BUSN101 Ch.09 Production and Operations Management of Goods and Services

What four major developments have radically changed the production process in the United States?

1) computer-aided design and manufacturing 2) flexible manufacturing 3) lean manufacturing 4) mass customization

What are the seven key areas in which a company must show quality in order to qualify for the Baldrige Awards?

1) leadership 2) strategic planning 3) customer and market focus 4) information and analysis 5) human resources focus 6) process management 7) business results

What are the three basic requirements of production, according to Andrew Grove?

1) to build and deliver products in response to the demands of the customer at a scheduled delivery time 2) to provide an acceptable quality level 3) to provide everything at the lowest possible cost

A firm eishing to go global should considerpassing ISO ( ) standards in order to demonstrate a commitment to best practices in terms of impacting the environment to international business.

14000

What is the difference between Gantt Chart and a PERT Chart?

A PERT chart analyzes the tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the total project. It is a complex project that is done by computer. A Gantt chart is used to measure production progress using a bar chart that shows what projects are being worked on and how much has been completed at any given time.

ISO I4000

A collection of the best practices for managing an organization's impact on the environment.

How does a company become "lean"?

A company becomes lean by continuously increasing its capacity to produce high-quality goods while decreasing it's need for resources.

What do the new ISO 9004: 2000 standards require?

A company determine what customer needs are, including regulatory and legal requirements, and make communication arrangements to handle issues such as complaints. Other standards cover process control, product testing, storage, and delivery.

Materials requirement planning (MRP)

A computer-based operations management system that uses sales forecasts to make sure that needed parts and materials are available at the right time and place.

What is the difference between a continuous production process and an intermittent process, in manufacturing?

A continuous process is one in which long production runs turn out finished goods over time. Intermittent process the production run is short and the producer adjusts machines frequently to make different products.

Program evaluation and review technique (PERT)

A method for analyzing tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the total project.

Enterprise resource planning (ERP)

A newer version of materials requirement planning (MRP) that combines the computerized functions of all the divisions and subsidiaries of the firms such as finance, human resources, and order fulfillment-into a single integrated software program that uses a single database.

Continuous process

A production process in which long production runs turn out finished goods over time.

Intermittent process

A production process in which the production run is short and the machines are changed frequently to make different products.

Six Sigma quality

A quality measure that allows only 3.4 defects per million opportunities.

Operations management

A specialized area in management that converts or transforms resources (including human resources) into goods and services.

Describe the International Organization for Standardization.

A worldwide federation of national standards bodies from more than 140 countries that set global measures for the quality of individual products. ISO is a nongovernmental organization established in 1947 to promote the development exchange of standards to facilitate the international exchange of goods and services.

Identify the quality of life questions that firms consider in the facilities location process.

Are good schools nearby? Is the weather nice? Is the crime rate low? Does the local community welcome new business? Do the chief executive and other key managers want to live there?

Production process that puts components together:

Assembly

What's the difference between an assembly line layout and a modular layout?

Assembly line layouts workers do only a few tasks at a time, to a modular layout, in which teams of workers combine to produce more complex units of the final product.

What is the key reason why firms move their plants?

Availability of low-cost labor or the right kind of skilled labor remains a key reason many producers mover their plants.

Gantt chart

Bar graph showing production managers what projects are being worked on and what stage they are in at any given time.

Why is it "critical" to identify the critical path?

Because a delay anywhere along this path will cause the project or production run to be late.

Describe the concept of "interfirm process", as it relates to operations management.

Companies are creating new relationships with suppliers over Internet so that operations management is becoming and "interfirm" process is in which companies work closely together to design, produce, and ship products to customers. Many manufacturing companies are developing new Internet-focused strategies that will enable them and others to compete more effectively. The changes are having a dramatic effect on operations managers who have to adjust from a one-firm system to an interfirm environment.

What is CIM and what is the benefit?

Computer-integrated manufacturing, unites CAD and CAM. It's benefit cuts as much as 80 percent of the time needed to program machines to make parts.

Why do many manufactures today use intermittent process?

Computers, robots, and flexible manufacturing processes allow firms to turn out custom-made goods almost as fast as mass-produced goods were once produced.

PERT charts allow managers to identify the ( ) ( ) of a project by illustrating the sequence of tasks that takes the longest to complete.

Critical path

What has become the quality standard in the services industry?

Delighting customers by anticipating their needs has become the quality standard for luxury hotels, as it has for most other service businesses.

Flexible manufacturing

Designing machines to do multiple tasks so that they can produce a variety of products.

The process of selecting a geographica location for a company's operations is referred to as ( ) ( ) .

Facility location

What do brick and mortar stores have to do to compete with services offered over the internet?

For brick-and-mortar retailers to beat such competition, they have to choose good locations and offer outstanding service.

An example of ( ) utility is when a butcher produces a specific cut of beef.

Form

What are the requirements for ISO 14000 certification?

Having an environmental policy, having specific improvement targets, conducting audits of environmental programs, and maintaining top management review of the process.

