Bmal 590 Operations/Production Management_Master Set
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.
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.
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
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
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.
When computing the expected time for a project, which time estimate is weighted the most?
Most likely time
A structured process for comparing business practices is known as what?
Benchmarking
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
Which of the following relationships between cost, time, and scope is not realistic?
Increased scope, decreased cost, and decreased time
What term describes a process for which a pre-specified percentage of measurements fall inside the specifications limits?
Capable
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
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 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
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
A low-cost operations strategy can be achieved by all of the following except
Finding new finance option
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
Quality improvement efforts are often credited with reducing
Overall production costs
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
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
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.
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
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.
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?).
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.
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.
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
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.
Organizations are linked in a supply chain by the exchange or flow of all of the following except
brand identity
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.
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.
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.
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.
On-time delivery describes a company's ability to
deliver a product when promised
Inspection
the process of comparing a sampled product with established guidelines
Sampling
the selection of randomly selected products from the production line for quality checks.
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.
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
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.
Organizations are linked in a supply chain by the exchange or flow of all of the following except
Brand identity
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
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
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
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
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 quality management 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.
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.
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.
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
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).
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.
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.
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.
