3QC3-CH6.docx

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11 Apr 2012
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Operations Management
Chapter 6: Processes and Technology
Process: A group of related tasks with specific inputs and outputs
Process strategy: An organization’s overall approach for physically producing goods and
services
A process strategy define its:
Vertical integration: The degree to which the firm will produce the inputs and control the outputs
of each stage of the production process
Capital Intensity: The mix of capital (ie, equipment, automation) and labour resources used in
the production process
Process flexibility: The ease with which resources can be adjusted in response to changes in
demand, technology, products or services, and resource availability
Customer involvement: The role of the customer in the production process
Processing Planning
- Converts design into workable instructions for manufacture or delivery
Outsourcing
- Decision involves evaluation on the following factors:
Cost, capacity, quality, speed, reliability, and expertise
Process Selection
Projects: One-at-a-time production of a product to customer order
Batch production: Processing many different jobs at the same time in groups (or batches)
Mass Production: Producing large volumes of a standard product for a mass market
Continuous production: Producing very high-volume commodity products
Breakeven Analysis: Examines the cost trade-offs associated with demand volume
Process Plans
- A set of documents that detail manufacturing and service delivery specifications
Assembly charts: A schematic diagram of a product that shows the relationship of component
parts to parent assemblies
Process Analysis
- The systematic examination of all aspects of a process to improve its operation
Process of building a flow chart:
1) Determine objectives
2) Define process boundaries
3) Define units of flow (ie. Patients, products, data)
4) Choose type of chart
5) Observe process and collect data
6) Map out process
7) Validate chart
Process flowchart: A document that uses standardized symbols to chart the productive and
nonproductive flow of activities involved in a process
Process Innovation: The total redesign of a process for breakthrough improvements
- Establish goals and specifications
- Process maps work backward from a performance goal
- Use pilot studies for rapid prototyping
Financial Justification of Technology
- Capital budgeting techniques are used to evaluate new technology
- Purchasing cost includes the add-ons necessary to make the technology work
- Visualize how the technology will be used
- New technology can save money through better quality and more efficient operation
- New technology can enhance revenue
- Deciding when to upgrade to a new technology often depends on the competitive environment
- It is risky to invest in new technology, and it’s risky not to
- Make sure new and existing technologies are compatible
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