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Chapter 17

Productivity and Quality in


Operations
Pamela S. Lewis
Stephen H. Goodman
Patricia M. Fandt
Slides Prepared by
Bruce R. Barringer
University of Central Florida
2001 South-Western College Publishing

Learning Objectives
Slide 1 of 4

1.Identify the major differences between


manufacturing and service organizations.
2.Describe the volume/variety continuum for
identifying different operating system
configurations and identify the different
types of manufacturing and service
organizations that might exist, as well as
their locations on the volume/variety
continuum.
2001 South-Western Publishing

Transparency 17-2

Learning Objectives
Slide 2 of 4

3.Identify the two broad categories of


decision-making areas within operating
systems, and describe some of the important
decisions in each category.
4.Define the concept of productivity, and
identify the three approaches to improving
productivity.

2001 South-Western Publishing

Transparency 17-3

Learning Objectives
Slide 3 of 4

5.Provide definitions of quality from both a


consumer perspective and a producer
perspective.
6.Identify factors that can be used to assess
the quality of products and services.
7.Describe the four categories of qualityrelated costs.

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Learning Objectives
Slide 4 of 4

8.Identify the various areas of concentration


and commitment for a program of total
quality management.
9.Describe the major contributions of the
most prominent contemporary quality
philosophers.

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What is Operations
Management?
Operations management is concerned with the
design, planning, and control of the factors
that enable us to provide the product or
service outputs of the organization.

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Importance of Making the Right


Decisions
Decision Making is Critical to Operations
Management
Operational managers must make decisions to
ensure that the firms product or service output
happens:

In the amount demanded.


At the right time.
With the appropriate quality level.
In a manner that is compatible with the
organization's goals.

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Manufacturing vs. Service


Operating Systems
Distinctive characteristics of manufacturing vs.
service
Manufacturing

Service

Output is a physical product

Output often lacks physical


qualities

Can stockpile inventories of


finished products
Production and consumption
is not simultaneous
Quality is relatively easy to
access

2001 South-Western Publishing

Cannot stockpile inventories


of finished products
Production and consumption
usually is simultaneous
Quality is more difficult to
access

Transparency 17-8

Structural Differences Among


Operating Systems
Volume/Variety Continuum
Individual operating systems can be categorized
along a volume/variety continuum, as
illustrated in the next slide.

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Transparency 17-9

Classification Scheme for


Different Operating Systems
Low variety/High volume
(Specific purpose)

High variety/Low volume


(Flexible purpose)

Volume/variety continuum
Product orientation
Manufacturing:
- Repetitive, assembly line
- Continuous-flow systems
Service:
- Standard service systems
2001 South-Western Publishing

Process orientation
Manufacturing:
- Job-shop production system
- Project systems
Service:
- Custom service systems
Transparency 17-10

Types of Manufacturing Systems


Slide 1 of 2

Repetitive, Assembly Line, or MassProduction Systems


Produces a high volume of discrete items.

Continuous-Flow Production System


Produces high volume of a continuous product
or nondiscrete item.

Job-Shop Production System


Produces small quantities of a wide variety of
specialized items.
2001 South-Western Publishing

Transparency 17-11

Types of Manufacturing Systems


Slide 2 of 2

Project Production System


Produces large scale, unique items.

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Types of Service Systems


Standard Service Systems
Service systems (like a college dormitory
cafeteria line) that are assembly line in
nature.

Custom Service Systems


Service systems that are designed to provide
different services to clients that have different
needs.

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Operations Management
Decision Areas
To operate any business organization, a
number of decisions must be made. Based
upon the time frame involved, these decisions
can be conveniently categorized as long-term
system design decisions or as short-term
operating and control decisions.

2001 South-Western Publishing

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Long-Term System Design


Decisions
Slide 1 of 4

Choice of a Product or Service


Product or Service Design
System Capacity
Process Selection
Facility Location

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Long-Term System Design


Decisions
Slide 2 of 4

Issues Pertaining to Facility Layout


Process layout
A configuration flexible enough to accommodate a
wide diversity of products or customers.

Product layout
A configuration set for a specific purpose, with all
product or service demands essentially identical.

2001 South-Western Publishing

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Long-Term System Design


Decisions
Slide 3 of 4

Issues Pertaining to Facility Layout (cont.)


Hybrid layout
A configuration containing some degree of
flexibility, lying between the extremes of process
and product layouts.

Fixed position layout


A configuration used for large or bulky items that
remain stationary in the manufacturing process.

2001 South-Western Publishing

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Long-Term System Design


Decisions:
Slide 4 of 4
Concept
development

Steps in
Product Design

Preliminary
design
Make versus
buy decision

Transformation
process design
2001 South-Western Publishing

Seek suppliers
Transparency 17-18

Short-Term Operating and


Control Decisions
Slide 1 of 4

Aggregate Planning
Link between the more general business
planning activities and the more specific master
planning activities.

Master Production Schedule


A detailed statement of projected production
quantities for each item in each time period.

