11

SMALL BUSINESS MANAGEMENT

Chapter 11 Chapter 11

Operations ManagementOperations Management

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Management of Internal Operations

Part of Physical Facilities PlanPart of Physical Facilities Plan Maintaining Quality and ControlMaintaining Quality and Control AreasAreas

– cash flow, production costs, product quality, cash flow, production costs, product quality, inventory management, physical facilities inventory management, physical facilities issues.issues.

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The Production Process

Converts Inputs Converts Inputs – money, people, machines, inventoriesmoney, people, machines, inventories

Into OutputsInto Outputs– products and/or servicesproducts and/or services

PERT = Priority Evaluation Review and PERT = Priority Evaluation Review and TechniqueTechnique

Total Quality ManagementTotal Quality Management

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Physical Facilities

Buildings - Buildings - age, space, configuration, appearance, frontage, age, space, configuration, appearance, frontage, accessaccess

Interior utilization - Interior utilization - floor space, room dimensions, floor space, room dimensions, ceiling heights, stairways, elevators, window space, utility ceiling heights, stairways, elevators, window space, utility servicesservices

Improvement potential - Improvement potential - building exterior and building exterior and interior,site, surrounding, streets, walks, access, expansioninterior,site, surrounding, streets, walks, access, expansion

Site and Environment - Site and Environment - street and service areas setback street and service areas setback and frontage, parking, surrounding businesses, area and frontage, parking, surrounding businesses, area environmentenvironment

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Layout

Layouts for Manufacturing Firms Layouts for Manufacturing Firms – product layout, process layout, fixed position layoutproduct layout, process layout, fixed position layout

Layouts for Retail FirmsLayouts for Retail Firms– selling vs. nonselling space, space among departments selling vs. nonselling space, space among departments

and/or products, classification of merchandise, display and/or products, classification of merchandise, display locations and product shelvinglocations and product shelving grid layout, free-flowing layoutgrid layout, free-flowing layout

Layouts for Service FirmsLayouts for Service Firms

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Purchasing and Controlling Inventories

Sources of SupplySources of Supply Evaluating SuppliersEvaluating Suppliers

– dependability, cost, services offereddependability, cost, services offered

Determining Order QuantitiesDetermining Order Quantities– order lead time, sales or production estimate, minimum order lead time, sales or production estimate, minimum

inventory levels needed, inventory currently on hand, inventory levels needed, inventory currently on hand, methods for determining order quantities, methods for determining order quantities, administration of the buying process (minimum administration of the buying process (minimum turnover method, maxmin, opentobuy, eoq, abc turnover method, maxmin, opentobuy, eoq, abc analysisanalysis))

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Purchasing and Controlling Inventories

Inventory ControlInventory Control– unit of control, unit of control, – valuation, valuation, – monitoring, monitoring,

periodic vs. perpetualperiodic vs. perpetual

– security of inventory security of inventory

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The Small Business-Supplier Relationship

EXAMPLE OF POLICYEXAMPLE OF POLICY 1. Define clear, identifiable, and measurable objectives for 1. Define clear, identifiable, and measurable objectives for

your supplier management strategy.your supplier management strategy. 2. Be prepared to work with the supplier to identify and 2. Be prepared to work with the supplier to identify and

define the roles that each will perform.define the roles that each will perform. 3. Attempt to employ technology to share data relating to 3. Attempt to employ technology to share data relating to

forecasting, product movement, and financial evaluation.forecasting, product movement, and financial evaluation. 4. Evaluate suppliers regularly with an objective 4. Evaluate suppliers regularly with an objective

standardized framework that is both quantitative and standardized framework that is both quantitative and qualitative.qualitative.

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Concept Checks

1. What is the production process?1. What is the production process?

2. Why is it important to continually 2. Why is it important to continually

monitor the state of the physical facilities?monitor the state of the physical facilities?

3. What are the three types of layouts used 3. What are the three types of layouts used

in the production process?in the production process?

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Concept Checks 4. In planning the layout of a retail store, 4. In planning the layout of a retail store,

what key areas should be analyzed?what key areas should be analyzed? 5. What are the two types of layouts used 5. What are the two types of layouts used

by a retail store?by a retail store? 6. What are the pros and cons of 6. What are the pros and cons of

purchasing from one supplier?purchasing from one supplier?

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Concept Checks

7. What items of information are required to 7. What items of information are required to estimate the quantities of inventories to estimate the quantities of inventories to order?order?

8. What specific methods can be used to 8. What specific methods can be used to determine order quantities?determine order quantities?

9. What are the three essential aspects of 9. What are the three essential aspects of inventory control?inventory control?