OPS Management - Chapter 1
The manager of a landscaping company is trying to determine the best crew size to use for laying sod for new construction homes. She has tried various crew sizes, with the results shown below. Based on productivity, which crew size averages the greatest productivity in square yards installed per week?
A) 2-person crew
Competitive priorities define the dimensions on which companies should excel in producing their products or services. Which one of the following statements is TRUE?
A) A firm that competes on the dimension of volume flexibility is more likely to manufacture products that experience a seasonal demand variation.
The foundations of modern manufacturing and technological breakthroughs were inspired by the creation of the mechanical computer by
A) Charles Babbage
Use the information provided in Table 1.1. An example of an external supplier is:
A) The lumber company
The process that facilitates the placement of orders and identifies, attracts, and builds relationships with external customers is called the
A) customer relationship process.
For students not wanting a traditional major in marketing or accounting, for example, the college decided to create a general business major, which allowed any combination of the easiest business courses to comprise the program. The competitive priority achieved in this example is:
A) customization.
Quickly filling a customer's order is evidence of:
A) delivery speed.
In response to social and political moves to discourage cigarette smoking, major cigarette manufacturers have had to diversify into other products. Identifying the pressures against smoking is an example of:
A) environmental scanning.
Which of the following is an example of a core competency?
A) facilities
Use the information provided in Table 1.2. Based on your productivity calculations, what decision should you make?
A) implement the new process
The Gap, Inc. has targeted teenagers and young adults needing casual clothes and, for its GapKids stores, the parents or guardians of infants through 12-year-olds. This is an example of:
A) market segmentation.
Competitive priorities:
A) may change over time.
The first three cars I bought all fell apart around 50,000 miles. It was called planned obsolescence and no one seemed to care until companies entered the market that promised 70,000, then 80,000, and finally 100,000 warranties. What sets a great car apart from a good one now is not the quality, which is assumed, but performance, safety and fuel economy. A car that can achieve all three is highly sought after. In the automotive market, performance, safety and fuel economy are sterling examples of:
A) order winners.
Manufacturing processes usually have:
A) physical, durable output.
A company's ability to support varying rates of production is best described as:
A) volume flexibility.
Explain what an operations strategy is and the importance of competitive priorities. Give an example from an organization (public or private, manufacturing or service).
Answer: An operations strategy is the means by which operations implements the firm's corporate strategy. Competitive priorities are the key capabilities that operations must develop to compete successfully in a market segment. Possible competitive priorities include low-cost operation, high-performance design, consistent quality, delivery speed, on-time delivery, development speed, customization, and volume flexibility. Examples will vary.
________ is how industrial buyers often refer to delivery speed.
Answer: Lead time
________ is the elapsed time between receiving a customer's order and filling it.
Answer: Lead time
________ measures the frequency with which delivery-time promises are met.
Answer: On-time delivery
________ provide vital resources and inputs to core processes.
Answer: Support processes
What are four core processes in a firm and how are they related?
Answer: The customer relationship process identifies, attracts, and builds relationships with external customers and facilitates the placement of orders. The order fulfillment process includes activities required to produce and deliver the service or product to the external customer. The new service/product development process designs and develops new services or products, which may be to customer specifications. The supplier relationship process selects the suppliers of services, materials, and information and facilitates the flow of these items into the firm. All of these processes exist to provide a service or product to the customer.
What are the three key functions of a firm and what is each responsible for?
Answer: The three main functions of a firm are operations, finance, and marketing. The operations function transforms material and service inputs into product and service outputs. The finance function generates resources, capital and funds from investors and sales of the firm's goods and services in the marketplace. The marketing function is responsible for producing sales revenue of the outputs.
________ is the ability to accelerate or decelerate the rate of production quickly to handle large fluctuations in demand.
Answer: Volume flexibility
A firm gains competitive advantage by outperforming competitors in terms of competitive priorities, which fall into four major groups: ________, ________, ________, and ________.
Answer: cost, quality, time, flexibility
External customers may be end users or intermediaries buying the firm's finished products, but ________ may be other businesses who provide the resources and materials for the firm's needs.
Answer: external suppliers
One form of strategic alliance is the ________, in which two firms agree to cooperate to produce a product or service together.
Answer: joint alliance
The three mainline functions of any business are ________, ________, and ________.
Answer: operations, finance, marketing
The activities required to create the service and put the product in the hands of the customer comprise the ________.
