Operations Management Chapter 10

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Questions and Answers

How is productivity defined in relation to outputs and inputs?

As the total number of employees in a company

As a ratio of outputs to inputs (correct)

As the total revenue generated by a business

As the total number of products manufactured

What impact does high productivity typically have on a company?

It generally leads to increased employee turnover

It allows for lower prices and higher wages (correct)

It causes a decrease in consumer demand

It results in a higher rate of product defects

Which industry has traditionally shown higher productivity compared to others?

Agriculture

Service industry

Manufacturing industry (correct)

Retail industry

What is a key focus of Total Quality Management (TQM)?

Leadership and customer focus Signup and view all the answers

Which of the following statements about domestic productivity is true?

It affects wages, profits, and customer prices. Signup and view all the answers

What level of commitment is required under Total Quality Management?

The highest level of commitment where no defects are acceptable Signup and view all the answers

What is one of the primary reasons why service industries have begun to improve productivity?

Modern information technology that eliminates inefficiencies Signup and view all the answers

What organizational aspect does high productivity NOT affect?

Customers' expectations for product delivery Signup and view all the answers

What is the primary purpose of capacity planning?

To identify the amount a firm can produce under normal conditions Signup and view all the answers

Which layout type organizes equipment and people to produce one type of product?

Product Layout Signup and view all the answers

What should capacity planning account for to effectively manage production?

Seasonal changes and peak times Signup and view all the answers

In scheduling goods operations, what does the Master Production Schedule primarily determine?

Which products to produce and their production timelines Signup and view all the answers

What is a Gantt Chart primarily used for in operations scheduling?

To diagram steps in a project and track time requirements Signup and view all the answers

How does a product layout differ from a process layout?

It focuses on producing one specific item or product efficiently Signup and view all the answers

What characterizes high-contact services regarding scheduling?

They require direct customer engagement to determine scheduling Signup and view all the answers

What is one of the developments in layout flexibility mentioned?

Flexible Manufacturing Process (FMS) Signup and view all the answers

What does benchmarking in quality assurance primarily involve?

Assessing output against industry leaders Signup and view all the answers

Which certification program focuses on meeting environmental standards?

ISO 14000 Signup and view all the answers

What is the primary goal of business process re-engineering?

To redesign processes for improved performance Signup and view all the answers

Which of the following best describes supply-chain management?

Enhancing competitive advantage through collaboration Signup and view all the answers

What is the main function of a supply chain?

To facilitate the movement of goods from raw materials to consumers Signup and view all the answers

Which of the following elements is NOT typically measured for ISO certification?

Market share analysis Signup and view all the answers

What type of utility is provided by ATMs for withdrawing cash?

Place utility Signup and view all the answers

The process that combines raw materials to produce finished goods is known as?

Manufacturing process Signup and view all the answers

What does performance quality refer to?

The features of a product and how well it performs Signup and view all the answers

Which tool is used for analyzing variations in production data?

Statistical process control (SPC) Signup and view all the answers

What does quality ownership imply in the context of Total Quality Management?

Quality belongs to each individual involved in the production process Signup and view all the answers

What is the main purpose of value-added analysis?

To identify the value added by various work activities Signup and view all the answers

What are control charts used for in statistical process control?

To check if results fall within control limits Signup and view all the answers

Which of the following components does quality/cost studies assess?

Quality-related costs and cost-saving areas Signup and view all the answers

Which of the following is NOT a tool for quality assurance?

Value-added customer feedback Signup and view all the answers

Which type of quality refers to the consistency or repeatability of performance?

Quality Reliability Signup and view all the answers

What type of process combines raw materials to produce a finished product?

synthetic Signup and view all the answers

Which chart is used to break down large projects into steps and identify the critical path?

PERT Signup and view all the answers

What system utilizes computers to estimate production needs?

Material Requirements Planning (MRP) Signup and view all the answers

During a value-added analysis, which element did British Airways examine to improve efficiency?

supply chain Signup and view all the answers

Which of the following does NOT pertain to the management and breakdown of project tasks?

Just-in-Time (JIT) Signup and view all the answers

Which option focuses on resource availability when needed?

Just-in-Time (JIT) Signup and view all the answers

What is the primary function of Material Requirements Planning?

To estimate production needs Signup and view all the answers

Which analysis does British Airways conduct to improve customer satisfaction?

