CHAPTER 7

Operations Management and Quality

WHAT DOES OPERATIONS
MEAN?

Operations (Production) Service Operations Goods Operations (Goods

(Service Production) Production)

activities involved in activities producing activities producing

making products — goods intangible products, such tangible products, such as
and services — for as entertainment, radios, newspapers, buses,
customers transportation, and and textbooks
education

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 CREATING
VALUE

Utility
 product’s ability to
satisfy a human want
or need

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 CREATING
VALUE

Utility
 product’s ability to
satisfy a human want
or need
• Form utility is created merely through transforming
raw materials into finished goods.
• Time utility is created when products are made
available when consumers want them.
• Place utility is created when products are made
available where they are convenient for consumers.

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 CREATING
VALUE
Utility Examples Responsible
Utility
Type Function  product’s ability to
satisfy a human want
Form Pizza or need

Time Pizza ready in 30

min.

Place Pizza delivery at

your door

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 OPERATIONS
PROCESSES

Operations Process
 set of methods and
technologies used to
produce a good or a
service

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OPERATIONS PLANNING AND
CONTROL

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Make-to-Order
OPERATI
Operations ON
(Customization) PLANNIN
G:
HOW DO
Make-to-Stock WE
Operations (Mass
Production) MAKE IT

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 SERVICE LOW-CONTACT
SYSTEM
PRODUCTION
PROCESSES:
EXTENT OF
CUSTOMER
CONTACT

HIGH-CONTACT
SYSTEM

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 OPERATIONS PLANNING

Capacity Planning Location Planning Layout Planning Quality Planning Methods Planning

determining the amount of determining where planning for the layout of planning to ensure that implementing methods to
a product that a company production will happen machinery, equipment, products are produced to reduce waste and
can produce under normal based on costs and and supplies meet the firm’s and inefficiency
conditions flexibility customers’ standards of
quality

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CAPACITY PLANNING

amount of a product that a company can

Capacity produce under normal conditions

Operations Aim to match the capacity to demand

missing the potential customers, hence

Lack of capacity market share and profits

Unutilized capacity maintaining costs

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LOCATION PLANNING:
WHERE DO WE MAKE IT

Production costs & flexibility

Suppliers, wages, labor

Manufacturers; availability, infrastructure,
transportaion options

Service providers; Nearness to customers

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LAYOUT PLANNING:
DESIGNING THE
FACILITY
Physical location or floor plan for people, machinery,
equipment, customers, supplies etc.
 Process Layout (Custom-Product Layout)
 Product Layout (Same-Steps Layout – Assembly Line)
 Fixed-Position Layout

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 PROCESS
LAYOUT FOR A Physical arrangement of production
activities that groups equipment and
SERVICE people according to function

PROVIDER
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PRODUCT LAYOUT FOR
GOODS PRODUCTION
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FIXED POSITION Labor, equipment, materials, and other
LAYOUT FOR A resources are brought to the geographic
location where all production work is
SERVICE done

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 Quality

• combination of “characteristics of a
product or service that bear on its
ability to satisfy stated or implied
needs”

Performance
QUALITY
• dimension of quality that refers to
PLANNING how well a product does what it is
supposed to do

Consistency

• dimension of quality that refers to

sameness of product quality from
unit to unit

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METHODS PLANNING

choosing specific methods

Identifying for each step

reducing costs
Improving improving efficieny

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 Master schedule

• “the game plan” for upcoming

production

Detailed schedules
STEP 2: • show day-to-day activities that will
OPERATIO occur in production

NS Staff schedules
SCHEDULI
• identify who and how many
NG employees will be working, and
when

Project schedules

• provide coordination for completing

large-scale projects

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 Materials Management Quality Control
• the process of planning, organizing, • action of ensuring that operations
and controling the flow of materials produce products that meet specific
from sources of supply through quality standards
distribution of finished goods

STEP 2: OPERATIONS CONTROL

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 Supplier from whom to buy
Selection

Purchasing acquisition of the materials and services

(procurement)

Transportation activities in transporting resources to the producer and finished goods to customers

Warehousing storage of incoming materials for production and finished goods for distribution to customers

Inventory process of receiving, storing, handling, and counting of all raw materials, partly finished goods, and
Control finished goods

5 MATERIALS MANAGEMENT
ACTIVITIES FOR PHYSICAL
GOODS
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 SUPPLY
CHAINS

Supply Chain (Value Chain)

 flow of information,
materials, and services
that starts with raw-
materials suppliers and
continues adding value
through other stages in
the network of firms
until the product
reaches the end
customer

Supply Chain Management

(SCM)
 principle of looking at
the supply chain as a
whole to improve the
overall flow through the
system

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 OUTSOURCING Outsourcing
 replacing internal processes by
AND GLOBAL paying suppliers and distributors
to perform business processes or

SUPPLY CHAINS to provide needed materials or

services

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MYLAB ASSIGNMENT

Assignment • Post-Midterm Assign. 2 -Ch 07

Name

Start Date • 25.04.2024 – 14.00

Due Date • 02.05.2024- 23.59

Final • 31.05.2024- 23.59

Submission

Penalty • 10% score deduction

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