Business Final: Chapters 6, 8, &9

Product Layout

A layout requiring production be broken down into relatively simple tasks assigned to workers, who are usually positioned along an assembly line

Fixed-Position Layout

A layout that brings all resources required to create the product to a central location

Process Layout

A layout that organizes the transformation process into departments that group related processes

Theory Z

A management philosophy that stresses employee participation in all aspects of company decision making

Economic Order Quantity (EOQ) Model

A model that identifies the optimum number of items to order to minimize costs of managing (ordering, storing and using) them

The Transformation Process of Operations Management

Combines inputs in predetermined ways using different equipment, administrative procedures, technology, to create a product -Any deviation between actual and desired outputs -Manager may take corrective actions

supply chain management

Connecting and integrating all parties or members of the distribution system in order to satisfy customers; also called logistics. -Obtaining/managing raw materials and component parts -Managing finished products -Packaging products -Getting products to customers

Productions and Operations Manager

Develop and administer the activities involved in transforming resources into goods, services, and ideas ready for the marketplace

Democratic Leader

Involve employees in decisions

Measurement of Productivity

intangibility of the service product makes measurement more difficult

Job Sharing

Performance of one full-time job by two people on part-time hours

Intrinsic Rewards

Personal satisfaction and enjoyment you feel after attaining a goal

Management Functions

Planning organizing staffing directing controlling

Planning

Planning is the process of determining the organization's objectives and deciding how to accomplish them; the first function of management

Production

The activities and processes used in making tangible products; also called manufacturing

Manufacturing

The activities and processes used in making tangible products; also called production

Operations

The activities used in making both tangible and intangible products

Scheduling

The assignment of required tasks to departments or even specific machines, workers or teams

Expectancy Theory

The assumption that motivation depends not only on how much a person wants something but also on how likely he or she is to get it

Purchasing

The buying of all materials needed by the organization; also called procurement -Aim is to obtain items of desired quality in the right quantities at the lowest possible cost -Companies may be able to make some component parts more economically and efficiently -Can arrange to lease the item from another company -What the firm does depends on cost, product availability, and supplier reliability

Modular Design

The creation of an item in self-contained units, or modules, that can be combined or interchanged to create different products

Computer-Assisted Design (CAD)

The design of components, products and processes on computers instead of on paper

Operations Management

The development and administration of the activities involved in transforming resources into goods and services. -Historically, OM has been called "production" or "manufacturing" limiting it to the manufacture of physical goods -The change from "production" to "operations" recognizes services and ideas and views the function as a whole

Downsizing

The elimination of a significant number of employees from an organization. -Production, sales and technical positions can be outsourced to countries with lower labor costs -Downsizing helps companies reduce costs quickly -This involves loss of jobs and lowered morale for remaining employees -An effective manager will promote optimism and positive thinking while minimizing criticism and fault-finding

Selecting the Best Option and Implementing the Decision

The fourth step in the decision making process is selecting the best option. -Often a subjective procedure The fifth step in the decision making process is implementing the decision. -This step can be fairly simple, or very complex, depending on the nature of the decision -Prepare for unexpected consequences

Outputs

The goods, services and ideas that result from conversion of inputs. -Operations managers control the process by taking measurements (feedback) and comparing them to established standards and taking corrective action for any deviation.

Planning Capacity

The maximum load that an organizational unit can carry or operate. -The unit of measurement could be a worker or machine, a department, a branch or an entire plant -Capacity can be stated in terms of inputs or outputs -Planning capacity too low results in unmet demand while planning it too high results in higher cost

Physiological Needs

The most basic human needs to be satisfied—water, food, shelter, and clothing

Project Organization

The name given to companies using a fixed-position layout because it is typically involved in large, complex projects such as construction or exploration.

Social Needs

The need for love, companionship, and friendship—the desire for acceptance by others

Esteem Needs

The need for respect—both self-respect and respect from others

Self- Actualization Needs

The need to be the best one can be; at the top of Maslow's hierarchy

Security Needs

The need to protect oneself from physical and economic harm

Top Management

The president and other top executives of a business, such as the chief executive officer (CEO), chief financial officer (CFO), and chief operations officer (COO), who have overall responsibility for the organization.

Inventory Control

The process of determining how many supplies and goods are needed and keeping track of quantities on hand, where each item is, and who is responsible for it. -Must be closely coordinated with operations management A. Each item held in inventory carries with it a cost -Inventory managers determine proper inventory level for each item A. Depends on usage rate, cost of maintaining the item in inventory, other procedures associated with ordering or making the item, and cost of the item

Controlling

The process of evaluating and correcting activities to keep the organization on course -Measuring performance -Comparing performance with standards or objectives -Identifying deviations from the standards -Investigating the causes of deviations -Taking corrective action when necessary

Quality Control

The processes an organization uses to maintain its established quality standards

Inputs

The resources - such as labor, money, materials and energy - that are converted into outputs.

