Description hey there happy to work with you again, I have an assignment that I need your help wit ...
Description hey there happy to work with you again, I have an assignment that I need your help with. as usual, please refrain from using a single word many times. When the capacity of an organization to produce goods or services and the demands of its customers to purchase goods or services is not matched, then the result is inefficiency, either in under-utilized resources or dissatisfied customers. Address the following requirements: Choose a Saudi Arabian organization that produces either a good or service and describe its capacity and demand concerns. Develop an equation to calculate its capacity. Define lead strategy, lag strategy, and match strategy, and recommend which your selected organization should pursue and why. the assignment requires adequate references with course material concepts, principles, and theories from the textbook and at least three scholarly, peer-reviewed journal articles. UNFORMATTED ATTACHMENT PREVIEW Operations Management Operations Management FOURTEENTH EDITION William J. Stevenson Saunders College of Business Rochester Institute of Technology OPERATIONS MANAGEMENT, FOURTEENTH EDITION Published by McGraw-Hill Education, 2 Penn Plaza, New York, NY 10121. Copyright © 2021 by McGraw-Hill Education. All rights reserved. Printed in the United States of America. Previous editions © 2018, 2015, and 2012. No part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without the prior written consent of McGraw-Hill Education, including, but not limited to, in any network or other electronic storage or transmission, or broadcast for distance learning. Some ancillaries, including electronic and print components, may not be available to customers outside the United States. This book is printed on acid-free paper. 1 2 3 4 5 6 7 8 9 LWI 24 23 22 21 20 ISBN 978-1-260-23889-1 (bound edition) MHID 1-260-23889-X (bound edition) ISBN 978-1-260-71842-3 (loose-leaf edition) MHID 1-260-71842-5 (loose-leaf edition) Portfolio Manager: Noelle Bathurst Product Developer: Fran Simon/Katie Ward Marketing Manager: Harper Christopher Content Project Managers: Fran Simon/Jamie Koch Buyer: Sandy Ludovissy Design: Matt Diamond Content Licensing Specialist: Jacob Sullivan Cover Image: Daniel Prudek/Shutterstock Compositor: SPi Global All credits appearing on page or at the end of the book are considered to be an extension of the copyright page. Library of Congress Cataloging-in-Publication Data Library of Congress Cataloging-in-Publication Data Names: Stevenson, William J., author. Title: Operations management / William J. Stevenson, Saunders College of Business, Rochester Institute of Technology. Description: Fourteenth edition. | New York, NY : McGraw-Hill Education, [2021] | Includes bibliographical references and index. Identifiers: LCCN 2019044799 | ISBN 9781260238891 (bound edition ; acid-free paper) | ISBN 126023889X (bound edition ; acid-free paper) | ISBN 9781260718423 (loose-leaf edition ; acid-free paper) | ISBN 1260718425 (loose-leaf edition ; acid-free paper) Subjects: LCSH: Production management. Classification: LCC TS155 .S7824 2021 | DDC 658.5–dc23 LC record available at https://lccn.loc.gov/2019044799 The internet addresses listed in the text were accurate at the time of publication. The inclusion of a website does not indicate an endorsement by the authors or McGraw-Hill Education, and McGraw-Hill Education does not guarantee the accuracy of the information presented at these sites. mheducation.com/highered The McGraw-Hill Series in Operations and Decision Sciences Supply Chain Management Business Research Methods Business Statistics Benton Purchasing and Supply Chain Management Third Edition Schindler Business Research Methods Thirteenth Edition Bowerman, Drougas, Duckworth, Froelich, Hummel, Moninger, and Schur Business Statistics and Analytics in Practice Ninth Edition Bowersox, Closs, Cooper, and Bowersox Supply Chain Logistics Management Fifth Edition Burt, Petcavage, and Pinkerton Supply Management Eighth Edition Business Forecasting Keating and Wilson Forecasting and Predictive Analytics Seventh Edition Business Systems Dynamics Johnson Purchasing and Supply Management Sixteenth Edition Sterman Business Dynamics: Systems Thinking and Modeling for Complex World Simchi-Levi, Kaminsky, and Simchi-Levi Designing and Managing the Supply Chain: Concepts, Strategies, Case Studies Third Edition Operations Management Stock and Manrodt Supply Chain Management Project Management Brown and Hyer Managing Projects: A Team-Based Approach Larson Project Management: The Managerial