Bmal 590 Operations/Production Management_Master Set

Kaoru Ishikawa

created a cause and effect diagram (fishbone diagram) that allows a user to visualize all possible causes of a result and hopefully find the root cause of process imperfections. He also explored and popularized the concept of quality circles - a small group of employees that meets regularly to identify, analyze, and solve quality and production problems related to its work.

Service quality

determined by multiple dimensions: (1) reliability—a measure of consistent performance and dependability; (2) responsiveness—the willingness of the service provider to assist customers; (3) competence—the knowledge and skills of the provider needed to perform the service; (4) access—the approachability and the ease of contacting the service provider; (5) courtesy—the service providers' politeness, respect, consideration, and friendliness; (6) communication—the use of understandable language so that customers can understand the different facets of the service; (7) credibility—the service provider's trustworthiness, believability, and honesty; (8) security—confidentiality and personal and financial security are important components of service delivery and measures its quality; (9) understanding/knowing the customer—the provider's efforts to understand the needs of its customers (listening to customers' specific requirements, providing individualized attention, and recognizing regular customers); and (10) tangibles—the physical characteristics (facilities and appearance of personnel) of the service.

quality of goods

determined by the following eight dimensions: (1) performance—the primary purpose of a tangible good, (2) special features—additional characteristics of a tangible good that enhance the value or usefulness of the primary product purpose, (3) reliability—consistency in the performance of a good and a good with higher reliability is considered to have higher quality than a good with lower reliability, (4) conformance—the degree to which a good matches the specified standards or guidelines, (5) durability—the useful life of a good since the longer the useful life, the higher the quality, (6) serviceability—the ability of the good to perform with ease for the customer, (7) aesthetics—a good's appearance, and (8) brand equity or reputation—a good's quality is associated with the company image, its brand name, and its past reputation (these indirect measures are collectively called brand equity).

program evaluation and review technique (PERT)

developed jointly by the U.S. Department of Defense and Booz Allen Hamilton during the development of the Polaris ballistic missile project in the late 1950s. PERT is a technique for addressing the impact of uncertainties in activity time estimates on the duration of the entire project duration. PERT analysis is very similar to CPM analysis with respect to several concepts discussed earlier (work breakdown structure, precedence relationships, and network diagram). However, because PERT attempts to address the uncertainties in a project schedule, four different estimates for activity times are developed.

Armand Feigenbaum

developed the concept of total quality control (TQC) which later evolved as part of total quality management (TQM). He believed that the management of a company must always strive for quality excellence and that everyone in the organization must commit to quality.

ISO 14000

helps organizations with environmental quality management by focusing on minimizing an organization's harmful effects on the environment and on achieving continual improvement in environmental performance. Together, these ISO standards are known as "generic management system standards" because they are not specific to a particular product, process, or material.

A low-cost operations strategy can be achieved by all of the following

investing in new and faster equipment reducing scrap eliminating waste eliminating unused capacity

Project control

means real-time assessment of the execution of a planned project. The real-time data (completion of activities, cost, and resource usage) are compared with the proposed plan, and corrective actions are taken as necessary. Therefore, project control requires time, cost, quality, resource, risk, and change management skills. Finally, at the conclusion of all project activities and after submission of the required deliverables, a project is formally closed. Often organizations conduct a critical assessment of all project phases to identify the steps that went well and those that did not. Such an assessment allows the organization to learn from both successes and failures and to improve the execution of the next project.

mission statement

often accompanies a business strategy and defines why a company exists, outlines its core values, and how it seeks to position the company within the larger market. Though mission statements tend to sound very nice and positive, they do not always offer much prescriptive guidance.

Organizations are linked in a supply chain by the exchange or flow of all of the following

physical goods information financial flows

The manufacturing process consists of transformations of the input materials in one or more of the following ways:

physical properties, shape, fixed dimension, surface finish, or joining parts and materials. If a process does not lead to one of these five changes, it is considered to be a service process. In other words, service is all of the value-added physical and intangible items that an organization provides to the customer. Service is intangible and it differs from manufacturing in that customers are often involved in the production and the consumption occurs simultaneously. Service operations are typically labor intensive and most service is bundled with manufactured goods.

Crosby defined quality as all of the following

prevention is the system for causing quality the performance standard must be zero defects conformance to requirements the measurement of quality is the price of nonconformance

project manager

seldom participates directly in the activities that produce the end result; rather, he or she ensures that the different components of the project are executed properly. A project manager is also the single point of contact for delivering the goals of a project to its customers. Therefore, the ability to adapt to the various project constraints quickly and effectively is essential in ensuring that the project is executed on time, within budget, and by using the resources provided. The project manager is responsible for successfully meeting three interrelated project constraints: time, cost, and scope. The project timeconstraint refers to the amount of time available to complete a project. The project cost constraint refers to the budgeted amount available for the project. The project scope constraint refers to what must be done to achieve a project's end goal. These three constraints are interrelated and are negatively correlated: For example, an increased scope typically means increased time and increased cost, a short time constraint could mean increased costs and reduced scope, and a limited budget could mean increased time and reduced scope.

x̅ chart

shows how the averages of a process change over time. It is used to track whether the long-term average of a process is changing over time because of special-cause variations.

Interrelationship Diagram

shows the connections and natural relationships between different ideas or constructs identified for quality improvement. It is often used along with brainstorming and an affinity diagram in identifying critical linkages across different concepts.

check sheet

structured, prepared form for collecting and analyzing sampled observations. This is a generic tool that can be adapted for a wide variety of purposes. Prior to using sampling, inspection, or other quantitative techniques, the check sheet is used to compile the raw data collected from the population of interest. For example, a pizza delivery company can use a check sheet like the one below to keep track of the number of wrong or late deliveries every day of the week or every hour of the day.

