© 2006 prentice hall, inc.1 – 1 operations management chapter 1 – operations and productivity...
Post on 20-Dec-2015
226 views
TRANSCRIPT
© 2006 Prentice Hall, Inc. 1 – 1
Operations ManagementOperations ManagementChapter 1 – Operations and ProductivityChapter 1 – Operations and Productivity
© 2006 Prentice Hall, Inc.
PowerPoint presentation to accompanyPowerPoint presentation to accompany Heizer/Render Heizer/Render Principles of Operations Management, 6ePrinciples of Operations Management, 6eOperations Management, 8e Operations Management, 8e
© 2006 Prentice Hall, Inc. 1 – 2
What Is Operations What Is Operations Management?Management?
ProductionProduction is the creation of is the creation of goods and servicesgoods and services
Operations management (OM)Operations management (OM) is the set of activities that is the set of activities that
creates value in the form of creates value in the form of goods and services by goods and services by
transforming inputs into transforming inputs into outputsoutputs
© 2006 Prentice Hall, Inc. 1 – 3
Organizing to Produce Organizing to Produce Goods and ServicesGoods and Services
Essential functions:Essential functions: Marketing – generates demandMarketing – generates demand
Production/operations – creates Production/operations – creates the productthe product
Finance/accounting – tracks how Finance/accounting – tracks how well the organization is doing, pays well the organization is doing, pays bills, collects the moneybills, collects the money
© 2006 Prentice Hall, Inc. 1 – 4
MarketingSales promotionAdvertisingSalesMarket research
Organizational ChartsOrganizational Charts
OperationsFacilities Construction; maintenance
Production and inventory control Scheduling; materials control
Quality assurance and controlSupply-chain managementManufacturing Tooling; fabrication; assembly
Design Product development and design Detailed product specifications
Industrial engineering Efficient use of machines, space, and personnel
Process analysis Development and installation of production tools and equipment
Finance/ accountingDisbursements/ credits Receivables Payables General ledgerFunds Management Money market International exchangeCapital requirements Stock issue Bond issue and recall
Manufacturing
Figure 1.1(C)Figure 1.1(C)
© 2006 Prentice Hall, Inc. 1 – 5
Organizational ChartsOrganizational Charts
OperationsGround support equipmentMaintenanceGround Operations Facility maintenance Catering Flight Operations Crew scheduling Flying Communications DispatchingManagement science
Finance/ accountingAccounting Payables Receivables General LedgerFinance Cash control International exchange
Airline
Figure 1.1(B)Figure 1.1(B)
MarketingTraffic administration Reservations Schedules Tariffs (pricing)SalesAdvertising
© 2006 Prentice Hall, Inc. 1 – 6
What Operations What Operations Managers DoManagers Do
PlanningPlanning
OrganizingOrganizing
StaffingStaffing
LeadingLeading
ControllingControlling
Basic Management FunctionsBasic Management Functions
© 2006 Prentice Hall, Inc. 1 – 7
The Critical DecisionsThe Critical Decisions
Service and product designService and product design What good or service should we What good or service should we
offer?offer? How should we design these products How should we design these products
and services? and services?
Quality managementQuality management How do we define quality?How do we define quality? Who is responsible for quality?Who is responsible for quality?
Table 1.2 (cont.)Table 1.2 (cont.)
© 2006 Prentice Hall, Inc. 1 – 8
The Critical DecisionsThe Critical Decisions
Process and capacity designProcess and capacity design What process and what capacity will What process and what capacity will
these products require?these products require?
What equipment and technology is What equipment and technology is necessary for these processes?necessary for these processes?
LocationLocation Where should we put the facility?Where should we put the facility?
On what criteria should we base the On what criteria should we base the location decision?location decision?
Table 1.2 (cont.)Table 1.2 (cont.)
© 2006 Prentice Hall, Inc. 1 – 9
The Critical DecisionsThe Critical Decisions Layout designLayout design
How should we arrange the facility How should we arrange the facility and material flow?and material flow?
How large must the facility be to meet How large must the facility be to meet our plan?our plan?
Human resources and job designHuman resources and job design How do we provide a reasonable work How do we provide a reasonable work
environment?environment? How much can we expect our How much can we expect our
employees to produce?employees to produce?
Table 1.2 (cont.)Table 1.2 (cont.)
© 2006 Prentice Hall, Inc. 1 – 10
The Critical DecisionsThe Critical Decisions
Supply-chain managementSupply-chain management Should we make or buy this component?Should we make or buy this component?
Who are our suppliers and who can Who are our suppliers and who can integrate into our e-commerce program?integrate into our e-commerce program?