Process Eighth Edition Service Operations Management Bordoloi, Fitzsimmons, and Fitzsimmons Service Management: Operations, Strategy, Information Technology Ninth Edition Management Science Hillier and Hillier Introduction to Management Science: A Modeling and Case Studies Approach with Spreadsheets Sixth Edition Cachon and Terwiesch Operations Management Second Edition Cachon and Terwiesch Matching Supply with Demand: An Introduction to Operations Management Fourth Edition Jacobs and Chase Operations and Supply Chain Management: The Core Fifth Edition Jacobs and Chase Operations and Supply Chain Management Sixteenth Edition Schroeder and Goldstein Operations Management: Contemporary Concepts and Cases Eighth Edition Stevenson Operations Management Fourteenth Edition Swink, Melnyk, and Hartley Managing Operations Across the Supply Chain Fourth Edition Doane and Seward Applied Statistics in Business and Economics Sixth Edition Doane and Seward Essential Statistics in Business and Economics Third Edition Lind, Marchal, and Wathen Basic Statistics for Business and Economics Ninth Edition Lind, Marchal, and Wathen Statistical Techniques in Business and Economics Eighteenth Edition Jaggia and Kelly Business Statistics: Communicating with Numbers Third Edition Jaggia and Kelly Essentials of Business Statistics: Communicating with Numbers Second Edition McGuckian Connect Master: Business Statistics Business Analytics Jaggia, Kelly, Lertwachara, and Chen Business Analytics: Communicating with Numbers v Preface The material in this book is intended as an introduction to the field of operations management. The topics covered include both strategic issues and practical applications. Among the topics are forecasting, product and service design, capacity planning, management of quality and quality control, inventory management, scheduling, supply chain management, and project management. My purpose in revising this book continues to be to provide a clear presentation of the concepts, tools, and applications of the field of operations management. Operations management is evolving and growing, and I have found updating and integrating new material to be both rewarding and challenging, particularly due to the plethora of new developments in the field, while facing the practical limits on the length of the book. This text offers a comprehensive and flexible amount of content that can be selected as appropriate for different courses and formats, including undergraduate, graduate, and executive education. This allows instructors to select the chapters, or portions of chapters, that are most relevant for their purposes. That flexibility also extends to the choice of relative weighting of the qualitative or quantitative aspects of the material, and the order in which chapters are covered, because chapters do not depend on sequence. For example, some instructors cover project management early, others cover quality or lean early, and so on. As in previous editions, there are major pedagogical f eatures designed to help students learn and understand the material. This section describes the key features of the book, the chapter elements, the supplements that are available for teaching the course, highlights of the fourteenth edition, and suggested applications for classroom instruction. By providing this support, it is our hope that instructors and students will have the tools to make this learning experience a rewarding one. What’s New in This Edition In many places, content has been rewritten or added to improve clarity, shorten wording, or update information. New material has been added on supply chains, and other topics. Some problems are new, and others have been revised. Many new readings and new photos have been added. Some of the class preparation exercises have been revised. The purpose of these exercises is to introduce students to the subject matter before class in order to enhance classroom learning. They have proved to be very popular with students, both as an introduction to new material and for study purposes. These exercises are available in the Instructor’s Resource Manual. Special thanks to Linda Brooks for her help in developing the exercises. Acknowledgments I want to thank the many contributors to this edition. Reviewers and adopters of the text have provided a “continuously improving” wealth of ideas and suggestions. It is encouraging to me as an author. I hope all reviewers and readers will know their suggestions were valuable, were carefully considered, and are sincerely appreciated. The list includes post- publication reviewers. Jenyi Chen Eric Cosnoski Mark Gershon Narges Kasiri Nancy Lambe