Ch. 20: Operation systems

Learning Objectives Distinguish among various types of production and manufacturing processes. Describe product innovation and development. Appreciate the importance of production planning and control. Analyze the factors influencing plant location. Distinguish between product layout and process layout. Demonstrate a knowledge of materials management. Describe the characteristics of mass production.

Production Process by which resources are converted into outputs that are desired by people.

Utility The value added by converting resources into useful goods and services.

Production process Method by which goods or services are produced.

Analytic process Process by which materials are broken down into several component parts.

Synthetic process Process by which two or more materials are combined together to create a new substance or finished goods.

Extractive process A primitive process by which a certain useful substance is taken from a natural resource.

Fabricating process Process by which the form of a material is altered or changed into another useful substance.

Assembling process Process by which a number of parts are put together to produce a larger and more complex product.

Chemical process Process by which a product is produced through chemical reactions.

Continuous process Manufacturing process characterized by long production runs, in which the products are produced over a period of days or months in a continuous product flow.

Intermittent process Manufacturing process characterized by short production runs and frequent shut downs for retooling in order to produce different products.

Comparison between continuous process and intermittent process Continuous processIntermittent process Product flowcontinuousinterrupted Machinesspecializedgeneral purpose Outputmade for inventorymade for orders Nature of productshighly standardizednon-standardized

Standard production process Manufacturing process by which products are uniformly made according to generally accepted specifications.

Custom production process Manufacturing process by which products are made to customers’ specifications and designs.

Classification of production process Analytic or Synthetic Extractive or Fabricating or Chemical Continuous or Intermittent Standard or Custom Production Process

Characteristics of poor product ideas involve too many uncertainties involve too many technical problems require too much investment do not fit the company’s overall objectives are unlikely to break even do not meet legal requirements cause too many legal requirements

Steps in product innovation and development Idea generation Idea screening Business analysis Small-scale production Market testing Commercialization Market

Major tasks required for production planning capacity planning through investment in plant and equipment selection of locations for the facility adoption of the production process design of the facility layout making make-or-buy decisions deciding short-term production rates deciding inventory levels determining staff levels

What makes a good location? reliable supply of raw materials at a reasonable cost proximity to the market abundant supply of skilled labour and experienced staff presence of sophisticated infrastructure and other supporting facilities reasonable operating costs local community welcomes new firms and plants local government provides favourable regulations

Facility layout Arrangement of the processes, workstations, machines and equipment in a plant.

Product layout Facility layout which arranges machinery, equipment and tools according to the tasks they perform in the sequence along an assembly line.

Process layout Facility layout which arranges equipment and tools that perform similar functions together. Each workstation performs a specific task.

Comparison between product layout and process layout Product layout: machines are stationed according to the tasks they perform in the sequence items move directly from one station to the next items do not need to be stored high rate of output allows low variability of product Product layout: machines are stationed according to the tasks they perform in the sequence items move directly from one station to the next items do not need to be stored high rate of output allows low variability of product Process layout: machines performing similar function are grouped together items move in batches to the other stations items need to be stored temporarily between stations low rate of output allows high variability of product Process layout: machines performing similar function are grouped together items move in batches to the other stations items need to be stored temporarily between stations low rate of output allows high variability of product

Materials Physical items consumed during the production process.

Materials management It refers to the purchase, storage and movement of materials.

Purchasing The process of acquiring material inputs for the production process.

Major roles of a purchasing manager selecting suppliers determining order quantities placing orders receiving orders checking and inspecting the orders

Mass production Manufacture of products in large quantities.

Advantages and disadvantages of mass production Advantages: workers require fewer skills and less training specialization and automation speed up the production process it minimizes unit costs Advantages: workers require fewer skills and less training specialization and automation speed up the production process it minimizes unit costs Disadvantages: high setup costs subject to shut down if one stage has broken down Disadvantages: high setup costs subject to shut down if one stage has broken down