Value-added analysis Signup and view all the answers

What is the primary purpose of a PERT chart?

To specify the sequence and critical path of project steps Signup and view all the answers

In operations control, what does monitoring performance involve?

Comparing actual results to planned objectives Signup and view all the answers

What is a key feature of Just-in-Time (JIT) production?

Parts are delivered only when needed Signup and view all the answers

What does Materials Requirements Planning (MRP) primarily involve?

Estimating production needs through a computerized system Signup and view all the answers

What is the role of materials management in operations control?

Planning and controlling the flow of materials from purchase to distribution Signup and view all the answers

Which of the following is NOT a component of Manufacturing Resource Planning (MRP II)?

Human Resources Signup and view all the answers

What is a benefit of implementing process control tools?

They identify areas needing improvement in production processes Signup and view all the answers

Which statement accurately describes the critical path in a project?

It is a sequence of steps that determines the minimum project duration Signup and view all the answers

Study Notes

Chapter 10: Operations Management, Productivity, and Quality

Learning Objectives: Explain production/operations, describe four utility types, differentiate service and goods production, describe operation processes, relate productivity to quality, understand total quality management (TQM), and explain supply-chain strategies.

Creating Value Through Production (LO 10.1)

Operations Management: A set of methods and technologies used in producing goods or services.
Service Operations: Production activities resulting in tangible and intangible service products.
Goods Production: Production activities focused on tangible products.

Creating Value Through Production (LO 10.1) - Utility Types

Time Utility: Product availability.
Place Utility: Product accessibility.
Ownership / Possession Utility: Product consumption or use.
Form Utility: Transforming raw materials into finished products.

Difference Between Service and Manufacturing Operations (LO 10.2)

Key Differences: Interactions with customers, the ability to store services, customer presence during operations, and the importance of intangible service quality.

Operations Processes (LO 10.3)

Goods-Producing Processes: Methods and technologies used to produce goods and services, classified by transformation technology type, process type (analytic or synthetic), and customer contact amount.

Operations Processes (LO 10.3) - Transformation Technology Types

Chemical Processes
Fabrication Processes
Assembly Processes
Transport Processes
Clerical Processes

Operations Processes (LO 10.3) - Process Types

Analytic Process: Resources are broken down during the production process (e.g., extracting minerals).
Synthetic Process: Resources are combined during the production process (e.g., paint production).

Operations Processes (LO 10.3) - Service Process Types

Low-Contact Systems: Customers do not need to be physically present.
High-Contact Systems: Customers need to be physically present.

Operations Processes (LO 10.3) - Business Strategy Drivers

Business Strategy Drivers: Primarily quality, lower pricing, flexibility, and dependability.

Operations Planning (LO 10.4)

Successful Operations: Carefully planned and implemented; includes forecasting and planning for capacity, quality, location, layout, and methods planning.

Operations Planning (LO 10.4) - Planning and Control

Operations Planning and Control Process: Involves strategic planning using the business plan, followed by long-range operational plans, operations scheduling, operations control, and output (customer delivery).

Operations Planning (LO 10.4) - Capacity Planning

Capacity Planning: Determining the amount of production under normal conditions, slightly exceeding normal demand to accommodate peaks and seasonal changes, and having strategies for using excess capacity.

Operations Planning (LO 10.4) - Layout Planning

Process Layout: Grouping equipment and people by function.
Cellular Layout: Arranging resources to support product families with similar flow paths.
Product Layout: Arranging resources and people around a product to make that product.

Operations Planning (LO 10.4) - Other Developments in Flexibility

Flexible Manufacturing Systems (FMS)
Soft Manufacturing
Movable Factory

Operations Scheduling (LO 10.4)

Scheduling Goods: Using master production schedules (MPS) to determine which products, when, and the resources needed.
Scheduling Services: Low-contact service scheduling is based on completion dates/arrival, while high-contact involves scheduling directly with customers.

Operations Scheduling (LO 10.4) - Scheduling Tools

Gantt Charts: Diagrams that show steps in a project and time required for each step; check progress.
PERT Charts: Specify the sequence and critical path of project steps, identify activities causing delays.

Operations Control (LO 10.4, LO 10.5)

Operations Control: Monitoring performance by comparing results to original plans and schedules to ensure production decisions are implemented effectively.

