Chapter 13 Managing Service and Manufacturing Operations Effective

2 What Would You Do? Producing a Daily Paper at Newsday 4 How can

3 Learning Objectives Managing for Productivity and Quality After discussing this section, you should

4 Productivity Why Productivity Matters Kinds of Productivity Effective Management, by Williams South-Western College

5 Why Productivity Matters Higher Productivity Higher Standard of Living Lower Costs Lower Prices

6 Kinds of Productivity 4 Partial productivity = Outputs Single Kind of Input 4

7 Quality-Related Product Characteristics Quality-Related Service Characteristics ISO 9000 Malcolm Baldrige National Quality Award

Quality-Related Product Characteristics 8 4 Reliability Tthe average time between breakdowns 4 Serviceability Tthe

9 Quality-Related Product Characteristics Reliability Tangibles Responsiveness Assurance Empathy Effective Management, by Williams South-Western

10 ISO 9000 4 A series of five international standards 4 Certifies quality processes

Malcolm Baldrige National Quality Award 11 4 Given to U. S. companies 4 Recognizes

12 Total Quality Management Customer Focus and Satisfaction Continuous Improvement Teamwork Effective Management, by

13 Learning Objectives Managing Operations After discussing this section, you should be able to:

14 Service Operations Service. Profit Chain Service Recovery and Empowerment Effective Management, by Williams

15 Service-Profit Chain Internal Service Quality Employee Satisfaction Service Capability High Value Service Customer

Service Recovery and Empowerment 16 4 Service recovery is restoring customer satisfaction to strongly

17 Manufacturing Operations Amount of Processing in Manufacturing Operations Flexibility of Manufacturing Operations Effective

Amount of Processing in Manufacturing Operations 18 4 Make-to-order operations Tmanufacturing doesn’t begin until

Flexibility of Manufacturing Operations 19 Continuous- Line. Batch Job Project Flow Production Shops Manufacturing

20 Inventory Types of Inventory Measuring Inventory Costs of Maintaining an Inventory Managing Inventory

21 Types of Inventory Raw Materials Fabrication Vendors Component Parts Initial Assembly Retailers Field

22 Measuring Inventory 4 Average aggregate inventory Tthe average overall inventory for a certain

Costs of Maintaining an Inventory 23 4 Ordering costs Tall associated costs with ordering

Managing Inventory 24 Economic Order Quantity Just-in-Time Independent Demand Systems Dependent Demand Systems Kanban

What Really Happened? 25 Producing a Daily Paper at Newsday 4 Reduce delays by

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2 What Would You Do? Producing a Daily Paper at Newsday 4 How can late-breaking stories be included in the paper? 4 How can quality and productivity be improved? 4 In terms of production, should they focus on efficiency or flexibility? Effective Management, by Williams South-Western College Publishing Copyright © 2002

3 Learning Objectives Managing for Productivity and Quality After discussing this section, you should be able to: ¬ discuss the kinds of productivity and their importance in managing operations. explain the role that quality plays in managing operations. Effective Management, by Williams South-Western College Publishing Copyright © 2002

5 Why Productivity Matters Higher Productivity Higher Standard of Living Lower Costs Lower Prices Higher Profits Higher Market Share Effective Management, by Williams South-Western College Publishing Copyright © 2002

6 Kinds of Productivity 4 Partial productivity = Outputs Single Kind of Input 4 Multifactor productivity = Outputs Labor + Capital + Materials + Energy Effective Management, by Williams South-Western College Publishing Copyright © 2002

7 Quality-Related Product Characteristics Quality-Related Service Characteristics ISO 9000 Malcolm Baldrige National Quality Award Total Quality Management Effective Management, by Williams South-Western College Publishing Copyright © 2002

Quality-Related Product Characteristics 8 4 Reliability Tthe average time between breakdowns 4 Serviceability Tthe ease with which a product is fixed 4 Durability Tmean time to failure Effective Management, by Williams South-Western College Publishing Copyright © 2002

10 ISO 9000 4 A series of five international standards 4 Certifies quality processes 4 Managers often want this to improve customer satisfaction Effective Management, by Williams South-Western College Publishing Copyright © 2002

Malcolm Baldrige National Quality Award 11 4 Given to U. S. companies 4 Recognizes achievement in quality 4 Winners have been financially successful Effective Management, by Williams South-Western College Publishing Copyright © 2002

13 Learning Objectives Managing Operations After discussing this section, you should be able to: ® explain the essentials of managing a service business. ¯ describe the different kinds of manufacturing operations. ° describe why and how companies should manager inventory levels. Effective Management, by Williams South-Western College Publishing Copyright © 2002

15 Service-Profit Chain Internal Service Quality Employee Satisfaction Service Capability High Value Service Customer Satisfaction Customer Loyalty Profit and Growth Adapted From Figure 13. 2 Effective Management, by Williams South-Western College Publishing Copyright © 2002

Service Recovery and Empowerment 16 4 Service recovery is restoring customer satisfaction to strongly dissatisfied customers 4 Empowering workers is one way to speed up service recovery Effective Management, by Williams South-Western College Publishing Copyright © 2002

Amount of Processing in Manufacturing Operations 18 4 Make-to-order operations Tmanufacturing doesn’t begin until an order is placed 4 Assemble-to-order operations Tused to create semi-customized products 4 Make-to-stock operations Tmanufacture standardized products Effective Management, by Williams South-Western College Publishing Copyright © 2002

Flexibility of Manufacturing Operations 19 Continuous- Line. Batch Job Project Flow Production Shops Manufacturing Production Least Flexible Adapted From Figure 13. 3 Most Flexible Effective Management, by Williams South-Western College Publishing Copyright © 2002

21 Types of Inventory Raw Materials Fabrication Vendors Component Parts Initial Assembly Retailers Field Warehouses Wholesalers Adapted From Figure 13. 4 Work-in. Progress Distribution Centers Final Assembly Finished Goods Effective Management, by Williams South-Western College Publishing Copyright © 2002

22 Measuring Inventory 4 Average aggregate inventory Tthe average overall inventory for a certain time period 4 Stockout Trunning out of inventory 4 Inventory turnover Tthe number of times a year that a company sells its average inventory Effective Management, by Williams South-Western College Publishing Copyright © 2002

Costs of Maintaining an Inventory 23 4 Ordering costs Tall associated costs with ordering goods 4 Setup costs Tchanging goods produced 4 Holding costs Tcarrying inventory 4 Stockout costs Trunning out of inventory Effective Management, by Williams South-Western College Publishing Copyright © 2002

Managing Inventory 24 Economic Order Quantity Just-in-Time Independent Demand Systems Dependent Demand Systems Kanban Materials Requirement Planning Effective Management, by Williams South-Western College Publishing Copyright © 2002

What Really Happened? 25 Producing a Daily Paper at Newsday 4 Reduce delays by reducing production problems 4 Moved up most closing times but extended it for sports 4 Used both JIT and MRP Effective Management, by Williams South-Western College Publishing Copyright © 2002