Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–1 Operations Exhibit 15–1

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–2 Classifying Operations Systems Tangibility of Products –Tangible: goods (computers) –Intangible: services (house cleaning) –Mixed: goods and services (airlines).

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–3 Classifying Operations Systems Customer Involvement –Make-to-stock (MTS) Producing products in anticipation of demand with a common design and price; low customer involvement. –Make-to-order (MTO) Producing products after receipt of an order; high customer involvement. –Assemble-to-order (ATO) Producing a standard product with some customized features; moderate customer involvement

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–4 Flexibility Operations Flexibility –Products are produced continuously, repetitively, in batches, or individually in different volumes (amounts) and varieties (types). –Continuous process operations (CPO) Produce outputs that are not discrete units. –Repetitive process operations (RPO) Produce outputs in an assembly-line-type structure. –Batch process operations (BPO) Produce different outputs with the same resources.

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–5 Flexibility (cont’d) Operations Flexibility –Individual process operations (IPO) Produce output to customer specifications. –Project process operations Produce low-volume outputs that take relatively long time to complete.

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–6 Classifying Operations Systems Exhibit 15–2

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–7 Designing Operations Systems Product Mix –The number of product lines, number of products in each line, and the mixture of goods and services within each line. Product Design –New or improved product development. Quality As a Virtue of Design –Products designed with cross-functional team input have fewer operations (manufacturing) problems.

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–8 Facility Layout Layout –The spatial arrangement of operations units relative to each other. Facility Layout –The arrangement of operations by: Product Process Cellular Fixed position

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–9 Facility Location Location –The physical geographic site of facilities Location Factors –Cost –Near inputs, customers, and/or competitors –Transportation –Access to Human Resources –Community interest –Quality of life issues –Number of facilities

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–10 Managing Operations Systems Organizing and Leading –Planning schedules Scheduling and routing –Priority Scheduling First come-first served Earliest due date Shortest operating time Combination Planning Sheet –State an objective and list the sequence and timing of each activity and who will carry it out.

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–11 Managing Operations Systems Planning Sheet –State an objective and list the sequence and timing of each activity and who will carry it out. Gantt Chart –Uses bars to illustrate a schedule and progress toward the objective over a period of time. –Is useful as both a planning and a control tool. Performance Evaluation and Review (PERT) –A network schedule that illustrates the dependence of activities.

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–12 Planning Sheet Exhibit 15–4

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–13 Gantt Chart (Order by Week) Exhibit 15–5

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–14 PERT Network Exhibit 15–6

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–15 Developing a PERT Network 1.List all the activities/events that must be completed. 2.Determine the time it will take to complete each activity event. 3.Arrange the tasks on the diagram in the sequence in which they must be completed. 4.Determine the critical path.

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–16 Inventory Control within the Systems Process Exhibit15–7 Just-in-Time Inventory: An inventory control method that has necessary parts and raw materials delivered shortly before they are needed.

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–17 Materials Requirements Planning Materials Requirements Planning (MRP) –A system that integrates operations and inventory control with complex ordering and scheduling. Enterprise Resource Planning (ERP) –Collects information from the entire organization and manages all systems related systems. Economic Order Quantity –A mathematical model that determines the optimal quantity to order when placing a reorder by optimizing inventory holding and ordering costs.

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–18 Quality Control –The process of ensuring that all four types of inventory meet standards. Quality Assurance –Means building in quality; not attempting to “inspect it in.” International Standards Organization (ISO) –Certifies organizations that meet set quality standards. Six Sigma –Higher levels of quality at lower costs.

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–19 Six Rules of Customer Human Relations Exhibit 15–8

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–20 Statistical Quality Control Statistical Quality Control (SPC) –A concurrent process control method that uses statistical tests of probability in determining if product quality is within the acceptable range.

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–21 Statistical Quality Control Steps 1.Set the desired quality standard and range. 2.Determine the frequency of measuring performance and the sampling technique. 3.Measure performance and plot it on a chart. 4.Use the exception principle and do nothing if performance is within range, but take action if its is out of control limits.

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–22 Statistical Process Control Chart by Ounces and Time of Day Exhibit 15–9

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–23 The Information Systems Process Exhibit 15–10

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–24 Types of Information Systems Transaction Processing Systems (TPS) –Used to handle routine and recurring business matters (e.g. accounting transactions). Management Information Systems (MIS) –Used to transform data into information that managers need from the database to do their work. Decision Support Systems (DSS) –Use a manager’s insights in an interactive computer-based process to assist in making nonroutine decisions.

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–25 Types of Information Systems (cont’d) Artificial Intelligence (AI) –An attempt to create computers that simulate the human decision process. Expert Systems –Imitate the thought processes of a human being.

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–26 Information Networks and Technology Computer Networks –Connect independent computers so that they can function in interrelated ways. Information Networks –Connect all employees from headquarters and remote facilities to each other, to suppliers and customers, and into databases. Types of Networks –Local-area networks (LAN) –Wide-area networks (WAN) –Firewalls, intranets, and peer-to-peer

Copyright © 2003 by South-Western/Thomson Learning. All rights reserved. 15–27 Information Network Exhibit 15–11