Inventory, material requirements Inventory, material requirements planning, and JITplanning, and JIT How much inventory of each item should How much inventory of each item should
we have?we have?
When do we re-order?When do we re-order?Table 1.2 (cont.)Table 1.2 (cont.)
© 2006 Prentice Hall, Inc. 1 – 11
The Critical DecisionsThe Critical Decisions
Intermediate and shortIntermediate and short––term term schedulingscheduling Are we better off keeping people on Are we better off keeping people on
the payroll during slowdowns?the payroll during slowdowns?
Which jobs do we perform next?Which jobs do we perform next?
MaintenanceMaintenance Who is responsible for maintenance?Who is responsible for maintenance?
When do we do maintenance?When do we do maintenance?
Table 1.2 (cont.)Table 1.2 (cont.)
© 2006 Prentice Hall, Inc. 1 – 12
Where are the OM Jobs?Where are the OM Jobs?
Figure 1.2Figure 1.2
© 2006 Prentice Hall, Inc. 1 – 13
New Challenges in OMNew Challenges in OM
Global focusGlobal focus
Just-in-timeJust-in-time
Supply chain Supply chain partneringpartnering
Rapid product Rapid product development, development, alliancesalliances
Mass Mass customizationcustomization
Empowered Empowered employees, teamsemployees, teams
ToToFromFrom Local or national focusLocal or national focus
Batch shipmentsBatch shipments
Low bid purchasingLow bid purchasing
Lengthy product Lengthy product developmentdevelopment
Standard productsStandard products
Job specializationJob specialization
© 2006 Prentice Hall, Inc. 1 – 14
Characteristics of GoodsCharacteristics of Goods
Tangible productTangible product
Consistent product Consistent product definitiondefinition
Production usually Production usually separate from separate from consumptionconsumption
Can be inventoriedCan be inventoried
Low customer Low customer interactioninteraction
© 2006 Prentice Hall, Inc. 1 – 15
Characteristics of ServiceCharacteristics of Service Intangible productIntangible product
Produced and Produced and consumed at same timeconsumed at same time
Often uniqueOften unique
High customer High customer interactioninteraction
Inconsistent product Inconsistent product definitiondefinition
Often knowledge-basedOften knowledge-based
Frequently dispersedFrequently dispersed
© 2006 Prentice Hall, Inc. 1 – 16
Goods Versus ServicesGoods Versus Services
Table 1.3Table 1.3
Can be resoldCan be resold
Can be inventoriedCan be inventoried
Some aspects of quality Some aspects of quality measurablemeasurable
Selling is distinct from Selling is distinct from productionproduction
Product is transportableProduct is transportable
Site of facility important for costSite of facility important for cost
Often easy to automateOften easy to automate
Revenue generated primarily Revenue generated primarily from tangible productfrom tangible product
Attributes of GoodsAttributes of Goods(Tangible Product)(Tangible Product)
Attributes of ServicesAttributes of Services (Intangible Product) (Intangible Product)
Reselling unusualReselling unusual
Difficult to inventoryDifficult to inventory
Quality difficult to measureQuality difficult to measure
Selling is part of service Selling is part of service
Provider, not product, isProvider, not product, isoften transportableoften transportable
Site of facility important forSite of facility important forcustomer contactcustomer contact
Often difficult to automateOften difficult to automate
Revenue generated primarily Revenue generated primarily from the intangible servicefrom the intangible service
© 2006 Prentice Hall, Inc. 1 – 17
Goods and ServicesGoods and ServicesAutomobile
Computer
Installed carpeting
Fast-food meal
Restaurant meal/auto repair
Hospital care
Advertising agency/investment management
Consulting service/teaching
Counseling
