chapter 11 notes.docx

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Northeastern University
Business Administration
BUSN 1101
William Shimer

11.1 Operations Management in Manufacturing and Service Industries Operations management. Carries out activities involved in transforming a product idea into a finished product/ transforms resources into a good or service Operations Management in Manufacturing “Strive to improve operational efficiency” -Make the production processes focus on quality -Hold down the costs of material and labor -Eliminate all costs that add no value to the finished product Responsibilities 1) Production Planning: determine how and where goods will be produced and how manufacturing facilities will be laid out 2) Production Control: Once goods are produced managers should respond to feedback to make adjustments when needed. 3) Quality Control: Make efforts to ensure that goods are produced according to specifications and that quality standards are maintained. Make to Order: products are customized to meet the needs of the buyers who ordered them Mass Production: producing high volumes of identical goods at a cost low enough to price them for large numbers of customers Mass customization: combines the advantages of customized products with those of mass production. SITE SELECTION: factors to consider-: ­ Find locations close to suppliers and customers to minimize shipping costs ­ Are with ample number of skilled workers ­ Locations where cost of resources are low ­ Location where there is favorable business climates Capacity Planning: Managers estimate the quantity of products to be produced by forecasting demand for their product and then calculating the capacity requirements of the production facility—the maximum number of goods that it can produce over a given period under normal working conditions. 11.2 Facility Layouts Plant layout—how equipment, machinery, and people will be arranged to make the production process as efficient as possible 1) Process Layout: group together workers or departments that perform similar tasks. Goods in process (goods not yet finished) move from one workstation to another.At each position, workers use specialized equipment to perform a particular step in the production process. 2) Product Layout: high volume goods are produced efficiently by people, equipment or departments arranged in an assembly line- that is, a series of workstations at which already-made parts are assembled. Both of the above layouts work by function, this is not always efficient, as production lines can break, inventories can build up, workers can get bored with repetitive jobs and time can be wasted in transporting goods from one workstation to another. 3) Cellular Layout: Small trams of workers handle all aspects of building a component or even a finished product. Each teamwork in a small area equipped with everything like a self-contained unit. Team members often share duties; they’re trained to perform several different jobs. Teams monitor both the quantity and the quality of their own output. This arrangement often results in faster completion time, lower inventory levels and improved quality. 4) Fixed Position Layout: Used mainly to produce large items, here the product stays in one place and the workers and equipment’s goes to the product. E.g. ship, building 11.3 Managing the Production Process in a Manufacturing Company After production is done the operation manager focuses on materials management, which included purchasing, inventory control and work scheduling. Purchasing and Supplier Selection Purchasing: acquiring materials and services to be used in production Because material costs often make up about 50 percent of total manufacturing costs, vendor selection and material acquisition gets a good deal of the operations manager’s time and attention. When selecting supplier’s managers have to question the price, the quality, the reliability of the vendor and the reputation. E-Purchasing: Technology is changing the way businesses buy things, internet is used now for companies to interact with suppliers. Electronic data interchange (EDI) processes transactions and transmit purchasing documents. Inventory Control: Inventories have to managed very efficiently by keeping a balance between the two threats to productivity which are loosing time because of running out of materials and wasting money by carrying to much inventory, this can be done by different inventory control methods. Commonly used inventory control methods include just-in-time (JIT) production, by which materials arrive just in time to enter the manufacturing process, and material requirements planning (MRP), which uses computer programming to determine material needs. JIT: requires considerable communication and cooperation between the manufacturer and the supplier. The manufacturer has to know what it needs, and when. The supplier has to commit to supplying the right materials, of the right quality, at exactly the right time. MRP: The program generates a production schedule based on estimated output, prepares a list of needed materials and orders the materials. Work Scheduling: All production activities have to be controlled and monitored to ensure planned performance. Master production schedule (MPS). To draw up an MPS, managers need to know where materials are located and headed at every step in the production process. For this purpose, they determine the routing of all materials—that is, the workflow of each item based on the sequence of operations in which it will be used 11.4 Graphical Tools: PERT and Gantt Timing of operations have to be controller for that managers have to set up schedules. -Select jobs to be performed during production process -Assign tasks to work groups -Set timetables for the completion of tasks -Make sure resources will be available when needed Two Scheduling techniques -: 1) Gantt Charts “Helps operations managers determine the status of projects” “Shows completed work and Work to be completed” Useful when production process is fairly simple and the activities aren’t interrelated 2) PERT Charts This chart is used for more complex schedules “Des
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