15 operations, quality and productivity
- 1. CHAPTER 15 OPERATIONS, QUALITY, AND PRODUCTIVITY CH 15 © 2015 SAGE Publications
- 2. Foundation Terms • Time-based: Use of strategies to increase the speed with which an organization goes from creativity to delivery. • Operations: Transforming resource inputs into product outputs. Effective operations give you the ability to change quickly in a dynamic environment. • Product: A good, a service, or a combination of the two.
- 3. Classifying Operations Systems • The tangibility of products refers to: • Tangible Products • Intangible Products • Mixed Products
- 4. Level of Customer Involvement • The amount of input from customers • Make-to-Stock (MTS) Operations • Assemble-to-Order (ATO) Operations • Make-to-Order (MTO) Operations
- 5. Operations Flexibility • The amount of variety in the products an operation produces, which determines whether the products are produced • Continuously: Continuous Process Operations (CPO) • Repetitively: Repetitive Process Operations (RPO) • In batches- Batch Process Operations (BPO) • Individually: Individual Process Operations (IPO) • By project: Project Process Operations (PPO)
- 6. Technology and Intensity • Technology: Process used to transform inputs into outputs • Intensity: Balance between the use of machine or human labor • In capital-intensive operations, machines do most of the work. • In labor-intensive operations, human resources do most of the work. • Manufacturing firms use a balance of capital and labor.
- 7. Designing Operations Systems • In a changing environment, operations systems must be continually redesigned. • Product mix includes the number of product lines, the number of products offered within each line, and the mixture of goods and services within each line. • Product design refers to new or improved product development.
- 8. Quality • “Quality is a virtue of design”: products are well designed through the use of cross-functional team input: • There will be fewer operations problems • The product will be easier to sell • Servicing the product will be less costly
- 9. Facility Layout • The spatial arrangement of physical resources: • Product layout is associated with make-to-stock and assemble-to- order levels of customer involvement, relatively inflexible repetitive process or continuous process operations, and capital intensity with high volume and low variety. • Process, or functional, layout is associated with a make-to-order level of customer involvement, flexible individual process operations, and labor intensity or a balanced intensity.
- 10. Facility Layout • The spatial arrangement of physical resources: • Cellular layout is associated with make-to-stock and assemble-to- order levels of customer involvement, relatively flexible batch process operations, and a balanced intensity. • Fixed-position layout is associated with make-to-order and assemble- to-order levels of customer involvement, flexible project process operations, and balanced intensity.
- 11. Facility Layout
- 12. Facility Location & Capacity Planning • Location is the physical geographic site of facilities. • The facility location must be determined based on the classification of the operations system and the organization’s product mix, layout requirements, and capacity planning.
- 13. Facility Location & Capacity Planning • Cost • Proximity to inputs • Customers, • Competitors • Availability of transportation • Access to human resources • Number of facilities
- 14. Capacity • The amount of products an organization can produce.
- 15. Planning Schedules • Scheduling is the process of listing activities that must be performed to accomplish an objective. • Scheduling answers the planning questions • Which employees will make which products? • When, how and where will they be produced? • How many of each will be produced? • Routing is the path and sequence of the transformation of a product into an output.
- 16. Planning Schedules • Priority scheduling is the continuing evaluation and reordering of the sequence in which products will be produced. • First come–first served. • Earliest due date. • Shortest operating time.
- 17. Planning Schedules • Planning sheets state an objective and list the sequence of activities required to meet the objective, when each activity will begin and end, and who will complete each activity. • Gantt charts use bars to graphically illustrate a schedule and progress toward the objective over a period of time.
- 18. Performance Evaluation & Review Technique (PERT) • PERT is a network scheduling technique that illustrates the interdependence of activities. • Activities • Events • Times • Critical path
- 19. How a PERT network is completed 1. List all the activities/events that must be completed to reach the specific objective. 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.
- 20. PERT Network
- 21. Inventory Control • The stock of materials held for future use. • Raw materials • Work-in-process • Finished goods • In-transit goods
- 22. Types of Inventory Control • Retailing and Services Inventory: Retail inventory control, including purchasing, is concerned almost exclusively with finished goods for resale as is. • Just-in-time (JIT) inventory: Necessary parts and raw materials are delivered shortly before they are needed. • Materials requirement planning (MRP): Integrates operations and inventory control with complex ordering and scheduling. MRP is commonly used by firms that have different delivery systems and lead times.
- 23. Economic Order Quantity (EOQ) • The EOQ is the optimal quantity of a product to order, determined on the basis of a mathematical model. • EOQ is a balance of ordering costs and holding costs.
- 24. Supply Chain Management • Supply chain management is the process of coordinating all the activities involved in producing a product and delivering it to the customer. • Radio-frequency identification (RFID): automatic identification method, relying on storing and remotely retrieving data using devices called RFID tags.
- 25. Quality Control • Quality control is the process of ensuring that all types of inventory meet standards. • Focus on delivering customer value • Continually improve systems and processes • Focus on managing processes rather than people • Use teams to continually improve
- 26. Statistical Quality Control (SPC) • SPC is a management science technique that uses a variety of statistical tests based on probability to improve the quality of decision making. • SPC aids in determining whether quality is within an acceptable standard range.
- 27. Measuring and Increasing Productivity • Productivity is a performance measure relating outputs to inputs. It allows you to: • Calculate Productivity • Calculate Productivity Percentage Changes • Compare Production and Productivity. • Increase Productivity