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MultiMedia by Stephen M. Peters © 2002 South-Western
Operations Management
MultiMedia by Stephen M. Peters © 2002 South-Western
Operations Strategy
Part of a strategic plan that defines:
– The role
– Capabilities
– Expectations of operations
MultiMedia by Stephen M. Peters © 2002 South-Western
Operational Problems for Producers of Goods and Services
Each is concerned with converting resources into something saleable.
Each must acquire materials or supplies to achieve that conversion.
Each must schedule the process of conversion.
Each must control processes and ensure quality.
MultiMedia by Stephen M. Peters © 2002 South-Western
Flow of Operations
•Raw Materials•Human Resources•Land, Buildings•Information•Technology
Inputs
Transformation Processes
Outputs
•Products•Services
Feedback to Provide Control
MultiMedia by Stephen M. Peters © 2002 South-Western
Role of Operations Strategy and Operations
Management
Operations Strategy
Operations Management
Products, Facilities, and Processes
Product or Service Design
Facilities Layout
Production Processes and Technology
Facilities Location
Capacity Planning
Productivity
Quality
Implementation Structures
Scheduling
Relationships
Decentralization
Teams
Productivity
Quality
Control Processes
Design Control
Purchasing Control
Inventory Control
Scheduling Control
Product Control
Productivity
Quality
Inputs Outputs
MultiMedia by Stephen M. Peters © 2002 South-Western
Operations Management Embraces
Facilities
Implementation structure Control
processes
Product
Process design
MultiMedia by Stephen M. Peters © 2002 South-Western
The Planning Stage of an Organization’s Operations
Involves decisions about:
– Product or service design
– Facilities layout
– Production processes and technology
– Facilities location
– Capacity planning
Involves decisions about:
– Product or service design
– Facilities layout
– Production processes and technology
– Facilities location
– Capacity planning
MultiMedia by Stephen M. Peters © 2002 South-Western
Two Design Concepts1. Design for manufacturability and assembly (DFM/A)
• Calls for design teams consisting of designers, manufacturers, and assemblers.
• all have a say in product design and actual production of the product.
• DFM/A product design involves four criteria: Producibility Cost Quality Reliability
2. Design for disassembly (DFD)
• The goal is to conceive, develop, and build a product with a long-term view of how its components can be refurbished and reused–or disposed of safely.
MultiMedia by Stephen M. Peters © 2002 South-Western
Major Benefits of the DFMA Approach, Against Which GM Evaluates New Designs
Quality
Durability
Mass
Safety
Manufacturability
Time to market
Total cost
Reliability
The total amount of materials, labor, transportation, design, and overhaul expenses associated with the design.
The time from product design until the car is ready for sale to the consumer.
The degree to which the car can be manufactured and assembled within existing operational capacity.
The degree to which the car increases the protection of occupants.
The total weight of the car.
The degree to which the car withstands performance demands.
The degree to which the car fulfills its intended purpose.
Excellence of the car, including serviceability.
MultiMedia by Stephen M. Peters © 2002 South-Western
Process LayoutEquipment or machines that perform a similar task or function are
located together.
A product is moved from process to process as needed.
Major advantage is potential for reducing costs.
Requires fewer people and pieces of equipment.
Limits the need to move the product through several different processes.
MultiMedia by Stephen M. Peters © 2002 South-Western
Four Options of Facilities Layout
(a) Process LayoutReceiving Dept.
Wiring
Molding
Insulation
Welding
Painting
Assembly
Testing
Storage
Product A Product B Product C
MultiMedia by Stephen M. Peters © 2002 South-Western
Product Layout
Machines and tasks are arranged according to the progressive steps by which the product is made.
Machines and tasks are arranged according to the progressive steps by which the product is made.
Efficient when the business produces large volumes of identical products.
Efficient when the business produces large volumes of identical products.
MultiMedia by Stephen M. Peters © 2002 South-Western
Four Options of Facilities Layout
(b) Product Layout
Receiving Dept.