Operations Control (LO 10.4) - Materials Management

Materials Management: Planning, organizing, and controlling the flow of materials from purchase to distribution of finished goods
Includes transportation, purchasing, inventory control, supplier selection, and warehousing.

Operations Control (LO 10.5) - Process Control Tools

Worker Training
Material Requirements Training
Just-in-Time (JIT) Production Systems
Quality Control

Operations Control (LO 10.5) - JIT Production

JIT Production: Components are delivered when required; raw materials flow continuously to finished goods; saves on warehouse costs, and ensures smooth movement of product components.
Materials Requirements Planning (MRP): Computerized systems to estimate production needs; resources are acquired as needed.
Manufacturing Resource Planning (MRP II): Advanced MRP that ties all organizational parts (production, inventory, human resources, marketing, and finance) into production activities.

The Productivity-Quality Connection (LO 10.5)

Quality: Product suitability defined by features/functional needs of consumers.
Productivity Measurement: Calculating the ratio of outputs to inputs (often labor input).
Labour Productivity: Calculating GDP (Gross Domestic Product) per worker.

The Productivity-Quality Connection (LO 10.5, Continued)

Effects of Productivity: Increased productivity impacts domestic employment (wage), investors (profits), and consumer prices. Manufacturing generally has higher productivity than service industries, but service productivity has improved significantly with modern information technology. Productivity levels differ among industries.

Total Quality Management (TQM) (LO 10.6)

TQM: A business approach encompassing all activities and business aspects; focusing on customer satisfaction, leadership, employee involvement, and continuous improvement; zero-defect tolerance.

Total Quality Management (TQM) (LO 10.6) - Dimensions of Quality

Performance Quality: Product features and functioning.
Reliability Quality: Consistency and repeatability of performance.
Quality Ownership: Responsibility rests with individual employees who create or destroy quality.

Tools for Quality Assurance (LO 10.6)

Competitive Product Analysis
Value-Added Analysis
Statistical Process Control (SPC)
Quality/Cost Studies
Quality Improvement Teams
Benchmarking
ISO 9000:2000 and ISO 14000
Re-engineering
Adding Value through Supply Chains

Tools for Quality Assurance (LO 10.6) - Value-Added Analysis

Value-Added Analysis: Determine value added during all work activities, material flows, and paperwork; eliminate wasteful actions.

Tools for Quality Assurance (LO 10.6) - SPC (Statistical Process Control)

Statistical Process Control (SPC): Methods used to analyze variations in production data; enables managers to discover when adjustments are required for high-quality production.
Process Variations: Changes in employees, materials, work methods, or equipment that impact product quality.
Control Chart: Diagram to visualize process control results; easily identify results outside control limits.

Tools for Quality Assurance (LO 10.6) - Quality/Cost Studies

Quality/Cost Studies: Assessing and determining costs associated with defects, including internal and external failures.

Tools for Quality Assurance (LO 10.6) - Quality Improvement Teams

Quality Improvement Teams: Groups of employees focused on defining, analyzing, and solving quality problems through brainstorming, discussion, and quality/cost studies.

Tools for Quality Assurance (LO 10.6) - Benchmarking

Benchmarking: Comparing firm output quality to industry leaders. Internal benchmarking compares to past performance, while external benchmarking compares to competitors' best practices.

Tools for Quality Assurance (LO 10.6) - ISO 9000:2000 and ISO 14000

ISO 9000:2000 and ISO 14000: Standards to demonstrate a firm's meeting rigorous methods. Earning these ratings involve qualified consultants measuring product testing, employee training, record-keeping, and defect correction.

Tools for Quality Assurance (LO 10.6) - Business Process Re-engineering

Business Process Re-engineering: Redesigning business processes to enhance performance, quality, and productivity more effictively.

Tools for Quality Assurance (LO 10.7) - Supply Chains

Supply Chain (Value Chain): Group of companies, and activities involved in moving goods from raw materials to consumers.

Supply-Chain Management (LO 10.7)

Supply Chain Management: Improves goods flow by combining companies; improves customer value from efficient information flow and faster material delivery to customers.

Quick-Check Questions (various) and Answers

Multiple-choice questions addressing concepts from previous sections. Answers are included.

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Description

This quiz covers key concepts from Chapter 10 of Operations Management, focusing on productivity and quality. It explores the distinction between service and goods production, operation processes, and the significance of total quality management (TQM). Test your understanding of how operations management creates value and the various types of utilities involved.