Answer: order fulfillment process
Every sub-contractor knew that their quality had to be excellent to be considered for the project; it was their ability to deliver on time that would secure the lucrative contract. Quality was recognized as being an ________, but on-time delivery was the ________
Answer: order qualifier, order winner
Productivity is defined as ________ divided by ________.
Answer: output, input
Operations management refers to the systematic design, direction, and control of ________ that transform ________ into products and services.
Answer: processes, inputs
The cumulative work of the processes of a firm is a(n) ________.
Answer: supply chain
A strategy that focuses on the competitive priorities of delivery speed and development speed is ________.
Answer: time-based competition
Identify a large employer in your hometown. Describe this organization's inputs, processes, and outputs.
Answers will vary based on the employer selected.
A process produces 5000 units of output that yield $6 per unit. Resources contributed to this output are 200 hours of labor at $15 per hour, materials at $700 and overhead at $300. What is the labor productivity?
B) 25 units per hour
Which of the following statements is more of a general characteristic of a manufacturing organization, as compared to a service organization?
B) Operations are more capital intensive.
Use the information provided in Table 1.1. An example of an internal supplier is:
B) The Receiving Department at ABC
All of the following are core competencies except:
B) competitive priorities.
A set of activities that delivers value to external customers is a:
B) core process.
It takes the Blacksburg shipyard twenty six weeks with 500 workers to build a small tanker. Material costs are $32 million and overhead costs are $2 million. Workers cost $40 per hour including benefits and work 40 hours per week. The ship sells for $75 million. What is the multifactor productivity ratio?
B) greater than 1.0 but less than or equal to 2.0
The process that designs and develops new products and services is called the:
B) new service development process.
Admission to the prestigious school had become so competitive that a high GPA is no longer enough to separate one fresh-faced high school student from another. Today's outstanding candidate must also demonstrate their involvement in a myriad of extracurricular activities in order to be admitted. It seems that good grades are now:
B) order qualifiers.
Regardless of how departments like Accounting, Engineering, Finance, and Marketing function in an organization, they are all linked together through
B) processes.
The framework for carrying out all of an organization's functions is:
B) the corporate strategy.
Using an airline example for competitive priorities, the process capability of handling service needs of all market segments and promotional programs would be best described by:
B) variety.
In an assembly operation at a furniture factory, six employees assembled an average of 450 custom cabinet drawers per 5-day week. What is the labor productivity of this operation?
C) 15 chairs per worker per day
The Burdell Company makes tee shirts on an assembly line that works 5 days per week and uses 5 workers. Over the past 4 weeks, the line has produced 16,000 shirts. The line's productivity for the 4-week period is:
C) 160 shirts per worker per day.
Which of the following is an example of a nested process?
C) A candidate's intent to graduate is checked for financial holds by the Bursar and for degree requirements by Advising before the diploma mill prints their sheepskin.
Use the information provided in Table 1.1. An example of an internal customer is: Lumber company to ABC Toy Manufacturing company to Toy Store at the mall.
C) The Shipping Department at ABC
Which one of the following correctly describes a production system?
C) furniture manufacturer: wood→sanding→chair
Use the information provided in Table 1.2. What is the multifactor productivity of the current process? CURRENT PROCESS NEW PROCESS OUTPUT (UNITS / HOUR) 200 300 NUMBER OF WORKERS 10 14 MATERIAL COST / HOUR $120 $150 Workers are paid at a rate of $10 per hour, and overhead is charged at 140% (or 1.4 times) labor costs. Finished switches sell for $20 / unit.
C) greater than 10.0 but less than or equal to 12.0
The process that includes the activities required to produce and deliver the service or product to the customer is called the:
C) order fulfillment process.
You are interested in buying a laptop computer. Your list of considerations include the computer's speed in processing data, its weight, screen size, and price. You consider a number of different models, and narrow your list based on speed and monitor screen size, then finally select a model to buy based on its weight and price. In this decision, weight and price are examples of:
C) order winners.
Budgeting, recruiting, and scheduling are examples of these types of processes.