Anita Lee-Post Behnam Nakhai Rosa Oppenheim Marilyn Preston Avanti Sethi John T. Simon Lisa Spencer Nabil Tamimi Oya Tukel Theresa Wells Heath Wilken Cleveland State University Lehigh University Temple University Ithaca College University of South Alabama University of Kentucky Millersville University of Pennsylvania Rutgers Business School Indiana University Southeast University of Texas at Dallas Governors State University California State University, Fresno University of Scranton Cleveland State University University of Wisconsin-Eau Claire University of Northern Iowa Additional thanks to the instructors who have contributed extra material for this edition, including accuracy checkers: Ronny Richardson, Kennesaw State University and Gary Black, University of Southern Indiana; Solutions and SmartBook: Tracie Lee, Idaho State University; PowerPoint Presentations: Avanti Sethi, University of Texas-Dallas; Test Bank: Leslie Sukup, Ferris State University. Special thanks goes out to Lisa Spencer, California State University-Fresno, for her help with additional readings and examples. vii viii Preface Finally, I would like to thank all the people at McGraw-Hill for their efforts and support. It is always a pleasure to work with such a professional and competent group of people. Special thanks go to Noelle Bathurst, Portfolio Manager; Michele Janicek, Lead Product Developer; Fran Simon and Katie Ward, Product Developers; Jamie Koch, Assessment Content Project Manager; Sandy Ludovissy, Buyer; Matt Diamond, Designer; Jacob Sullivan, Content Licensing Specialist; Harper Christopher, Executive Marketing Manager; and many others who worked behind the scenes. I would also like to thank the many reviewers of previous editions for their contributions: Vikas Agrawal, Fayetteville State University; Bahram Alidaee, University of Mississippi; Ardavan Asef-Faziri, California State University at Northridge; Prabir Bagchi, George Washington State University; Gordon F. Bagot, California State University at Los Angeles; Ravi Behara, Florida Atlantic University; Michael Bendixen, Nova Southeastern; Ednilson Bernardes, Georgia Southern University; Prashanth N. Bharadwaj, Indiana University of Pennsylvania; Greg Bier, University of Missouri at Columbia; Joseph Biggs, Cal Poly State University; Kimball Bullington, Middle Tennessee State University; Alan Cannon, University of Texas at Arlington; Injazz Chen, Cleveland State University; Alan Chow, University of Southern Alabama at Mobile; Chrwan-Jyh, Oklahoma State University; Chen Chung, University of Kentucky; Robert Clark, Stony Brook University; Loretta Cochran, Arkansas Tech University; Lewis Coopersmith, Rider University; Richard Crandall, Appalachian State University; Dinesh Dave, Appalachian State University; Scott Dellana, East Carolina University; Kathy Dhanda, DePaul University; Xin Ding, University of Utah; Ellen Dumond, California State University at Fullerton; Richard Ehrhardt, University of North Carolina at Greensboro; Kurt Engemann, Iona College; Diane Ervin, DeVry University; Farzaneh Fazel, Illinois State University; Wanda Fennell, University of Mississippi at Hattiesburg; Joy Field, Boston College; Warren Fisher, Stephen F. Austin State University; Lillian Fok, University of New Orleans; Charles Foley, Columbus State Community College; Matthew W. Ford, Northern Kentucky University; Phillip C. Fry, Boise State University; Charles A. Gates Jr., Aurora University; Tom Gattiker, Boise State University; Damodar Golhar, Western Michigan University; Robert Graham, Jacksonville State University; Angappa Gunasekaran, University of Massachusetts at Dartmouth; Haresh Gurnani, University of Miami; Terry Harrison, Penn State University; Vishwanath Hegde, California State University at East Bay; Craig Hill, Georgia State University; Jim Ho, University of Illinois at Chicago; Seong Hyun Nam, University of North Dakota; Jonatan Jelen, Mercy College; Prafulla Joglekar, LaSalle University; Vijay Kannan, Utah State University; Sunder Kekre, Carnegie-Mellon University; Jim Keyes, University of Wisconsin at Stout; Seung-Lae Kim, Drexel University; Beate Klingenberg, Marist College; John Kros, East Carolina University; Vinod Lall, Minnesota State University at Moorhead; Kenneth Lawrence, New Jersey Institute of Technology; Jooh Lee, Rowan University; Anita Lee-Post, University of Kentucky; Karen Lewis, University of Mississippi; Bingguang Li, Albany State University; Cheng Li, California State University at Los Angeles; Maureen P. Lojo, California State University at Sacramento; F. Victor Lu, St. John’s University; Janet Lyons, Utah State University; James Maddox, Friends