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Chapter 1 1-1. Define Operations Management (OM). Provide an example of OM, including inputs, outputs, resources, and transformation.

OM is the process of managing resources to transform inputs into outputs to create value. Can be goods or services. Internal facing = cost , quality , productivity/efficiency = firm competitiveness Example Resources Plant, workers, machines, tools Transformation Inputs Outputs Materials, parts cars Value Quality, design, cost, performance

Automotive factory

Assembly

23. Operations management is applicable d. to all firms, whether manufacturing and service 93. Define operations management. Will your definition accommodate both manufacturing and service operations? Operations management can be defined as the management of all activities directly related to the creation of goods and/or services through the transformation of inputs into outputs. List and clearly describe reasons why OM is important

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1. OM produces products/services Producing products (goods or services) is the main activity (core function) of any type of business 2. Product/service performance defines success It delivers and satisfies customers expectations, and a satisfied customer is the main goal of all business 3. OM costs dominate profitability is based on operations activities such as COGS, facilities, Direct Labor or Transportation. 28. Reasons to study Operations Management include d. learning about a costly part of the enterprise 29. Reasons to study Operations Management include learning about a. why people organize themselves for productive enterprise b. how goods and services are produced c. what operations managers do d. a costly part of the enterprise e. all of the above

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Recognize and describe the critical decisions of OM that we will study in this class Quality mgt, SPC Programs to improve process quality? Process/capacity design Process design and capacity required? Supply chain mgt Make or buy? If buy, from whom? Inventory, MRP Inventory needed to serve demand? 37. The Ten Critical Decisions of Operations Management include: c. Process and capacity design Recognize important events in OM history and their impacts on OM practice 40. Eli Whitney, in the _____, provided the foundations for ______ in operations management. d. nineteenth century; interchangeable parts o 41. The person most responsible for popularizing interchangeable parts in manufacturing was: Eli Whitney o 47. Which of the following statements is true? a. The person most responsible for initiating use of interchangeable parts in manufacturing was Eli Whitney. 43. Henry Ford is noted for his contributions to: c. assembly line operations Alfred Sloan (1923) Increased production complexity by providing a huge variety of models (GM). The more complex the process is the slower or less efficient. Quality focus (post WWII) Process improvement, quality outputs Outsourcing/offshoring (current) Cost reduction vs. control. By outsourcing you have lower costs but less control over the product quality

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List and describe key differences between producing products and services Attributes of Products o Tangible o Storable o Production demand o Production unimportant o Quality pre-assessable Attributes of Service o Intangible o Not storable o Production = demand o Production important o Quality not pre-assessable 49. Typical differences between goods and services do not include a. cost per unit

50. Which is not true regarding differences between goods and services? d. Goods tend to have higher customer interaction than services. 51. Which of the following is not a typical attribute of goods? c. aspects of quality difficult to measure 52. Which of the following services is least likely to be unique: d. elementary education 53. Which of the following is not a typical service attribute? b. easy to store 96. Why are services typically more difficult to standardize, automate, and make efficient? Services typically require customer interaction, which makes it difficult to standardize, automate, and make efficient. 97. How do services differ from goods? Identify five ways. A service is usually intangible; it is often produced and consumed simultaneously; often unique; it involves high customer interaction; product definition is inconsistent; often knowledge-based; and frequently dispersed. 98. Services are often knowledge-based. Provide two examples, and explain why they are knowledge based. Educational, medical, and legal services. Describe the importance of services to the US economy Throughout the latter half of the twentieth century, the service sector has been both the largest and the fastest growing component of the U.S. economy. Today, the service sector's share of the U.S. economy has risen to roughly 80 percent Define, calculate, and interpret productivity Productivity (units produced) / (inputs used) 59. A foundry produces circular utility access hatches (manhole covers). If 120 covers are produced in a 10-hour shift, the productivity of the line is c. 12 covers/hr 60. A foundry produces circular utility access hatches (manhole covers). If 120 covers are produced in a 10-hour shift. If labor productivity can be increased by 20%, it would then be a. 14.4 covers/hr 61. Gibson Valves produces cast bronze valves on an assembly line. If 1600 valves are produced in an 8-hour shift, the productivity of the line is d. 200 valves/hr 62. Gibson Valves produces cast bronze valves on an assembly line, currently producing 1600 valves each 8-hour shift. If the productivity is increased by 10%, it would then be c. 220 valves/hr 63. Gibson Valves produces cast bronze valves on an assembly line, currently producing 1600 valves per shift. If the production is increased to 2000 valves per shift, labor productivity will increase by c. 25% 64. The Dulac Box plant produces 500 cypress packing boxes in two 10-hour shifts. What is the productivity of the plant? a. 25 boxes/hr 65. The Dulac Box plant works two 8-hour shifts each day. In the past, 500 cypress packing boxes were produced by the end of each day. The use of new technology has enabled them to increase productivity by 30%. Productivity is now approximately b. 40.6 boxes/hr

