SCM Chapter 7

Professional services typically require low levels of labor intensity.

False

Successful process redesign focuses on departmental areas where small, continuous improvements can be made.

False

The typical full-service restaurant uses a product-focused process.

False

Identify nine areas of technology that enhance production and productivity.

(1) machine technology, (2) automatic identification systems (AIS), (3) process control, (4) vision systems, (5) robots, (6) automated storage and retrieval systems (ASRSs), (7) automated guided vehicles (AGVs), (8) flexible manufacturing systems (FMSs), and (9) computer-integrated manufacturing (CIM)

A firm is about to undertake the manufacture of a product, and it is weighing the process configuration options. There are two intermittent processes under consideration, as well as a repetitive focus. The smaller intermittent process has fixed costs of $3,000 per month and variable costs of $10 per unit. The larger intermittent process has fixed costs of $12,000 per month and variable costs of $2 per unit. A repetitive focus plant has fixed costs of $50,000 per month and variable costs of $1 per unit. a. At what output does the large intermittent process become cheaper than the small one? b. At what output does the repetitive process become cheaper than the larger intermittent process?

(a) at 1125 units, the large job shop becomes cheaper than the small job shop; (b) at 38,000 units, the repetitive shop is cheaper than the larger job shop.

The local convenience store makes personal pan pizzas. Currently, its process makes complete pizzas, fully cooked, for the customer. This process has a fixed cost of $20,000, and a variable cost of $1.75 per pizza. The owner is considering a different process that can make pizzas in two ways: completely cooked (as before), or partially cooked and then flash frozen for the customer to finish heating at home. This alternate process has a fixed cost of $24,000, but a lower variable cost (because much less energy is used in baking) of $1.25 per pizza. a. What is the crossover point between the existing process and the proposed process? b. If the owner expects to sell 9,000 pizzas, should he get the new oven?

(a) the crossover is 8,000 units (b) for production quantities of 8,000 or larger, the new, more flexible process has a lower cost.

Big John's Manufacturing currently produces its lead product on a machine that has a variable cost of $0.32 per unit, and fixed costs of $75,000. Big John is considering purchasing a new machine that would drop the variable cost to $.28 per unit, but has fixed costs of $150,000. What is the cross-over point between the two machines?

1,875,000 units

Align Technology uses a ________ approach to produce clear plastic removable aligners. A) mass customization B) product focus C) process focus D) repetitive focus E) crossover

A

Arnold Palmer Hospital uses which focus? A) process B) repetitive C) product D) mass customization E) A and D

A

Computer-integrated manufacturing (CIM) includes manufacturing systems that have: A) computer-aided design, a flexible manufacturing system, inventory control, warehousing and shipping integrated. B) transaction processing, management information systems, and decision support systems integrated. C) automated guided vehicles, robots, and process control integrated. D) robots, automated guided vehicles, and transfer equipment integrated. E) all of their computers integrated with the marketing department.

A

Goods made to order are typical of ________ and ________ approaches while goods made to forecast are typical of ________ and ________ approaches. A) process, mass customization; repetitive, product B) product, mass customization; repetitive, process C) product, process; repetitive, mass customization D) repetitive, product; mass customization, process E) repetitive, process; mass customization, product

A

Process A has fixed costs of $1000 and variable costs of $5 per unit. Process B has fixed costs of $500 and variable costs of $15 per unit. What is the crossover point between process A and process B? A) 50 units B) 200 units C) $2,500 D) $5,000 E) $9,500

A

The use of information technology to monitor and control a physical process is known as: A) process control. B) computer-aided design. C) information numeric control. D) numeric control. E) IT oversight.

A

What is a drawing of the movement of material, product, or people? A) flowchart B) process chart C) service blueprint D) process map E) vision system

A

Which of the following are all strategies for improving productivity in services? A) separation, self-service, automation, and scheduling B) lean production, strategy-driven investments, automation, and process focus C) reduce inventory, reduce waste, reduce inspection, and reduce rework D) high interaction, mass customization, service factory, and just-in-time E) process focus, repetitive focus, product focus, and mass customization focus

A

Which of the following phrases best describes process focus? A) low volume, high variety B) Finished goods are usually made to a forecast and stored. C) Operators are less broadly skilled. D) high fixed costs, low variable costs E) low inventory

A

Which of the following products is likely to be assembled on a repetitive process line? A) automobiles B) custom personal computers C) custom cakes D) steel E) beer

A

Identify the five major tools of process analysis and design. Describe them in a sentence or two each.

