Chapter 1 - Introduction to Operations
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Questions and Answers

What does operations management primarily oversee?

  • Financial auditing processes
  • The marketing strategies of the organization
  • Employee training and development programs
  • Systems or processes for creating goods and providing services (correct)
  • Which statement correctly distinguishes between efficiency and effectiveness?

  • Efficiency focuses on resource utilization, while effectiveness is about achieving a goal or objective. (correct)
  • Efficiency is about achieving a goal, while effectiveness refers to the use of fewer resources.
  • Efficiency and effectiveness are interchangeable terms in operations.
  • Effectiveness is solely about the speed of achieving objectives.
  • What best describes core competencies of an organization?

  • They are always outsourced to maximize efficiency.
  • They refer to the average skills of the workforce.
  • They are determined primarily by market trends.
  • They are attributes that provide a competitive edge and differentiate a company. (correct)
  • Which of the following factors does NOT directly determine customer prices?

    <p>Cost elements in the operations process</p> Signup and view all the answers

    What is a critical measure of productivity?

    <p>The ratio of outputs to inputs over time.</p> Signup and view all the answers

    Which aspect is NOT a characteristic that differentiates goods from services?

    <p>Time taken for production</p> Signup and view all the answers

    Why is it crucial to track productivity over time?

    <p>To monitor internal progress and industry benchmarks.</p> Signup and view all the answers

    What is the primary purpose of vision and mission statements?

    <p>They serve as guidance for setting goals and strategies.</p> Signup and view all the answers

    What does multifactor productivity measure?

    <p>The total output in relation to multiple inputs combined.</p> Signup and view all the answers

    Which forecast type typically provides more accuracy?

    <p>Forecasting groups of items.</p> Signup and view all the answers

    Which technique gives greater emphasis to more recent data?

    <p>Weighted moving average.</p> Signup and view all the answers

    What is a primary objective of sustainability in production?

    <p>To ensure future generations have access to natural resources.</p> Signup and view all the answers

    Which of the following is NOT one of the 3 Rs in product and service design?

    <p>Refurbish.</p> Signup and view all the answers

    What does a forecast error represent?

    <p>The difference between actual results and the forecasted values.</p> Signup and view all the answers

    Which statement about productivity is accurate?

    <p>An increased ratio of output to input signifies improved productivity.</p> Signup and view all the answers

    What do moving averages help to smooth out in forecasting?

    <p>Seasonal trends and variations.</p> Signup and view all the answers

    What is the main purpose of reverse-engineering a competitor's product?

    <p>Examining efficient and cost-effective production methods</p> Signup and view all the answers

    What does effective capacity take into account?

    <p>Allowances for personal time, maintenance, and holidays</p> Signup and view all the answers

    Which of the following is true about efficiency?

    <p>It measures actual output relative to effective capacity.</p> Signup and view all the answers

    Which type of capacity is defined as the maximum system is designed for?

    <p>Design capacity</p> Signup and view all the answers

    Outsourcing is an effective way to increase capacity unless it involves which activities?

    <p>Core competency activities</p> Signup and view all the answers

    What characterizes a job shop process?

    <p>Intermittent processing with few similarities</p> Signup and view all the answers

    Which of the following strategies can be used to deal with variability in demand?

    <p>Using overtime or subcontracting for short term boosts</p> Signup and view all the answers

    Which situation describes a bottleneck in a production process?

    <p>A previous step has higher capacity than a subsequent step</p> Signup and view all the answers

    What are the primary characteristics of a repetitive production process?

    <p>Medium to high volumes with low mix or variety of goods</p> Signup and view all the answers

    Which dimension of customer expectations relates to the dependability and consistency of performance?

    <p>Reliability</p> Signup and view all the answers

    What is one of the benefits of maintaining good quality in products and services?

    <p>Ability to charge premium pricing</p> Signup and view all the answers

    Which of the following costs relate to fixing issues before a product is delivered?

    <p>Internal failure costs</p> Signup and view all the answers

    In the context of quality costs, what do appraisal costs refer to?

    <p>Costs of inspection and testing</p> Signup and view all the answers

    What is a characteristic of continuous production processes?

    <p>Consistent input with highly standardized outputs</p> Signup and view all the answers

    Which of the following is NOT a type of cost associated with poor quality?

    <p>Higher productivity</p> Signup and view all the answers

    Which factor does NOT directly affect quality according to customer perceptions?

    <p>Price</p> Signup and view all the answers

    What is the optimal point for inspection cost in Quality Control?

    <p>Cost of inspection equals cost of passing a defect</p> Signup and view all the answers

    When is it best to flow down inspection to raw materials?

    <p>Before adding significant cost</p> Signup and view all the answers

    Which type of chart is most effective for measuring changes in the central tendency of a process?

    <p>X-bar chart</p> Signup and view all the answers

    Which inventory type is NOT specifically listed in the content provided?

    <p>Obsolete inventory</p> Signup and view all the answers

    What is the largest value among inventory costs?

    <p>Purchase cost</p> Signup and view all the answers

    What does 'shortage costs' in inventory management primarily relate to?

    <p>Cost associated with missed sales and opportunity loss</p> Signup and view all the answers

    How often should attributes be inspected in Quality Control?

    <p>Based on visual observations</p> Signup and view all the answers

    What is a primary function of inventory management?