Developing Options and Analyzing Options

The second step in the decision making process is developing options. -A list of possible courses of action should include both standard and creative plans The third step in the decision making process is analyzing options. -Management must look at practicality and appropriateness of each option -Consider whether proposed option adequately addresses the situation

Routing

The sequence of operations through which the product must pass; sequence depends on the product specifications

Monitoring the Consequences

The sixth step in the decision making process is monitoring the consequences. -Has the implementation of the decision accomplished the desired result? -Is yes, then the decision was sound -If no, then more analysis is warranted

Organizing

The structuring of resources and activities to accomplish objectives in an efficient and effective manner

Managers

Those individuals in organizations who make decisions about the use of resources and who are concerned with planning, organizing, staffing, directing and controlling the organization's activities to reach its objectives

Middle Managers

Those members of an organization responsible for the tactical planning that implements the general guidelines established by top management. -Have more focused responsibilities and spend more time organizing than other managers -In business, plant managers, division mangers and department mangers make up middle management -The ranks of middle managers have been shrinking as more companies downsize to be more productive

Strategic Plans

Those plans that establish long-range objectives and overall strategy or course of action by which a firm fulfills its mission Generally cover periods ranging from one year or longer -Plans to add products -Purchase companies -Sell unprofitable segments of the business -Issue stock -Move into international markets

First-Line Managers

Those who supervise both workers and the daily operations of an organization. -Responsible for implementing plans established by middle management and directing workers' daily performance -Spend most of their time directing and controlling -Commonly called foreman, supervisor and office service manager

Classical Theory of Motivation continued

To improve productivity managers should: -Break down each job into its component tasks (specialization) -Determine the best way to perform each task -Specify the output to be achieved by the worker Incentives motivate employees to be more productive -Link workers' pay directly to their output

Financial Resources

To pay for essential activities Owners, shareholders, banks, and other financial institutions

Operational Plans

Very short-term plans that specify actions individuals, work groups, or departments need to accomplish in order to achieve the tactical plan and ultimately the strategic plan. Apply to details in executing activities quickly.

Employee Empowerment

When employees are provided with the ability to take on responsibilities and make decisions about their jobs. -Participative corporate culture is beneficial - employees feel they are taking an active role in the firm's success -Leaders must adopt systems that support employee's ability to provide input and feedback on the company -Manager should be trained to empower employees to make decisions even in challenging situations

raw materials inventory

all materials purchased to be used as inputs for making other products

Objectives

are measurable statements on common issues such as profit, competitive advantage, efficiency and growth

The Hawthorne Studies

-1924-1932 at the Hawthorne Works Plant -Beginning of concern for human relations in the workplace -Elton Mayo: -Postulated that physical conditions in workplace stimulate productivity -Productivity increased regardless of the physical conditions (the Hawthorne effect) -Findings show that social and psychological factors could significantly affect productivity and morale

Human Relations Skills

-Ability to deal with people, both inside and outside the organization -Those who can relate, communicate well, understand the needs, and show a true appreciation for others are more successful -Important in organizations that provide services, such as hospitals, airlines and banks

Analytical Skills

-Ability to identify relevant issues, recognize their importance, understand relationships between them and perceive underlying causes of a situation -Most important to the success of top level managers -Resolving ethical issues often requires analytical skills

Conceptual Skills

-Ability to think in abstract terms and see how parts fit together to form the whole -Needed most by top level managers -Evaluate where the company will be in the future

Sampling

-Allows a company to pass an entire batch of products through inspection by testing a sample -Always the risk of making an incorrect conclusion based on a sample -Sampling more likely to be used when inspection tests are destructive to the product

Motivation

-An inner drive that directs a person's behavior toward goals -A goal is the satisfaction of some need, and a need is the difference between a desired state and an actual state

Behavior Modification

-Changing behavior and encouraging appropriate actions by relating the consequences of behavior to the behavior itself. Two strategies may not be equally effective: -Punishing unacceptable behavior may lead to employee dissatisfaction and increased turnover -In general, rewarding appropriate behavior is a more effective way to modify behavior

6 Areas of Management

-Financial Manager -Production and Operations Manager -Human Resource Manager -Marketing Manager -Information Technology (IT) Manager -Administrative Manager

Importance of Motivational Strategies

-Fosters employee loyalty -Boosts productivity -Influences pay, promotion, job design, training opportunities, and reporting relationships -Employees motivated by the nature of relationships with their supervisors, nature of their jobs, and by characteristics of the organization

Hawthorne Outcomes

-Hawthorne experiments revealed that human factors do influence workers' behavior -Managers who understand needs, beliefs, and expectations successful in motivating employees -Some companies allow pets as an added incentive to make the workplace seem more friendly

