Chapter 9 Operations Management
A New Dimension in Production Technology
3-D printing is poised to change mass customization The printer downloads computer specification Prints and deposits layers of material to build the product The cost has recently dropped from pricing in the 1980s
From Simple Supply Chains to Complex Value Chains
A shift from cost perspective to value perspective require broader supply chains
Factors that Affect Location Decisions
Adequacy of Utilities Land Labor Market conditions Transportation factors Quality of life factors Legal and political environment
Automation: The Rise of the Machine
Automation-replacing human operations and control of machinery and equipment with some form of programmed control Robot-a programmable machine that is capable of manipulating materials in order to perform tasks
The Technology of Operation: Software Technologies
Computer-aided design (CAD) Computer-aided engineering (CAE) Computer-aided manufacturing (CAM) Computer-integrated manufacturing (CIM)
The Baldridge National Quality Program
Created by Congress in 1987 to encourage global competition Vigorously pursue improvements in quality and productivity Detailed reports of company strengths and weaknesses
Designing the Servicescape
Customers interact directly with service providers Each interaction is unique and challenging to managing A servicescape is the environment in which the customer and service provider interact -Ambience -Functionality -Signs
The Move to be Lean and Green
Eliminate waste Improvements in efficiency Reduce inventory through just-in-time Think green in supply chain
The International Organization for Standardization (ISO)
ISO 9000 Certification -International consensus on good quality management practices -Several standards for certification (ISO 9001) -Over 1 million organizations worldwide are ISO9001 certified ISO 1400 Certification -Focused on environment management -A family of standards for certification -ISO14001 is the broadest set of standards
From Local Competition to Global Competition
Offering lower labor costs and impressive technology, countries around the world can compete with American firms
Going Overseas
Offshoring can go in both directions Low-wage labor is a key reason firms focus overseas but, offshoring can produce some challenges -Complicate value chains -Coordination problems -Counterfeiting and intellectual property Complexity requires enterprise resource planning (ERP) software for supply chain management
Project Scheduling
Operations managers must manage and schedule projects Immediate predecessors are activities that must be completed before other activities begin A critical path consists of the sequence of activities that takes the longest to complete
What Do Operations Managers Do
Process selection and facility layout Facility location Inventory control Scheduling Creating value is important. The value chain refers to the network of relationships that channels the flow of inputs, information, and financial resources.
Reducing Investment in Inventory: Just-in-Time to the Rescue
Produce goods and services to meet actual demand. Minimize inventories at all stages of the supply chain through coordination
Focus on Quality
Quality improves effectiveness and efficiency Quality helps achieve competitive advantage Lower costs, increases value Poor quality costs
How Big is Big Enough?
Services cannot be produced in advance to meet demand There are fluctuations in demand -Capacity is the number of customers the service facility can accommodate per time period Too little capacity, customers must wait Too much capacity costs increase Happy hours and early-bird specials are strategies to manage demand
Quality Approach: Six Sigma
Single unifying measure: to reduce defects of operation to a level of no more than 3.4 million Organization-wide focus on quality Prevention rather than correction Rigorous and challenging goal Rely on employee training and export guidance Advanced techniques, high level of expertise
Why hold inventories...
Smoother production schedules Protection against stock outs and lost sales Reduced ordering costs
Lean Thinking in the Service Sector
Standardize Minimize costs High utilization Simplified processes
From Mass Production to Mass Customization
Technology today allows more firms to pursue mass customization strategies
Designing and Managing Value Chains
The value chain is the network of relationships that channels the flow of inputs to provide goods and services Includes the supply chain, value chain is broader concept Includes acquiring customers Vertical integration allows organizations to have more control over value chain Outsourcing is the opposite of vertical integration Offshoring means the firm moves processes to a foreign locations
Why not hold inventories...