    <p>Support production requirements</p> Signup and view all the answers

    Study Notes

    Chapter 1 - Introduction to Operations

    • Operations is a business organization responsible for transforming inputs into goods/services.
    • Operations management encompasses many cost elements that affect price but does not determine the price to customers.
    • Operations management manages systems or processes that create goods and/or provide services within an organization's supply chain.
    • The supply chain includes suppliers, direct suppliers, operations, distributors, and final customers.
    • Effectiveness is achieving a goal or objective.
    • Efficiency is achieving a goal using fewer resources (labor, material, machines, less overhead).
    • Goods/manufacturing and services have different characteristics, but similarities in degree of customer contact and uniformity of input/output exist.
    • Labor content of goods is more consistent than that of services.
    • Operations, marketing, and finance are interconnected business functions.
    • Vision and mission statements guide organizational goals and strategies.

    Chapter 2 - Competitiveness, Strategy and Productivity

    • Strategy is a plan for achieving organizational goals, serving as a roadmap.
    • Strategy formulation includes core competencies and SWOT analysis.
    • Core competencies are strengths, skills, knowledge and capabilities that differentiate a company from competitors. They are not suitable for outsourcing.
    • Productivity is the ratio of outputs to inputs, tracked over time, compared to previous internal results, industry results, or national results.
    • Units of measure are needed to define productivity i.e., parts/hour, parts/machine, etc.
    • Productivity is stated as "output per input". Increasing the ratio improves productivity.
    • Calculate productivity increase or decrease using the formula (current - previous)/previous.

    Chapter 3 - Forecasting

    • Forecasting is a statement about the future value of a variable.
    • Forecasts are usually close but not precise.
    • Accuracy decreases as the forecast horizon increases.
    • Trends, seasonality, and techniques for forecasting including naïve, average, moving averages, and weighted moving average are used to smooth variations, utilize history, and give more emphasis to recent data.
    • Forecast error = Actual - Forecast.

    Chapter 4 - Product & Service Design

    • 3Rs - Reduce, reuse, and recycle
    • Reduce functions, cost (cheaper materials), and quantity of parts.
    • Reuse/remanufacture/refurbish worn out or defective parts.
    • Recycle materials for future use and packaging.
    • Sustainability goals should be incorporated into product design considerations.
    • Reverse engineering involves examining competitor products for cost-effective and efficient processes for product or service generation.

    Chapter 5 - Capacity

    • Capacity types include equipment, space, and number of employees (direct)
    • Capacity is needed in units like square feet, number of machines/workstations.
    • Two types of capacity and two key terms are needed to be known.

    Chapter 6 - Process Selection and Facility Layout

    • Process types include job shop (low volume, high mix), intermittent (medium volume, moderate mix), repetitive (medium to high volume, low mix), and continuous (very high volume, low mix )
    • Effective capacity considers personal time, maintenance, holidays, scrap, and other allowances for production.
    • Efficiency is actual output divided by effective capacity and is expressed as a percentage.
    • Utilization is actual output divided by design capacity and is expressed as a percentage.
    • Bottlenecks occur when a step has lower capacity than other steps in the production process.
    • Variability in demand can be managed with overtime, furloughs, subcontracting, or reducing work force as needed.

    Chapter 9 - Management of Quality

    • Dimensions of customer expectations for products, price isn't a quality dimension.
    • Quality dimensions include performance (key characteristics and utilization), special features, conformance (fit for use), reliability, aesthetics, durability, perceived quality, and serviceability (warranty, repairs, and handling of complaints).
    • Benefits of good quality include maintaining and strengthening reputation, ability to charge more, increased market share, and lower warranty costs.
    • Costs of poor quality include losses in customers and business, increased liabilities, decreased productivity, scrap, rework, and low productivity.
    • Four costs of quality are appraisal (inspection), prevention (training and planning), internal failure (before delivery of good/service), and external failure (after delivery, warranty, and recall).

    Chapter 10 - Quality Control

    • Quality control determines how much to inspect and how often.
    • Cost of inspection vs. cost of passing a defective product/service should be compared.
    • Inspection timing should be considered at various stages in the production process.
    • Control charts, flow charts, Pareto charts, histograms, and check sheets can be used to visually or quantitatively analyze manufacturing processes.

    Chapter 12 - Inventory Management

    • Inventory types include raw materials, work in process, finished goods, tools, and supplies, along with maintenance, repair, and operations, as well as in-transit materials.
    • Inventory functions include meeting and satisfying customer demand, avoiding stockouts, taking advantage of economic order quantities, and managing costs in addition to managing delays in product costs.
    • Inventory costs include purchase costs, holding costs, ordering costs, setup costs, and shortage costs.
    • A-B-C classification is a system to categorize inventory items based on value and importance for inventory management.
    • Key inventory terms include cycle count, safety stock, and reorder point.

    Chapter 14 – JIT and Lean Operations

    • Lean Operations uses fewer resources than other systems and excels in productivity, lower costs, shorter cycle times, and higher quality.
    • Lean operation's primary goal is matching supply to demand in a smooth flow.
    • Goals of lean Operations include eliminating or reducing waste (muda) throughout an operation's processes.
    • Japanese terms like Poka-yoke (fail-safe), Kaizen, Kanban, Muda (waste), are used to define lean operational practices.

    Chapter 15 - Supply Chain Management

    • Purchasing cycle steps include requisition generation, supplier selection, order placement, order monitoring, goods received, and payment.
    • 3-way matching involves quantity and price verification of purchase order, dock receipt, and invoice.

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    Description

    This quiz focuses on the foundational concepts of operations management as discussed in Chapter 1. You'll explore the relationships between operations, marketing, and finance, and examine the efficiency and effectiveness of transforming inputs into goods and services. Test your understanding of key terms and principles that guide organizational goals.

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