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Chapter 10

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Rotman Commerce
Michael Khan

Chapter 10 Production and Operations Management Inside Business: The World Cup Gets a Kick Out of Jabulani Manufacturing football for FIFA can be a complicated process. Since the beginning of the World Cup, Adidas has won the contract to produce football many times. In 2010, it produced a ball called Jabulani, which means to celebrate in a South African language. The ball had 11 colours, which represent the 11 players in a team, the 11 year Adidas manufactured football for World Cup, 11 tribes in South African, and 11 languages that South African people speak. The ball also had much technology involved in its design; it has 3-D global shaped panel for perfect roundness, goose-bump surface for improving players control of the ball, etc. The ball also has to meet other standard requirement of FIFA, such as circumference, diameter, and water absorption. The replications of the ball were made to be sold to the general public, and the authentic ball to be used for the World Cup. Chapter 10 Overview Businesses satisfy their commitment to society by producing and marketing the goods and services that people want. They create utility, or the want satisfying power of a good or service. 4 types of utility that businesses create or improve: time (making the good available when needed), place (available where needed), ownership (can be owned or brought), and form (converting raw material into finished products) Production: the use of resources, such as workers and machinery, to convert materials into finished goods and services. Production and operations management: the process of overseeing the production process by managing the people and machinery that convert materials and resources into finished goods and services. Production vs. Manufacturing: production is used in both manufacturing and nonmanufacturing industries. Fishing and mining are production, but not manufacturing. Production can result in a tangible good or an intangible service. The production process always converts input into output. RSM100 Chapter 10 Jia Yin (Elisha) Yu Page 1 of 12 The Strategic Importance of Production L.O. 10.1 Explain the strategic importance of the production function Both for-profit and not-for-profit companies need good production process. When production and operations management are effective, they can 1) lower a firms costs of production,2) increase the quality of its goods and services, 3) allow it to be dependable when meeting customer demands, and 4) enable it to renew itself by providing new products. 1. Mass Production Mass production: a system for manufacturing products in large quantities by using effective combinations of employees with specialized skills, mechanization, and standardization. Goods produced by mass production have a lower per unit cost than goods produced individually. Mass production begins with specialization of labour. Managers separate a job into small tasks, which creates the right condition for mechanization. Mechanization: machines do much of the work previously done by people. Standardization: produce identical, interchangeable goods and parts (easier to replace standard or worn-out parts) The principle of specialization, mechanization, and standardization led to the development of assembly line. Assembly line: The product moves along a conveyor belt past many workstations, where workers perform specialized tasks, such as welding painting, installing individual parts, and tightening bolts. First stared by Henry Ford in the automobile industry, 10h of assembling 1 car changed into 1.5h. Limitations of Mass Production: 1) Highly inefficient when producing small batches of different items. 2) Boring jobs 3) Firms may focus on whats most efficient instead of what customers want Some firms adapt flexible production systems and customer-driven production systems to improve their competitive abilities. 2. Flexible Production More cost effective compared to mass production when it comes to producing smaller batches. Generally, flexible production uses three resources: RSM100 Chapter 10 Jia Yin (Elisha) Yu Page 2 of 121) information technology to share the details of customer orders 2) programmable equipment to fill the orders 3) skilled people to carry out the tasks needed to complete an order This system works even better when it is combined with lean production methods that use automation and information technology to reduce the need for workers and inventory. Flexible production needs a lot of communication among everyone in the organization. Automobile industry is now widely using flexible production, to produce different kinds of cars at the same plant. 3. Consumer-Driven Production Definition: a consumer-driven production system assesses customer demands to make a connection between the products that are manufactured and the products people want to buy. One method: set up computer links between factories and retailers scanners. Data about sales are then used to create short-term forecasts and design production schedules to meet those forecasts. Another method: wait u
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