Tied-up funds Additional holding costs Increased risk
__________________ software provides powerful drawing and drafting tools that enable users to create and edit blueprints and design drawings quickly and easily. These programs allow users to create three-dimensional drawings a. CAD b. CAM c. CAE d. Gantt
a. CAD
Which statement about total quality management (TQM) is correct? a. TQM recognizes that quality is defined by the preferences and perceptions of the customer b. TQM emphasizes the role of the individual rather than the role of teams c. TQM calls for the establishment of a quality department that is staffed by specialists who have complete authority and responsibility to initiate quality improvement programs d. TQM recognizes that perfect quality can never be attained, so it focuses on attainable short term results
a. TQM recognizes that quality is defined by the preferences and perceptions of the customer
Services are: a. consumed where they are produced b. shipped c. produced independently of the consumer d. stored in an inventory
a. consumed where they are produced
In operations management, _______________ refers to completing a task or producing a product at the lowest cost a. effectiveness b. efficiency c. competence d. processing
a. effectiveness
In operations management, ________________ means completing tasks or producing product that create the greatest value a. effectiveness b. efficiency c. satisficing d. expertise
a. effectiveness
Production of a standardized product would most likely be organized in a ________________, while production of a customized product would be more likely to use a _______________. a. flow shop process; job shop process b. job shop process, flow shop process c. production process, flow shop process d. job shop process, production process
a. flow shop process; job shop process
The bars on a Gantt chart indicate: a. progress toward completing an activity b. cost as a percentage of budget c. quality relative to competitors d. level of demand
a. progress toward completing an activity
________ is/are reprogrammable machines that can manipulate materials, tools, and parts to perform a variety of tasks a. robots b. automation c. drones d. diverters
a. roboths
From an operations management perspective, a manufacturing firm's supply chain includes: a. the flow of materials and finished goods through all firms involved in production and distribution, plus the corresponding flows of services, financial resources, and information b. firms connected with the flow of output throughout the channel to the final customer, particularly those other companies involved with financial transactions c. only vendors that supply goods and services in the production of a firm's product offerings d. all and any forms of software or manufacturing technology it uses in its operation
a. the flow of materials and finished goods through all firms involved in production and distribution, plus the corresponding flows of services, financial resources, and information
______________ software takes the electronic design for a product and creates the programmed instructions that robots must follow to produce a product as efficiently as possible a. CAD b. CAM c. CAE d. Gantt
b. CAM
______________ is/are the replacement of human operation and control of machinery with some form of programmed control a. robotics b. automation c. computer-integrated manufacturing d. computer engines
b. automation
Brian is an engineer working on a large industrial project for Raven Air, Inc. He is well-versed in using __________- to test, analyze, and optimize his project design to correct flaws before production starts a. computer-aided design b. computer-aided engineering c. computer-aided manufacturing d. computer-aided construction
b. computer-aided engineerings
___________ is an organization system that integrates the flow of information among all aspects of an organization's operations a. enterprise development b. enterprise resource planning c. enterprise integration planning d. enterprise aided design
b. enterprise resource planning
A(n) ________________ is a set of activities or steps that combine inputs to create a good or service a. network b. process c. ERP d. forecast
b. process
A _____________ is a diagram providing the detailed picture of the flows of all parts, materials, and information throughout the entire production process for the purpose of streamlining the process and avoiding waste a. Gantt chart b. value stream map c. PERT diagram d. critical path network
b. value stream map
Anne Miles owns a small business that produces gourmet candles that are popular with local households during the holiday party season from Halloween to New Years. Although it it only mid-September, Anne's storage pantries are beginning to fill with boxes of her special candies. Given the nature of her business, the most likely explanation for Anne's large inventory of sweets is that she: a. believes that there could might be an unexpected surge in demand for her candy and she doesn't want to lose sales by having too little available to sale b. made a poor sales forecast c. builds inventory during slow periods so she will have plenty of candy to sell d. spent a lot of money on her storage facilities and wants to make sure they are fully utilized
c. builds inventory during slow periods so she will have plenty of candy to sell
When a company utilizes______, it arranges for other organizations in the supply chain to perform functions that were previously performed internally a. offshoring b. insourcing c. outsourcing d. contract manufacturing
c. outsourcing
One goal of TQM is to focus on _____ rather than _________ of problems a. defections; selection b. correction; prevention c. prevention; correction d. selection; development
c. prevention; correction
Deciding how much inventory to keep on hand can be a challenge. Jackie, a local toy store manager has ordered a large number of skateboards for the holiday season. Most likely, her reason for this tactic is: a. she wants to tie up money in inventory b. she wants to build more storage space c. she is preparing for a large sale and does not want to run out d. she wants to create jobs for skateboard manufacturers
c. she is preparing for a large sale and does not want to run out
With respect to the successful completion of a project, a critical path is: a. the series of tasks that is expected to take the shortest time to complete b. the composite of tasks in a project that have predecessors. The predecessors are critical to the accomplishment of subsequent tasks c. the sequence of activities that is expected to take the longest time to complete d. a path that includes two or more activities that must be performed simultaneously, and there poses complex coordination problems
c. the sequence of activities that is expected to take the longest time to complete
Effectiveness
completing tasks and producing products that create the greatest value
Total Quality Management
customer focus build quality throughout the organization empowerment of employees focus on prevention of errors long-run commitment to continuous improvement
The ___________ was established by Congress to encourage American firms to focus on quality impovement in order to improve their global competitiveness a. US National Quality Improvement Program b. Forbes Quality Program Achievement c. Reagan-Carter TQM Award d. Baldrige National Quality Program
d. Baldrige National Quality Program
___________________ is the set strategies and practices to eliminate waste a. lean management b. lean investment c. lean production d. lean manufacturing
d. lean manufacturing
___________________ is concerned with all the activities involved in creating goods and services and the distribution of those goods and services to customers a. marketing science b. information management c. management science d. operations management
d. operations management
As you walk into Mesa Cycles, a local bike shop, you feel at ease due to lighting, noise level, and the background music. You are impressed with the well-designed store and how easy it is to move around while you shop. Mesa Cycles has a well-designed: a. service process b. product layout c. floor plan d. servicescape
d. servicescape
Six Sigma has a single unifying measure to reduce defects: a. to no more than 1 per 1,000,000 opportunities b. to a level not to exceed per 2,500 opportunities c. to a minimum d. to a level of no more than 3.4 million opportunities
d. to a level of no more than 3.4 million opportunities
Cellular layout
groups resources in cells
Services
intangible products, such as computer repair, hair cut, lawn service, and interior design
Operations Management
managing all of the activities involved in creating value by producing goods and services and distributing them to customers
Efficiency
producing output or achieving a goal at the lowest cost
Fixed position
production at a specific site
Process layout
some customization; batches
Product layout
specialized and efficient
Goods
tangible products that you can see and touch durable and nondurable
