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*Chapter Nine

Production And

Operations Management

Copyright © 2010 by The McGraw-Hill Companies, Inc. All rights reserved.McGraw-Hill/Irwin

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*Manufacturing and Services in Perspective

• From 2001 to 2009, manufacturing output in the U.S. rose 4% each year.

• The U.S. is still the world’s leading manufacturer.

MANUFACTURING in the U.S.

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• Almost 25% of all goods produced each year come from the U.S.

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*From Production to Operations Management

• Production -- The creation of goods using land, labor, capital, entrepreneurship and knowledge (the factors of production).

PRODUCTION and PRODUCTION MANAGEMENT

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• Production Management -- All the activities managers do to help firms create goods.

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*From Production to Operations Management

• 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• Follow-up services

OPERATIONS MANAGEMENT

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*Production Processes

• Form Utility -- The value producers add to materials in the creation of finished goods and services.

FORM UTILITY

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• Process Manufacturing -- The part of production that physically or chemically changes materials.

• Assembly Process -- The part of the production process that puts together components.

PROCESS and ASSEMBLY in PRODUCTION

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Production Processes

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• 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.

KEY PRODUCTION PROCESSES

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Production Processes

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*Mass CustomizationMASS CUSTOMIZATION

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• Mass Customization -- Tailoring products to meet the needs of a large number of individual customers.

• More manufacturers are learning to customize.

• Mass customization exists in the service sector too.

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*Operations Management Planning

• Operations management planning helps solve problems like:

- Facility location

- Facility layout

- Materials requirement planning

- Purchasing

- Inventory control

- Quality control

OPERATIONS MANAGEMENT

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*Quality Control

• Quality -- Consistently producing what the customer wants while reducing errors before and after delivery.

• Six Sigma Quality -- A quality measure that allows only 3.4 defects per million opportunities.

QUALITY CONTROL

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*Control Procedures: PERT and GANTT Charts

• Program Evaluation and Review Technique (PERT) -- A method for analyzing the tasks involved in completing a given project and estimating the time needed.

PERT

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*Control Procedures: PERT and GANTT Charts

1. Analyzing and sequencing tasks

2. Estimating the time needed to complete each task

3. Drawing a PERT network illustrating the first two steps

4. Identifying the critical path

• Critical Path -- The sequence of tasks that takes the longest time to complete.

STEPS INVOLVED in PERT

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*Control Procedures: PERT and GANTT Charts

• Gantt Chart – A bar graph that shows what projects are being worked on and how much has been completed.

GANTT CHARTS

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