High Morale contributes to:

-High levels of productivity -High returns to stakeholders -Employee loyalty

Low Morale may cause:

-High rates of absenteeism -High rates of employee turnover

Program Evaluation and Review Technique (PERT)

-Identifies all major activities or events required -Arranges them in a sequence or path -Determines the critical path --Path requiring longest time from start to finish is called critical path as that is minimum time needed for completion -Estimates the time required for each event

Product Specifications and Quality Standards

-Must be set so company can compete in marketplace -Company must first determine what standard of quality it desires -Manufacturing: Specifications such as metal thickness -Service: Standards such as customer wait time

Steps in Decisions Making Process

-Recognize and define the decision situation -Develop options -Analyze options -Select the best option -Implement the decision -Monitor the consequences

Inspection

-Reveals whether a product meets quality standards -Inspecting finished items determines quality level -Inspecting work-in-process items finds defects before the product is completed so corrections can be made

OM in Service Businesses

-Significant customer-contact component to most services -Strive to provide a standardized process, and technology offers an interface that creates an automatic and structured response -The output is generally intangible and even perishable -Few services can be saved, stored, resold, or returned

Recognizing and Defining the Decision Situation

-Situations may be positive or negative -Situations calling for small-scale decisions occur without warning -Large-scale decisions generally occur after some warning signs -Once a situation is recognized, management must define it

Technical Expertise

-Specialized knowledge and training needed to perform jobs related to particular areas of management -Needed most by first-line managers and least critical to top-level managers

Hawthorne Discoveries

-Studied workers at Hawthorne Works Plant of the Western Electric Company and measured their productivity under various physical conditions -Employees expressed satisfaction because: -Co-workers in the experiments were friendly -Supervisors had asked for their help and cooperation in the study -Responded to attention received not the changing physical work conditions -Social/psychological factors affect productivity and morale

Classical Theory of Motivation

-Suggests that money is the sole motivator for workers -Early 20th century -Frederick W. Taylor and Frank & Lillian Gilbreth -Analyzed how workers perform specific work tasks in an effort to improve the employees' productivity -Led to the application of scientific principles to management

McGregor's Theory Y Assumptions

-The expenditure of physical and mental effort in work is as natural as play or rest -People will exercise self-direction and self-control to achieve objectives to which they are committed -People will commit to objectives when they realize that the achievements of those goals will bring them personal reward -The average person will accept and seek responsibility -Imagination, ingenuity, and creativity can help solve organizational problems, but most organizations do not make adequate use of these characteristics in their employees -Organizations today don't fully use workers' intellectual potential

Human Relations

-The study of the behavior of individuals and groups in organizational settings -Involves motivating employees to achieve organizational objectives efficiently and effectively -Becomes increasingly important over the years

Positive Reinforcement

-When employees are recognized for a job well done, more likely to put forth the same amount of effort or more in future tasks -Positive reinforcement clearly and immediately defines the kind of behaviors that are appreciated by employers -This tactic works especially well with employees who naturally take pride in their work and are inherently motivated to do well -However, it still has positive results among the less naturally motivated employees -Positive reinforcement also empowers employees through self-confidence making them more adaptable and open to change

Personal Input-Output Ratio

-Worker develops a personal input-output ratio by taking stock of his/her contribution (inputs) to the organization: --Time, effort, skills, and experience -Assessing rewards (outputs) offered by organization: --Pay, benefits, recognition, and promotions -Compares ratio to input-output ratio of other person --A "comparison other" may be a co-worker, friend in another organization, or "average" of several people --If ratios are close, individual feels treated equitably

Customization

making products to meet a particular customers needs or wants

Uniformity of Inputs

services are more "customized" to each consumer

Labor Required

services are more labor intensive

Nature and Consumption of Output

services require more customer contact and happen at the point of consumption

Standardization

the making of identical interchangable parts

Goals

the results the company wants to achieve

Mission

the statement of an organization's fundamental purpose and basic philosophy

Compressed Workweek

A four-day (or shorter) period during which an employee works 40 hours

Employees

Important in helping a firm attain its objectives Recruit, train, compensate, and provide benefits to foster loyalty

Job Enrichment

Incorporation of motivational factors, such as opportunity for achievement, recognition, responsibility, and advancement

Operations Managers

Operations managers are concerned with managing inventory to ensure that there is enough inventory in stock to meet demand

Plans

Specify what should be done, by whom, where, when and how.

