1、Production and Operations ManagementX Zhujun Guangdong Polytechnic Normal University (1)Introduction (2)Operations Strategy (3)Product and Service Design (4)Strategic Capacity management (4)Strategic Capacity management (5)Process selection(Production processes and Process Analysis)（6）Job design and
2、 work measurement（7）Facility Layout (8)Service processes（9）Waiting line analysis（10）Managing Quality (11)Supply chain management (12)Demand management and Forecasting（13）Inventory control（14）Material requirements planningPART TWO MANUFACTURING,PART TWO MANUFACTURING,PRODUCTION,AND SERVICE PROCESSESP
3、RODUCTION,AND SERVICE PROCESSES(4)Strategic Capacity management-1(4)Strategic Capacity management-1Chapter outlineRecognize the concept of capacity and how important it is to“manage”capacity.Explain the impact of economies of scale on the capacity of a firm.Understand how to use decision trees to an
4、alyze alternatives when faced with the problem of adding capacity.Describe the differences in planning capacity between manufacturing firms and service firms.Capacity management in operationsDefinition of capacity:the ability to hold,receive,store or accommodate.Capacity decision must be aligned wit
5、h the operations strategy of a firm.(long range,medium range,and short range)Capacity planning conceptsCapacityBest operating level Best operating level refers to the level of capacity for which the process was designed.It is the volume of output at which average unit cost is minimized.Capacity util
6、ization rate Capacity utilization rate reveals how close a firm is to its best operating level.（the relationship between actual output and capacity.）Capacity used(Actual out put)Capacity utilization rate=-Best operating level(Capacity)For exampleIf our plants best operating level were 500 cars per d
7、ay and the plant was currently operating at 480 cars per day,the capacity utilization rate would be96%Other restriction:requires the numerator and denominator be measured in the same units and time periods.FACILITIES DECISIONSHow mauch capacity is needed?How large should each facility be?When is the
8、 capacity needed?Where should the facilities be located?What type of facilities/capacity are needed?Facilities strategyAmount of capacitySize of facilitiesTiming of facility decisionsFacility locationTypes of facilitiesAmount of capacityDetermining capacity requirements1)Use forecasting techniques t
9、o predict sales for individual products within each product line.2)Calculate equipment and labor requirements to meet line forecasts.3)Project labor and equipment availablities over the planning horizon.describes how much capacity to provide in relation to expected demand.Capacity cushionLarge cushi
10、on.Moderate cushion.Small cushion.When planning the capacity cushion,firms:assess the probability of various levels of demand and then used those estimates to make decisions about planned increases or decreases in capacity.For example,a firm has capacity to produce 1200 units,50 percent probability
11、of 1000 units of demand,and 50 percent probability of 800 units of demand.Then average demand is estimated to be:Utilization rate of producing 900 units:Based on the existing capacity,the cushion is:(900/1200)*100%=75%100%-75%=25%(.5*1000)+(.5*800)=900 unitsPredicted demand.Cost of facilities.Likely
12、 behavior of competitors.Business strategy.International considerations.Size of facilitiesECONOMIES AND DISECONOMIES OF SCALEFacility location selectionImportance of facility location selection:Region selection:A global point of view Locate in regions compete with existing customers or create demand
13、 for the product and serviceSpecific place:Expansion of facility：Move facility site：Influencing factors in site selectionquantitative factors qualitative factorsTypes of region selectionInfluencing factorsCountryStability of political situationGovernment policy and incentivesEconomy and culture,reli
14、gious beliefInterest ratesRegion or cityRegional policy Target market Supply source of raw material Transportation condition Corresponding site of cooperation manufacturers Labor resources Weather condition Infrastructure conditionDetailed layoutPlace sizeConditions that can be expandedGeological co
15、nditionSurrounding environmentHow much did Alabama spend to win the How much did Alabama spend to win the name of auto industry basename of auto industry baseIn 1993,Benz was convinced to start his first auto factory in a city of the state(incentives$253 million),providing 1500 working positions,=$1
16、69,000 for each W.P.Tax payers vote against the governor2005,expand to 4000 W.P2003,Honda entered,corresponding incentives,producing motor engine2005,Hyundai Motor entered,motor vehicle assembly plantNow,84000 working positionsCASETarget marketGeographically near may be good for products entering on
17、e market and reducing the logistic costConvenience.Service industry is obvious:near center location,e.g.restaurants,shopping malls,laundries,community hospital,banks,etc.For example,why most super markets have chain stores?Scale or?Manufacture industry.Coco cola build factory in china,human resource
18、s,and product enter the market too.Filling factories in different regions.Market segments.Supply source of raw material Site near the target market or raw material decided by three factors:Necessity.Mining,agriculture,forestry,and fishery.Vulnerability,or fragile goods or easily rotten food.esp.sea
19、food,fresh fruit or vegetable,dairy product,etc.Transportation cost.Near the producing field/origin reduce the cost.E.g.paper mill,sugar production,steel smelting,etc.Transportation conditionsConvenientNear railway,ports or highwayCorresponding site of cooperation manufacturersSilicon valley,Industr
20、y park,automotive zone(motor city)Industry chain,cooperative providersE.g.mold,injection molding,metal,aluminum alloy die-castingLabor resourcesLabor cost is important to Labor-intensive industries Low salary vs.labor productivityA case in point:Quality Coils Salary:1/3 of America,later nearly bankr
21、uptcy Reasons:CaseWeather conditionHumidity,temperature,air pressure should be considered.Zhuhai,Nansha,Huangpu,as an example,engine production,Damp,corrosion and rustWays to decide plant site selectionFactor evaluation method:Choose related factorsGive weight,to show comparable importance(weight to
22、tal 1.00,100%)Give each unified numerical range(say,0-10 or 0-100)Multiple each score with its weight,add together to get the total.Choose the highest scoreUsing decision trees to evaluate capacity alternativesA decision tree is a schematic model of the sequence of steps in a problem and the conditi
23、ons and consequences of each step.See example 4.2E-Education is a new star-up that develops and markets MBA courses offered over the Internet.The company is currently located in Chicago and employs 150 people.Due to strong growth the company needs additional office space.The company has the option o
24、f leasing additional space at its current location in Chicago for the next two years,but after that will need to move to a new building.Another option the company is considering is moving the entire operation to a small Midwest town immediately.A third option is for the company to lease a new buildi
25、ng in Chicago immediately.If the company chooses the first option and leases new space at its current location,it can,at the end of two years,either lease a new building in Chicago or move to the small Midwest town.ExerciseThe following are some additional facts about the alternatives and current si
26、tuation:1.The company has a 75%chance of surviving the next two years.2.Leasing the new space for two years at the current location in Chicago would cost$750,000 per year.3.Moving the entire operation to a Midwest town would cost$1 million.Leasing space would run only$500,000 per year.4.Moving to a
27、new building in Chicago would cost$200,000,and leasing the new buildings space would cost$650,000 per year.5.The company can cancel the lease at any time.6.The company will build its own building in five years,if it survives.7.Assume all other costs and revenues are the same no matter where the company is located.What should E-Education do?KFCs follow-up strategy in site selectionBusiness division and choice.Guest gathering Point measurement and choice.
