Chapter 2: Ensuring High Quality and Productivity

ISO 9000

A series of standards adopted by the International Organization for Standardization to spell out acceptable criteria for quality systems

Average Rate of Return Formula

ARR = Average annual earnings or saving / Amount Invested (cost)

Overhead

Expenses not related to producing goods and services; examples are rent, utilities, and staff support

Total Quality Management

Focusing the whole organization on continuously improving every business so it satisfies customers

(a) Employers tend to pay higher wages and salaries to productive workers.

Identify a consequence of improved productivity of organizations in a country. (a) Employers tend to pay higher wages and salaries to productive workers. (b) Goods and services will be available with maximum taxes. (c) Goods and services will be prices at their all-time high. (d) Employers tends to withhold wages and salaries to all workers.

(d) To directly involve employees in planning how to improve quality

Identify a goal of an employee involvement team. (a) To assume that the quality of a sample describes the quality of the entire lot of products (b) To select outcomes in a way that each outcome has an equal chance of being selected (c) To inspect only a specified sample of products (d) To directly involve employees in planning how to improve quality

(d) Wasted time and materials

Identify a result of the poor quality of production in an organization. (a) Low process control (b) Wider client base (c) Lower costs for the organization (d) Wasted time and materials

(c) Product (d) Process

Identify the areas that a supervisor needs to focus on when reinforcing high-quality performance in an organization. Select all that apply. (a) Return on investment (b) Cost (c) Product (d) Process

(a) Leadership (c) strategic planning (h) Customer and market focus (f) Measurement, analysis, and knowledge management (i) Human resource focus (e) Process management (d) Results

In the context of quality standards, identify the categories that are evaluated for the Baldridge Performance Excellence Program. Select all that apply. (a) Leadership (b) Product management (c) strategic planning (d) Results (e) Process management (f) Measurement, analysis, and knowledge management (g) Waste elimination (h) Customer and market focus (i) Human resource focus

Statistical Quality Control

Looking for defects in parts or finished products selected through a sampling technique

(a) Reliability - (y) The probability that a product will function smoothly and not break down during a specified period (b) Conformance - (w) The degree to which a product's design and operating features meet established standards (c) Durability - (z) The length of the life of a product (d) Perceived Quality - (x) A customer's impression of the quality of a product

Match the dimensions of goods or services (a-d) to their descriptions (w-z). (a) Reliability (b) Conformance (c) Durability (d) Perceived Quality (w) The degree to which a product's design and operating features meet established standards (x) A customer's impression of the quality of a product (y) The probability that a product will function smoothly and not break down during a specified period (z) The length of the life of a product

Payback Period Formula

Payback Period = Cost of new equipment / savings per year

Process Control

Quality control that emphasizes how to do things in a way that leads to better quality

Product Quality Control

Quality control that focuses on ways to improve the product itself

Payback Period

The length of time it will take for the benefits generated by an investment (such as cost savings from machinery) to offset the cost of the investment

(b) random sample

The most accurate way to apply statistical quality control is to use a _____. (a) specific sample (b) random sample (c) stratified sample (d) systematic sample

(d) meet or exceed customer expectations

The objective of Total Quality Management (TQM) is to _____. (a) improve the flow of work through a production process by correcting any interruptions to the flow (b) use statistics to analyze the reasons for defects in products (c) identify and eliminate waste through the use of a variety of assessment, scheduling, and production control tools (d) meet or exceed customer expectations

Turnover

The rate at which employees leave an organization

Overhead

The term _____ refers to expenses not related directly to producing goods and services.

Value

The worth a customer places on a total package of goods and services relative to its cost

(b) 18 applications per hour

Tim processes 144 load applications in an eight-hour day at Bank One. Calculate his productivity. (a) 576 applications per hour (b) 18 applications per hour (c) 1152 applications per hour (d) 36 applications per hour

Idle Time (Downtime)

Time during which employees or machines are not producing goods or services

False

True or False: All quality control strategies employed by supervisors to lower costs are mutually exclusive.

False

True or False: An even flow of work in a department can be costly.

Six Stigma

Using a formal process in which teams study processes and correct problems to limit defects to 3.4 million operations

zero-defects approach

the quality-control technique where an organization works toward making its goods and services free of problems is known as the ______.