Quality improvement involves costs

such as the effort and investment in better employees, raw materials, production processes, and all support activities. In 1979, Philip B. Crosby authored the book Quality Is Free, which emphasized that doing things right the first time adds nothing to the cost of a product or a service. Dr. W. Edwards Deming also emphasized that improving quality means reducing the cost of rejects and rework, warranty expenses, and loss of goodwill.

Quality is best defined as

the ability of a product (either a good or a service) to consistently meet or exceed customer expectation

Project Management

the application of the knowledge, skills, tools, and techniques necessary to successfully complete a project. Therefore, project management includes planning, directing, scheduling, and controlling resources (people, equipment, and material) to meet the technical, cost, and time constraints of the project. the body of knowledge of project management can be divided into five categories: initiation, planning, execution, control, and closure.

business strategy

the entire organization is generally guided by a business strategy that defines the markets, products, and target customers and sets both short- and long-term objectives for the organization.

Logistics

the functional element of the company that plans, implements, and manages the efficient and effective flow and storage of goods and services from the point of origin to the point of end consumption.

Type II error, beta error, of false negative

the mistake of failing to reject the hypothesis that everything within a population meets established standards when in reality the population does not conform to specifications. For example, it is possible that an entire batch of Raisin Bran contains less than the necessary amount of raisins. However, if a few cereal boxes randomly sampled, by chance, contain enough raisins to meet the specifications, the manufacturer may conclude that the entire production batch meets established quality standards. Therefore, it might ship the entire batch of cereal boxes to the distribution centers to be sold to customers. Similarly, a blood test that concludes that a patient is free from HIV when he or she is actually HIV positive is another example of Type II error. In both these cases, the customers have to bear the consequences of lower quality. Therefore, a Type II error is also known as consumers' risk.

Type I error, alpha error, or false positive

the mistake of rejecting a hypothesis that should not have been rejected. Examples of Type I error include concluding that a batch of Raisin Bran does not contain the necessary amount of raisins, based on the results of a sample, when the batch actually does contain the necessary amount; or concluding that a blood sample is HIV positive when it is not; or concluding that a product is defective when it is not. Because a Type I error can lead a manufacturer or a service provider to reject a perfectly good product unnecessarily, this type of error is also known as producers' risk in quality management terminology.

work breakdown structure (WBS)

the most fundamental technique for defining and organizing the total scope of a project. A large program (the development of a new video-game console by Sony) is divided into several loosely connected independent projects (the development of hardware and the development of software). Each project is then subdivided into its component subprojects (the development of the memory module and the development of the computer microprocessor), and then each subproject is divided into several tasks. these tasks are subdivided several times into component subtasks and finally to the smallest work package (or activity) that can be assigned to a single worker or a team.

It is important to distinguish between services and manufacturing because they have three fundamental differences:

the nature of their output - tangible vs. intangible, the degree of customer contact and co-production, and simultaneous production and consumption.

Inspection

the process of comparing a sampled product with established guidelines

Strategic sourcing/purchasing includes

the processes associated with identifying material and service needs, locating and selecting suppliers, negotiating contract and payment terms, and tracking to assess supplier performance.

Sampling

the selection of randomly selected products from the production line for quality checks.

Inspection and sampling

the statistical practice of selecting a few observations intended to generate inferences about a population of interest, such as an entire batch or shipment. Sampling methods include random sampling, stratified sampling, and quota sampling. Random sampling wants to ensure that each member of the population is equally likely to be selected as a sample. A stratified sampling is used when the population of interest is made up of many distinct subgroups or strata (e.g., customers of American Express Blue, Green, Platinum, or Centurion credit cards). Care must be taken to ensure that the relative sample size for each stratum is an accurate representation of the population. Quota sampling is used to collect a pre-specified number of observations from each subgroup and is used to collect sufficient data to be able to make statistical inferences about certain subgroups that are underrepresented in the population. For example, a company might want to oversample responses from customers who rate its services as poor to proactively identify causes of customer dissatisfaction. Along with the selection of a sampling framework, great care must be taken to ensure that the sample size is appropriate for making informed generalizations about the population of interest. A less than appropriate sample size can lead to a higher possibility of the two types of errors commonly associated with any statistical analysis: Type I Error and Type II Error.

Operational Decision Areas

the tactical tools that allow an organization to achieve its priorities and are demonstrated in structural decisions and infrastructural decisions. An organization is faced with hundreds or thousands of operating decisions that must be made on a daily and systematic basis.

Quality Improvement Methods

today's leaders must also be cognizant of methods that will facilitate implementation of strategies to improve and sustain a commitment to quality. When embarking on quality improvement, the organization must identify the goals and objectives of the program, identify the needs and preferences of the customers, users, or recipients of the processes that produce products and services, and understand the current state of affairs at the organization. Once the current environment is understood, the organization can start identifying the gaps between its present and preferred situations and identify opportunities for improvement. Such an analysis also involves understanding the constraints that might prevent the organization from achieving its quality goals. Understanding the organizational constraints naturally leads to identifying changes that will overcome the barriers and make it possible to achieve higher quality. To accomplish these tasks, a firm must review sources of quality improvement ideas, learn a number of qualitative techniques, and select quantitative quality improvement tools. However, firms must also equip all workers to utilize and understand these steps in order to effect quality improvement.

p chart

tracks the changes in percentages of a specified attribute over a period of time.

network diagram

used to show the precedence relationship among different activities. There are two conventions for building a network diagram. The activity on node (AON) approach shows each activity as a circle (or a node) and connects the activities with arrows. The direction of an arrow indicates the project direction. For example, if activity A precedes activity B, then the arrow will point from A to B. In practice, a second convention known as the activity on arrow (AOA) convention is also used. The AOA convention is opposite to AON: Each activity is represented by an arrow, and the nodes are used to show the beginning and end points.

process decision program chart (PDPC

used to systematically identify initiatives that might potentially go wrong in a quality improvement plan that is under consideration. It is particularly useful when the cost of failure is high. To construct a PDPC, first develop a tree diagram of the proposed plan; then identify all potential problems and brainstorm potential countermeasures.

