Chapter 09 – Production and Operations Management
PPT 9-52
Progress Assessment
1. Managers must always consider the customer
and the impact on customers’ ability to use the
company’s services and to communicate about
their needs. Other criteria that need to be con-
sidered include labor costs, availability of re-
sources, access to transportation, proximity to
customers, suppliers, crime rates, quality of life
for employees, and the cost of living, to men-
tion but a few.
2. Materials requirement planning (MRP) is a
computer-based operations management system
that uses sales forecasts to make sure needed
parts and materials are available at the right
time and place. Enterprise resource planning
(ERP), a newer version of MRP, combines the
computerized functions of all the divisions and
subsidiaries of the firm into a single integrated
software program that uses a single database.
3. One major expense in the production process is
the holding of parts. The goal of just-in-time
inventory is to eliminate or reduce that cost.
Just-in-time inventory systems keep a mini-
PPT 9-52
Progress Assessment
(continued)
federation of national standards bodies from
more than 140 countries. This nongovernmen-
tal organization establishes global measures for
the quality of individual products. ISO 9000 is
the common name given to quality manage-
ment and assurance standards, while ISO 14000
is a collection of the best practices for manag-
Chapter 09 – Production and Operations Management
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Chapter 09 – Production and Operations Management
PPT 9-55
PERT Chart for a Music Video
PPT 9-56
Gantt Charts
Henri Gantt created the Gantt chart which allows
management to chart workflow and improve worker
productivity. The Gantt chart is the forerunner to the
modern PERT chart.
PPT 9-57
Gantt Chart for a Doll Factory
9-64
PPT 9-58
Progress Assessment
1. To answer this question, refer to Figure 9.3 in
the textbook.
2. A Gantt chart is a scheduling mechanism used
by manufacturers for measuring production
progress. This chart will give management a
clear idea as to the status of the project and
how much has been completed at any given
time.
lecture
links
“Quality is remembered long after the price is forgotten.”
Gucci family motto
“In the factory we make cosmetics, in the store we sell hope.”
Charles Revlon
“Almost all quality improvement comes via simplification of design, manufacturing,
layout, processes, and procedures.”
Tom Peters
lecture link 9-1
THE MILITARY LEARNS FROM NASCAR
Sometimes production innovations come from unexpected sources. Recently the Pentagon has
been consulting with NASCAR professionals on how to improve techniques and equipment. Carlson
Technology, which advises NASCAR teams on how to shave seconds off pit stops, has advised the Army
National Guard on how to significantly reduce the time it takes to change out a Humvee engine.
Chapter 09 – Production and Operations Management
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lecture link 9-2
MADE IN THE USA, BUT OWNED BY CHINA
Over the past few years, American manufacturing grew in ways that never would have been con-
sidered in the nation’s industrial heyday. New factories are popping up and expanding all across the coun-
try, only they’re not being built by American companies. Foreign manufacturers are setting up shop in the
United States in order to bypass trade barriers and capitalize on the government’s subsidies of alternative
energy sources. But most surprisingly, migrating manufacturing to American shores is a dependable way
for some companies to save on payroll costs.
For instance, BMW recently hired 1,000 workers for its factory in Greer, South Carolina. Among
the applicants were many overqualified candidates, such as a former construction consultant and a man-
lecture link 9-3
TOLEDO’S SUNNY FUTURE
In the 1970s Toledo, Ohio, was a Rust Belt heavyweight. The city reigned as the glass capital of
the country and boasted an average per-capita income ranking in the nation’s top 10. But like many other
cities dependent on manufacturing, deindustrialization hit it hard, causing Toledo’s once lofty per-capita
income to languish in America’s bottom 10 by 2000. Throughout the 1990s civic officials focused on
Chapter 09 – Production and Operations Management
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lecture link 9-4
SPEEDING UP THE DRIVE-THROUGH
The average service time for a fast-food retailer has not changed in recent years. Technical and
communication advances have reached a point of diminishing returns. Delivery time is limited by how
fast workers can assemble orders, collect payment, and hand out food. Now fast-food retailers are trying
to improve the speed of delivery service to customers pulling up at the take-out window.
Drive-through purchases now represent a huge portion of sales. For Burger King, window sales
are 70% of total sales. To improve speed, outlets are concentrating on reducing mistakes in orders and
making ordering easier.
lecture link 9-5
AMERICA’S ROBOTICS REBOUND
Chapter 09 – Production and Operations Management
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Today American tech companies are enjoying a revival in the growing business of service robot-
ics. The market is comprised of robots in such varied areas as defense, space, health care, and consumer
products. With a market valued at $13 billion worldwide already, the service robot industry is expected to
double in size by 2013. And of the approximately 200 top companies currently in operation, 70 hail from
lecture link 9-6
KODAK LEARNS SPEED
As digital photography has taken over the consumer photo market, Kodak’s profitable film busi-
ness has gone into a free fall. The company has long invested in digital technologies, going back to a
1976 digital-camera prototype. However, Kodak was slow to accept the shift in consumer preference from
film to digital.