Percent of Product that is a GoodPercent of Product that is a Good Percent of Product that is a ServicePercent of Product that is a Service
100%100% 7575 5050 2525 00 2525 5050 7575 100%100%|| || || || || || || || ||
Figure 1.4Figure 1.4
© 2006 Prentice Hall, Inc. 1 – 18
Organizations in Each SectorOrganizations in Each Sector
Service SectorService Sector ExampleExample% of all % of all
JobsJobs
Professional Professional Services, Services, Education, Education, Legal, MedicalLegal, Medical
Notre Dame University, Notre Dame University, San Diego Zoo, Arnold San Diego Zoo, Arnold Palmer HospitalPalmer Hospital
25.525.5
Trade (retail, Trade (retail, wholesale)wholesale)
Walgreen’s, Wal-Mart, Walgreen’s, Wal-Mart, Nordstrom’sNordstrom’s
20.620.6
Utilities, Utilities, TransportationTransportation
Pacific Gas & Electric, Pacific Gas & Electric, American Airlines, Santa American Airlines, Santa Fe R.R., Roadway Fe R.R., Roadway ExpressExpress
7.17.1
Table 1.4Table 1.4
© 2006 Prentice Hall, Inc. 1 – 19
Organizations in Each SectorOrganizations in Each Sector
Service SectorService Sector ExampleExample% of all % of all
JobsJobs
Business and Business and Repair ServicesRepair Services
Snelling and Snelling, Snelling and Snelling, Waste Management, Waste Management, Pitney-BowesPitney-Bowes
6.96.9
Finance, Finance, Insurance, Insurance, Real EstateReal Estate
Citicorp, American Citicorp, American Express, Prudential, Express, Prudential, Aetna, Trammel CrowAetna, Trammel Crow
6.76.7
Food, Lodging, Food, Lodging, EntertainmentEntertainment
McDonald’s, Hard Rock McDonald’s, Hard Rock Café, Motel 6, Hilton Café, Motel 6, Hilton Hotels, Walt Disney, Hotels, Walt Disney, Paramount PicturesParamount Pictures
5.45.4
Public Public AdministrationAdministration
U.S., State of Alabama, U.S., State of Alabama, Cook CountyCook County
4.54.5
Table 1.4Table 1.4
© 2006 Prentice Hall, Inc. 1 – 20
Organizations in Each SectorOrganizations in Each SectorManufacturing Manufacturing SectorSector ExampleExample
% of all % of all JobsJobs
GeneralGeneral General Electric, Ford, General Electric, Ford, U.S. Steel, IntelU.S. Steel, Intel
13.313.3
ConstructionConstruction Bechtel, McDermottBechtel, McDermott 7.17.1
AgricultureAgriculture King RanchKing Ranch 2.52.5
MiningMining Homestake MiningHomestake Mining 0.40.4
SectorSector Percent of all jobsPercent of all jobs
ServiceService 76.7%76.7%
ManufacturingManufacturing 23.3%23.3%
Table 1.4Table 1.4
© 2006 Prentice Hall, Inc. 1 – 21
ServicesServices
Manufacturing
Manufacturing
Development of the Development of the Service EconomyService Economy
Figure 1.5 (A)Figure 1.5 (A)
AgricultureAgriculture
100100
9090
8080
7070
6060
5050
4040
3030
2020
1010
00
18001800 18501850 19001900 19501950 20002000
© 2006 Prentice Hall, Inc. 1 – 22
Development of the Development of the Service EconomyService Economy
Figure 1.5 (C)Figure 1.5 (C)
United States
Canada
France
Italy
Britain
Japan
W. Germany
1970 2005
| | | | |
40 50 60 70 80Percent
© 2006 Prentice Hall, Inc. 1 – 23
Productivity ChallengeProductivity Challenge
Productivity is the ratio of outputs (goods Productivity is the ratio of outputs (goods and services) divided by the inputs and services) divided by the inputs
(resources such as labor and capital)(resources such as labor and capital)
The objective is to improve this The objective is to improve this measure of efficiencymeasure of efficiency
Important Note!Production is a measure of output
only and not a measure of efficiency
© 2006 Prentice Hall, Inc. 1 – 24
FeedbackFeedback looploop
OutputsOutputs
Goods and
services
ProcessesProcesses
The U.S. economic system transforms inputs to outputs
at about an annual 2.5% increase in productivity per
year. The productivity increase is the result of a
mix of capital (38% of 2.5%), labor (10% of 2.5%), and
management (52% of 2.5%).
