* * Chapter Nine Production And Operations Management Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

* * Manufacturing and Services in Perspective From 2001 to 2009, manufacturing output in the U.S. rose 4% each year. The U.S. is still the world’s leading manufacturer. MANUFACTURING in the U.S. LG1 Almost 25% of all goods produced each year come from the U.S. 9-2

* * From Production to Operations Management Production -- The creation of goods using land, labor, capital, entrepreneurship and knowledge (the factors of production). PRODUCTION and PRODUCTION MANAGEMENT LG2 Production Management -- All the activities managers do to help firms create goods. 9-3

* * From Production to Operations Management Operations Management -- A specialized area in management that converts or transforms resources into goods and services. Operations management includes: Inventory management Quality control Production scheduling Follow-up services OPERATIONS MANAGEMENT LG2 9-4

* * Production Processes Form Utility -- The value producers add to materials in the creation of finished goods and services. FORM UTILITY LG3 9-5

* * Process Manufacturing -- The part of production that physically or chemically changes materials. Assembly Process -- The part of the production process that puts together components. PROCESS and ASSEMBLY in PRODUCTION LG3 Production Processes 9-6

* * Production processes are either continuous or intermittent. Continuous Process -- Long production runs turn out finished goods over time. Intermittent Process -- Production runs are short and the producer adjusts machines frequently to make different products. KEY PRODUCTION PROCESSES LG3 Production Processes 9-7

* * Mass Customization MASS CUSTOMIZATION LG3 Mass Customization -- Tailoring products to meet the needs of a large number of individual customers. More manufacturers are learning to customize. Mass customization exists in the service sector too. 9-8

* * Operations Management Planning Operations management planning helps solve problems like:  Facility location  Facility layout  Materials requirement planning  Purchasing  Inventory control  Quality control OPERATIONS MANAGEMENT LG4 9-9

* * Quality Control Quality -- Consistently producing what the customer wants while reducing errors before and after delivery. Six Sigma Quality -- A quality measure that allows only 3.4 defects per million opportunities. QUALITY CONTROL LG4 9-10

* * Control Procedures: PERT and GANTT Charts Program Evaluation and Review Technique (PERT) -- A method for analyzing the tasks involved in completing a given project and estimating the time needed. PERT LG5 9-11

* * Control Procedures: PERT and GANTT Charts 1. Analyzing and sequencing tasks 2. Estimating the time needed to complete each task 3. Drawing a PERT network illustrating the first two steps 4. Identifying the critical path Critical Path -- The sequence of tasks that takes the longest time to complete. STEPS INVOLVED in PERT LG5 9-12

* * Control Procedures: PERT and GANTT Charts Gantt Chart – A bar graph that shows what projects are being worked on and how much has been completed. GANTT CHARTS LG5 9-13