BA339–OM–Chapters7.ppt

1、8/13/2020,1,BA 339 OM Chapters 7 each process designed to perform a wide variety of activities and handle frequent changes Standard Register example (text, page 235-6),8/13/2020,4,BA 339 OM Chapters 7 modules combined for many product/output options Falls in between product classic assembly line (au

2、tomobiles, appliances) Examples: Fast-food firms (quasi-custom product) Harley-Davidson final assembly of multiple cells, nodes, or modules Economic advantages of continuous model and custom advantages of low-volume, high-variety (quasi-customization),8/13/2020,5,BA 339 OM Chapters 7 Can be discrete

3、 (discrete unit manufacturing) or nondiscrete (continuous process manufacturing) Examples: Glass, light bulbs, beer, rolls of paper Inherent advantage in establishing standards or maintaining a given quality level Advantages: Lower variable cost/unit, lower but more specialized labor skills, easier

4、production planning characterized by higher fixed costs, dynamic variable cost Examples: Automobiles 140 260 models (1970s-1990s), product to market in 2-3 years vs. 7-8 years, increasing number of options Phone services many more options (caller ID, voice mail, forwarding, data, cellular vs. land l

5、ine, etc.,8/13/2020,7,BA 339 OM Chapters 7 Utilization above 15% suggests moving toward repetitive, product or mass customization focus Low utilization often driven by need for excess capacity needed for peak loads; often driven by inefficient scheduling and resulting imbalance in facility usage Cro

6、ss-over charts examines comparative costs of different processes; illustrates lowest cost alternative at any given volume Difficult/expensive to change production system from process to other type Example: McDonalds shift to charbroiling See figure 7.1, page 234 in text,8/13/2020,8,BA 339 OM Chapter

7、s 7 Low labor intensity Lend themselves to innovation in process technology and scheduling Low customization Characterized by lower customer feedback; maintaining quality standards is critical,8/13/2020,11,BA 339 OM Chapters 7 generally lower that design capacity due to constraints, changes, etc. Sy

8、stem performance measures Utilization = Actual output/design capacity expressed as % = Planned hours to be used/total hours available Efficiency = Actual output/effective capacity expressed as % = actual outputs in units/standard outputs in units = average actual time/standard time Anticipated produ

9、ction (output or throughput) Uses design capacity, effective capacity expansion sometimes leads, sometimes lags,8/13/2020,24,BA 339 OM Chapters 7 accommodate market through product changes Adjusting to Seasonal Demand Offer products with complimentary demand patterns (increase/smooth facility utiliz

10、ation),8/13/2020,26,BA 339 OM Chapters 7 Dana corporation ($5B steel) has a cap of 200 employees at nearly all 120 plants) 4 Reasons why economies drive down costs Fixed costs are spread over more units of production avg. unit cost drops Reducing construction costs cost of constructing additional ca

11、pacity increases slower than capacity increase yield Reduced cost of purchased materials better pricing based on volume purchases Process advantages in efficiency due to faster learning, lower inventory, reducing changeovers,8/13/2020,27,BA 339 OM Chapters 7&8,Diseconomies of Scale Avg. unit cost in

12、creases as facility size/capacity increase (sometimes at a faster rate) Too many layers of bureaucracy Losing touch with employees and customers Less agile/flexible to demand changes Less involvement in innovation & greater risk avoidance resulting from planning & analysis Example: Incredible Univer

13、se Superstores has 85k products in 185k sf, 4 times the avg. of rival Circuit City. Lack of focus and huge size makes it impossible to generate enough sales/SF,8/13/2020,28,BA 339 OM Chapters 7&8,Capacity and Other Decisions Must be linked to other strategies and operations. Examples include: Compet

14、itive priorities Quality management Capital intensity Resource flexibility Product lifecycle Inventory Scheduling,8/13/2020,29,BA 339 OM Chapters 7&8,Breakeven Analysis Objective is to find the point (in dollars & units) at which costs equal revenues Includes fixed & variable costs Assumptions: Reve

15、nue & cost are related linearly to volume, all is information is know w/certainty, and no time value of money Graphed with costs/dollars on the vertical axis and volume/units on the horizontal axis Basic formulas Breakeven point TC = TR Breakeven in units = Total fixed costs/ Price variable cost Bre

16、akeven = Total fixed cost/1-(variable cost/selling price),8/13/2020,30,BA 339 OM Chapters 7&8,Strategy-Driven Investment (Guidelines) Select investments as part of a coordinated strategic plan Choose investments yielding a competitive advantage Consider product lifecycles Include relevant operating

17、factors in the financial return analysis (Ex.: scrap, rework, floor space & inventory affect ROI) Test investments in light of several revenue projections to ensure that upside and downside risks are considered,8/13/2020,31,BA 339 OM Chapters 7&8,ERP Systems “Packaged business software system that a

18、llows companies to”: Automate & integrate majority of business processes Share common data & practices across the entire enterprise Product and access information in a real-time environment Utilizes a centralized database to assist information flow between ordering, project management, manufacturing

19、, purchasing, finance, logistics, and human resources Hitting business when data integration, reduced transaction costs, and speed & accuracy of information are critical strategic issues 20,000 firms are paying $10B/Year to ERP firms Vendors include: PeopleSoft, Oracle, SAP, JD Edwards,8/13/2020,32,BA 339 OM Chapters 7&8,ERP Systems Advantages Provides integration of supply-chain, production & administrative processes Creates commonality of databases Can incor