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Creating Value:

Producing Quality Goodsand Services

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What Is Production?

Production Operations Management

Planning

Leading

Organizing

Controlling

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What Is the Conversion

Process? Inputs

Transformation Outputs

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Input-Transformation-OutputRelationships 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 carsHigh-quality cars

RestaurantHungry

customers, foodChef, waitress,

environmentWell-prepared &well-served food

Satisfiedcustomers

HospitalPatients, medical

supplies

MDs, nurses,

equipmentHealth care

Healthy

individuals

Typical Desired

Output

Transformation

Function

Transformation

ComponentsInputsSystem

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Challenges of the Service

Industry Customer involvement

Delivery timing

People-intensive activities

Production and location

Subjective quality

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Manufacturing Goods

Mass production

Mass customization

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Outsourcing the

Manufacturing Function Advantages

Capital and resources

Economies of scale

Disadvantages

Job displacementLost wages

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Production Process Design

Forecast demand

Plan for capacity

Choose facility site

Design facility layout

Schedule work

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The Supply Chain

Suppliers

Manufacturers

Distributors

Retailers

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Forecasting Demand

Customer feedback

Market research

Sales figures

Industry analyses

Educated guesses

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Capacity Planning

Level of resources

Customer demand

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Facility Location

Land

Construction

Labor

Local taxes

Energy

Living standards

Transportation

Raw materials

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Types of Facility Layout

Process

Product

Cellular

Fixed-position

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Process Layout

Made-to-order products

Process arrangement

Specialized employees

Specialized materials

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Product Layout

Mass production of few items

Process arrangement

Continuous sequence

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Cellular Layout

Mass customization

Process arrangement

Work centers

Teamwork

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Fixed-Position Layout

Immovable product

Process arrangement

Employee go to the site

Materials are brought to the site

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Production Schedule

Scheduling

Dispatching

Contingencies

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The Gantt Chart

ID Number

Task name

Start date

End date

Duration

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Program Evaluation and

Review Technique (PERT)1. Identify activities

2. Determine sequence3. Establish time frame

4. Diagram activity network

5. Calculate longest completion path6. Refine timing

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PERT Time Estimates

Optimistic

Pessimistic

Most likely

Expected

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Industrial Robotics

Precision

Diligence

Stamina

Speed

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Computerized Production Computer-aided design (CAD)

Computer-aided engineering (CAE)

Computer-aided manufacturing (CAM)

Computer-integrated manufacturing (CIM)

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Manufacturing Systems

Traditional Flexible

Mass Production

Resistant to Change

High Set-Up Costs

Specialty Operations

Conducive to Change

Minimal Set-Up Costs

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Supply Chain Data

Interchange Electronic Data Interchange (EDI)

Extensible Markup Language (XML)

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The Production Process

Inventory management

Quality assurance

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Supply Chain Coordination

Inventory

Purchasing

Lead time

Inventory control

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Inventory Control

Just-in-time (JIT)

Materials requirements planning (MRP)

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Supply Chain Management

Manage risks

Manage relationships Manage trade-offs

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Maintaining Quality

Quality control

Quality assurance

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Total Quality Management

Management commitment to TQM

Clear customer focus

Employee employment Commitment to continuous

improvement

Partner with suppliers

Meaningful performancemeasurements

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Six-Sigma Approach

Define the problem

Measure performance

Analyze root causes

Improve the process

Control the process

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Global Quality Standards

ISO 9000

ISO 14000