ISO (International Organization for Standardization) 9000 standards

were created that certify companies on the basis of their adherence to quality management principles through their use of documented operational procedures. Then ISO 14000 was also developed to certify companies on the basis of their commitment to environmental quality management. Now, companies around the world actively pursue quality-related best practices in the management of their daily operations. These companies are also paying greater attention to service quality, customer satisfaction, and customer loyalty. All of the pieces are in place so that quality is a focused goal of all companies in the world today.

Structural decisions

which are really mid-term and long-term forward planning, are high-capital-investment decisions that occur less frequently but have a lasting impact on the organization because they impact and/or are impacted by capacity (What type? How much is needed? When/How to grow/shrink?), technology (What kind? How often updated?), facilities (Where/How many? Layout/Design? Local/Global?), and vertical integration/sourcing (What suppliers? Type of partnership/relationship with suppliers? Number of suppliers?).

A delay in the critical path

will cause a delay in the project end date without corrective action

Crosby defined quality as all of the following except

"goodness" or "elegance"

12 "service values"

(1) "I am always responsive to the expressed and unexpressed wishes and needs of our guests." (2) "I own and immediately resolve guest problems." (3) "I have the opportunity to continuously learn and grow." So while Ritz-Carlton's credo and motto remain the same, its implementation of its quality management philosophy has evolved from a formal approach to a broader definition of elegance and luxury.

major themes of the conceptual framework of Six Sigma are:

(a) genuine focus on customer needs and preferences, (b) management by fact, (c) the unit of analysis within a Six Sigma approach is a process, (d) a proactive management style is necessary, (d) collaboration between employees working within different functional areas is necessary for the approach to succeed, i.e., teamwork, and (e) Six Sigma strives for perfection.

slack

(flexibility) exists in scheduling the noncritical activities. Slack is the estimate of the maximum amount of time that a noncritical activity can be delayed without affecting the entire project schedule. Therefore, a systematic algorithm is used to calculate the critical path and identify slack for each activity.

Gantt Chart

(named after Henry Gantt, who originally developed the chart in the 1910's) is a special type of horizontal bar chart that displays the schedule for the entire project. It shows the beginning and end times for each activity and can also show the interrelationships between activities. A Gantt chart with different color codes can also be used to track performance while the project is in progress.

Air pressure must be in a tight range for the proper performance of aerosol air fresheners. Engineering specifications call for 50 psi of pressure with an upper tolerance of 55 psi and a lower tolerance of 45 psi. A sample from the previous week's production had a mean of 51 psi and a standard deviation of 1.5 psi. What is the capability of the process?

0.89

What percentage of the area of a normal curve is between +2 and -2 standard deviations?

0.955

Typical control limits are how many standard deviations from the mean?

3

If you conclude that a soda-filling machine is not filling bottles completely, based on the results of a sample, when the bottles actually contain the necessary amount of liquid, is an example of what type of error?

A false positive

Projects generally have all the following characteristics except

A repeated process

Out-of-Control Rules

A single point outside the control limits Two out of three successive points on the same side of the center line and farther than 2 standard deviations from the overall mean Four out of five successive points on the same side of the center line and farther than 1 standard deviations from the overall mean A run of nine data points in a row that are on the same side of the center line Six (or more) points in a row that are continually increasing (or decreasing) Fourteen (or more) points in a row that alternate in direction, increasing then decreasing Fifteen points in a row that are all within 1 standard deviation of the mean on either side of the mean Eight points in a row where none is within 1 standard deviation of the mean and the points are in both directions from the mean Obvious consistent or persistent patterns that suggest that there is something unusual about the data

Which of the following is/are fundamental differences between services and manufacturing?

A,B, and C are fundamental differences

Quality Management: American Express

AMEX) provides a variety of services to its customers such as credit cards, travelers' checks, and other financial services. To ensure that AMEX delivers high quality service to its customers, a number of quality improvement processes, policies, and procedures are in place: (1) Each application for a credit card goes through a structured review process; (2) The AMEX factory produces a custom credit card with the customer's name and unique account number; and (3) The customer is instructed to call a specified toll-free phone number to activate the card. To ensure quality, all aspects of the processes must be executed perfectly millions of times every few minutes. AMEX's information systems and the entire worldwide financial services network must have accurate information. Why? The card would be denied, resulting in a very angry customer. American Express has to ensure that the quality of its goods (the credit cards) and services (provided by the telephone call center) both meet customer expectations. The example of AMEX clearly demonstrates that in the global business environment, quality is no longer considered a nice-to-have luxury but is acknowledged as a necessary requirement in order to compete successfully and survive in the marketplace.

Which of the following is not a project management tool?

Activity ordering analysis (AOA)

Which of the following is not a common source of customer feedback?

Advertising agencies

Which of the following is a qualitative technique that provides a systematic method for generating a large number of creative problem solving ideas from many different individuals?

Brainstorming

Qualitative Quality Improvement Tools

Brainstorming is a systematic method for generating a large number of creative problem-solving ideas in a relatively short amount of time based on input from many different individuals. The affinity diagram is a visual tool for organizing ideas from the brainstorming session into natural groups based on the collective wisdom of the participants. Each idea generated is recorded during brainstorming and then the entire team gathers around the notes and moves them into logical subgroups until a consensus is reached. The failure modes and effects analysis (FMEA) is a systematic approach for identifying all possible failures in a design, a manufacturing process, or a service process. Its purpose is to take action to eliminate or reduce failures, starting with the highest-priority ones. Mistake-Proofing, Fail-Safing, or Poka-Yoke all build on the use of any automatic device or method that either makes it impossible for an error to occur or makes the error immediately obvious once it has occurred. This technique is used when the process steps have been identified, but human errors can potentially cause mistakes that can have expensive or dangerous consequences. A flow chart is a pictorial representation of the separate steps of a process in a sequential manner so that consistencies and missing aspects can be identified, studied, and improved.

