Integrated Production systems

Transcription

1 Integrated Production systems Dr. Anwar Abu-Zarifa Department of Industrial Engineering Islamic University of Gaza Tel intern:

2 Course Description and Outline Integrated Production systems EIND 2305 Course Description and Outline This module introduces the concept of integrated productions systems. Furthermore, it helps the students to improve their skills of dealing with real life problems and perform further research in the related areas. Discussed Topics Supply Chain Management Inventory Management Systems Resource Planning Just-in-time Systems Learning Curve Analysis Scheduling Constraint Management Text Book Krajewski, L., Ritzman, L., and Malhotra, M., Operations Management processes and supply chains, 9 th Edition, Pearson, Software: QM Explorer References Evans, J., Anderson, D., Sweeney, D., and Williams, T., Applied Production and Operations Management, 3 rd Edition, West Publishing Company, Grading Attendance 5% Quizzes 5% Project 10% Mid-term 30% Final examination 50% 1-2

3 1 Operations and Productivity 1-3

4 What Is Operations Management? Production is the creation of goods and services Operations management (OM) is the set of activities that create value in the form of goods and services by transforming inputs into outputs 1-4

5 Organizing to Produce Goods and Services Essential functions: 1. Marketing generates demand 2. Production/operations creates the product 3. Finance/accounting tracks how well the organization is doing, pays bills, collects the money 1-5

6 Organizational Charts Commercial Bank Operations Teller Scheduling Check Clearing Collection Transaction processing Facilities design/layout Vault operations Maintenance Security Finance Investments Security Real estate Accounting Auditing Marketing Loans Commercial Industrial Financial Personal Mortgage Trust Department Figure 1.1(A) 1-6

7 Organizational Charts Airline Operations Ground support equipment Maintenance Ground Operations Facility maintenance Catering Flight Operations Crew scheduling Flying Communications Dispatching Management science Finance/ accounting Accounting Payables Receivables General Ledger Finance Cash control International exchange Marketing Traffic administration Reservations Schedules Tariffs (pricing) Sales Advertising Figure 1.1(B) 1-7

8 Organizational Charts Manufacturing Operations Facilities Construction; maintenance Production and inventory control Scheduling; materials control Quality assurance and control Supply-chain management Manufacturing Tooling; fabrication; assembly Design Product development and design Detailed product specifications Industrial engineering Efficient use of machines, space, and personnel Process analysis Development and installation of production tools and equipment Finance/ accounting Disbursements/ credits Receivables Payables General ledger Funds Management Money market International exchange Capital requirements Stock issue Bond issue and recall Marketing Sales promotion Advertising Sales Market research Figure 1.1(C) 1-8

9 Why Study OM? 1. OM is one of three major functions of any organization, we want to study how people organize themselves for productive enterprise 2. We want (and need) to know how goods and services are produced 3. We want to understand what operations managers do 4. OM is such a costly part of an organization 1-9

10 Options for Increasing Contribution Finance/ Marketing Accounting OM Option Option Option Increase Reduce Reduce Sales Finance Production Current Revenue 50% Costs 50% Costs 20% Sales $100,000 $150,000 $100,000 $100,000 Cost of Goods 80, ,000 80,000 64,000 Gross Margin 20,000 30,000 20,000 36,000 Finance Costs 6,000 6,000 3,000 6,000 Subtotal 14,000 24,000 17,000 30,000 Taxes at 25% 3,500 6,000 4,250 7,500 Contribution $ 10,500 $ 18,000 $ 12,750 $ 22,500 Table

11 What Operations Managers Do Basic Management Functions Planning Organizing Staffing Leading Controlling 1-11

12 Ten Critical Decisions Ten Decision Areas Chapter(s) 1. Design of goods and services 5 2. Managing quality 6, Supplement 6 3. Process and capacity 7, Supplement 7 design 4. Location strategy 8 5. Layout strategy 9 6. Human resources and 10 job design 7. Supply-chain 11, Supplement 11 management 8. Inventory, MRP, JIT 12, 14, Scheduling 13, Maintenance 17 Table

13 The Critical Decisions 1. Design of goods and services What good or service should we offer? How should we design these products and services? 2. Managing quality How do we define quality? Who is responsible for quality? Table 1.2 (cont.) 1-13

14 The Critical Decisions 3. Process and capacity design What process and what capacity will these products require? What equipment and technology is necessary for these processes? 4. Location strategy Where should we put the facility? On what criteria should we base the location decision? Table 1.2 (cont.) 1-14

15 The Critical Decisions 5. Layout strategy How should we arrange the facility? How large must the facility be to meet our plan? 6. Human resources and job design How do we provide a reasonable work environment? How much can we expect our employees to produce? Table 1.2 (cont.) 1-15

