Business in a Changing World McGraw-Hill/Irwin Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights reserved. Chapter 9 Production and Operations Management Asst. Prof. Dr. Serdar AYAN 1

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9-3 Operations Management The planning and designing of the processes that transform resources into finished products; managing the transformation process; ensuring high quality of finished goods. Importance of Production & Operations Management

9-4 Development and administration of the activities involved in transforming resources into goods and services. Operations Management (OM) Operations Management

9-5 Historically called production or manufacturing Change to operations = focus on goods & services Emphasis on viewing the operations function as a whole Operations Management (OM) Operations Management

9-6 Manufacturing – activities and processes used in making tangible products (production) Production – activities and processes used in making tangible products (manufacturing) Operations – the activities and processes used in making both tangible and intangible products Production & Operations Management

9-7 Production & Operations Management Transformation Process of operations management

9-8 Inputs – Labor Money Materials Energy Outputs Goods Services ideas Transformation Process

9-9 Production & Operations Management Inputs, outputs, and transformation processes Manufacturing Oak Furniture

9-10 Operations Management Service Businesses – Airlines Colleges Nonprofit organizations OM in Service Businesses

9-11 Operations Management Service Businesses – 70% of all employment in the United States; fastest growth of jobs OM in Service Businesses

9-12 Operations Management Service Businesses – actions that are directed toward consumers who use them OM in Service Businesses

9-13 Operations Management Ideal Service Business - Customer contact High-tech High-touch OM in Service Businesses

9-14 Operations Management Service Business Output Intangible Perishable Difficult to gauge demand OM in Service Businesses

9-15 Operations Management Differences in Nature & Consumption of Output (Manufacturing vs. Service Providers) Nature and consumption of output Uniformity of inputs Uniformity of outputs Labor required Measurement of productivity

9-16 Planning & Designing Operations Systems Determine – What consumers want Design product to satisfy the want Marketing research Planning the Product

9-17 Planning & Designing Operations Systems Determine – Types and quantities of raw materials Skills & quantity of labor Processes for transformation to outputs Planning the Product

9-18 Designing the Operations Processes Standardization – the making of identical interchangeable components or products. Faster, reduces production costs Televisions Ballpoint pens Tortilla chips

9-19 Designing the Operations Processes Modular Design – creation of an item in self- contained units that can be combined or interchanged to create different products Personal computers -- CPU’s, motherboards, monitors

9-20 Designing the Operations Processes Customization – making products to meet a particular customer’s needs or wants Repair services Photocopy services Custom artwork Bridges Ships Computer software

9-21 Designing the Operations Processes Mass Customization – making products to meet needs or wants of a large number of individual customers. Customer selects Model, size, color, style, design Dell Computer Dell Fitness program Travel packages

9-22 Planning Capacity Capacity – maximum load that an organizational unit can carry or operate Hershey’s production capacity 33 million Hershey’s kisses per day 12 billion per year

9-23 Planning Facilities Facility location Facility layout Technology

9-24 Managing Quality Quality – critical element of operations management. Degree to which a good or service meets the demands and requirements of customers.

9-25 Managing Quality Quality Control – processes an organization uses to maintain its established quality standards. Total Quality Management (TQM) – philosophy that uniform commitment to quality will promote a culture that meets customers’ perceptions of quality.