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Short-Term Operating and


Control Decisions
Slide 2 of 4

Inventory Management
One of the most studied of the short-term
decisions deals with the control of inventories.
Items in inventory may exist in any of four
forms:
Raw materials, work-in process, finished
goods, supplies.

2001 South-Western Publishing

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Short-Term Operating and


Control Decisions
Slide 3 of 4

Materials Requirements Planning


Methodology that uses the production schedule
for the finished products to derive demand and
production schedules for component items that
make up the final product.

Just-in-Time Inventory Management


A philosophy that advocates eliminating waste,
solving problems, and striving for continual
improvement in operations.
2001 South-Western Publishing

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Short-Term Operating and


Control Decisions
Slide 4 of 4

Supply Chain Management


Management and control of the sequence of
suppliers, warehouses, operations, and retail
outlets for an organization.

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The Role of Productivity and


Quality in Operations
Productivity
A measure of the efficiency with which a firm
transforms inputs into outputs, calculated as
output divided by input.
In the broadest sense, productivity is defined as
follows:
Productivity =

2001 South-Western Publishing

system outputs
system inputs

Transparency 17-23

Improving Productivity
Productivity
Productivity Improvement
Improvement Through
Through
Technology
Technology
Productivity
Productivity Improvement
Improvement Through
Through
aa Diverse
Diverse Work
Work Force
Force
Productivity
Productivity Improvement
Improvement Through
Through
Design
Design
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Fundamentals of Quality
Slide 1 of 3

Consumer Perspective
Quality can be defined as the degree to which
the product or service meets the expectations of
the customer.

Producer Perspective
Quality can be defined as the degree to which
the product or service conforms to design
specifications.

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Fundamentals of Quality
Slide 2 of 3

Quality Control (QC)


Focuses on the actual measurement of output to
see if specifications have been met.

Quality Assurance (QA)


Focuses on any activity that influences the
maintenance of quality at the desired level.

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Fundamentals of Quality
Slide 3 of 3

Total Quality Management (TQM)


A systematic approach for enhancing products,
services, processes, and operational quality
control.

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Factors for Assessing Quality


Product Factors
Aesthetics, features, performance, reliability,
serviceability, durability, conformance, and
perceived quality.

Service Factors
Responsiveness, reliability, assurance, empathy,
and tangibles.

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Cost of Quality

Prevention Costs
Appraisal Costs
Internal-Failure Costs
External-Failure Costs

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TQM as a Tool for Global


Competitiveness
Slide 1 of 4

The Emphasis on Quality is Crucial for Two


Reasons:
Customers are becoming increasingly
conscious of quality in their choice of products
and services.
Increased quality leads to increased
productivity and its associated benefits.

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TQM as a Tool for Global


Competitiveness
Slide 2 of 4

Customer-Driven Standards
External customer
User of an item who is not a part of the organization
that supplies the item.

Internal customer
User of an item who is a member of, or employee
of, the organization that supplies the item.

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TQM as a Tool for Global


Competitiveness
Slide 3 of 4

Management and Labor Commitment


Organization and Coordination of Effects
Benchmarking
The process of comparing ones own products,
services, or processes against those of industry
leaders for the purpose of improvement.

Kaizen
Japanese term referring to the total quality
management principle of continuous improvement.
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TQM as a Tool for Global


Competitiveness
Slide 4 of 4

Employee Participation
Quality Circle
A work team that meets regularly to identify,
analyze, and solve problems related to its work area.

Special-Purpose Team
A temporary team formed to solve a special or
nonrecurring problem.

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Prominent Quality Management


Philosophers
Slide 1 of 2

W. Edwards Deming
Perhaps the most prominent quality philosopher,
he devised a 14-point plan to summarize his
philosophy on quality improvement.

Joseph Juran
Observed that over 80 percent of quality defects
are caused by factors controllable by management.
Developed a trilogy of planning, control, and
implementation.
2001 South-Western Publishing

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Prominent Quality Management


Philosophers
Slide 2 of 2

Others
Armand Feigenbaum
Introduced the concept of total quality
control.
Kaoru Ishikawa
Introduced quality control circles.
Philip Crosby
Introduced the philosophy that quality is
free.
2001 South-Western Publishing

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Concerning Operations
Management, Tomorrows Managers
Must:
Slide 1 of 2

Be prepared to make the tough decisions


that commit to a long-term design for the
operating system.
Strive for perfection in making the recurring
short-term operating and control decisions.
Focus on achieving continuous
improvement as these operating and control
decisions are made repeatedly throughout
the life of the organization.
2001 South-Western Publishing

Transparency 17-36

Concerning Operations
Management, Tomorrows Managers
Must:
Slide 2 of 2

Be aware of the importance of productivity


to organizational success, and understand
the ways in which productivity can be
improved.
Recognize the links between productivity
and quality.
Focus on improving the quality of the
product or service provided.
2001 South-Western Publishing

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