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66. The Dulac Box plant produces 500 cypress packing boxes in two 10-hour shifts. Due to higher demand, they have decided to operate three 8-hour shifts instead. They are now able to produce 600 boxes per day. What has happened to production? c. It has increased by 20%. 67. Productivity measurement is complicated by b. the fact that precise units of measure are often unavailable 70. Productivity can be improved by d. decreasing inputs while holding outputs steady 101. Identify the three productivity variables used in the text. The three common variables are labor, capital, and management. 106. Susan has a part-time "cottage industry" producing seasonal plywood yard ornaments for resale at local craft fairs and bazaars. She currently works 8 hours per day to produce 16 ornaments. o a. What is her productivity? a. 16 ornaments/8 hours = 2 ornaments/hour o b. She thinks that by redesigning the ornaments and switching from use of wood glue to a hot-glue gun she can increase her total production to 20 ornaments per day. What is her new productivity? b. 20 ornaments/8 hours = 2.5 ornaments/hour o c. What is her percentage increase in productivity? c. Change in productivity = 0.5 ornaments/hour; percent change = 0.5/2= 25% 107. A firm cleans chemical tank cars in the Bay St. Louis area. With standard equipment, the firm typically cleaned 70 chemical tank cars per month. They utilized 10 gallons of solvent, and two employees worked 20 days per month, 8 hours a day. The company decided to switch to a larger cleaning machine. Last April, they cleaned 60 tank cars in only 15 days. They utilized 12 gallons of solvent, and the two employees worked 6 hours a day. o 1. What was their productivity with the standard equipment? o 2. What is their productivity with the larger machine? o 3. What is the change in productivity? Resource Solvent Labor Standard Equipment 70/10=7 70/320=0.22 Larger Machine Percent Change 60/12=5 60/180=0.33 (57)/7= 28.57% (0.330.22)/0.22=50%

108. The Dulac Box plant produces wooden packing boxes to be used in the local seafood industry. Current operations allow the company to make 500 boxes per day, in two 8hour shifts (250 boxes per shift). The company has introduced some small changes in equipment, and conducted appropriate job training, so that production levels have risen to 300 boxes per shift. These changes did not require any change in the amount of capital spending or energy use. What is the firm's new labor productivity? 600 boxes per day / 16 hours = 37.5 boxes per hour Explain how labor, capital, and management affect productivity

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Labor = education, training, well-being of society Positive impact on productivity Capital (cost of borrowing) = interest rate, taxes Negative impact on productivity Management = effect use of labor, capital Positive impact on productivity 69. Which of the following inputs has the greatest potential to increase productivity? c. management 72. The factor responsible for the largest portion of productivity increase in the U.S. is b. management 74. Three commonly used productivity variables are: b. labor, capital, and management

Chapter 2 2-1. Explain differentiation, cost leadership, and response as strategic approaches. Apply the appropriate approach to a given example. A Strategy is a long term plan that creates value for target customers. The main objective is to make customers buy a business product instead of its competitors. 46. The impact of strategies on the general direction and basic character of a company is c. long range 54. A strategy is a(n) e. action plan to achieve the mission 116. What is the difference between a firm's mission and its strategy? A firm's mission is its purpose or rationale for an organizations existence, whereas a firm's strategy is how it expects to achieve its mission and goals. Approaches o Cost Tradeoff of other value services (the cheapest the product the better). Has a more efficient capacity, many low cost suppliers, and low inventories. (EX: Making just one breakfast option for three kids) o Differentiation brand loyalty o Response flexible reaction to market. Has a flexible rather than efficient capacity and works with few responsive suppliers. Is more customized than cost. (EX: three different breakfast options for three kids) 49. According to the authors, which of the following strategic concepts allow firms to achieve their missions? b. differentiation, cost leadership, and quick response 52. The ability of an organization to produce goods or services that have some uniqueness in their characteristics is e. competing on differentiation 56. Which of the following is an example of competing on the basis of differentiation? d. A firm offers more reliable products than its competitors do. 60. Which of the following is the best example of competing on low-cost leadership? a. A firm produces its product with less raw material waste than its competitors. 118. Provide an example of an organization that achieves competitive advantage through experience differentiation. Explain. Competing on experience differentiation implies providing uniqueness to your service offering through immersion of the consumer into the service, with visual or sound elements to turn the service into an experience.

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Describe how the OM critical decisions relate to the three strategic approaches Approaches o Cost Tradeoff of other value services (the cheapest the product the better). Has a more efficient capacity, many low cost suppliers, and low inventories. (EX: Making just one breakfast option for three kids) o Differentiation brand loyalty o Response flexible reaction to market. Has a flexible rather than efficient capacity and works with few responsive suppliers. Is more customized than cost. (EX: three different breakfast options for three kids) Define value 123. Define core competencies: A set of skills, talents, and activities that a firm does particularly well

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2-4. Define order qualifier and order winner. Determine order qualifiers and winners for a given company. Order qualifier: the standards customers set to consider a specific product Order winner: what drives the customer to choose a product over a competitor EX: to choose a computer order qualifier may be: RAM, hard drive, system operator. And the order winner may be: price, warranty, battery efficiency. Cost Quality Service Convenience These can be order qualifier, winner or loser Style, Features depending of the customer and the product Flexibility, customization Sustainability, ethics

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Recognize and describe reasons to globalize operations Reasons to globalize (facilities, suppliers, outsourcing, etc.) Cost Lower wages and materials cost, therefore having lower operating costs o Response to competition Quality May outsource for higher product quality (EX: GM outsourcing to plants in Germany) Demand, respond faster serve international demand for one product (EX: outsource the production of KFC to China since the demand there is huge)

Talent Take advantage of education and skills overseas 100. Why are organizations becoming more global? Organizations are becoming more global with the decline in the cost of communication and transportation. Additionally, resourcescapital, material, talent, and labor--are also becoming more global 113. How can global operations improve the supply chain? The supply chain can often be improved by locating facilities in countries where unique resources exist. 114. How do global operations attract new markets? Since international operations require local interaction with customers, suppliers, and other competitive businesses, international firms inevitably learn about unique opportunities for new products and services.