Organizations are linked in a supply chain by the exchange or flow of all of the following except

Brand identity

What term describes a process for which a prespecified percentage of measurements fall inside the specifications limits?

Capable

Why Do Projects Fail?

Change in initial project expectations Change in the overall project importance to the organization Change in the need for the project by the organization Change in overall complexity Change in overall time to completion Change in user needs Change in overall project resources (people, materials, funds) Change in technical difficulties Change in funding source Change in regulatory problems Internal politics within the organization External politics to the organization Change in commitment by project champion Some projects fail simply because projects are inherently risky. However, by taking proper precautions and developing appropriate contingency plans, the chances of a project's failure can be reduced.

the Global Nature

China, the United States, Germany, and Japan remain the top four traders for both exports and imports in 2015.

Which of the following is not considered a dimension of product quality?

Communication

The Six Sigma approach is implemented using a structured five-step plan known as

DMAIC

Which of the following is not a reason projects succeed?

Declining material prices

On-time delivery describes a company's ability to

Deliver a product when promised

The algorithm for identifying the critical path and slack involves calculating the following four parameters for each activity:

Early start time (ES): the earliest time at which an activity can start, considering the beginning and ending times for each of the preceding activities. Early finish time (EF): the sum of the early start time (ES) and the time required to complete the activity. Late start time (LS): the latest time at which an activity can start, considering all the precedence relationships, without delaying the completion time for the project. Late finish time (LF): the sum of the late start time and the time required to complete the activity.

Business processes can be categorized as primarily manufacturing or primarily services

Eighty percent of organizations in developed countries are primarily services that may include consulting, medical care, and project management. In general, most organizations will use services to differentiate products.

In the long term which of the following is not the result of an organization's quality improvement efforts?

Employee turnover rate

A quality circle is a way of getting feedback from what group?

Employees

Which of the following summarizes a large number of observations in a few data categories?

Histogram

9 steps of benchmarking

Identify a clearly defined practice or process to benchmark. Note: This issue should be critical to the company, and the approach should have support from top management. Organize a motivated, cross-functional team to undertake the benchmarking efforts. Identify partner organizations that may have best practices. The partner organizations should have similar processes, but need not be from the same industry. Collect data from the partner organizations. The data can be collected in many forms, including surveys, interviews, or actual observations. Collect data from own company or division (in the case of internal benchmarking). Systematically compare the data and determine the performance gaps between the organizations or divisions. Determine which difference between the practices are potentially causing the performance gap. Based on the comparison results, develop goals and action plans. Implement action plans and review them periodically.

Which of the following relationships between cost, time, and scope is not realistic?

Increased scope, decreased cost, and decreased time

different types of costs associated with quality improvement can be classified in four broad categories:

Internal failure cost is the cost of poor quality if the error is caught within the production facility. External failure cost is the cost of poor quality if the error is caught after the product has been sold to a customer. Assurance costs are the costs necessary to ensure that the product or service meets quality standards. Prevention costs are all the costs and efforts associated with preventing quality problems. Quality improvement efforts reduce overall production costs within an organization. The definition of quality changes over time as customer needs change and evolve. Therefore, organizations must strive for continuous quality improvement.

Which is true about the critical path?

It is the longest network path

Operations and Supply Chain Strategies for Three "World Class" Organizations

Kellogg's has an extensive product line and serves international markets with a large network of plants. Important operations decisions include the product mix at each plant, the network of suppliers, inventory policies, and forecasting. Sony makes and sells a huge variety of electronic goods all around the world and much of the manufacturing occurs in Japan and China as well as the Americas and Europe. Manufacturing costs vary but the increased responsiveness of having supply near a major source of demand is a savvy business decision. Sony's dispersed production and customer base create numerous logistical challenges, and Sony manages these challenges through third-party logistics. American Express is a financial services company whose supply chain is not as complex as Kellogg's or Sony's. Important decisions it must make include locating retail branches, locating other operations (call centers), and choosing suppliers—such as manufacturers of credit cards and providers of IT and billing services.

Examples of Companies with Different Operations Strategies

Low cost Superior quality Delivery speed Customization flexibility Walmart Taco Bell Southwest Airlines Rolex BMW Singapore Airlines FedEx Amazon Dell Land's End (custom khakis) wedding planner These contemporary businesses meet diverse needs and interests of consumers. Note how the competitive priority/capability "fit" with the company's products or services. So competitive priorities are the relative rankings of what the company would LIKE to achieve. Competitive capabilities are the relative effectiveness that the company is ABLE to actually achieve. Capabilities will occur if the priorities are chosen well and if operations are managed well to match these priorities.

The award created by the U.S. government in 1987 to help improve quality and competitiveness of U.S. companies by recognizing the highest performing organizations is the

Malcolm Baldrige National Quality Award

Which of the following is not one of the four quality absolutes as defined by Philip Crosby?

Management must enforce quality levels

Which is not a general risk category for project management?

Management risk

Which of the following terms does not describe one of the four broad categories of competitive priorities that a company can pursue?

Marketing

Which of the following defines why a company exists, outlines a company's core values, and positions the company within its market?

Mission statement

Making the size of a gas pump nozzle different from that of a diesel pump nozzle is an example of what technique?

Mistake-proofing

functional strategies

More specific details are provided by breaking the high-level business strategies into functional strategies, which specify the core goals of areas such as operations, marketing, finance, IT, and research & development. Functional strategies must align with the business strategy and be aligned with one another. Market considerations such as product variety and types of sales channels (number of stores, Internet) have implications for operations. The need for all functions to be "on the same page" sometimes creates tension between functions and usually requires balancing the priorities of multiple functions. Finance becomes involved as well because it can evaluate whether the investment is worthwhile.

When computing the expected time for a project, which time estimate is weighted the most?