What is the difference between ISO 9000 and ISO 14000?

ISO 9000 is the common name given to quality management and assurance standards. ISO 14000 is a collection of the best practices for managing, an organization's impact on the environment.

Critical path

In a PERT network, the sequence of tasks that takes the longest time to complete.

How is purchasing function different today from the past?

In the past, manufacturers dealt with many suppliers so that if one couldn't deliver, the firm could get materials from someone else. Today, however, manufacturers rely more heavily on just one or two suppliers, because the relationship between suppliers and manufactures is much closer than before.

Other key reasons that firms move their production facilities include:

Inexpensive resources are another major reason for moving production facilities. Often the most important resource is people, so companies tend to cluster where smart and talented people are. Time-to-market is another decision making factor. Access to highways, rail lines, waterways, and airports is thus critical.

Describe the current state of manufacturing in the U.S. compared to the beginning of this decade. is the U.S. still a manufacturing based economy?

Jobs in manufacturing have been declining in the last years, and unemployment could reach double digits in the manufacturing sector. However, from 2001 until the collapse in 2007, manufacturing output rose 4 percent per year, and the United States was still the world's leading manufacturer, accounting for 25 percent of all goods produced in the world each year. The U.S. is no longer manufacturing based. About 70 percent of G.D.P. and 85 percent of jobs now come from the service sector.

Name the two major criteria for earning the Baldrige Awards.

Major criteria for earning the award include whether customer wants and needs are being met and whether customer satisfaction ratings are better than those of competitors.

Why do businesses build factories in foreign countries? What do U.S. firms consider in choosing a site in a foreign country?

Many businesses are building factories in foreign countries to get closer to their international customers. When U.S. firms select foreign sites, they consider whether they are near airports, waterways, and highways so that raw and finished goods can move quickly and easily.

Describe: A process layout:

One in which similar equipment and functions are grouped together. The order in which the product visits a function depends on the design of the item. This allows for flexibility.

What is the focus of operations management in the service sector?

Operations management in the service industry is all about creating a good experience for those who use the service.

What us the difference between process manufacturing and assembly process?

Process manufacturing physically or chemically changes materials. The assembly process puts together components and makes a product.

How can flexible manufacturing reduce labor costs?

Products are made without any labor, this means machines are designed to do multiple tasks so they can produce a variety of products.

Benefits of enterprise resources planning (ERP):

Shorter time between orders and payment Less staff is required to process orders Any department can see the status of an order at any time

What are the results from using ERP?

Shorter time between orders and payment, less staff needed to do ordering and order processing, reduced inventories, and better customer service.

Mass customization

Tailoring products to meet the needs of individual customers.

What impact is technology having on facilities location?

Technology gives firms and employees increased flexibility to choose locations while staying in the competitive mainstream.

Process manufacturing

That part of the production process that physically or chemically changes materials.

Assembly process

That part of the production process that puts together components.

Production

The creation of finished goods and services using the factors of production: land, labor, capital, entrepreneurship, and knowledge.

Statistical process control (SPC)

The process of testing statistical samples of product components at each stage of the production process and plotting those results on a graph. Any variances from quality standards are recognized and can be corrected if beyond the set standards.

What is required in order for JIT (just-in-time) program to work effectively What problems could be encountered?

The process requires an accurate production schedule (using ERP) and excellent coordination with carefully selected suppliers, who are usually connected electronically so they know what will be needed and when. JIT runs into problems when suppliers are farther away. Weather may delay shipments.

Computer- integrated manufacturing (CIM)

The uniting of computer-aided design with computer-aided manufacturing.

Computer-aided design (CAD)

The use of computer in the design of products

Computer-aided manufacturing (CAM)

The use of computers in the manufacturing of products

Form utility

The value producers add to materials in the creation of finished goods and services.

How can a manager use a Gantt Chart?

With a Gantt chart, a manager can trace the production process minute by minute to determine which tasks are on time, and which are behind so that adjustments can be made to stay on schedule.

Telecommuting

Working from home via computer

Mass production focuses on producing:

a limited varitey of products

What are the problems solved by operations management planning?

a) Facility location b) Facility layout c) Materials requirement planning d) purchasing e) inventory control f) quality control

What problems resulted when quality control was conducted at the end of the production line?

a) The need to inspect work required extra people and resources. b) If an error was found, someone had to correct the mistake or scrap the product. This, of course, was costly. c) If the customer found the mistake, he or she might be dissatisfied and might even buy from another firm thereafter.

What are the characteristics of lean companies?

a) They take half the human effort b) They have half the defects in the finished product or service c) They require one-third the engineering effort d) They use half the floor space for the same output e) They carry 90 percent less inventory

Which is a step used in PERT?

analyzing and sequencing taks estimating time for tasks

Statistical quality control is the process used to...

continually monitor all phases of the production process and assure quality is being built into the product from the beginning.