Staffing

Staffing the organization with qualified people

Products are manufactured using one of three processes:

Standardization Modular Design Customization

Material-Requirements Planning (MRP)

A planning system that schedules the precise quantity of materials needed to make the product

Management

A process designed to achieve an organization's objectives by using its resources effectively and efficiently in a changing environment

Flextime

A program that allows employees to choose their starting and ending times, provided that they are at work during a specified core period. Flextime provides many benefits, including improved ability to recruit and retain workers who wish to balance work and home life

Just-In-Time (JIT) Inventory Management

A technique using smaller quantities of materials that arrive "just in time" for use in the transformation process; therefore require less storage space and other inventory management expense

Maslow's Hierarchy of Needs

A theory that arranges the five basic needs of people—physiological, security, social, esteem, and self-actualization—into the order in which people strive to satisfy them

Job Enlargement

Addition of more tasks to a job instead of treating each task separately

Inventory

All raw materials, components, completed or partially completed products, and pieces of equipment a firm uses

Equity Theory

An assumption that how much people are willing to contribute to an organization depends on their assessment of the fairness, or equity, of the rewards they will receive in exchange

Crisis Management or Contingency Planning

An element in planning that deals with potential disasters such as product tampering, oil spills, fire, earthquake, computer virus.

Morale

An employee's attitude toward his or her job, employer, and colleagues

Transformation Process

At the heart of OM is the transformation process though which inputs are converted into outputs

Leadership Styles

Autocratic Democratic Free-Rein

Extrinsic Rewards

Benefits and/or recognition from someone else

Acquiring Supplies

Ensuring that products are made available to customers In global markets firms enlist hundreds of diverse suppliers

Financial Manager

Focus on obtaining the money needed for the successful operation of the organization and using that money in accordance with organizational goals

Human Resource Manager

Handle the staffing function and deals with employees in a formalized manner

Herzbergs Two- Factor Theory

Hygiene Factors: -Aspects that focus on the work setting and not the content of the work; these aspects include adequate wages, comfortable and safe working conditions, fair company policies, and job security Motivational Factors: -Aspects that focus on the content of the work itself; these aspects include achievement, recognition, involvement, responsibility, and advancement

International Organization for Standards

ISO9000 -A series of quality assurance standards designed by the International Organization for Standardization (ISO) to ensure consistent product quality under many conditions ISO1400 -A comprehensive set of environmental standards that encourages companies to conduct business in a cleaner, safer and less wasteful way; providing a uniform set of global standards

7 Tips for Successful Leadership

Leadership is the ability to influence employees to work toward organizational goals. -Build effective and responsive interpersonal relationships -Communicate effectively - in person, print, e-mail, etc. -Build the team and enable employees to collaborate effectively -Understand the financial aspects of the business -Know how to create an environment in which people experience positive morale and recognition -Lead by example -Help people grow and develop

Free Rein Leader

Let employees work without much interference; setting performance standards and letting employees find their own way to meet them

Autocratic Leader

Make all the decisions then tell employees what must be done and how to do it

Administrative Manager

Manage an entire business or a major segment of a business; do not specialize in a particular function

Computer-Assisted Manufacturing (CAM)

Manufacturing that employs specialized computer systems to actually guide and control the transformation processes

McGregor's Theory Y

McGregor's humanistic view of management whereby it is assumed that workers like to work and that under proper conditions employees will seek out responsibility in an attempt to satisfy their social, esteem, and self-actualization needs

McGregor's Theory X

McGregor's traditional view of management whereby it is assumed that workers generally dislike work and must be forced to do their jobs

Directing

Motivating and leading employees to achieve organizational objectives. -Telling employees what to do and when to do it using deadlines, then encourage them to do their work -Determining and administering rewards and recognition -Providing incentives but recognition and appreciation are often the best motivators -Ask workers to contribute ideas for reducing costs, making equipment more efficient, improving customer service, or even developing new products

Job Rotation

Moving employees from one job to another in an effort to relieve boredom associated with job specialization

Managing Quality

Quality, like cost and efficiency, is a critical element of operations management; defective products can quickly ruin a firm. -Quality reflects the degree to which a good or service meets the demands and requirements of customers -Determining quality can be difficult because it depends on customers' perceptions -Quality is especially difficult to measure for a service --A company must define important quality characteristics into measurable terms

Morale Boosters

Respect Appreciation Promotions Involvement Positive organizational culture Adequate compensation A pleasant work environment

IT Manager

Responsible for implementing, maintaining, and controlling technology applications in business, such as computer networks

Marketing Manager

Responsible for planning, pricing, and promoting products and making them available to customers through distribution

Tactical Plans

Short-range plans (one year or less) designed to implement the activities and objectives specified in the strategic plan. Keep the firm on course established in the strategic plan. An ever-changing market requires firms to develop short-run or tactical plan to deal with the changing environment.

Planning Facility Location

Significant due to the high costs involved and complex because it involves the evaluation of many factors, some of which cannot be measured with precision

Uniformity of Output

each service is performed differently

work in process inventory

products partly completed

finished goods inventory

products ready for sale