(c) They are technically competent product or line personnel in an organization implementing Six Stigma.

Identify a true statement about Black Belts in an organization. (a) The term refers to the way a product looks, feels, tastes, and smells, such as the styling and smell of a new car. (b) The term refers to the degree to which a product's design and operating characteristics meet established standards. (c) They are technically competent product or line personnel in an organization implementing Six Stigma. (d) They are specialized personnel assigned to a process in statistical process control (SPC).

(b) Total Quality Management (TQM)

Jacob works at a manufacturing plant that produces spare parts for the automobile industry. He records the accuracy of the thread patterns on screws and bolts and plots this information on a control chart. This helps him monitor the production quality on an ongoing basis. In this scenario, Jacob is using ______. (a) the zero-defects approach (b) Total Quality Management (TQM) (c) statistical process control (SPC) (d) the Six Stigma method of quality control

(b) reengineering

Reviewing and revamping the way things are done is the basic principle of ______. (a) perceived quality management (b) reengineering (c) benchmarking (d) quality assurance

Employee Involvement Teams

Setting up teams of employees to identify and solve quality-related problems

Detour Behavior

Tactics for postponing or avoiding work

Employee Involvement Teams

Teams pf employees who plan ways to improve quality in their areas of organization

(d) use groups, such as employee involvement teams, to identify and solve problems

A basic strategy for implementing Total Quality Management (TQM) is to _____. (a) identify and eliminate waste through the use of a variety of assessment and production control tools (b) improve the flow of work through a production process by correcting any interruptions to the flow (c) use statistics to analyze the reasons for defects in products (d) use groups, such as employee involvement teams, to identify and solve problems

Average Rate of Return (ARR)

A percentage that represents the average annual earnings for each dollar of a given investment

Lean Process Improvement

A practice that considers any cost other than a cost that adds value for the customer to be wasteful and, hence, something to be eliminated

Six Stigma

A process-oriented quality-control method designed to improve the product or service output to 99.97 percent perfect

Zero-Defects Approach

A quality-control technique based on the view that everyone in the organization should work toward the goal of delivering such high quality that all aspects of the organization's goods and services are free of problems

Statistical Process Control (SPC)

A quality-control technique using statistics to monitor production quality on an ongoing basis and making correction whenever the results show the process is out of control

(a) Benchmarking

A salon chain unit managed by Andrew did good business and had high retail sales during the financial year. The salon chain's chief executive officer (CEO) decided to identify Andrew's salon as the "first salon" for comparisons, not only in terms of gross sales but also for efficiency in all areas of operations. Identify the concept used in this scenario. (a) Benchmarking (b) Total quality management (TQM) (c) Six Sigma (d) Statistical process control (SPC)

(c) budget reports

A supervisor can see which categories of expenses are largest and identify where his or her department is spending more than allocated to it by regularly reviewing ______. (a) mission statements (b) vision statements (c) budget reports (d) employee policies

Zero-Defects Approach

All employees delivering such high quality that goods and services are free of problems

Baldridge Performance Excellence Program

An annual award administered by the U.S. Department of Commerce and given to the company that shows the highest quality performance in seven categories: 1. Leadership 2. Strategic planning 3. Customer and market focus 4. Measurement, analysis, and knowledge management 5. Human resource focus 6. Process management 7. Results

Product quality control

An organization that focuses on ways to improve a product itself uses _____.

Quality Control

An organization's efforts to prevent or correct defects in its goods or services or to improve them in some way

(c) process control

An organization's focus to consider how to do things in a way that leads to better quality is known as _____. (a) job design (b) ISO 2000 (c) process control (d) product quality assessment

Total Quality Management (TQM)

An organization-wide focus on satisfying customers by continuously improving every business process for delivering goods or services

(d) An employee involvement team is most successful when all group members are eager to participate.

Identify a true statement about an employee involvement team in an organization. (a) A typical employee involvement team consists of up to 100 employees. (b) In a typical employee involvement team, a supervisor should not serve as the team leader. (c) Membership to an employee involvement team is mandatory for all employees. (d) An employee involvement team is most successful when all group members are eager to participate.

