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Entrepreneurship and Innovation
ENTI 201
Norman Althouse

Production: the creation of products and services by turning inputs, such as natural resources, raw materials, human resources, and capital, into outputs, which are products and services !"#$%&'()*+%(%,#-#(.* Operations management: management of the production process Production and operations management involves three main types of decisions that are made finding the most efficient changes in producing the goods or services at three different stages: consumer expectations, 1. Production planning: The first decisions come at the planning stage, at which time tcompetitionand rethinking where, when and how the organization managers decide where, when and how production will occur. will produce products and 2. Production control. The decision-making process focuses on scheduling, controlling quality services and costs, and the actual day-to-day operations of running a factory or service facility. 3. Improving production and operations: The final stage focuses on developing more efficient methods of producing the firmʼs goods. These three types of decisions are ongoing and often occur simultaneously. !"#$%&'#()!*+((,(-) Production planning: the aspect of operations management in Short-Term Medium-Term which the firm considers the competitive environment and its own Long-Term 1 Year 2 Years 3-5 Years strategic goals in an effort to find the best production method During production planning, the firm considers the competitive Type of Production Process environment and its own strategic goals in an effort to find the Decisions best production methods. Site selection in Production planning involves three phases: long-term planning Production Facility layout Planning (time of 3-5 years), medium-term planning (time of 2 years), and short-term planning (time of 1-year). Resource planning Four important decisions must be made in production planning. 8 They involve the type of production process that will be used, Copyright © 2011 by Nelson Education Ltd. site selection, facility layout, and resource planning. Production process: the way in which a good is made Mass production: the ability to manufacture many identical goods at once Mass customization: a manufacturing process in which goods are mass produced up to a point and then custom tailored to the needs or desires of individual customers Customization: the production of goods or services one at a time according to the specific needs or wants of individual customers Job shop: a manufacturing firm that produces goods in response to customer orders Inputs -> outputs .Process manufacturing: a production process in which the basic input is broken down into one or more outputs (products) Assembly process: a production process in which the basic inputs are either combined to create the output or transformed into the output Production Timing Continuous process: a production process that uses long production runs lasting days, weeks, or months without equipment shut-downs; generally used for high volume, low variety products with standardized parts Intermittent process: a production process that uses short production runs to make batches of different products; generally used for low-volume, high-variety products Factors in Facility Location Decisions 1. Availability of production inputs: Assess the availability of raw materials, parts, and equipment, as well and availability and cost of labor. 2. Marketing factors: Evaluate how their facility location will affect their availability to serve their customers. Locating near customers can provide market advantages. Consider the location of competitors. With more than one facility, consider how far to spread their locations in order to maximize market coverage. 3. Manufacturing environment: When a large number of manufacturers are already located in an area, that area is likely to offer greater availability of resources, better accessibility to suppliers and transportation, and other factors that increase efficiency. 4. Local incentives: Incentives offered by countries, states, or cities, such as tax breaks and exemptions. 5. International location considerations: Labor costs are lower in countries like Singapore, China, and Mexico. Foreign countries may have fewer regulations. Designing the facility All _____Stand here: Process layout: a facility arrangement in which work flows according to the production process. All workers performing similar tasks are grouped together, and products pass from one workstation to another Moving down the line: Product (assembly line) layout: a facility arrangement in which work-stations or departments are arranged in a line with products moving along the line Staying Put: Fixed-position layout: a facility arrangement in which the product stays in one place and workers and machinery move to it as needed A Start-to-Finish Focus: Cellular manufacturing: Production technique that uses small, self-contained production units, each performing all or most of the tasks necessary to complete a manufacturing order !"#$%&'%()*+,$-./.&0/+ Quantity of items needed Resource Planning Standard or Bill of material: a list of the items and the number of each nonstandard items required to make a given product Purchasing: the process of buying production inputs from Factors Size of components various sources; also called procurement Make-or-buy decisions: the determination by a firm of whether to make its production materials or buy them from Special design features outside sources Outsourcing: the purchase of items from an outside source Quality and reliability of suppliersather than making them internally 18 Copyright © 2011 by Nelson Education Ltd. Inventory: the supply of goods that a firm holds for use in pr
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