University; Gita Mathur, San Jose State University; Mark McComb, Mississippi College; George Mechling, Western Carolina University; Scott Metlen, University of Idaho; Douglas Micklich, Illinois State University; Ajay Mishra, SUNY at Binghamton; Scott S. Morris, Southern Nazarene University; Philip F. Musa, University of Alabama at Birmingham; Roy Nersesian, Monmouth University; Jeffrey Ohlmann, University of Iowa at Iowa City; John Olson, University of St. Thomas; Ozgur Ozluk, San Francisco State University; Kenneth Paetsch, Cleveland State University; Taeho Park, San Jose State University; Allison Pearson, Mississippi State University; Patrick Penfield, Syracuse University; Steve Peng, California State University at Hayward; Richard Peschke, Minnesota State University at Moorhead; Andru Peters, San Jose State University; Charles Phillips, Mississippi State University; Frank Pianki, Anderson University; Sharma Pillutla, Towson University; Zinovy Radovilsky, California State University at Hayward; Stephen A. Raper, University of Missouri at Rolla; Pedro Reyes, Baylor University; Buddhadev Roychoudhury, Minnesota State University at Mankato; Narendra Rustagi, Howard University; Herb Schiller, Stony Brook University; Dean T. Scott, DeVry University; Scott J. Seipel, Middle Tennessee State University; Raj Selladurai, Indiana University; Kaushic Sengupta, Hofstra University; Kenneth Shaw, Oregon State University; Dooyoung Shin, Minnesota State University at Mankato; Michael Shurden, Lander University; Raymond E. Simko, Myers University; John Simon, Governors State University; Jake Simons, Georgia Southern University; Charles Smith, Virginia Commonwealth University; Kenneth Solheim, DeVry University; Young Son, Bernard M. Baruch College; Victor Sower, Sam Houston State University; Jeremy Stafford, University of North Alabama; Donna Stewart, University of Wisconsin at Stout; Dothang Truong, Fayetteville State University; Mike Umble, Baylor University; Javad Varzandeh, California State University at San Bernardino; Timothy Vaughan, University of Wisconsin at Eau Claire; Emre Veral, Preface Baruch College; Mark Vroblefski, University of Arizona; Gustavo Vulcano, New York University; Walter Wallace, Georgia State University; James Walters, Ball State University; John Wang, Montclair State University; Tekle Wanorie, Northwest Missouri State University; Jerry Wei, University of Notre Dame; Michael Whittenberg, University of Texas; ix Geoff Willis, University of Central Oklahoma; Pamela Zelbst, Sam Houston State University; Jiawei Zhang, NYU; Zhenying Zhao, University of Maryland; Yong-Pin Zhou, University of Washington. William J. Stevenson Walkthrough MAJOR STUDY AND LEARNING FEATURES A number of key features in this text have been specifically designed to help introductory students learn, understand, and apply operations concepts and problem-solving techniques. Examples with Solutions Rev.Confirming Pages Throughout the text, wherever a quantitative or analytic technique is introduced, an example is included to illustrate the application of that technique. These are designed to be easy to follow. Chapter Three Forecasting EXAMPLE Determining a Regression Equation Sales of new houses and three-month lagged unemployment are shown in the following table. Determine if unemployment levels can be used to predict demand for new houses and, if so, derive a predictive equation. Period . . . . . . . . . . . . . 1 Units sold . . . . . . . . . . 20 Unemployment % (three-month lag) 7.2 1. 2 41 3 17 4 35 5 25 6 31 7 38 8 50 9 15 10 19 11 14 4.0 7.3 5.5 6.8 6.0 5.4 3.6 8.4 7.0 9.0 Plot the data to see if a linear model seems reasonable. In this case, a linear model seems appropriate for the range of the data. 50 Units sold, y 40 30 20 10 0 2 4 6 8 10 Level of unemployment (%), x 2. Check the correlation coefficient to confirm that it is not close to zero using the website template, and then obtain the regression equation: r = ?.966 This is a fairly high negative correlation. The regression equation is y = 71.85 ? 6.91x Note that the equation pertains only to unemployment levels in the range 3.6 to 9.0, because sample observations covered only that range. x 103 8 mhhe.com/stevenson14e S O L U T I O N Solved Problems At the end of chapters and chapter supplements, “Solved Problems” are provided to illustrate problem solving and the core concepts in the chapter. These have been carefully prepared to help students understand the steps involved in solving different types of problems. The Excel logo indicates that a spreadsheet is available on the text’s website. 