Most likely time

Employee Feedback

One approach that is used extensively in Japanese companies is known as a quality circle. A quality circle is a small volunteer group of employees responsible for similar or related work functions who meet regularly to identify, analyze, and solve quality and production problems related to its work. Dell and United Airlines are two large companies in the U.S. that have used quality circles to identify approaches for eliminating waste within their operations. They claim to have saved millions of dollars by implementing suggestions derived from quality circles The group uses specific tools and techniques to prioritize, analyze, and address issues systematically. The tools and techniques can be classified into two categories: qualitative and quantitative.

Operations and Supply Chain Strategies

Organizations will seek a strategy that focuses on either efficiency or responsiveness in their operations and supply chain An organization that is focused on efficiency as a strategy is seeking to compete on lower cost, while an organization focused on a responsiveness strategy is seeking to compete on speed of delivery. Both strategies will impact the price of the product and the perception of quality. Regardless of the strategy, the ultimate goal of the organization is to make profits, and preferably more profits than its competitors. Thus it is possible that either the more efficient or the more responsive organization could be more profitable. It is also possible that neither organization is profitable - particularly if they do not manage their operations well

On a SPC chart, if a data point falls outside the control limits, the process is said to be what?

Out of control

Attribute data can be tracked on what type of control chart?

P chart

A scatter diagram is used to graph what?

Pairs of numerical data

Project risk can be grouped into four categories. Which of the following is not one of the categories?

Personnel

A network diagram is used to show what?

Precedence relationships

Being an expert in information integration, project scope, time management, quality management, human resources, communications, risk, and procurement are beneficial skills for what member of a project management team?

Project manager

supplementary characteristics for projects can be identified such as the following:

Projects typically include pre-specified deliverables after completion. Because projects are defined to have specific objectives, they also have pre-established limits and exclusions. Projects generally have specific intermediate goals or performance milestones. Because a project can contain some unique element(s), it can also include an element of risk. Project teams are generally made up of several individuals who come from cross-functional departments or functional areas or who have unique skills. Project team members often work on multiple projects at the same time with each project having unique goals, deadlines, and requirements. project management has become an essential part of the professional lives of employees working in business, not-for-profit, and government organizations.

Security as a dimension of service quality means

Recognizing that confidentiality is important in service delivery

Firms undertake quality and process improvement efforts to achieve all the following goals except

Reduced profitability

Which term refers to a customer associating the quality of a product with the image of the company?

Reputation

An approach to reduce the amount of fluctuations in day-to-day resource requirements within an organization is

Resource leveling

Which of the following is a quantitative quality improvement tool?

SPC chart

Why Organizations Improve Quality

Secondly, organizations improve quality to enhance customer satisfaction. The quality of products and services can have a big impact on customer satisfaction, which is an indication of the long-term profitability of a company. The American Customer Satisfaction Index (ACSI) is an ongoing index for tracking customer satisfaction for a wide range of products and services in the U.S. In addition, customer loyalty, word of mouth, and enhancement of the organization's reputation are important components. Research has shown that it is less costly to continue serving existing customers than to increase market share. Organizations that continue to provide high-quality products and services realize high customer loyalty. A customer who is satisfied and more loyal to a company is also likely to spread positive word-of-mouth and create additional goodwill in the marketplace. Finally, firms improve quality to increase profitability and market share. Organizations that produce higher quality products and services are also rewarded by enhanced financial performance. Honda and Toyota, committed to quality and capturing the market share, have consistently ranked higher than other competitors in various quality ratings over the last several years. Many scholars have analyzed the impact of quality improvement programs on a organization's profitability, and research has shown that the long-term profitability of organizations that have won various quality awards increase significantly more (approximately 25 to 50%) compared to other organizations in the same industry.

The percentage of the project's scope that will be affected by a problem defines which project risk classification?

Severity

The identified problems can be classified according to the following criteria:

Severity: What percentage of the project's scope will be affected by a problem? Probability: What are the chances that a specific problem will occur? Timing: At what point in the project is the specific problem likely to appear? Dynamic risk: As the project proceeds, will the probability of the problem occurrence increase, decrease, or stay constant?

Six Sigma Quality Management Approach

Six f is a comprehensive and flexible system for achieving, sustaining, and maximizing business success that is uniquely driven by a close understanding of customer needs; disciplined use of facts, data, and statistical analysis; and diligent attention to managing, improving, and reinventing business processes. Six Sigma has rapidly emerged as the dominant quality management framework used in manufacturing and service organizations in the last decade. Based on the philosophies of gurus (Deming, Juran, and others), it has aspects in common with TQM and the Baldrige Framework. This approach was originally developed as a framework for implementing quality improvement approaches at Motorola which resulted in its receiving the 1988 MBNQA. The Six Sigma way of thinking is organized around DMAIC (define, measure, analyze, improve, and control). The number six refers to the objective that no measure should be more than six standard deviations (sigma) from the desired standard to achieve almost perfection (99.9997 percent error-free products). It ultimately emphasizes the structured use of quantitative and data-driven quality improvement techniques.

The amount of leeway each activity has in its starting time and duration without delaying the project

Slack time

The amount of leeway each activity has in its starting time and duration without delaying the project.

Slack time

Guidelines for developing an aggregate project plan include the following:

Step 1: Define project types as either breakthrough, platform, derivative, R&D, or partnered projects. Step 2: Identify existing projects and classify by project type. Step 3: Estimate the average time and resources needed for each project type based on past experience. Step 4: Identify existing resource capacity. Step 5: Determine the desired mix of projects. Step 6: Estimate the number of projects that existing resources can support. Step 7: Decide which specific projects to pursue. Step 8: Work to improve development capabilities.