A flowchart is a schematic or drawing of the movement of material, product, or people. Time-function mapping is a flow chart, with the addition of time on the horizontal axis. Value-stream mapping shows how to add value in the flow of materials and information through the entire production process. Process charts use symbols, time, and distance to provide an objective and structured way to analyze and record the activities that make up a process. Service blueprinting focuses on the customer and the provider's interaction with the customer.

Frito-Lay is to ________ focus as Harley Davidson is to ________ focus. A) process, repetitive B) product, repetitive C) repetitive, product D) process, product E) product, mass customization

B

Which of the following characteristics best describes repetitive focus? A) It uses sophisticated scheduling to accommodate custom orders. B) Its output is a standardized product produced from modules. C) Operators are broadly skilled. D) It is widely used for the manufacture of steel. E) low volume, high variety

B

Which of the following is FALSE regarding repetitive processes? A) They use modules. B) They allow easy switching from one product to the other. C) They are the classic assembly lines. D) They have more structure and less flexibility than a job shop layout. E) They include the assembly of basically all automobiles.

B

Which one of the following products is most likely made in a job shop environment? A) rolls of newsprint B) paper forms C) television sets D) cigarettes E) canned vegetables

B

"Operators simply load new programs, as necessary, to produce different products" describes: A) CAD. B) automated guided vehicles. C) flexible manufacturing systems. D) vision systems. E) process control.

C

A product-focused process is commonly used to produce: A) high-volume, high-variety products. B) low-volume, high-variety products. C) high-volume, low-variety products. D) low-variety products at either high- or low-volume. E) high-volume products of either high- or low-variety.

C

A system using an automated work cell controlled by electronic signals from a common centralized computer facility is called: A) an adaptive control system. B) robotics. C) a flexible manufacturing system. D) an automatic guided vehicle (AGV) system. E) a manufacturing cell.

C

An assembly line is an example of a: A) product-focused process. B) process-focused process. C) repetitive process. D) line process. E) specialized process.

C

One fundamental difference between a process chart and a flowchart is that: A) the process chart adds a time dimension to the horizontal axis, while a flowchart is not time-oriented. B) the process chart includes the supply chain, while the flowchart stays within an organization. C) the process chart is more like a table, while the flowchart is more like a schematic diagram. D) the process chart focuses on the customer and on the provider's interaction with the customer, while the flowchart does not deal directly with the customer. E) None of these is true, because a process chart and a flowchart are the same thing.

C

Which one of the following technologies is used ONLY for material handling, NOT actual production or assembly? A) robots B) CNC C) CAD D) AGVs E) FMS

D

Process X has fixed costs of $10,000 and variable costs of $2.40 per unit. Process Y has fixed costs of $9,000 and variable costs of $2.25 per unit. Which of the following statements is TRUE? A) The crossover point is approximately 6667 units. B) It is impossible for one process to have both of its costs lower than those of another process. C) Process Y is cheaper than process X at all volumes. D) Process X should be selected for very large production volumes. E) Process X is more profitable than process Y and should be selected.

C

Three of the four types of processes are: A) goods, services, and hybrids. B) manual, automated, and service. C) process focus, repetitive focus, and product focus. D) modular, continuous, and technological. E) input, transformation, and output.

C

A job shop is an example of a(n): A) repetitive process. B) continuous process. C) line process. D) intermittent process. E) specialized process.

D

Advances in technology: A) have impacted the manufacturing sector only. B) have had only a limited impact on services. C) have failed to change the level of customer interaction with an organization. D) have had a dramatic impact on customer interaction with services and with products. E) have dramatically changed health care, but have not changed retailing.

D

Harley Davidson: A) utilizes job shops to make each of its modules. B) uses product focused manufacturing. C) uses a large number of modules to build a small number of different bikes. D) uses work cells to feed its assembly line. E) All of the above are true.

D

In mass service and professional service, the operations manager should focus extensively on: A) automation. B) equipment maintenance. C) sophisticated scheduling. D) human resources. E) cost-cutting initiatives.

D

One of the similarities between process focus and mass-customization is: A) the volume of outputs. B) the use of modules. C) many departments and many routings. D) the variety of outputs. E) All of the above are similarities.

D

Product focused processes: A) allow more customization, but are not very efficient. B) are desirable because resource needs increase slowly with the complexity of a process. C) are processes that are specialized for relatively few products or customer groups. D) apply only to service firms, not to manufacturers. E) are profitable because customers demand flexibility, not specialization.