16 The Critical Decisions 7. Supply-chain management Should we make or buy this component? Who should be our suppliers and how can we integrate them into our strategy? 8. Inventory, material requirements planning, and JIT How much inventory of each item should we have? When do we re-order? Table 1.2 (cont.) 1-16

17 The Critical Decisions 9. Intermediate and short term scheduling Are we better off keeping people on the payroll during slowdowns? Which jobs do we perform next? 10. Maintenance How do we build reliability into our processes? Who is responsible for maintenance? Table 1.2 (cont.) 1-17

18 Where are the OM Jobs? Technology/methods Facilities/space utilization Strategic issues Response time People/team development Customer service Quality Cost reduction Inventory reduction Productivity improvement 1-18

19 New Challenges in OM From Local or national focus Batch shipments Low bid purchasing Lengthy product development Standard products Job specialization To Global focus Just-in-time Supply-chain partnering Rapid product development, alliances Mass customization Empowered employees, teams 1-19

20 Characteristics of Goods Tangible product Consistent product definition Production usually separate from consumption Can be inventoried Low customer interaction 1-20

21 Characteristics of Service Intangible product Produced and consumed at same time Often unique High customer interaction Inconsistent product definition Often knowledge-based Frequently dispersed 1-21

22 Industry and Services as Percentage of GDP 1-22 Australia Canada China Czech Rep France Germany Hong Kong Japan Mexico Russian Fed South Africa Spain UK US Services Manufacturing

23 Goods and Services Automobile Computer Installed carpeting Fast-food meal Restaurant meal/auto repair Hospital care Advertising agency/ investment management Consulting service/ teaching Counseling 100% % Percent of Product that is a Good Percent of Product that is a Service 1-23

24 Manufacturing and Service Employment 120 Employment (millions) Service Manufacturing (est) Figure 1.4 (A) 1-24

25 New Trends in OM Ethics Global focus Environmentally sensitive production Rapid product development Environmentally sensitive production Mass customization Empowered employees Supply-chain partnering Just-in-time performance 1-25

26 Productivity Challenge Productivity is the ratio of outputs (goods and services) divided by the inputs (resources such as labor and capital) The objective is to improve productivity! Important Note! Production is a measure of output only and not a measure of efficiency 1-26

27 The Economic System Inputs Transformation Outputs Labor, capital, management The U.S. economic system transforms inputs to outputs at about an annual 2.5% increase in productivity per year. The productivity increase is the result of a mix of capital (38% of 2.5%), labor (10% of 2.5%), and management (52% of 2.5%). Goods and services Feedback loop Figure

28 Improving Productivity at Starbucks A team of 10 analysts continually look for ways to shave time. Some improvements: Stop requiring signatures on credit card purchases under $25 Change the size of the ice scoop New espresso machines Saved 8 seconds per transaction Saved 14 seconds per drink Saved 12 seconds per shot 1-28

29 Improving Productivity at Starbucks A team of 10 analysts continually look for ways to shave time. Some improvements: Operations improvements have Stop requiring signatures helped Starbucks Saved increase 8 seconds yearly on credit card purchases revenue per outlet per by transaction $200,000 to under $25 $940,000 in six years. Change the size Productivity of the ice has Saved improved 14 seconds by 27%, scoop or about 4.5% per per year. drink New espresso machines Saved 12 seconds per shot 1-29

30 Productivity Productivity = Units produced Input used Measure of process improvement Represents output relative to input Only through productivity increases can our standard of living improve 1-30

31 Productivity Calculations Labor Productivity Productivity = Units produced Labor-hours used 1,000 = = 4 units/labor-hour 250 One resource input single-factor productivity 1-31

32 Multi-Factor Productivity Productivity = Output Labor + Material + Energy + Capital + Miscellaneous Also known as total factor productivity Output and inputs are often expressed in dollars Multiple resource inputs multi-factor productivity 1-32

33 Measurement Problems 1. Quality may change while the quantity of inputs and outputs remains constant 2. External elements may cause an increase or decrease in productivity Precise units of measure may be lacking 1-33

34 Productivity Variables 1. Labor - contributes about 10% of the annual increase 2. Capital - contributes about 38% of the annual increase 3. Management - contributes about 52% of the annual increase 1-34

35 Service Productivity 1. Typically labor intensive 2. Frequently focused on unique individual attributes or desires 3. Often an intellectual task performed by professionals 4. Often difficult to mechanize 5. Often difficult to evaluate for quality 1-35

36 The Hard Rock Cafe First opened in 1971 Now 129 restaurants in over 40 countries Rock music memorabilia Creates value in the form of good food and entertainment 3,500 + custom meals per day in Orlando How does an item get on the menu? Role of the Operations Manager 1-36