Business a changing world 7e by ferrell chap009

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Business in a
Changing World

Chapter 9

Production and Operations
Management
2
McGraw-Hill/Irwin

Copyright © 2009 by the McGraw-Hill Companies, Inc. All rights


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Goya Foods: Quality
Operations and Products

Goya Foods offers a wide range of products. As
their product lines have expanded, management
of operations has become a major priority.
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Operations Management
Importance of Production & Operations Management

The planning and designing of the processes
that transform resources into finished
products; managing the transformation
process; ensuring high quality of finished
goods.
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Operations Management

Operations Management (OM)

Development and administration of the activities
involved in transforming resources into goods
and services.
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Operations Management

Operations Management (OM)

•Historically called production or manufacturing
•Change to operations = focus on goods & services
•Emphasis on viewing the operations function as a whole
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Production & Operations Management
Manufacturing – activities and processes used in

making tangible products (production)
Production – activities and processes used in
making tangible products (manufacturing)
Operations – the activities and processes used in
making both tangible and intangible products
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Production & Operations Management

Transformation Process of operations management
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Transformation Process
Inputs –

•Labor
•Money
•Materials
•Energy

Outputs

•Goods
•Services
•ideas

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Production & Operations Management

Inputs, outputs, and transformation processes
Manufacturing Oak Furniture

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Operations Management
OM in Service Businesses

Service Businesses –
•Airlines
•Colleges
•Nonprofit organizations
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Operations Management

OM in Service Businesses

Service Businesses – 70% of all employment in
the United States; fastest growth of jobs

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Operations Management

OM in Service Businesses

Service Businesses – actions that are directed
toward consumers who use them

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Operations Management

OM in Service Businesses

Ideal Service Business - Customer contact
•High-tech
•High-touch
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Operations Management

OM in Service Businesses

Service Business Output

• Intangible
• Perishable
• Difficult to gauge demand
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Operations Management
Differences in Nature & Consumption of Output
(Manufacturing vs. Service Providers)
•Nature and consumption of output
•Uniformity of inputs
•Uniformity of outputs
•Labor required
•Measurement of productivity
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Planning & Designing Operations Systems

Planning the Product

Determine –
•What consumers want
•Design product to satisfy the want
•Marketing research
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Planning & Designing Operations Systems

Planning the Product

Determine –
•Types and quantities of raw materials
•Skills & quantity of labor

•Processes for transformation to outputs
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Designing the Operations Processes

Standardization – the making of identical
interchangeable components or products. Faster,
reduces production costs
•Televisions
•Ballpoint pens
•Tortilla chips
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Designing the Operations Processes

Modular Design – creation of an item in selfcontained units that can be combined or
interchanged to create different products
•Personal computers -- CPU’s, motherboards, monitors
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Designing the Operations Processes

Customization – making products to meet a
particular customer’s needs or wants
•Repair services
•Photocopy services
•Custom artwork

•Bridges
•Ships
•Computer software
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Designing the Operations Processes
Mass Customization – making products to meet
needs or wants of a large number of individual
customers.
•Customer selects
•Model, size, color, style, design
•Dell Computer
•Fitness program
•Travel packages
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Planning Capacity

Capacity – maximum load that an organizational
unit can carry or operate
•Hershey’s production capacity
•33 million Hershey’s kisses per day
•12 billion per year

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Planning Facilities

Facility location
Facility layout
Technology

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