2. Strategy formulation is critical because strategies provide direction for the organization, so they can play a role in the success or failure of a business organization. 3. Functional strategies and supply chain strategies need to be aligned with the goals and strategies of the overall organization. 4. The three primary business strategies are low cost, responsiveness, and differentiation. 5. Productivity is a key factor in the cost of goods and services. Increases in productivity can become a competitive advantage. 6. High productivity is particularly important for organizations that have a strategy of low costs. competitiveness, 42 core competencies, 46 environmental scanning, 48 goals, 44 mission, 44 mission statement, 44 operations strategy, 51 order qualifiers, 48 order winners, 48 productivity, 56 quality-based strategies, 52 strategies, 44 SWOT, 48 tactics, 45 time-based strategies, 53 SOLVED PROBLEMS Computing Productivity A company that processes fruits and vegetables is able to produce 400 cases of canned peaches in one-half hour with four workers. What is labor productivity? 400 cases Quantity produced Labor productivity = ________________ = ________________________ Labor hours 4 workers × 1 / 2 hour / worker Problem 1 mhhe.com/stevenson14e Solution = 200 cases per labor hour Computing Multifactor Productivity A wrapping-paper company produced 2,000 rolls of paper in one day. Labor cost was $160, material cost was $50, and overhead was $320. Determine the multifactor productivity. Quantity produced Multifactor productivity = ______________________________ Labor cost + Material cost + Overhead Problem 2 mhhe.com/stevenson14e Solution 2,000 rolls = _______________ = 3.77 rolls per dollar input $160 + $50 + $320 A variation of the multifactor productivity calculation incorporates the standard price in the numerator by multiplying the units by the standard price.Rev.Confirming Pages Computing Multifactor Productivity Compute the multifactor productivity measure for an eight-hour day in which the usable output was 300 units, produced by three workers who used 600 pounds of materials. Workers have an hourly wage of $20, and material cost is $1 per pound. Overhead is 1.5 times labor cost. TABLE 16.5 Excel solution for Example 2a KEY TERMS Chapter Sixteen Scheduling Usable output 707 Multifactor productivity = __________________________________ Labor cost + Material cost + Overhead cost 300 units = _____________________________________________________ (3 workers × 8 hours × $20 / hour) + (600 pounds × $1 / pound) + (3 workers × 8 hours × $20 / hour × 1.50) 300 units = ________________ $480 + $600 + $720 = .167 units of output per dollar of input Problem 3 mhhe.com/stevenson14e Solution Excel Spreadsheet Solutions ste3889X_ch02_040-073.indd 63 Where applicable, the examples and solved problems include screen shots of a spreadsheet solution. 09/04/19 09:59 AM Source: Microsoft c. Using earliest due date as the selection criterion, the job sequence is C-A-E-B-D-F. The measures of effectiveness are as follows (see table): (1) Average flow time: 110/6 = 18.33 days (2) Average tardiness: 38/6 = 6.33 days (3) Average number of jobs at the work center: 110/41 = 2.68 xi CHAPTER ELEMENTS Within each chapter, you will find the following elements that are designed to facilitate study and learning. All of these have been carefully developed over many editions and have proven to be successful. Learning Objectives Every chapter and supplement lists the learning objectives to achieve when studying the chapter material. The learning objectives are also included next to the specific material in the margins of the text. Rev.Confirming Pages Rev.Confirming Pages 4 Product and Service Design C H A P T E R LEARNING OBJECTIVES After completing this chapter, you should be able to: LO4.1 Explain the strategic importance of product and service design. LO4.2 Describe what product and service design does. LO4.3 Name the key questions of product and service design. LO4.4 Identify some reasons for design or redesign. LO4.5 List some of the main sources of design ideas. LO4.6 Discuss the importance of legal, ethical, and sustainability considerations in product and service design. LO4.7 Explain the purpose and goal of life-cycle assessment. LO4.8 Explain the phrase “the 3 Rs.” LO4.9 Briefly describe the phases in product design and development. LO4.10 Discuss several key issues in product or service design. LO4.11 Discuss the two key issues in service design. LO4.12 List the characteristics of well-designed service systems. LO4.13 List some guidelines for successful service design. C H A P T E R 4.1 Mark Lennihan/AP Images 4.11 Service Design 165 Overview of Service