CHAPTER 9
Production
and
Operations
Management
McGraw-Hill/Irwin
Copyright © 2015 by the McGraw-Hill Companies, Inc. All rights reserved.
LEARNING OBJECTIVES
1. Describe the current state of U.S. manufacturing and
what manufacturers have done to become more
competitive.
2. Describe the evolution from production to operations
management.
3. Identify various production processes and describe
techniques that improve productivity, including
computeraided design and manufacturing, flexible
manufacturing, lean manufacturing and mass
customization.
9-2
LEARNING OBJECTIVES
4. Describe operations management planning issues
including facility location, facility layout, materials
requirement planning, purchasing, justintime
inventory control and quality control.
5. Explain the use of PERT and Gantt charts to control
manufacturing processes.
9-3
SHAHID KHAN
FlexNGate
• Moved from Pakistan to the
U.S. at the age of 16.
• After college, he got a job
overseeing FlexNGate.
• Bought the company after two
years and refined the
production process
• Now the company brings in
over $3 billion in sales each
year.
9-4
NAME that COMPANY
Operations management in this hotel company
includes restaurants that offer the finest in
service, elevators that run smoothly, and a front
desk that processes people quickly. It may
include freshcut flowers in the lobbies and
dishes of fruit in every room.
Name that company!
9-5
MANUFACTURING in the U.S.
LO 91
• Some areas in the U.S.
are experiencing
economic growth while
others are declining.
• Manufacturing in the
U.S. is so productive
fewer workers are
needed.
9-6
WHAT’S MADE in the USA?
LO 91
Leading U.S. Manufactured Goods
Source: Parade Magazine, www.parade.com, accessed November 2014.
9-7
MASSIVE MANUFACTURERS
LO 91
The Top Ten U.S. Manufacturers
Source: Industry Week, www.industryweek.com, accessed November 2014.
9-8
YOUR OWN FARM in a BOX
• Freight Farms was developed after the founders
were unsatisfied with rooftop greenhouses.
• Each container is 320squarefeet and can
produce 900 heads of leafy greens each week.
• The company works with small and medium
sized food distributers so local food can be
enjoyed year round.
9-9
TOPPAYING SERVICE JOBS
LO 91
• The U.S. economy is no longer manufacturing
based.
• 85% of jobs are in the service sector.
• The toppaying service jobs in the U.S. are in:
- Legal services
- Medical services
- Entertainment
- Accounting
- Finance
- Management consulting
9-10
REMAINING COMPETITIVE in
GLOBAL MARKETS
LO 91
• U.S. is still the leader in nanotechnology and
biotechnology.
• How can U.S. businesses maintain a competitive
edge?
-
Focusing on customers
-
Maintaining close relationships with suppliers
-
Practicing continuous improvement
-
Focusing on quality
-
Saving on costs through site selection
-
Relying on the Internet to unite companies
-
Adopting new production techniques
9-11
NOBODY DOES IT BETTER
• Germany’s economy is the
most powerful and
respected economy in
Europe.
• Mittlestand companies
design their own machines
and production processes.
• China has purchased many
German firms and are
studying their production
techniques.
9-12
PRODUCTION and
PRODUCTION MANAGEMENT
LO 92
• Production The creation of goods using land,
labor, capital, entrepreneurship and knowledge (the
factors of production).
• Production
Management All the
activities managers do to
help firms create goods.
9-13
OPERATIONS MANAGEMENT
LO 92
• Operations Management A specialized area in
management that converts or transforms resources
into goods and services.
• Operations management includes:
- Inventory management
- Quality control
- Production scheduling
- Followup services
9-14
OPERATIONS MANAGEMENT
in the SERVICE SECTOR
LO 92
• All about creating a good experience for those
who use the service.
• In hotels, like Ritz
Carlton, operation
management
includes fine dining,
fresh flowers, and
training for every
employee.
9-15
THERE’S an APP for THAT
LO 92
Top Productivity Apps for iPad
Source: PC Magazine, www.pcmag.com, accessed November 2014.
9-16
TEST PREP
• What have U.S. manufacturers done to regain a
competitive edge?
• What must U.S. companies do to continue to
strengthen the country’s manufacturing base?
• What led companies to focus on operations
management rather than production?
9-17
The PRODUCTION PROCESS
LO 93
9-18
FORM UTILITY
LO 93
• Form Utility The value
producers add to materials
in the creation of finished
goods and services.
9-19
GROVE’S BASIC PRODUCTION
REQUIREMENTS
LO 93
1. To build and deliver products in response to the
demands of the customer at the scheduled
delivery time.
2. To provide an acceptable quality level.
3. To provide everything at the lowest possible
cost.
9-20
PROCESS and ASSEMBLY in
PRODUCTION
LO 93
• Process Manufacturing
The part of production that
physically or chemically
changes materials.
• Assembly Process The
part of the production process
that puts together components.
9-21
KEY PRODUCTION PROCESSES
LO 93
• Production processes are either continuous or
intermittent.
• Continuous Process Long production runs turn
out finished goods over time.
• Intermittent Process Production runs are short
and the producer adjusts machines frequently to
make different products.
9-22
MINUTE MADE
LO 93
Production of Some of America’s Favorite Products
9-23
DEVELOPMENTS MAKING U.S.
COMPANIES MORE COMPETITIVE
LO 93
1. Computeraided design
and manufacturing
2. Flexible manufacturing
3. Lean manufacturing
4. Mass customization
9-24
COMPUTERAIDED DESIGN and
MANUFACTURING
LO 93
• ComputerAided Design
(CAD) The use of computers
in the design of products.
• ComputerAided
Manufacturing (CAM) The
use of computers in the
manufacturing of products.
9-25