D

Service blueprinting: A) provides the basis to negotiate prices with suppliers. B) mimics the way people communicate. C) determines the best time for each step in the process. D) focuses on the provider's interaction with the customer. E) uses the schematic of a house to diagram a service process.

D

The crossover point is that production quantity where: A) variable costs of one process equal the variable costs of another process. B) fixed costs of a process are equal to its variable costs. C) total costs equal total revenues for a process. D) total costs for one process equal total costs for another process. E) the process no longer loses money.

D

Which of the following is TRUE regarding vision systems? A) They are consistently accurate. B) They are modest in cost. C) They do not become bored. D) All of the above are true. E) None of the above is true.

D

Which of the following is true regarding the concept of flexibility? A) It is the ability to respond with little penalty in time, cost, or customer value. B) It may be accomplished with digitally controlled equipment. C) It may involve modular or movable equipment. D) All of the above are true. E) None of the above is true.

D

Which of the following phrases best describes product focus? A) low volume, high variety B) Finished goods are usually made to order. C) Processes are designed to perform a wide variety of activities. D) high fixed costs, low variable costs E) high inventory

D

Which of the following provides automatic placement and withdrawal of parts and products into and from designated places in a warehouse? A) AGV B) CAD/CAM C) CIM D) ASRS E) FMS

D

Which of the following technologies could enable a cashier to scan the entire contents of a shopping cart in seconds? A) ASRS B) AGV C) CAD/CAM D) RFID E) FMS

D

A quasi-custom product: A) gets its apparent customization from the combinations available from a small number of modules. B) is often the output of repetitive focus facilities. C) is a valid description of a fast food sandwich. D) only applies in services. E) All but D are true.

E

High fixed costs and low variable costs are typical of which approach? A) product B) process C) mass customization D) repetitive E) A and C

E

In the mass service and service factory quadrants of the service process matrix, the operations manager could focus on all of the following except: A) automation. B) standardization. C) tight quality control. D) removing some services. E) customization.

E

Process redesign: A) is the fundamental rethinking of business processes. B) is sometimes called process reengineering. C) tries to bring about dramatic improvements in performance. D) often focuses on activities that cross functional lines. E) all of the above

E

Value-stream mapping: A) is a variation of time-function mapping. B) examines the supply chain to determine where value is added. C) extends time function mapping back to the supplier. D) starts with the customer and works backwards. E) All of the above are true.

E

What have restaurants such as Steakhouses and Stacked Restaurants replaced their traditional paper menus with? A) spoken descriptions B) singing descriptions C) menus painted on the walls D) index cards containing a picture of each item E) iPad menus

E

Which of the following companies use a mass customization approach? A) Dell B) Align Technology C) Frito-Lay D) Arnold Palmer hospital E) A and B

E

Which of the following industries is most likely to have low equipment utilization? A) auto manufacturing B) commercial baking C) television manufacturing D) steel manufacturing E) restaurants

E

Which of the following is not one of the strategies for improving service productivity? A) self-service B) automation C) scheduling D) separation E) mass customization

E

A flowchart with the addition of a time axis becomes a process chart.

False

Activity times should not be included in a service blueprint.

False

An example of the postponement strategy for improving service productivity is having the customer wait until you have sufficient time to serve the customer.

False

Flowcharts use distance, but not time, to show the movement of material, product, or people through a process.

False

Harley-Davidson, because it has so many possible combinations of products, utilizes the process strategy of mass customization.

False

Production technology has had a major impact on services, but as yet there has been little reduction in service labor requirements.

False

Why do modern operations managers look for flexibility in their equipment?

Flexibility in equipment provides managers with the ability to respond to changes in demand with little penalty in time, cost, or customer value. And in this age of rapid technological change and short product life cycles, adding flexibility to the production process can be a major competitive advantage.

What is the link between focused processes and specialization? What kinds of focus are possible?

Focused processes are a means of obtaining increased productivity through forms of specialization. Focus can take several forms, including concentrating on specific classes of customers, working only with products in selected product families, specializing in a specific service, or working with a narrow range of technology.

In an affluent society, how do we produce a wide number of options for products at low cost? Hint: Focus on how to address some of the major challenges of mass customization.

For mass customization, products should be built-to-order. Product design must be imaginative. Process design must be flexible and able to accommodate changes in both design and technology. Inventory management requires tight control. Tight schedules are needed that track orders and material from design through delivery. Responsive partners in the supply chain can yield effective collaboration.