Design 166 Differences between Service Design and Product Design 166 Phases in the Service Design Process 167 Service Blueprinting 168 Characteristics of WellDesigned Service Systems 168 Challenges of Service Design 169 Guidelines for Successful Service Design 169 4.12 Operations Strategy 170 Operations Tour: High Acres Landfill 174 Chapter Supplement: Reliability 176 O U T L I N E Introduction 140 4.7 What Does Product and Service Design Do? 140 Objectives of Product and Service Design 141 Key Questions 141 Reasons for Product or Service Design or Redesign 141 4.2 Idea Generation 142 4.3 Legal and Ethical Considerations 144 4.4 Human Factors 145 4.5 Cultural Factors 145 4.6 Global Product and Service Design 146 4.8 Environmental Factors: Sustainability 146 Designing for Mass Customization 154 Reliability 156 Robust Design 157 Degree of Newness 158 Quality Function Deployment 158 The Kano Model 160 Cradle-to-Grave Assessment 146 End-of-Life Programs 147 The Three Rs: Reduce, Reuse, and Recycle 147 Reduce: Value Analysis 147 Reuse: Remanufacturing 148 Recycle 149 4.9 Other Design Considerations 151 4.10 Designing for Production 163 Strategies for Product or Service Life Stages 151 Product Life Cycle Management 153 Degree of Standardization 153 Phases in Product Design and Development 162 Concurrent Engineering 163 Computer-Aided Design (CAD) 164 Production Requirements 165 Component Commonality 165 The essence of a business organization is the products and services it offers, and every LO4.1 Explain the strateaspect of the organization and its supply chain are structured around those products gic importance of product and services. Organizations that have well-designed products or services are more and service design. likely to realize their goals than those with poorly designed products or services. Hence, organizations have a strategic interest in product and service design. Product or service design should be closely tied to an organization’s strategy. It is a major factor in cost, quality, time-to-market, customer satisfaction, and competitive advantage. Consequently, marketing, finance, operations, accounting, IT, and HR need to be involved. Demand forecasts and projected costs are important, as is the expected impact on the supply chain. It is significant to note that an important cause of operations failures can be traced to faulty design. Designs that have not been well thought out, or are incorrectly implemented, or instructions for assembly or usage that are wrong or unclear, can be the cause of product and service failures, leading to lawsuits, injuries and deaths, product recalls, and damaged reputations. continued 138 ste3889X_ch04_138-175.indd 139 138 08/01/19 07:17 AM ste3889X_ch04_138-175.indd 139 Chapter Outlines Opening Vignettes Every chapter and supplement includes an outline of the topics covered. Each chapter opens with an introduction to the important operations topics covered in the chapter. This enables students to see the relevance of operations management in order to actively engage in learning the material. xii 08/01/19 07:17 AM Figures and Photos The text includes photographs and graphic illustrations to support student learning and provide interest and motivation. Approximately 100 carefully selected photos highlight the 14th edition. The photos illustrate applications of operations and supply chain concepts in many successful companies. More than 400 graphic illustrations, more than any other text in the field, are included and all are color coded with pedagogical consistency to assist students in understanding concepts. 56 Chapter Two A major key to Apple’s continued success is its ability to keep pushing the boundaries of innovation. Apple has demonstrated how to create growth by dreaming up products so new and ingenious that they have upended one industry after another. Rev.Confirming Pages 246 Chapter Six Process Selection and Facility Layout FIGURE 6.1 Process selection and capacity planning influence system design Inputs Outputs Forecasting Facilities and equipment Capacity Planning Product and service design Layout Rev.Confirming Pages Process Selection Technological change Work design Competitiveness, Strategy, and Productivity LO6.1 Explain the strategic importance of process selection and the influence it has on the organization and its supply chain. 