Quality InputsOutputs

MultiMedia by Stephen M. Peters© 2002 South-Western Operations Management Embraces Facilities Implementation structure Control processes Product Process design

MultiMedia by Stephen M. Peters© 2002 South-Western The Planning Stage of an Organization’s Operations  Involves decisions about: – Product or service design – Facilities layout – Production processes and technology – Facilities location – Capacity planning  Involves decisions about: – Product or service design – Facilities layout – Production processes and technology – Facilities location – Capacity planning

MultiMedia by Stephen M. Peters© 2002 South-Western Two Design Concepts 1.Design for manufacturability and assembly (DFM/A) Calls for design teams consisting of designers, manufacturers, and assemblers. all have a say in product design and actual production of the product. DFM/A product design involves four criteria:  Producibility  Cost  Quality  Reliability 2.Design for disassembly (DFD) The goal is to conceive, develop, and build a product with a long-term view of how its components can be refurbished and reused–or disposed of safely.

MultiMedia by Stephen M. Peters© 2002 South-Western Major Benefits of the DFMA Approach, Against Which GM Evaluates New Designs Quality Durability Mass Safety Manufacturability Time to market Total cost Reliability The total amount of materials, labor, transportation, design, and overhaul expenses associated with the design. The time from product design until the car is ready for sale to the consumer. The degree to which the car can be manufactured and assembled within existing operational capacity. The degree to which the car increases the protection of occupants. The total weight of the car. The degree to which the car withstands performance demands. The degree to which the car fulfills its intended purpose. Excellence of the car, including serviceability.

MultiMedia by Stephen M. Peters© 2002 South-Western Process Layout Equipment or machines that perform a similar task or function are located together. A product is moved from process to process as needed. Major advantage is potential for reducing costs. Requires fewer people and pieces of equipment. Limits the need to move the product through several different processes.

MultiMedia by Stephen M. Peters© 2002 South-Western Four Options of Facilities Layout (a) Process Layout Receiving Dept. Wiring Molding Insulation Welding Painting Assembly Testing Storage Product AProduct B Product C

MultiMedia by Stephen M. Peters© 2002 South-Western Product Layout Machines and tasks are arranged according to the progressive steps by which the product is made. Efficient when the business produces large volumes of identical products.

MultiMedia by Stephen M. Peters© 2002 South-Western Four Options of Facilities Layout (b) Product Layout Receiving Dept. Molding Assembly Wiring InsulatingPainting Molding Painting TestingWelding Receiving Dept. Product AProduct B Product C

MultiMedia by Stephen M. Peters© 2002 South-Western Cellular Layout Combines some of the characteristics of process and product layouts. All the equipment required for a sequence of operations on the same product is placed together. Allows efficient handling of materials and inventory. Workers are physically close enough to work together to solve problems.

MultiMedia by Stephen M. Peters© 2002 South-Western Four Options of Facilities Layout (c) Cellular Layout Product AProduct B Product C Assembly Painting Wiring Welding Molding Testing

MultiMedia by Stephen M. Peters© 2002 South-Western Fixed-Position Layout Used because of size or bulk. Tools, equipment, and human skill are brought to the product. The product remains in one location.

MultiMedia by Stephen M. Peters© 2002 South-Western Four Options of Facilities Layout (d) Fixed-Position Layout Product Equipment Machines Supplies Materials Labor

MultiMedia by Stephen M. Peters© 2002 South-Western Technologies Responsible for Revolutionizing Manufacturing Processes Robotics CAD/CA M Soft manufacturin g systems Agile manufacturin g Computer- integrated manufacturing Flexible manufacturing systems

MultiMedia by Stephen M. Peters© 2002 South-Western Placement of Facilities Two Questions  Should the firm have one or two large plants, or several smaller ones?  Where should the facilities be located?

MultiMedia by Stephen M. Peters© 2002 South-Western Facility Location Depends on Labor costs Availability of labor skills Proximity to suppliers Tax rates The location of the market where the product will be sold Construction expenses Quality of life for employees Utility rates

MultiMedia by Stephen M. Peters© 2002 South-Western To Increase Capacity Build new facilities Create additional shifts and hire new staff Pay present staff overtime Subcontract work to outside firms Refit existing plants

MultiMedia by Stephen M. Peters© 2002 South-Western Specific Plans for the Overall Production Activities Involve Structuring for operations Master scheduling Aggregate planning

MultiMedia by Stephen M. Peters© 2002 South-Western Development of a Master Schedule from an Aggregate Plan 1, ,750 1, ,050 1, ,900 1,300 1,000 2,300 1,200 1,000 2, ,0001,300 January TotalFebruary Total 3,600 3,665 3, JanuaryFebruary Master Schedule for Electric Ranges (Units per Week) Aggregate Plan (Units per Month) JanuaryFebruaryMarchAprilMay Electric Ranges Gas Ranges Total Note: Another master schedule will be developed for the gas ranges.

MultiMedia by Stephen M. Peters© 2002 South-Western Operational Controls Control of design Materials Scheduling Products Inventory

MultiMedia by Stephen M. Peters© 2002 South-Western Design Control Focuses on creating new products engineered for reliability. FunctionalityServiceability

MultiMedia by Stephen M. Peters© 2002 South-Western Purchasing is Critical for the Following Reasons  If the materials are not on hand, nothing can be produced.  If the right quantity of materials is not available, the organization cannot meet demand.  If the materials are of inferior quality, producing quality products is difficult or costly.

MultiMedia by Stephen M. Peters© 2002 South-Western Goals of Purchasing Control Ensure availability of material Ensure acceptable quality of material Balance costs

MultiMedia by Stephen M. Peters© 2002 South-Western Three Types of Inventory Inputs Transformation Processes Outputs Raw Materials Inventory Work-in- Process Inventory Finished Goods Inventory

MultiMedia by Stephen M. Peters© 2002 South-Western Four Specific Techniques for Inventory Management Materials requirement planning Manufacturing resource planning Just-in-time inventory systems Economic order quantity