Quality of life issues for employees should be considered by a company when choosing a proper location for its...

facility

Choosing facility location has become more flexible for both companies and employees throught the use of ( ) ( ) such as texting, teleconferencing, cell phones, and emails

information technology

Lean manufacturing uses:

less resources less time

One strategy in selection a facility location is to find a location that...

makes it easy for consumers to use the company's services and to communicate about their needs.

The basic premise of just-in-time inventory is:

minimum inventory us kept on hand

Time-to-market means:

moving products quickly to customers at the lowest cost

Six Sigma quality detects...

potential problems to prevent their occurrence.

An assembly line or product layout is used in production when:

producing large quantities of a few types of products

The ultimate goal of operations management is to...

provide high-quality goods and services instantaneously in response to customer demand.

JIT systems make sure the:

right materials are at the right place at the right time at the cheapest cost to meet both customer and production needs.

DEveloping countries are providing new markets for companies that can provide them with needed:

services and goods

Working from home using information technology such as computer and modem is called:

telecommuting

Characteristics of a lean company:

they use half the floor space they cary less inventory

Production adds ( ) , or utility, to materials or processes.

value

What does the production process add to materials?

value

What are 7 areas American manufacturers and service organizations do to maintain a competitive edge in the world marketplace?

1) Focusing more on customers 2) Maintaining closer relationships with suppliers and other companies to satisfy customer needs 3) Practicing continuous improvement 4) Focusing on quality 5) Saving on costs through site selection 6) Relying on the Internet to unite companies that work together 7) Adopting production techniques such as enterprise resource planning computer integrated manufacturing, and lean manufacturing

List the four steps in designing a PERT chart:

1) analyzing and sequencing tasks that need to be done 2) estimating the time needed to complete each task 3) drawing a PERT network illustrating the information from steps 1 and 2 4) identifying the critical path

Just-in-time (JIT) inventory control

A production process in which a minimum of inventory is kept on the premises and parts, supplies, and other needs are delivered just in time to go on the assembly line.

In reducing time to market, what do manufacturers need?

Access to highways, rail lines, waterways, and airports is thus critical.

What are some examples of how companies have used mass customization?

Companies in both the manufacturing and the service sector are using mass customization. GNC stores for example feature machines that allow shoppers to custom design several products. Other companies provide custom made books, custom greeting cards and custom fitted shoes and clothes. In the service sector there are customized insurance policies, fitness programs, and vacation packages.

Quality

Consistently producing what the customer wants while reducing errors before and after delivery to the customer.

How do manufacturing and services differ with respect to facilities layout?

In manufacturing facilities layout depends on the processes that are to be performed. The physical arrangement must be designed to most efficiently produce goods and services for customers. For services, the layout is designed to help the consumer find and buy what they need. Often this means helping consumers to find and buy things on the Internet. Some stores have added kiosks that enable customers to search for goods on the Internet and place the order from the store.

How is ERP different from MRP?

MRP is a computer-based operations management system that uses sales forecasts to make sure needed parts and materials are available at the right time and place. ERP is a newer version of MRP, combines the computerized functions of all the divisions and subsidiaries of the firm- such as finance, human resources, and order fulfillment- into a single integrated software program that uses a single database.

What is the difference between production management and operations management?

Production has historically meant manufacturing, and the term production management has described the management activities that helped firms create goods. Operations management is a term that is used in both manufacturing and service organization. Operations management is a specialized area in management that converts or transforms resources including human resources like technical skills and innovation, into goods and services. It includes inventory, management, quality control, production scheduling, follow-up services and more.

Why is ISO certification so important for U.S. firms?

The European Union (EU) demands that companies want to do business with the EU be certified by ISO standards. Some major U.S. companies are also demanding suppliers meet these standards.

What is the benefit, for companies, of locating close to their suppliers?

The benefit for companies to locate close to their suppliers is that it cuts cost of distribution and makes communication easier.

ISO 9000

The common name given to quality management and assurance standards.

What is made possible with the use of CAD/CAM?

The first thing computers did was help in the design of products through the CAD process. This system allows designers to work in 3D. The use of both CAD/CAM makes it possible to custom design products to meet the needs of small markets with very little increase in cost.

Purchasing

The function in a firm that searches for high-quality material resources, finds the best suppliers, and negotiates the best price for goods and services.

Facility layout

The physical arrangement of resources (including people) in the production process.

Facility location

The process of selecting a geographic location for a company's operations.

Statistical quality control (SQC)

The process some managers use to continually monitor all phases of the production process is being built into the product from the beginning.

Lean manufacturing

The production of goods using less of everything compared to mass production.

Production management

The term used to describe all the activities managers do to help their firms create goods.

List the major considerations in the site selection process.

a) labor costs b) availability of resources c) cost of living d) access to transportation that can reduce time to market e) proximity to suppliers and customers f) the need to train or retrain the local workforce g) proximity to customers h) crime rates i) quality of life for employees

Describe: A fixed position layout:

Allows workers to congregate around the product to be completed. Used when working on a major project, such as a bridge or an airplane.

Statistical process control reduces the need for...

a quality-control inspection at the end because mistakes are caught much earlier in the process.