Several things must go right for a project to be successful:

Successful execution of a project requires strong project leadership. The project manager must focus on meeting the three constraints: scope, time, and budget. A successful project means that all deliverables are completed on time, within budget, and at a level of quality that is acceptable to the project's sponsors and stakeholders. It is necessary to develop clear and measurable project goals. Projects with uncertain objectives fail more often than projects in which the goals are clearly defined and communicated to all stakeholders. For a project to be successful, the roles and responsibilities of each team member should be clearly defined. The project team must agree on the finished deliverables so that all effort is focused in the same direction. Therefore, vague descriptions of tasks and responsibilities should be avoided at all costs. The project execution strategy and implementation plan must be well defined and clear to all stakeholders. The single most important activity that an excellent project manager engages in is carefully planning all aspects of the project prior to and during execution. Business executives also believe that it is necessary for the project team members to have a sense of urgency about the execution of the project. Because projects are finite endeavors with limited time, money, and other resources available, they must be kept moving toward completion. Because most team members have lots of other priorities, it's up to the project manager to keep their attention focused on project deliverables and deadlines. Regular status checks, meetings, and reminders are essential. All project deliverables and all project activities must be visualized and communicated in detail to all team members and the stakeholders.

Which of the following terms means offering something that customers will pay a premium for, or something that outshines the competition?

Superior quality

Which of the following is a strategic issue in operations management?

Supply chain strategy

several additional analyses can be conducted with respect to each potential problem as described here:

The project manager should attempt to quantify the impact of each potential problem on a common basis, such as time delays or cost overruns. Once the risks are presented on the same scale, a prioritization scheme can be developed to minimize the probability that a particular problem will occur. The project team should develop a contingency plan in case the identified problems do occur during the project execution. The project manager should also develop a potential upside for the project if the potential problem is avoided. Finally, different project team members should be assigned the responsibility for monitoring the signs of each potential problem. During project update meetings, each member should update his or her project colleagues regarding the status of the potential problems he or she is monitoring. Each risk or problem should have a potential solution. This approach ensures that the probability of a problem occurring will be minimized. The risk assessment plan is a living document and will change.

planning begins during the second phase

The project plan outlines the activities, their interdependencies, and time estimates. The resource plan lists the labor, equipment, other resources, components, and raw materials required to complete the project activities. The quantities of different resources required during different project stages are estimated. The financial plan reports estimated costs and cash flow requirements at different project stages. Quality plans provide details on quality targets, control, and potential improvement measures. The communications plan often includes updates on project status relative to schedule, which needs to be communicated to key stakeholders. The risk plan provides an assessment of potential risks and uncertainties, and actions that might be necessary to overcome the challenges. The project execution phase involves the actual completion of all activities that are part of the project. The project manager monitors the execution to ensure that each activity is completed on time using the allotted resources and budget. This phase also requires the project manager to start constructing the deliverables. The project deliverables can be sequenced in series so that neither the project team nor the recipient is overburdened by them.

critical path

Using the information included in the work breakdown structure, and the precedence relationships and time estimates, the CPM algorithm estimates the time necessary to complete each part of the project. The path that takes the longest time to complete is known as the critical path. Because all paths within a project need to be completed before the project can be considered complete, the critical path (also known as the bottleneck path or the binding constraint) dictates the project's duration. The activities making up a critical path are known as critical activities. Any delay in the execution of a critical activity results in delaying the entire project.

During the project initiation phase

a business problem or opportunity is identified, a solution is identified, and a project team is established. This process often involves selecting a project sponsor; setting the project scope, timeline, and budget; and appointing a project team and manager. The project manager is ultimately responsible for the successful execution of the project. Therefore, he or she is the main custodian of all information related to the project and controls the assignment of tasks to different team members. Because of their crucial role, the Project Management Institute recommends that project managers need to gain expertise in several different areas, including information integration, scope, time, cost, quality, human resources, communications, risk, and procurement.

customer expectations

a determinant of quality and are influenced by factors such as personal needs, word of mouth or organization reputation, and the individuals' own past experiences. Therefore, a customer compares the objective quality of a product based on the dimensions described earlier with his or her expectations. Based on such comparisons, the perceived quality (the customer's judgment) of the product is thought to be higher or lower than expectations. As a result, quality excellence means improving the joint dimensions of both objective and perceived product quality.

project

a set of interrelated activities necessary to achieve established goals using a specified amount of time, budget, and resources. In simple terms, the primary characteristics of a project are that it: Has a well-defined goal or objective. Is composed of a set of interrelated activities. Has a specified beginning and ending time. Has specified resource and personnel requirements. Has a specified budget.

run chart

a simple graph used to display changes in observed data over a period of time. This tool plots changes in critical performance data (pizza delivery time) as a function of time. It can be used to illustrate long-term changes or stability in the performance. An example of a run chart for the pizza delivery time shows that delivery times are increasing over time; hence, there may be some type of quality problem.

Statistical Process Control Chart

a specific type of run chart calculated with well-defined statistical properties. Deming strongly believed in the extraordinary insights gained from tracking the causes of the variations present within a production system by using SPC. He encouraged Japanese managers to implement SPC methodology for all critical operations that might affect the quality of the manufactured product. Today, SPC is an essential tool for the operational analyses in a large number of manufacturing, service, healthcare, education, government, and not-for-profit organizations around the world.

resource breakdown structure (RBS)

a standardized list of personnel required to complete various activities in a project. This technique is often used in combination with the work breakdown structure.

Pareto analysis

a statistical technique for identifying and categorizing data based on frequency and percentage of occurrences and is typically depicted using a bar chart. This approach is named after Italian economist Vilfredo Pareto who first identified the concept that 80 percent of problems are often produced by 20 percent of the causes in many different applications. To conduct a Pareto analysis, a bar chart is constructed and arranged with the longest bar on the left and the shortest bar on the right. The example for the pizza delivery company shows that the majority of dissatisfied customers report only two problems: late deliveries and wrong orders.