C) support process
A manufacturing process requires 12 minutes of labor to make 10 units of production. Which of the following actions will increase productivity? 1. Increase labor per 10 units of production 2. Decrease labor per 10 units of production 3. Increase number of units per 10 minutes of labor 4. Decrease number of units per 12 minutes of labor
D) 2. and 3. only
The details of weekly output and input for a fabrication process are as follows: output is 400 units, with a standard selling price of $100 per unit. For the week, total labor costs are: 10 workers at 40 hours for the week, paid $15 per hour. Total material costs for the 400 units are $5,000. Weekly overhead is charged at the rate of 1.5 times the labor costs. What is the multifactor productivity for the week?
D) 2.00
Which one of the following statements is more of a general characteristic of a service organization, as compared to a manufacturing organization?
D) The facilities tend to be smaller.
Use the information provided in Table 1.1. An example of an external customer is:
D) The toy store at the mall
A company's ability to quickly introduce a new service or product would be best described as:
D) development speed.
A company realizes that recent layoffs at its primary customers reflect potential falling demands for its customers' products, and hence for its own products. The company has engaged in:
D) environmental scanning.
Use the information provided in Table 1.2. What is the multifactor productivity of the new process?
D) greater than 12.0
Service processes usually have:
D) low levels of capital intensity.
A business focusing on increasing the efficiency of its operations is more directly addressing:
D) low-cost.
You are interested in buying a laptop computer. Your list of considerations include the computer's speed in processing data, its weight, screen size and price. You consider a number of different models, and narrow your list based on its speed and monitor screen size, then finally select a model to buy based on its weight and price. In this decision, speed and monitor screen size are examples of:
D) order qualifiers.
Which of the following would be considered an advantage of global competition?
D) strong global competition and increased worldwide demand
Core competencies are:
D) the unique resources and strengths that management considers when formulating strategy.
A firm once made purchasing decisions based on which supplier had the lowest cost. But once cash flow was healthy, purchasing decisions were made based on which company could provide the goods and services the fastest. In this case, delivery speed is clearly the order qualifier.
False
At the level of the firm, service providers offer just services and manufacturers offer just products.
False
Competitive priorities are the means by which operations implements the firm's corporate strategies.
False
Consistent quality is not important to today's consumers.
False
Contact with the customer is usually higher in a manufacturing process than in a service process.
False
Environmental scanning refers to the unique resources and strengths that an organization's management considers when formulating a strategy.
False
In a service process, output can be inventoried.
False
Productivity is measured as input divided by output.
False
Quality is more easily measured in a service process than in a manufacturing process.
False
The increased global presence of many firms has lessened the burden to behave ethically.
False
The supplier relationship process selects the suppliers of services, materials and information, while the order fulfillment process facilitates the timely and efficient flow of these items into the firm.
False
List and briefly describe five differences between services and manufacturing. Provide examples to illustrate your arguments.
Manufactured Goods Physical, durable products Output can be produced, stored, and transported Low customer contact Have days to deliver Regional, national, or international markets Large facilities Capital intensive Quality easily measured Services Intangible, perishable products Can't be produced and stored Customers can be part of the input and part of the process Must be offered within minutes Local markets Small facilities Labor intensive Quality not easily measured
Operations management is part of a production system that can be described in the following manner:
Organization: inputs→processes→outputs.
A(n) ________ is any activity or group of activities that takes one or more inputs, transforms and adds value to them, and provides one or more outputs for its customers.
Process
A core process is a set of activities that delivers value to external customers.
True
A firm's core competencies should determine its core processes.
True
A nested process refers to a process within a process.
True
A process involves transforming inputs into outputs.
True
A supply chain is the cumulative work of a firm's processes.
True
As a functional area of a business, Operations translates materials and services into outputs. True or false?
True
At the process level, it is much easier to distinguish whether the process is providing a service or manufacturing a product.
True
Every process has a customer.
True
Flexibility is a possible competitive priority.
True
Inputs to a process can include human resources.
True
Labor productivity is an index of the output per person or hours worked.
True
Manufacturing processes tend to be capital intensive, while service processes tend to be more labor intensive.
True
Manufacturing processes usually have long response times compared to service processes.
True
Most products today are composites of global materials and services from throughout the world.
True
Operations management refers to the direction and control of inputs that transform processes into products and services. True or false?
True
Operations managers are involved at both the strategic and tactical levels of corporate strategy.
True
Strategic plans are developed farther into the future than tactical plans.
True
Support functions in an organization include Accounting, Human Resources and Engineering.
True
The three main line functions of any business include Operations, Finance and Marketing
True
Volume flexibility involves accelerating or decelerating the rate of production of services or products to handle large fluctuations in demand.
True
