1. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 1 Producing Quality Goods and Services

2. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 2 What Is Production? LeadingPlanning Organizing Production Operations Management(POM) Management(POM) Controlling

3. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 3 The Conversion Process Transformation Outputs Inputs Analytic Systems The Value Chain Synthetic Systems Tangible Goods Intangible Services

4. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 4 Input-Transformation-Output Relationships for Typical Systems Department Store Shoppers, stock of goods Displays, sales clerks Attract customers, promote products, fill orders Sales to satisfied customers College or University High School graduates, books Teachers, classrooms Impart knowledge & skills Educated individuals Automobile Factory Sheet steel, engine parts Tools, equipment, workers Fabrication & assembly of cars High-quality cars Restaurant Hungry customers, food Chef, waitress, environment Well-prepared & well-served food Satisfied customers Hospital Patients, medical supplies MDs, nurses, equipment Health care Healthy individuals Typical Desired Output Transformation Function Transformation Components InputsSystem

5. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 5 Challenges of the Service Industry People-IntensiveActivitiesPeople-IntensiveActivitiesProduction and Location Production SubjectiveQualitySubjectiveQuality CustomerInvolvementCustomerInvolvementDeliveryTimingDeliveryTiming

6. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 6 Manufacturing Goods Mass Customization Mass Production Customized Production

7. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 7 DisadvantagesDisadvantagesAdvantagesAdvantages Outsourcing the Manufacturing Function Capital and Resources Economies of Scale Quality and Cost Privacy Issues

8. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 8 Production Process Design Forecast Demand Plan for Capacity Identify Supply Chain

9. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 9 Production Process Design Choose Facility Site Design Facility Layout Schedule Work

10. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 10 Establish the Supply Chain Suppliers Manufacturers Distributors Retailers

11. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 11 Forecast Demand CustomerFeedbackMarketResearchSalesFiguresIndustryAnalysesEducatedGuesses BusinessResources PlanningBudgetingScheduling

12. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 12 Capacity Planning CustomerDemand Level of Resources

13. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 13 Facility Location EnergyTransportation Land LivingStandardsConstructionRawMaterials Local Taxes Labor

14. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 14 Facility Layout Product Cellular Fixed-Position Process

15. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 15 Process Layout

16. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 16 Product Layout

17. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 17 Cellular Layout

18. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 18 Fixed-Position Layout

19. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 19 Production Schedule Scheduling Dispatching Contingencies

20. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 20 The Gantt Chart IDTask NameStart DateEnd DateDuration AugustSeptember 2006 1Make legs8/1/068/28/0620d 2Cut tops8/22/068/28/065d 3Drill8/29/069/4/065d 4Sand9/5/069/11/065d 5Assemble9/12/069/25/0610d 6Paint9/19/069/25/065d

21. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 21 Program Evaluation and Review Technique (PERT) 1.Identify activities 2.Determine sequence 3.Establish time frame 4.Diagram activity network 5.Calculate longest completion path 6.Refine timing

22. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 22 PERT Time Estimates Optimistic Pessimistic Most Likely Expected

23. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 23 Simplified PERT Diagram for Store Opening 15 Days 24 Days 3 Days 4 Days 21 Days Training Completed Training Completed Merchandise Received Merchandise Received Staffing Completed Staffing Completed Merchandise Ordered Merchandise Ordered Staffing Plan Merchandise Plan Merchandise Plan Ads Placed Ads Created Promotion Plan Promotion Plan Project Launch Project Launch 5 Days 14 Days 7 Days Opening Day Opening Day

24. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 24 Industrial Robotics StaminaStamina DiligenceDiligence SpeedSpeed PrecisionPrecision

25. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 25 Computerized Production Computer-Aided Manufacturing (CAM) Computer-Aided Computer-Integrated Manufacturing (CIM) Computer-Integrated Product Lifecycle Management (PLM) Product Lifecycle Management (PLM) Computer-Aided Design (CAD) Computer-Aided Computer-Aided Engineering (CAE) Computer-Aided

26. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 26 Manufacturing Systems TraditionalFlexible Mass Production Resistant to Change High Set-Up Costs Specialty Operations Conducive to Change Minimal Set-Up Costs

27. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 27 Supply Chain Data Interchange Electronic Data Interchange (EDI) Extensible Markup Language (XML)

28. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 28 The Production Process Transformation Outputs Inputs Operations Managers Coordinating The Supply Chain Assuring Product Quality

29. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 29 Supply Chain Coordination InventoryInventoryPurchasingPurchasing Lead Time Inventory Control

30. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 30 Inventory Control Just-In-Time (JIT) Material Requirements Planning (MRP) Manufacturing Resource Planning (MRP)

31. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 31 Supply Chain Management ImprovedQuality Manage Risks Manage Relationships Manage Trade-Offs IncreasedSalesCostSavingsReducedInventoryFasterDelivery ImprovedService

32. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 32 Assuring Product Quality Quality Assurance Quality Control Establishing Standards Measuring Quality Minimizing Defects Statistical Quality Control Statistical Process Control Continuous Improvement

33. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 33 Total Quality Management Management commitment to TQM Clear customer focus Employee involvement Continuous improvement Partnering with suppliers Meaningful performance standards

34. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 34 The Six Sigma Approach Define the Problem Measure Performance Analyze Root Causes Improve the Process Control the Process

35. © Prentice Hall, 2007Excellence in Business, 3eChapter 9 - 35 Global Quality Standards ISO 9000 ISO 14000