The Economic SystemThe Economic System
InputsInputs
Labor,capital,
management
Figure 1.7Figure 1.7
© 2006 Prentice Hall, Inc. 1 – 25
Measure of process improvementMeasure of process improvement
Represents output relative to inputRepresents output relative to input
Only through productivity increases Only through productivity increases can our standard of living improvecan our standard of living improve
ProductivityProductivity
Productivity =Productivity =Units producedUnits produced
Input usedInput used
© 2006 Prentice Hall, Inc. 1 – 26
Productivity CalculationsProductivity Calculations
Productivity =Productivity =Units producedUnits produced
Labor-hours usedLabor-hours used
= = = = 44 units/labor-hour units/labor-hour1,0001,000
250250
Labor ProductivityLabor Productivity
© 2006 Prentice Hall, Inc. 1 – 27
Multi-Factor Productivity Multi-Factor Productivity
OutputOutput
Labor + Material + Energy Labor + Material + Energy + Capital + Miscellaneous+ Capital + Miscellaneous
Productivity =Productivity =
Also known as total factor productivityAlso known as total factor productivity
Output and inputs are often expressed Output and inputs are often expressed in dollarsin dollars
© 2006 Prentice Hall, Inc. 1 – 28
Collins Title ProductivityCollins Title Productivity
Staff of Staff of 44 works works 8 8 hrs/dayhrs/day 88 titles/day titles/dayPayroll cost = Payroll cost = $640$640/day/day
Old System:Old System:
==Old labor Old labor
productivityproductivity88 titles/day titles/day
3232 labor-hrs labor-hrs
© 2006 Prentice Hall, Inc. 1 – 29
Collins Title ProductivityCollins Title Productivity
Staff of Staff of 44 works works 88 hrs/day hrs/day 88 titles/day titles/dayPayroll cost = Payroll cost = $640$640/day/day
Old System:Old System:
88 titles/day titles/day
3232 labor-hrs labor-hrs==
Old labor Old labor productivityproductivity = = .25.25 titles/labor-hr titles/labor-hr
© 2006 Prentice Hall, Inc. 1 – 30
Collins Title ProductivityCollins Title Productivity
Staff of Staff of 44 works works 8 8 hrs/dayhrs/day 88 titles/day titles/dayPayroll cost = Payroll cost = $640$640/day/day
Old System:Old System:
1414 titles/day titles/day
New System:New System:
88 titles/day titles/day
3232 labor-hrs labor-hrs==
Old labor Old labor productivityproductivity
==New labor New labor
productivityproductivity
= .25 titles/labor-hr= .25 titles/labor-hr
1414 titles/day titles/day
3232 labor-hrs labor-hrs
© 2006 Prentice Hall, Inc. 1 – 31
Collins Title ProductivityCollins Title Productivity
Staff of Staff of 44 works works 88 hrs/day hrs/day 88 titles/day titles/dayPayroll cost = Payroll cost = $640$640/day/day
Old System:Old System:
1414 titles/day titles/day
New System:New System:
88 titles/day titles/day
3232 labor-hrs labor-hrs==
Old labor Old labor productivityproductivity = = .25.25 titles/labor-hr titles/labor-hr
14 14 titles/daytitles/day
3232 labor-hrs labor-hrs==
New labor New labor productivityproductivity = = .4375.4375 titles/labor-hr titles/labor-hr
© 2006 Prentice Hall, Inc. 1 – 32
Productivity VariablesProductivity Variables
LaborLabor
CapitalCapital
ManagementManagement
© 2006 Prentice Hall, Inc. 1 – 33
Key Variables for Improved Key Variables for Improved Labor ProductivityLabor Productivity
Basic education appropriate for the Basic education appropriate for the labor forcelabor force
Diet of the labor forceDiet of the labor force
Social overhead that makes labor Social overhead that makes labor availableavailable
Maintaining and enhancing skills in the Maintaining and enhancing skills in the midst of rapidly changing technology midst of rapidly changing technology and knowledgeand knowledge
© 2006 Prentice Hall, Inc. 1 – 34
Service ProductivityService Productivity
Typically labor intensiveTypically labor intensive
Frequently focused on unique Frequently focused on unique individual attributes or desiresindividual attributes or desires
Often an intellectual task performed by Often an intellectual task performed by professionalsprofessionals
Often difficult to mechanizeOften difficult to mechanize
Often difficult to evaluate for qualityOften difficult to evaluate for quality
© 2006 Prentice Hall, Inc. 1 – 35
Productivity at Taco BellProductivity at Taco Bell
Improvements:Improvements: Revised the menu Revised the menu Designed meals for easy preparationDesigned meals for easy preparation Shifted some preparation to suppliersShifted some preparation to suppliers Efficient layout and automationEfficient layout and automation Training and employee empowermentTraining and employee empowerment
© 2006 Prentice Hall, Inc. 1 – 36
Productivity at Taco BellProductivity at Taco Bell
Improvements:Improvements: Revised the menu Revised the menu Designed meals for easy preparationDesigned meals for easy preparation Shifted some preparation to suppliersShifted some preparation to suppliers Efficient layout and automationEfficient layout and automation Training and employee empowermentTraining and employee empowerment
Results:
Preparation time cut to 8 seconds Management span of control
increased from 5 to 30 In-store labor cut by 15 hours/day Stores handle twice the volume with
half the labor Fast-food low-cost leader
© 2006 Prentice Hall, Inc. 1 – 37
Ethics and Social ResponsibilityEthics and Social Responsibility
Challenges facing Challenges facing operations managers:operations managers:
Developing safe quality productsDeveloping safe quality products
Maintaining a clean environmentMaintaining a clean environment
Providing a safe workplaceProviding a safe workplace
Honoring community commitmentsHonoring community commitments