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Questions and Answers
Operations Management (OM) is solely concerned with manufacturing processes, not service operations.
Operations Management (OM) is solely concerned with manufacturing processes, not service operations.
False (B)
The role of OM in a business is to directly generate revenue by selling goods or services.
The role of OM in a business is to directly generate revenue by selling goods or services.
False (B)
One of the steps involved in the transformation process is receiving inputs from suppliers, but not storing materials until needed.
One of the steps involved in the transformation process is receiving inputs from suppliers, but not storing materials until needed.
False (B)
The transformation process in OM only involves converting materials into finished products.
The transformation process in OM only involves converting materials into finished products.
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Only for-profit organizations rely on Operations Management (OM) for their operations.
Only for-profit organizations rely on Operations Management (OM) for their operations.
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The value added in a transformation process is calculated as the difference between the output product value and the input material value.
The value added in a transformation process is calculated as the difference between the output product value and the input material value.
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In a service organization, the product is tangible and can be inventoried.
In a service organization, the product is tangible and can be inventoried.
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Manufacturing organizations are characterized by a high level of customer contact, while service organizations have low customer contact.
Manufacturing organizations are characterized by a high level of customer contact, while service organizations have low customer contact.
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Both manufacturing and service organizations must decide on the best layout and location for their operations.
Both manufacturing and service organizations must decide on the best layout and location for their operations.
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Strategic decisions made within organizations cover a narrow scope and are generally short-term in nature.
Strategic decisions made within organizations cover a narrow scope and are generally short-term in nature.
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The "scope of production and operations management" concerns the conversion of inputs into outputs using only intangible resources.
The "scope of production and operations management" concerns the conversion of inputs into outputs using only intangible resources.
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Plant layouts and material handling are essential to effective production and operations management.
Plant layouts and material handling are essential to effective production and operations management.
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Product design focuses on transforming ideas into tangible goods, while process design encompasses the overall flow of production, from raw materials to finished products.
Product design focuses on transforming ideas into tangible goods, while process design encompasses the overall flow of production, from raw materials to finished products.
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Production and planning control is only concerned with creating production schedules and setting deadlines.
Production and planning control is only concerned with creating production schedules and setting deadlines.
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The primary goal of quality control is to ensure that products and services meet a predetermined level of excellence.
The primary goal of quality control is to ensure that products and services meet a predetermined level of excellence.
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Materials management primarily focuses on procuring and controlling the materials needed for production, without concern for the flow of goods and services.
Materials management primarily focuses on procuring and controlling the materials needed for production, without concern for the flow of goods and services.
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Maintenance management is a secondary concern in a production and operations management system.
Maintenance management is a secondary concern in a production and operations management system.
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Strategic decisions are more frequent than tactical decisions.
Strategic decisions are more frequent than tactical decisions.
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The human relations movement emphasized the use of scientific methods for improving efficiency.
The human relations movement emphasized the use of scientific methods for improving efficiency.
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Competitiveness refers to a firm's capacity to compete solely in terms of its pricing strategy.
Competitiveness refers to a firm's capacity to compete solely in terms of its pricing strategy.
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Just In Time (JIT) and Total Quality Management (TQM) became prominent in the 1980s.
Just In Time (JIT) and Total Quality Management (TQM) became prominent in the 1980s.
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Time-Based Competition is a recent trend in the 2000s.
Time-Based Competition is a recent trend in the 2000s.
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Supply chain management is a relatively new concept that emerged with the rise of e-commerce in the 2000s.
Supply chain management is a relatively new concept that emerged with the rise of e-commerce in the 2000s.
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The objective of Production Management is to produce goods or services of the right quality, quantity, time, and lowest cost.
The objective of Production Management is to produce goods or services of the right quality, quantity, time, and lowest cost.
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Operations management is only concerned with the production of physical goods, not services.
Operations management is only concerned with the production of physical goods, not services.
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According to E.S. Buffa, production management should ensure the products meet specifications, quantity, and schedule, and minimize costs.
According to E.S. Buffa, production management should ensure the products meet specifications, quantity, and schedule, and minimize costs.
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A positioning strategy is focused on how a company competes in the market and involves identifying its core strengths.
A positioning strategy is focused on how a company competes in the market and involves identifying its core strengths.
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A company that excels in providing competitive pricing is an example of a company with a strong positioning strategy.
A company that excels in providing competitive pricing is an example of a company with a strong positioning strategy.
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Start-up companies with limited capital often opt for positioning strategies emphasizing mass production to leverage economies of scale.
Start-up companies with limited capital often opt for positioning strategies emphasizing mass production to leverage economies of scale.
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Capital and natural resources are not considered factors contributing to a company's competitive advantage.
Capital and natural resources are not considered factors contributing to a company's competitive advantage.
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Advanced technology can be a source of competitive advantage for a company, particularly when used to improve the effectiveness of internal processes.
Advanced technology can be a source of competitive advantage for a company, particularly when used to improve the effectiveness of internal processes.
