1 SMALL BUSINESS MANAGEMENT Chapter Eleven Operations Management

2 Management of Internal Operations u Part of Physical Facilities Plan u Maintaining quality and control u Areas – cash flow, production costs, product quality, inventory management, physical facilities issues.

3 The Production Process u Converts inputs – money, people, machines, inventories u Into outputs – products and/or services u PERT = Priority Evaluation Review and Technique u Total Quality Management

4 Physical Facilities and Factors u Buildings - age, space, configuration, appearance, frontage, access u Interior utilization - floor space, room dimensions, ceiling heights, stairways, elevators, window space, utility services u Improvement potential - building exterior and interior,site, surrounding, streets, walks, access, expansion u Site and Environment - street and service areas setback and frontage, parking, surrounding businesses, area environment

5 Layout u Layouts for Manufacturing Firms – product layout, process layout, fixed position layout u Layouts for Retail Firms – selling vs nonselling space, space among departments and/or products, classification of merchandise, display locations and product shelving F grid layout, free-flowing layout u Layouts for Service Firms

6 Purchasing and Controlling Inventories u Sources of Supply u Evaluating Suppliers – dependability, cost, services offered u Determining Order Quantities – order lead time, sales or production estimate, minimum inventory levels needed, inventory currently on hand, methods for determining order quantities, minimum turnover method, maxmin, opentobuy, eoq, abc analysis

7 Purchasing and Controlling Inventories u Inventory Control – unit of control, – valuation, – monitoring, F periodic vs perpetual – security of inventory,

8 Concept Checks u 1. What is the production process? u 2. Why is it important to continually monitor the state of the physical facilities? u 3. What are the three types of layouts used in the production process?

9 Concept Checks u 4. In planning the layout of a retail store, what key areas should be analyzed? u 5. What are the two types of layouts used by a retail store? u 6. What are the pros and cons of purchasing from one supplier?

10 Concept Checks u 7. What items of information are required to estimate the quantities of inventories to order? u 8. What specific methods can be used to determine order quantities? u 9. What are the three essential aspects of inventory control?