Chapter 08 - Managing Service and Manufacturing Operations
8-7
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b. Modular design is the creation of an item in self-contained units, or
modules, which can be combined or interchanged to create different
products.
1) Modular design allows products to be repaired quickly, thus
reducing the cost of labor, but the component itself is expensive,
raising the cost of repair materials.
c. Customization is making products to meet a particular customer’s needs
or wants.
1) Products produced in this way are generally unique.
2) Mass customization is making products to meet the needs and
wants of a large number of individual customers
PPT 8.14
D. Planning Capacity
1. Capacity refers to the maximum load that an organizational unit can carry or
operate.
a. The unit of measurement may be a worker or machine, a department, a
branch, or even an entire plant.
b. Maximum capacity can be stated in terms of the inputs or outputs
provided.
2. Efficiently planning the organization’s capacity needs is an important
process for the operations manager.
a. Capacity levels that fall short can result in unmet demand (lost
customers).
b. When there is more capacity than needed, operating costs are driven up
needlessly due to unused and often expensive resources.
c. To avoid such situations, organizations must accurately forecast demand
and then plan capacity based on these forecasts.
3. Once a capacity decision—such as factory size—has been implemented, it is
very difficult to change the decision without incurring substantial costs.
PPT 8.15
E. Planning Facilities
1. Many products are produced in factories, but others are produced in stores, at
home, or where the product ultimately will be used.
2. Companies must decide where to locate their operations facilities, what
layout is best for producing their particular product, and even what
technology to apply to the transformation process.
a. Some companies are using both physical and virtual locations.
3. Facility Location
a. Once a facility-location decision has been made and implemented, the
firm must live with it due to the high costs involved.
b. When making the facility location decision, the firm must pay careful
attention to factors such as proximity to market, availability of raw
materials, availability of transportation, availability of power, climatic
influences, availability of labor, community characteristics (quality of
life), and taxes and inducements.
c. The facility location is complex because it involves the evaluation of
many factors, some of which cannot be measured with precision.