But the painful reorganization has finally borne fruit. Its line of EasyShare digital cameras has
grabbed market share from digital competitors. The company now leads in market share, surging ahead of
rival Sony. And Carp is slowly changing the old, comfortable culture that the company developed in its
hugely profitable era. “We organized the company so it was very clear who was responsible for what,”
says Kodak COO Antonio Perez.
The company overhauled its manufacturing process as well. Led by Charles Brown, a chemical
Chapter 09 – Production and Operations Management
9-68
The restructuring has not been entirely smooth or completely successful. Setbacks have plagued
Kodak’s medical imaging division. However, CEO Carp believes that the company will emerge stronger.
“The strategy is to lead our customers through the transition from traditional products to digital prod-
ucts.”vi
lecture link 9-7
URBAN AGRICULTURE IN DETROIT
The rundown Detroit of today is a far cry from the industrial behemoth it once was. Less than
900,000 residents remain in a city that once housed 2 million. Civic planners fear that in the coming years
the population could drop even lower to 700,000. Approximately 40 square miles of the 139-square-mile
metropolis sits almost completely abandoned. Faced with street after street of empty homes, Detroit offi-
cials have no choice but to consider radical options in dealing with the city’s blighted neighborhoods. As
a result, city leaders and local entrepreneurs have proposed that some abandoned neighborhoods be lev-
eled and replaced with, curiously enough, working commercial farms.
Though urban agriculture may run counter to Detroit’s long-held reputation as a manufacturing
hub, the city may not have any choice if it wants to survive. The city can’t just let the vacant land rot, and
lecture link 9-8
WYETH BIOTECH
Big gambles are nothing new to pharmaceutical companies. The next drug in the pipeline may be
Chapter 09 – Production and Operations Management
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The new approach was tested when Mike Kamarck, Wyeth’s president for technical operations,
spearheaded a program to give performance-based bonuses to workers at a Wyeth Biotech facility in Ire-
land. Wyeth longtimers wondered what on earth could be gained by giving bonuses to factory workers.
But when the Irish workers met all of their stretch performance targets without logging a single hour of
overtime, those skeptical senior managers started paying attention. Today, Wyeth’s traditional pharma
plants in China and Spain are implementing reward-driven compensation programs modeled on the bio-
lecture link 9-9
SPYING ON THE GREEN GIANT
In an official company history, Green Giant Company owned up to the fact that in the early days
its own management didn’t know how the canning process actually worked. Small canneries of that time
hired plant superintendents who kept canning methods a secret from the company as a form of job insur-
ance.
Chapter 09 – Production and Operations Management
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lecture link 9-10
MOTOROLA AND SIX SIGMA
critical
thinking exercises
Name: ___________________________
Date: ___________________________
critical thinking exercise 9-1
GROUP PROJECT: ORGANIZING PRODUCTION
You will need about 20 sheets of paper (regular-length scratch paper, old handouts, discarded
photocopy paper, etc.) for each student and one large cardboard box for each group of students.
Designate groups of five to six students as “production groups” and one group as “evaluators.”
Chapter 09 – Production and Operations Management
9-71
Stage 1: Organizing for production (10 minutes). Each team will design their product, devel-
op a simple logo, build a prototype, assign duties, and discuss quality criteria: (1) uniformi-
ty of design, (2) accuracy, and (3) distance of flight.
profit calculation worksheet
Each production unit (paper airplane) that meets quality criteria will be purchased for $2.50. De-
fective products will be valued at $0. Raw materials (paper) cost $1.00 per unit. Production equipment
(box) costs $25.00 rental. Each team member will be paid $5.00 in labor cost.
Revenue
Expenses
Raw material costs:
Total Expenses ________________
Chapter 09 – Production and Operations Management
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critical thinking exercise 9-2
PRODUCTION PROCESSES
PRODUCT
PROCESS
MANUFACTURING
ASSEMBLY
PROCESS
Orange juice
Hair brush
Motor oil
Computer
Desk
Chapter 09 – Production and Operations Management
9-73
Textbook
Milk
Dress
Coal
Newspaper
Telephone
notes on critical thinking exercise 9-2
PRODUCT
PROCESS
MANUFACTURING
ASSEMBLY
PROCESS
Orange juice
X
Hair brush
X
Motor oil
X
Computer
X
Desk
X
Textbook
X