(d) When work levels are low in a department, the result is idle time.

Identify a true statement about departmental work flow in a company. (a) Supervisors should use temporary employees during peak periods to maintain an even work flow. (b) People are more efficient during overtime hours than they are during a normal workday. (c) When a department faces a surge in demand for its work, employees are asked to take more leaves. (d) When work levels are low in a department, the result is idle time.

(d) Employees feel unhappy when output is increased while quality is sacrificed.

Identify a true statement about increasing outputs in a production process. (a) Increasing output without increasing cost means employees can work less for more pay. (b) The logical way to increase productivity is to increase output by boosting costs. (c) The greater the output is at a given cost, the lesser is the productivity. (d) Employees feel unhappy when output is increased while quality is sacrificed.

(c) It refers to continually identifying and eliminating waste through the use of a variety assessment, scheduling, and production control tools.

Identify a true statement about lean manufacturing. (a) It is a process-oriented quality-control method designed to improve a product or service output to 99.9997 percent perfect. (b) It looks for defects in parts or finished products selected through a sampling technique. (c) It refers to continually identifying and eliminating waste through the use of a variety assessment, scheduling, and production control tools. (d) It refers to the delivery of goods and services that are of very high quality and are free of problems.

(d) It refers to the amount of acceptable work employees do for each dollar they earn.

Identify a true statement about productivity. (a) It refers to an organization's efforts to prevent or correct defects in its goods or services. (b) It refers to the practice of identifying the top performer of a process, then learning and carrying out the top performer's practices. (c) It refers to a system of inventory control that does away with large stocks. (d) It refers to the amount of acceptable work employees do for each dollar they earn.

(a) It is more efficient to design and build quality into a product than to try to improve the product later.

Identify a true statement about the guidelines for quality control. (a) It is more efficient to design and build quality into a product than to try to improve the product later. (b) Employee who are confident and satisfied are more likely to allow defects in goods or services. (c) It is almost always more expensive to prevent problems from occurring than it is to solve them after they occur. (d) Quality-control programs should be limited to the detection of defects.

(a) The degree to which employees feel supported by their organization directly influences their decision to stay or quit that organization.

Identify a true statement about turnover. (a) The degree to which employees feel supported by their organization directly influences their decision to stay or quit that organization. (b) High turnover in inexpensive. (c) When an employee is feeling supported by his or her organization, that employee is more likely to look for a new employment opportunity. (d) Absenteeism is unrelated to turnover.

(a) They should show that they are interested in their department's productivity through their actions and words.

Identify a way in which supervisors can overcome the productivity constraint of management limitations. (a) They should show that they are interested in their department's productivity through their actions and words. (b) They should avoid instances of employee participation in planning and decision making. (c) They should increase employees' access to the Internet and social networking Web sites. (d) They should shift their focus from achieving quality to earning high quarterly profits.

(a) They should be measurable, clear, and specific. (c) They should be written. (d) They should be challenging but achievable.

Identify the characteristics of quality standards. Select all that apply. (a) They should be measurable, clear, and specific. (b) They should be incalculable and unbelievable. (c) They should be written. (d) They should be challenging but achievable. (e) They should be communicated orally.

(a) People will have access to more and better goods and services. (b) Goods and services will be available at low prices.

Identify the consequences of improved productivity of organizations in a country. Select all that apply. (a) People will have access to more and better goods and services. (b) Goods and services will be available at low prices. (c) Goods and services will be prices at their all-time high. (d) Goods and prices will be available with maximum taxes.

(b) Productivity = Outputs/Inputs

Identify the formula for measuring productivity. (a) Productivity = Inputs/Outputs (b) Productivity = Outputs/Inputs (c) Productivity = Inputs x Outputs (d) Productivity = Outputs - Inputs

Benchmarking

Identifying the top performer of a process, then learning and carrying out the top performer's practices

(c) 4 years

In a legal firm, a new printer will save the firm $2,000 per year and costs $8,000. Calculate the payback period. (a) 5 years (b) 3 years (c) 4 years (d) 2 years

(a) 25 percent

In a repair shop, a new printer would save the shop $1,000 per year and cost the shop $4,000. Calculate its average rate of return (ARR).