6.1 INTRODUCTION Process selection refers to deciding on the way production of goods or services will be organized. It has major implications for capacity planning, layout of facilities, equipment, and design of work systems. Process selection occurs as a matter of course when new products or services are being planned. However, it also occurs periodically due to technological changes in products or equipment, as well as competitive pressures. Figure 6.1 provides an overview of where process selection and capacity planning fit into system design. Forecasts, product and service design, and technological considerations all influence capacity planning and process selection. Moreover, capacity and process selection are interrelated, and are often done in concert. They, in turn, affect facility and equipment choices, layout, and work design. How an organization approaches process selection is determined by the organization’s process strategy. Key aspects include: • Capital intensity: The mix of equipment and labor that will be used by the organization. • Process flexibility: The degree to which the system can be adjusted to changes in processing requirements due to such factors as changes in product or service design, changes in volume processed, and changes in technology. Pieter Beens/Shutterstock Moreover, this approach pays little attention to suppliers and government regulations, and community, environmental, and sustainability issues are missing. These are closely linked, theoftwo and business organizations LO6.2 need to Name be aware the impact they are having in these areas and Process choice demand-driven. main factors that influence respond accordingly. Otherwise, organizations may be subject to attack by is pressure groups The two key questions in process selection are: process selection. and risk damage to their reputation. 6.2 PROCESS SELECTION 1. 2. LO2.6 Define the term productivity and explain why it is important to companies and to countries. Productivity A measure of the effective use of resources, usually expressed as the ratio of output to input. How much variety will the process need to be able to handle? How much volume will the process need to be able to handle? Answers to these questions will serve as a guide to selecting an appropriate process. Usually, volume and variety are inversely related; a higher level of one means a lower level of the other. However, the need for flexibility of personnel and equipment is directly related to the One of the primary responsibilities of a manager is to achieve productive use of an organizalevel of variety the will need to handle: The lower the variety, the less the need for tion’s resources. The term productivity is used to describe this. Productivity is anprocess index that flexibility, while the higher the variety, the greater the need for flexibility. For example, if a measures output (goods and services) relative to the input (labor, materials, energy, and other worker’s job to in input: a bakery is to make cakes, both the equipment and the worker will do the same resources) used to produce it. It is usually expressed as the ratio of output thing day after day, with little need for flexibility. But if the worker has to make cakes, pies, Output cookies, brownies, and croissants, both the worker and the equipment must have the flexibilProductivity = ______ (2–1) Input ity to be able to handle the different requirements of each type of product. Thereitisisanother aspect of variety that is important. Variety means either having dedicated Although productivity is important for all business organizations, particularly impordifferentthe product or service, or if not, having to get equipment ready every tant for organizations that use a strategy of low cost, becauseoperations the higherfor theeach productivity, time there is the need to change the product being produced or the service being provided. lower the cost of the output. 2.7 PRODUCTIVITY A productivity ratio can be computed for a single operation, a department, an organization, or an entire country. In business organizations, productivity ratios are used for planning workforce requirements, scheduling equipment, financial analysis, and other important tasks. Productivity has important implications for business organizations and for entire nations. For nonprofit organizations, higher productivity means lower costs; for profit-based organizations, productivity is an important factor in determining how competitive a company is. For a nation, the rate of productivity growth is of great importance. Productivity growth is the ste3889X_ch06_244-299.indd 246 increase in productivity from one period to the next relative to the productivity in the preceding period. Thus, Current productivity ? Previous productivity Productivity growth = _____________________________________ × 100 Previous productivity (2–2) 08/01/19 07:28 AM xiii Rev.Confirming Pages Chapter Five Strategic Capacity Planning