Kirstin is thinking about opening a Chinese restaurant and needs to buy a rice cooker. Machine A has fixed costs of $100 and variable costs of $1/pound. Machine B has fixed costs of $500 and variable costs of $.1/pound. If Kirstin plans to sell 100 pounds of rice, which machine should she choose? What is the cross-over point?

Machine A costs 100 + 1(100) = $200 Machine B costs $500 + .1(100) = $510 Thus she should buy machine A. Crossover occurs when 100+V = 500 + .1V, or V = 444.4 pounds of rice

What is mass customization?

Mass customization is rapid, low-cost production of goods and services that fulfill increasingly unique customer desires. It brings us the variety of products traditionally provided by the process focus, with low costs associated with standardized high volume production (the product focus).

How are modules useful in manufacturing processes?

Modules are parts or components of a product previously prepared. By using modules, the final product can be quickly assembled. Using a different combination of modules allows for quasi-customization.

**Identify the four basic process strategies, and describe them in a complete sentence or two each.

Process focus is a job shop—high variety and low volume; repetitive focus is an assembly line—relatively standardized products with options from modules; product focus is for high volume, low-variety, products, such as oil refining and flour milling; and mass customization is for high volume, high variety.

Identify the typical elements in a process control system.

Sensors collect data, which are read on a periodic basis. Measurements are digitized and transmitted to a computer. Computer programs read the file and analyze the data. Output is produced in the form of signals, diagrams, charts, messages, etc.

When selecting new equipment and technology, decision makers look for flexibility—the ability to respond with little penalty in time, cost, or customer value.

True

A product is currently made in a process-focused shop, where fixed costs are $9,000 per year and variable costs are $50 per unit. The firm is considering a fundamental shift in process, to repetitive manufacturing. The new process would have fixed costs of $90,000, and variable costs of $5. What is the crossover point for these processes? For what range of outputs is each process appropriate?

The crossover is at 1800 units annually. For volumes under 1800, the process focus is cheaper; for volumes over 1800 units, the repetitive focus is cheaper.

Provide an example of the focus strategy for improving service productivity.

The focus strategy refers to restricting the offerings. Examples will vary, but a restaurant with a limited menu would be one example.

Provide an example of the postponement strategy for improving service productivity.

The postponement strategy refers to customizing the product at delivery, not at production. Examples will vary, but a home builder might leave some tasks unfinished until the house is sold, so that the buyer can make those final decisions. Carpeting, paint colors, cabinet doors, and some appliance choices might be good examples. Another example would be cars or vans.

A firm's process strategy is its approach to transforming resources into goods and services.

True

A value-stream map includes both (1) inventory quantities, and (2) symbols for customers and suppliers.

True

Automated storage and retrieval systems are commonly used in distribution facilities of retailers.

True

Flexible manufacturing systems, because of easily changed control programs, are able to perform such tasks as manufacturing one-of-a-kind parts economically.

True

In process-focused facilities, utilization of facilities is low.

True

Intermittent processes are organized around processes.

True

One use of camera-and-computer-based vision systems is to replace humans doing tedious and error-prone visual inspection activities.

True

Optical checkout scanners and ATMs are examples of technology's impact on services.

True

Process control is the use of information technology to monitor and control a physical process.

True

Service blueprinting is a process analysis technique that focuses on the customer and the provider's interaction with the customer.

True

The assembly line is a classic example of a repetitive process.

True

The term focused processes refers to the quest for increased efficiency, whether in goods or services, that results from specialization.

True

The tool that calculates which process has the lowest cost at any specified production volume is a crossover chart.

True

Time-function mapping is a flowchart with time added to the horizontal axis.

True

Describe Value-stream mapping. Explain how it is different from process mapping.

Value-stream mapping is a variation on time-function mapping or process mapping. The most fundamental difference between them is that Value-stream mapping is not confined to the organization itself. In particular, in its analysis of where value is added, it extends the analysis to the organization's supply chain. Value-stream mapping takes into account not only the process but also the management decisions and information systems that support the process.

Why is Harley-Davidson identified as a repetitive manufacturer, not a mass customizer?

While Harley-Davidson's motorcycles variety, they are not as individualized as Dell's personal computers. The variety comes from choices in predefined modules, and there is apparently no place for a customer to get customization that would go beyond what is available in these modules.