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A company's "Competitive Benefit Package" focuses solely on the tangible features of a product.
A company's "Competitive Benefit Package" focuses solely on the tangible features of a product.
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A company's "Competitive Priorities" are determined by its production system, not by the demands of its target market.
A company's "Competitive Priorities" are determined by its production system, not by the demands of its target market.
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Low-cost production is a competitive priority for all businesses.
Low-cost production is a competitive priority for all businesses.
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A "Product Focused" production system is best suited for producing customized products.
A "Product Focused" production system is best suited for producing customized products.
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The "Produce to Order" inventory plan involves producing goods in advance of customer demand.
The "Produce to Order" inventory plan involves producing goods in advance of customer demand.
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A company's Operations Strategy should be developed in isolation from its overall Business Strategy.
A company's Operations Strategy should be developed in isolation from its overall Business Strategy.
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If a company's production system is designed for a "Standard product design", then it cannot also offer "Customized product design" options.
If a company's production system is designed for a "Standard product design", then it cannot also offer "Customized product design" options.
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The "Inventory Management" aspect of operational strategy primarily focuses on ensuring that raw materials are available for production.
The "Inventory Management" aspect of operational strategy primarily focuses on ensuring that raw materials are available for production.
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Study Notes
Learning Objectives
- Define and explain operations management (OM)
- Explain the role of operations management in business
- Describe the decisions operations managers make
- Describe the differences between service and manufacturing operations
- Identify major historical developments in operations management
- Identify current trends in operations management
- Describe the flow of information between Operations Management (OM) and other business functions
Operations Management
- Is the business function responsible for planning, coordinating, and controlling resources to produce products and services for a company
- A management function
- A core function of every organization (service or manufacturing, profit or non-profit)
Role of Operations Management (OM)
- Oversees and optimizes processes that transform inputs into goods or services
- Transforms inputs (resources like people, materials, and money) into outputs (goods and services)
OM's Transformation Process
- A series of activities that convert inputs into outputs
- Steps involve receiving inputs from suppliers, storing materials, planning production order, moving materials to production areas, workers converting materials into finished goods, inspecting and testing quality, and shipping finished products to customers
Manufacturers vs. Organizations (Service)
- Service: Intangible products, cannot be inventoried, high customer contact, short response time, labor intensive
- Manufacturers: Tangible products, can be inventoried, low customer contact, longer response time, capital intensive
Similarities (Service/Manufacturers)
- Both use technology
- Both have quality, productivity, and response issues
- Both must forecast demand
- Both can have capacity, layout, and location issues
- Both have customer, supplier, scheduling, and staffing issues
- Manufacturing often provides services
- Services often provide tangible goods
- Some organizations are a blend of service and manufacturing
OM Decisions
- Strategic decisions: broad, long-term and encompassing
- Tactical decisions: narrow, short-term and focused on small groups
- Strategic decisions set the direction for the entire company, long-term in nature
Historical Development of OM
- Industrial Revolution (Late 1700s)
- Scientific management (Early 1900s)
- Human relations movement (1930s-60s)
- Management science (1940s-60s)
- Computer age (1960s)
- Environmental Issues (1970s)
- Just-in-Time (JIT) and Total Quality Management (TQM) (1980s)
- Reengineering (1990s)
- Global competition (1980s)
- Flexibility (1990s)
- Time-Based Competition (1990s)
- Supply Chain Management (1990s)
- Electronic Commerce (2000s)
- Outsourcing and flattening of the global world (2000s)
Today's OM Environment
- Customers demand better quality, greater speed, and lower costs
- Companies implement lean system concepts (total systems approach to efficient operations)
- Recognized need to better manage information using ERP and CRM systems
- Increased cross-functional decision-making (ethical issues)
Ethical Issues in Operations Management
- Financial statements
- Worker safety
- Product safety
- Quality
- The environment
- The community
- Hiring and firing workers
- Closing facilities
- Workers' rights
Production & Operations Management
- Operations management is the design, operation, and improvement of systems that create and deliver primary products and services.
- Production management deals with decision-making related to production processes to meet specifications, amount, and schedule, efficiently and at minimum cost
Scope of Production and Operations Management
- Input to output conversion using physical resources
- Meet organizational objectives
Operations Activities
- Location of facilities
- Plant layouts and material handling
- Product design
- Process design
- Production and planning control
- Quality control
- Material management
- Maintenance management
Quality Control
- Systems maintain desired product/service quality
Materials Management −
- Acquisition, control and use of materials
Maintenance Management
- Plant machinery upkeep
Competitive Advantage
- Factors allowing a company to produce goods/services better or more cheaply than rivals
- Influences sales or superior margins
Competitive Priorities
- Cost, quality, flexibility, speed, innovation, service
Positioning Strategies
- A strategy where a company excels in key areas/concentrates on choosing one or two important areas.
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Description
This quiz covers key concepts in operations management, including its definition, significance in business, and the decision-making processes of operations managers. It also explores the distinctions between service and manufacturing operations, historical developments, and current trends in the field.
