Lecture Business: A changing world - Chapter 9: Production and operations management

After reading this chapter, you will be able to: Define operations management and differentiate between operations and manufacturing; explain how operations management differs in manufacturing and service firms; describe the elements involved in planning and designing an operations system; specify some techniques managers may use to manage the logistics of transforming inputs into finished products; assess the importance of quality in operations management; evaluate a business''s dilemma and propose a solution.

Production and Operations Management

The development and administration of  the activities involved in transforming  resources into goods and services.

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Inputs land  labor  capital  raw  materials  time  information  energy

Transformation

or Conversion procedures  equipment  facilities  technology  knowledge

Outputs goods  services  ideas

sawing  routing  measuring  assembling  staining/varnishing  storing

Outputs  oak furniture

Businesses

• Service providers use human and mechanical processes to provide products that are 

intangible

• The transformation process requires inputs such as employees, equipment and supplies

• Outputs provide a benefit from a performance, event or type of involvement with the service provider

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product are brought to a  central location.

departments that group related  processes.

relatively simple tasks assigned

to workers positioned along a line.

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Logistics Provides 

Integrated  Solutions

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• Economic order quantity (EOQ) model

• Just­in­time inventory management  (JIT)

• Material­requirements planning (MRP)

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with Transportation and  Inventory Management

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A Hypothetical PERT Diagram  for a McDonald’s Big Mac

sauce,  lettuce,  onions,  pickle  (20)

Grill beef  patties  (120)

Apply  sauce 

to bun  (10)

Place  cooked  patties 

on bun  (5)

Top  with  cheese  and  vegetables  (15)

Place  Big Mac in  package  (5)

Place  package 

in heated  bin  (5)

Serve to  customer  (5)

Critical path Activity Event (185) Time to complete 

         event (seconds)

n  d

National Quality Institute Principles of Business Excellence

National Quality Institute Principles of Business Excellence

A philosophy and set of guiding  principles that provide a foundation  for the continuous improvement of an 

enterprise.

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The integration of all departments  and functions of a company into one 

computer system9-16

Internal Organization for Standardization

• Designed to ensure consistent quality

• Requires documenting record keeping on training, testing and responding to defects

• Independent auditor must verify standards required by ISO

• ISO 9002 certification has been established for service providers

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approaching the introduction of pizza? How could this product introduction have been coordinated to avoid the problems that were encountered? If you were an executive at McKing, how would you proceed with the introduction of pizza into the restaurants?

How can an understanding of total  quality management (TQM) or ISO 9000  series certification assist in developing a  career?

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Additional Discussion  Questions and Exercises

9-20a 1 What is the purpose of inventory control?

2 PERT charts can show a sequence of activities in days rather than seconds.  Draw a PERT chart for the chairperson of a banquet committee showing the  most efficient path for these projected events:

January 5 Confirm banquet room reservation.

January 6 Publicize banquet.

January 19 Count number of banquet reservations; phone in total to hotel January 20 Phone chairpersons of banquet decorating committee and 

hospitality committee to review preparations for banquet. 

Additional Discussion  Questions and Exercises

January 30 Send thank­you notes to all committee persons and hotel staff. 

Additional Discussion  Questions and Exercises

• 3. Prepare a Gant Chart for the  sequence of activities described in  question #2

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a just­in­time (JIT)

b material­requirements planning (MRP)

c economic­order quantity model

d program evaluation and review technique (PERT)