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1. Operations management is the field that deals with the effective and efficient design
and operation of the transformation processes that provide the various goods and
services.
2. In a general sense, the production planning problem can be described as the company
effort to produce the right product in the right quantities in an efficient manner. It
should be obvious then, that in order to address the first issue, i.e., produce the right
products in the right quantity, the companies need to have information about the
market behavior, i.e., the expected demand and any further developing trends.
Similarly, in order to meet this expected demand efficiently, the companies need to
have a clear understanding of – i.e., detailed information about - their current
operational status – i.e., existing stock, production capacity, already initiated
production, expected supplier deliveries, etc. – since only then they can make the
right decisions regarding how to adjust the existing status in a way that will allow
them to meet the expected demand in a cost-effective and timely fashion.
9. One would expect to find departments in a home appliance manufacturer for most, if
not all, of the activities suggested by the 10 decisions in Table 1.2 and the
organization chat in Figure 1.2.
Methods Engineering
Industrial engineers working toward improving procedures in the workplace.
Product Engineering
Fine-tunes the product design to enhance production efficiency
Maintenance
Focuses on designing systems and procedures and develops personnel who
will create and maintain a reliable system.
END-OF-CHAPTER PROBLEMS
1.3
Resource Last Year This Year Change Percent Change
Labor 1000/300 = 3.33 1000/275 = 3.64 0.31 0.31/3.33 = 9.3%
Resin 1000/50 = 20 1000/45 = 22.22 2.22 2.22/20 = 11.1%
Capital 1000/10000 = 0.1 1000/11000 = 0.09 -0.01 -0.01/0.1 = -10.0%
Energy 1000/3000 = 0.33 1000/2850 = 0.35 0.02 0.02/0.33 = 6.1%
1.4
Last Year This Year
Production 1,000 1,000
CASE STUDY
1. The number of stops per driver is certainly still a good productivity measure, since
it gives a good idea regarding the “amount of service” provided by the company
on a daily basis. Another issue that could be tracked regarding the company’s
productivity might be area covered per driver per day since this measure would
provide additional information regarding the company’s capability to serve a more
geographically dispersed area and its effectiveness with respect to the relevant
route planning problems.
2. Since most call-in pickups are around 5.00 p.m., by offering some incentive, i.e.
discounted rates, to customers that call in earlier parts of the day, could help
smoothen the experienced (service) demand, and reduce the congestion currently
experienced by the company. An additional de-congesting measure could be to
preprocess most of the involved paperwork so that the expected service time at the
customer site is minimized.
4. Here are some of the typical practices on which modern automotive industries base
their competitiveness:
(a) Design of goods and services:
new products, designed and evaluated with CAD; coordinated with
STEP
(b) Quality:
100% conformance to standards; better feedback from customer
benchmarking
(c) Process and capacity planning:
new jigs to improve quality
new robots to reduce labor cost and improve quality
(d) Location strategy:
Location relative to suppliers is now more important, migration to low-
cost labor areas
(e) Layout strategy:
Work cells, flexible assembly lines
(f) Inventory management:
MRP, JIT are now regularly employed
(g) Scheduling:
Scheduling to meet requirements of JIT
Expert systems and finite scheduling
(h) Maintenance:
Improved and increased training of maintenance personnel
(i) Supply chain management:
Fewer suppliers who are more heavily integrated into the main
organization’s information system
CASE STUDIES
MINIT-LUBE, INC.
Quality Strategy:
Because of limited task variety, high repetition, good training, and good
manuals, quality should be relatively easy to maintain.
Process Strategy:
The process strategy allows employees and capital investment to focus on
doing this mission well, rather than trying to be a “general purpose” garage
or gas station.
Location Strategy:
Facilities are usually located near residential areas.
Layout Strategy:
The three bays are designed specifically for lubrication and vacuuming tasks
to minimize wasted movement on the part of the employees and to
contribute to the speedier service.
Inventory:
Inventory investment should be relatively low, and they should expect a
high turnover.
Scheduling:
Scheduling is quite straightforward with similar times for most cars. Once
volume and fluctuation in volume are determined, scheduling should be very
direct—assisting both staffing and customer relations.
Maintenance:
There is relative little equipment to be maintained, therefore little preventive
maintenance required. With three bays and three systems, there is backup
available in the case of failure.
2. Describe how Motorola might have arrived at its current strategy as a result of a
SWOT analysis.
A SWOT analysis is an assessment of a firm’s strengths, weaknesses, opportunities,
and threats. A good SWOT analysis should provide the basis for strategy
development that allows a firm to exploit strengths and opportunities, neutralize
weaknesses, and minimize threats. Clearly Motorola identified the Japanese as a
threat in the early 1980’s, but also saw an opportunity in the world marketplace.
Motorola at the time was weak in the areas of costs and quality, but exceptional
leadership and R&D were able to neutralize the weaknesses and turn the company
around.
1. An international strategy uses exports and licenses to penetrate the global arenas. A
multidomestic strategy uses subsidiaries, franchises, and joint ventures. A global
strategy views the world as a single marketplace, with standardized goods and services
worldwide. The focus is usually on cost reduction. A transnational is a truly
internationalized firm whose country identity is not as important as its worldwide
networks. Transnational strategies exploit economics of scale and responsiveness.
3. C.f. the relevant slide in (PowerPoint) class presentation on the challenges and
opportunities of globalization.
6. Product design is important, as Coke recognizes, because tastes may differ from country
to country. Other examples is the customization of the computer software to take into
consideration the language differences at different countries, the design of the controls
and the entire interior for cars produced for the Commonwealth countries where the
steering wheel must be on the right side, etc.
10. The World Trade Organization tries to lower trade barriers and ensure that international
agreements and codes of conduct (including ethical standards) are uniformly applied
around the world. “Its main function is to ensure that trade flows as smoothly,
predictably, and freely as possible.” (From the WTO web page, www.wto.org).
CASE STUDY
1. GM’s international strategy has been rather typical. First, it exports, then builds
local subsidiaries (i.e., Germany and Argentina), then joint ventures (the NUMMI
plant with Toyota in Fremont, California), but is now moving toward a global
strategy. The global strategy will provide a standardized (if not identical) product
with economies of scale. GM hopes this approach will allow it to succeed in
emerging markets.
2. This strategy is appropriate in those industries where the demand for local
customization or responsiveness to local tastes is overwhelmed by economies of
scale. A global strategy such as this is not appropriate in other industries where
local and changing tastes dominate (i.e., food, cosmetics, some clothes, etc.). GM’s
global strategy with very similar products may be weak in its ability to respond to
local conditions and cultures.
3. The case demonstrates the advantages of a low-cost strategy as opposed to a
strategy of differentiation or responsiveness. The issues present in the case are:
product design (standard modules), process selection (replicating a repetitive
process), location (low cost locations that minimize transportation cost and
overcome local trade barriers), layout (balanced assembly line), supply chain
management (delivery directly to the assembly line, cutting down on warehousing),
and inventory (reduced inventory via less warehousing and JIT deliveries).