Molding
Assembly
Assembly
Wiring
Insulating Painting
Molding
Molding
Painting
TestingWelding
Receiving Dept.
Product A Product B Product C
MultiMedia by Stephen M. Peters © 2002 South-Western
Cellular Layout
Combines some of the characteristics of process and product layouts.
All the equipment required for a sequence of operations on the same product is placed together.
Allows efficient handling of materials and inventory.
Workers are physically close enough to work together to solve problems.
MultiMedia by Stephen M. Peters © 2002 South-Western
Four Options of Facilities Layout
(c) Cellular Layout
Product A Product B Product C
Assembly
Painting Wiring
Welding
Molding
Testing
MultiMedia by Stephen M. Peters © 2002 South-Western
Fixed-Position Layout
Used because of size or
bulk. Tools, equipment, and human skill
are brought to the product.
The product remains in
one location.
MultiMedia by Stephen M. Peters © 2002 South-Western
Four Options of Facilities Layout
(d) Fixed-Position Layout
ProductProductEquipment
Machines Supplies
Materials
Labor
MultiMedia by Stephen M. Peters © 2002 South-Western
Technologies Responsible for Revolutionizing Manufacturing Processes
RoboticsCAD/CAM
Soft manufacturin
g systems
Agile manufacturin
g
Computer- integrated
manufacturing
Flexible manufacturing
systems
MultiMedia by Stephen M. Peters © 2002 South-Western
Placement of FacilitiesTwo Questions
Should the firm have one or two large plants, or several smaller ones?
Where should the facilities be located?
MultiMedia by Stephen M. Peters © 2002 South-Western
Facility Location Depends on
Labor costs
Availability of labor
skills
Proximity to suppliers
Tax rates
The location of the market
where the product will
be soldConstruction
expenses
Quality of life for
employees
Utility rates
MultiMedia by Stephen M. Peters © 2002 South-Western
To Increase Capacity
Build new facilitiesCreate additional
shifts and hire new staff
Pay present staff overtime
Subcontract work to outside firms
Refit existing plants
MultiMedia by Stephen M. Peters © 2002 South-Western
Specific Plans for the Overall Production Activities Involve
Structuring for operations
Master scheduling
Aggregate planning
MultiMedia by Stephen M. Peters © 2002 South-Western
Development of a Master Schedule from an Aggregate Plan
1,000750
1,750
1,250800
2,050
1,200700
1,900
1,3001,0002,300
1,2001,0002,200
100100150
10050
150
50100150
100100150
100100100
100100
50
5050
100
50100100
1,000 1,300January Total February Total
3,6003,6653,670
1 2 4 53 6 7 8January February
Master Schedule for Electric Ranges (Units per Week)
Aggregate Plan (Units per Month)
January February March April MayElectric Ranges
Gas RangesTotal
Note: Another master schedule will be developed for the gas ranges.
MultiMedia by Stephen M. Peters © 2002 South-Western
Operational Controls
Control of
design
MaterialsMaterials
SchedulingScheduling ProductsProducts
InventoryInventory
MultiMedia by Stephen M. Peters © 2002 South-Western
Design Control
Focuses on creating new products engineered for reliability.
Functionality Serviceability
MultiMedia by Stephen M. Peters © 2002 South-Western
Purchasing is Critical for the Following Reasons
If the materials are not on hand, nothing can be
produced.
If the right quantity of materials is not available,
the organization cannot meet demand.
If the materials are of inferior quality, producing
quality products is difficult or costly.
MultiMedia by Stephen M. Peters © 2002 South-Western
Goals of Purchasing Control
Ensure availability of material
Ensure acceptable quality of material
Balance costs
MultiMedia by Stephen M. Peters © 2002 South-Western
Three Types of Inventory
InputsTransformation
ProcessesOutputs
Raw Materials Inventory
Work-in-Process
Inventory
Finished Goods
Inventory
MultiMedia by Stephen M. Peters © 2002 South-Western
Four Specific Techniques for Inventory Management
Materials requirement planning
Manufacturing resource planning
Just-in-time inventory systems
Economic order quantity