Chapter 9 Production and Operations Management

Production

The creation of finished goods and services using the factors of production: land, labor, capital, entrepreneurship, and knowledge.

Production management

The term used to describe all the activities managers do to help firms create goods. 

Operations management

A specialized area in management that converts or transforms resources (including human resources) into goods and services. The goal is to create a good experience for those who use the service.

Form utility

The value producers add to materials in the creation of finished goods and services.

Process manufacturing

That part of the production process that physically or chemically changes materials.

Assembly process

That part of the production process that puts together components.

Continuous process

Long production runs turn out finished goods over time.

Intermittent process

The production run is short and the machines are changed frequently to make different products. 

Computer-aided design (CAD)

The use of computers in the design of products.

Computer-aided manufacturing (CAM)

The use of computers in the manufacturing of products.

Computer-integrated manufacturing (CIM)

The uniting of computer-aided design with computers-aided manufacturing. Generally expensive but it drastically reduces the time needed to program machines to make parts. 

Flexible manufacturing

Designing machines to do multiple tasks so that they can product a variety of products. For example, machines and robots are used to build, test, and package different parts. 

Lean manufacturing

The production of goods using less of everything compared to mass production.

Mass customization

Tailoring products to meet the needs of individual customers.

Facility location

The process of selecting a geographic location for a company’s operations. Considers things like labor costs, availability of rescues, cost of living, access to transportation, etc.

Telecommuting

Working from home via computer and modem. Popular during covid.

Facility layout

The physical arrangement of resources (including people) in the production process.

Assembly line layout

Workers preform a few set of tasks at a time.

Modular layout

Teams of workers produce more complex units of the final product.

Fixed-position layout

Allows workers to congregate around the product.

Process layout

Similar equipment and function are grouped together.

Materials requirement planning (MRP)

A computer-based operations management system that uses sales forecasts to make sure that needed parts and materials are available at the right time and place. 

Enterprise resource planning (ERP)

A newer version of MRP that combines the computerized function of all the divisions and subsidiaries of the firm - such as finance, Human Resources, and order fulfillment - into a single integrated software program that uses a single database. 

Purchasing

The function in a firm that searches for quality material resources, finds the best suppliers, and negotiates the best price for goods and services.

Just-in-time (JIT) inventory control

A production process in which a minimum of inventory is kept on the premises and parts, supplies, and other needs are delivered just in time to go on the assembly line. To work effectively, the process requires excellent coordination with suppliers.

Quality

Consistently producing what the customer wants while reducing errors before an dafter delivery to the customer.

Six Sigma quality

A quality measure that allows only 3.4 defects per million opportunities.

Statistical quality control (SQC)

The process some managers use to continually monitor all phases of the production process to assure that quality is being built into the product from the beginning. 

Statistical process control (SPC)

The process of taking statistical samples of product components at each stage f the production process and plotting those results on a graph.

ISO 9001

The common name given to quality management and assurance standards.

ISO 14001

A collection of the best practices for managing an organziation’s impact on the environment.