Benchmarking

a structured process for comparing the business practices of an organization to the best practices that can be identified in other organizations (partner firms, competitors, or suppliers) or other divisions within a company. Benchmarking is a widely accepted approach for quality and performance improvement and is practiced in manufacturing, service, not-for-profit, and government organizations. Benchmarking can be used to identify the drivers of best practices, such as an organization's culture, employee skills, recognition systems, and training programs. This use of benchmarking requires an unusual amount of cooperation among all participants. The companies sharing information do so openly and exchange information, data, and results with one another with the objective of learning from one another and collectively improving everyone's quality. Benchmarking can also be done internally in a company. Notice the nine specific steps of successful benchmarking.

histogram

a type of graph used to show how often different values in a set of data occur. It is commonly used to show frequency distributions of data on a continuous scale and to summarize a large number of observations in a few data categories. The histogram below shows the frequency distribution of delivery times to customers in 10-minute increments.

Malcolm Baldrige National Quality Award

an award given by the President of the United States to organizations judged to be outstanding in specific managerial tasks that lead to improved quality for both products and services

When considering an efficient strategy:

an organization is seeking to be efficient in its operations processes in order to offer a lower price in the market by using cost and quality approaches. A low cost leader, seeks lower prices as the easiest reason to communicate to customers why they should buy a particular product or service. Unfortunately, simply lowering prices will lead to reduced profits or even losses; therefore, a company must simultaneously reduce its operating costs. Low-cost operations seek to provide a product or service that is less expensive than similar products or services offered by competitors. To reduce operating costs an organization should consider qualitymanagement tools (described in sections 2 and 3) as a means for cost reduction. Customers will pay a premium for superior quality. Yet, a quality strategy is beyond offering a product or service that is superior to the alternatives. Consistent quality involves meeting the product specifications and the promises made to customers with high reliability. The product does not necessarily have to be superior to another, but customers must have a high degree of confidence that what they are buying will perform as promised. Yet, quality as a strategic approach seeks to reduce scrap, eliminate waste, and improve process efficiencies.

When considering a responsive strategy:

an organization is seeking to compete on speed of delivery in the market by using time/delivery and flexibility approaches. With time/delivery, organizations focus on the gap between when a customer orders a product and when he or she receives it. On-time delivery involves delivering a product when it is promised, but not necessarily quickly. Delivery speed means that an organization offers to deliver a product/service faster than a competitor. Getting something quickly has obvious appeal. Many customers will pay a premium for speed. Product development speed refers to the time between generations or major changes to a product. Product development speed is important to just about any business, but it is particularly important in dynamic industries such as electronics, computers, and fashion. When considering flexibility, organizations take into account (a) customization—the ability to make a product to exactly fit customer needs; (b) postponement—keeping products in a standard format and then adding unique components for individual customers at the last possible moment; (c) mass customization—products are produced in high volume at standard product costs but are customized to individual customer tastes; (d) variety—the ability to handle a wide range or assortment of products without undue costs; or (e) volume flexibility—the ability to adjust production volume up or down to meet fluctuations in demand. Volume flexibility is important when supporting delivery speed and when demand is fairly unstable.

Total quality management (TQM)

an umbrella term used to describe a quality management system that addresses all areas and all employees of an organization, emphasizes customer satisfaction, and uses continuous improvement tools and techniques. The approach builds on the Japanese quality improvement practices and also encompasses many of the teachings and techniques of the gurus previously described. As the diagram reflects, the essential elements of TQM are top management commitment, employee participation, customer focus, management by fact, and continuous improvement.

Infrastructural decisions

are shorter-term, more frequent, less capital-intensive, are easier to change or modify, and could impact the workforce (How many workers of each type? What skills?), the production planning and scheduling (What quantities should be produced? In what order?), the quality systems (What metrics? How to assess and check quality?), and the overall organization (How many levels in the organization? Who makes decisions in each area?).

Joseph M. Juran

author of Quality Control Handbook, was one of the first to incorporate the human aspect of quality management. He revolutionized the Japanese practice of quality management and helped that country become an industrial economic leader. His quality teachings include: (a) quality planning which includes activities such as identifying the customer, determining customer needs, translating customer needs into production language, and optimizing product features to meet customer needs; (b) quality improvement which means developing and optimizing a process that is able to produce a specified high-quality product; and (c) quality control which means proving that the process can operate under normal conditions without the need for inspection.

A structured process for comparing business practices is known as what?

Benchmarking

Competitive Priorities Versus Capabilities

Competitive priorities are the relative rankings of what the company would like to achieve. Competitive capabilities are the relative effectiveness that the company is able to actually achieve. Some companies start with a competitive priority because there is a niche in the market that is not being filled, such as the high level of product flexibility in the mobile device arena (Dell, Apple) while others start with an existing set of competitive priorities and then find products and markets that are a good fit for the priorities (Starbucks).

Which of the following is not a time estimate used in PERT?

Critical time

Of the following phrases, which is one of the most distinctive features of a service?

Customer involvement in the production process

The risks associated with projects can be divided into four broad categories:

Financial resource risk, such as cash overruns, budget shortfalls, and cash flow problems Human resource risk, such as changes in project personnel Supply risk, such as suppliers not providing the required materials on time Quality risk, or the possibility that the quality of individual tasks gets compromised when trying to keep up with the project schedule

A low-cost operations strategy can be achieved by all of the following except

Finding new finance options

More specific details are provided by breaking the high-level business strategies into

Functional strategies

Quality improvement efforts are often credited with reducing

Overall production costs

When one idea branches into two or more sub-ideas, each of which branches into further sub-ideas, the appropriate problem-solving technique is what?