(a) The acceleration of an automobile

In the context of the dimensions of quality of services or goods, identify an example of performance. (a) The acceleration of an automobile (b) A manufacturer's warranty for a cell phone (c) Safety standards for an infant car seat (d) Power windows on a pickup truck

(a) Downtime - (y) When an employee is waiting for a machine to be repaired (b) Detour Behavior - (z) When an employee takes a coffee break.

In the context of the types of waste in an organization, match the terms (a or b) to their examples (y or z). (a) Downtime (b) Detour Behavior (y) When an employee is waiting for a machine to be repaired (z) When an employee takes a coffee break.

(a) Payback Period - (y) The length of time it will take for the benefits generate by an investment to offset the cost of the investment (b) Average Rate of Return (ARR) - (z) A percentage that represents the average annual earnings for each dollar of a given investment

Match the calculations used by companies to determine if an investment is practical (a or b) with their definitions (y or z). (a) Payback Period (b) Average Rate of Return (ARR) (y) The length of time it will take for the benefits generate by an investment to offset the cost of the investment (z) A percentage that represents the average annual earnings for each dollar of a given investment

(a) Six Sigma - (z) using a formal process in which teams study purposes and correct problems to limit defects to 3.4 per million operations (b) Lean Process Improvement - (x) A practice that considers any costs other than a cots that adds value for a customer to be wasteful and, hence, something to be eliminated (c) Total Quality Management - (y) Focusing the whole organization on continuously improving every business process so it satisfies customers

Match the common quality improvement methods used in an organization (a-c) to their descriptions (x-z). (a) Six Sigma (b) Lean Process Improvement (c) Total Quality Management (x) A practice that considers any costs other than a cots that adds value for a customer to be wasteful and, hence, something to be eliminated (y) Focusing the whole organization on continuously improving every business process so it satisfies customers (z) using a formal process in which teams study purposes and correct problems to limit defects to 3.4 per million operations

(a) Outsourcing - (z) Contracting with specialists to perform business functions. (b) Offshoring - (y) Arranging for lower-cost workers in other countries to handle jobs that have to be performed in the United States

Match the terms (a or b) with their definitions (y or z). (a) Outsourcing (b) Offshoring (y) Arranging for lower-cost workers in other countries to handle jobs that have to be performed in the United States (z) Contracting with specialists to perform business functions.

Comparing Applications per Dollar of Wages

Productivity of Employee 1 = applications processed / ($$ per hour)(hours worked) =

Comparing Applications per Hour

Productivity of Employee 1 = applications processed / hours worked = applications per hour Productivity of Employee 2 = applications processed / hours worked = applications per hour

(d) walking the talk

Supervisors can help a Total Quality Management (TQM) effort succeed by behaving as if quality is important. Among TQM users, this commonly is called _____. (a) overhead (b) turnover (c) benchmarking (d) walking the talk

True

True or False: Productivity increases when output rises without a cost increase or when an organization can do as much work at a lower cost.

Statistical Process Control

Using statistical to monitor production quality during the production process

(b) To maintain or enhance the organization's reputation

Why is it necessary for employees in an organization to care about quality? (a) To implement the lean process improvement in the organization (b) To maintain or enhance the organization's reputation (c) To implement the six stigma process in the organization (d) To decrease the client base of the organization

(a) ISO 9000

_____ is a series of standards adopted by the International Organization for Standardization to spell out acceptable criteria for quality systems. (a) ISO 9000 (b) The Baldridge Performance Excellence Program (c) The Lean Enterprise Philosophy (d) ISO 1400

(c) Statistical quality control

_____ is the use of statistical and analytical tools to keep a check on the outputs of a process. (a) Product assessment (b) Statistical process control (c) Statistical quality control (d) Process control

(c) Six Stigma

_____ refers to a process-oriented quality-control method designed to improve the product or service output to 99.9997 percent perfect. (a) Total Quality Management (TQM) (b) Statistical process control (SPC) (c) Six Stigma (d) Zero-defects approach

Value

_____ refers to the worth a customer places on what he or she gets (the total package of goods and services) relative to the cost of acquiring it.