Tree diagram

statistical process control

Walter A. Shewhart developed the control charts and principles of modern statistical process control that were used in American companies prior to and during World War II. W. Edward Deming and Joseph Juran taught the quality control concepts of continuous improvement and statistical process control to the Japanese after the war. The Japanese rigorously followed these teachings and the mark, "Made in Japan", became a mark of excellence within the next two decades.

process capability analysis

a method used to compare the statistical variations present within a system with any predefined existing range. Quality managers are often required to compare the output of their process with established criteria (e.g., on-time performance of an airplane, fuel efficiency of an automobile, delivery time for pizza). The process capability analysis is the ratio of the acceptable range of output with respect to the natural (or random) variations present with the production system. A capable process is one for which a pre-specified percentage of measurements fall inside the specification limits.

global supply chain

a network of organizations that work together to convert and move goods from the raw materials stage to the end customer. These organizations are linked together through physical, information, and financial flows. The end customer has a choice of numerous similar products from similar retailers provided through different channels. The goal of individual organizations is to manage their supply chain upstream (the part that supplies components/parts/inputs) and downstream (the part that distributes outputs) so that it provides a competitive edge that makes the company's products or service superior to that of another producer.

The cause and effect diagram is also called

an Ishikawa diagram

critical path method (CPM)

an algorithm for scheduling the activities within a project to achieve the fastest and most efficient execution of that project. The algorithm, originally developed by DuPont and Remington Rand Corporation in the 1950's, is an essential project management technique.

Resource leveling

an approach to reduce the amount of fluctuations in day-to-day resource requirements within an organization. This approach is especially useful when employees in an organization work on multiple projects simultaneously. Each project might have separate deadlines and a different set of resource requirements during different time periods. However, the organization generally has a set number of employees. Therefore, the resource leveling approach is used to adjust the project schedule so that almost the same amount of personnel time is required every day to work on different projects.

Philip Crosby

author of Quality Is Free, proposed that if management does not create a system in which zero defects are the objective, then employees are not to blame when things go wrong and defects occur. The benefit of this thinking is a dramatic decrease in wasted resources and time spent producing goods that consumers do not want. Crosby defined quality with four absolutes: (1) quality is defined as conformance to requirements, not as "goodness" or "elegance"; (2) prevention, not appraisal, is the system for causing quality; (3) the performance standard must be zero defects, not "that's close enough"; and (4) the measurement of quality is the price of nonconformance, not indices

Perceived Quality is

based upon the customer's judgement

Projects often fail due to all of the following except

changes in company leadership

precedence relationship analysis

conducted to identify the sequence of activities defined by the work breakdown structure. Furthermore, great care is taken to estimate the approximate completion time for each activity. The project schedule, cost, and resource requirements depend on the precedence relationships and time estimates for individual tasks.

number of challenges occur in managing a global supply chain across numerous organizations

conflicting objectives, mismatched communication systems, differences in organizational and national culture, competitive pressures, lack of trust, and government regulations. Despite these challenges, companies have seen a huge return on investments in broadening their focus to the entire global supply chain as IT can enhance information sharing and cooperation among numerous organizations. Inter-organizational communication provides the foundation for efficient or responsive global supply chain management.

W. Edwards Deming

considered the father of modern quality management and had the most significant impact on the practice of quality management around the world. He emphasized the philosophy of continuous improvement: that the quest for quality is a never-ending journey. His teaching can be summarized with: Plan, Do, Check, and Act.

Walter Shewhart

considered the grandfather of quality management. He preached the importance of adapting management processes to create profitable situations for both businesses and consumers. He promoted the utilization of his own creation: statistical process control (SPC) charts.

Organizations undertake quality and process improvement efforts to achieve multiple goals:

cost reduction, customer satisfaction enhancement, increased customer loyalty, and an increase in profitability and market share.

Genichi Taguchi

created and developed two concepts important to quality: (1) quality loss function which is a mathematical formula for determining the cost of poor quality, and (2) robust quality which is an experimental design-based statistical analysis approach for identifying the optimum product design configuration.

Most firms utilize three sources of ideas for quality improvement:

customer feedback, benchmarking, and employee feedback

Quality

defined as the ability of a product (a good or a service) to consistently meet or exceed customer expectations. In that definition, ability refers to the competence, either native or acquired, that enables one to do something well. Consistently refers to a reliable or steady pattern of performance. Expectations refers to a state of anticipation about a future outcome. High-quality products and services are necessary for the survival, growth, and competitiveness of an organization.

Customer feedback

essential for identifying or developing any quality improvement plan. Customer satisfaction measurements reflect how well the products and services that a firm supplies meet or exceed its customers' expectations, and also track how customers' perceptions of an organization's quality are changing over time as the organization initiates and continues with any improvement efforts. Customer choice analysis is an approach for quantifying the relative importance that customers assign to the various features and components of products and services. The results of a customer choice study are used to identify the potential areas for quality improvement. Customer panels are groups of individuals selected according to predetermined criteria who agree to provide periodic assessments of the quality of firms' products and services. Companies sometimes also recruit individuals and observe their use of a product or service in its natural surroundings to identify ideas for improvement. Very valuable customer feedback can be gained by carefully keeping track of customer complaints. In addition, information from blogs and other Internet forums can provide significant information.

scatter diagram

graph of pairs of numerical data, with one variable on each axis, and is used to look for a relationship between the variables and identify potential correlations between them. If the variables are correlated, the points will fall a line or a curve. The example shows that the delivery time and number of drivers are inversely related. When one variable increases, then the other variable goes down. The scatter diagram is an exploratory technique that looks for only the potential relationship between two variables; it cannot be used to infer that one variable causes the other. However, if a scatter diagram shows negligible correlation, then the analyst can be assured that neither of the two variables is affecting the other.

tree diagram

used to describe how one idea branches into two or more sub-ideas, each of which branches into further sub-ideas and so on. It helps organizations shift analysis from general ideas to specific ideas.

cause and effect diagram

used to illustrate the potential reasons for an outcome (usually a quality problem). It helps to structure and explore potential reasons for any undesirable outcome. This diagram is also called a fishbone or Ishikawa diagram.

R chart (or range chart)

used to track the range of variations present within each sample of data collected.