Operations Management Exam 1

a. Built into the product. The other choices all imply "quality through inspection."

"Quality at the source" suggests quality should be: a. Built into the product. b. Inspected at multiple points. c. Ensured by the quality control lab. d. An inspector's function.

a. An approach that develops culture and tools with a focus on quality Quality management combines philosophy, culture, tools and techniques to ensure that high quality products and services are produced.

"Quality management" is: a. An approach that develops culture and tools with a focus on quality b. The achievement of all dimensions of quality c. A measure of how well managers achieve goals d. Six sigma

Internally, there is a hierarchy of strategic plans consisting of

(1) corporate planning, (2) strategic business unit (SBU) planning, and (3) functional planning.

Single Server Queue

- Arrivals: Random, average arrival rate of λ(unit/time) -Service: Random, average service rate of μ(unit/time) - First-come first-served (First-in first-out) -Infinite queue capacity, no balking, no reneging -Focus on cases λ< μ!!!

Order Qualifier

- Minimum Requirement criteria for product to enter/do business

Juran's Law

-15% of operational problems are the result of human errors; the other 85% are due to systemic process errors

Just-In-Time Philioshophy

-A logistics process in which goods arrive when needed for production, use, or sale rather than sitting in storage -EXAMPLE: Toyota (order right amount and always order what is needed)

Buffer (Process Analysis/Stages)

-A process in the operation that helps smooth the process by preventing a standstill occurring

Starving (Process Analysis/Stages)

-A process in the system that is lacking any units because of the process behind it

Little's Law

-An empirically proven relationship that exists between flow time, inventory, and throughput (L = Lambda*Waiting Time) or (W = L/Lambda)

Minimum Throughput Time or Flow Time

-Assuming an empty system, time that it takes a unit to complete the process, from start to finish

Capacity

-Average number of units processed over a time interval. Measured as units/time

Process Cycle Time

-Average time between the production of two consecutive units. Longest cycle time among all the stages

Cycle Times

-Average time for completion of a unit at a production stage. Measured as time/unit

Manufacturing Environment

-Connects with the 5 Product Process Matrix 1. Engineer to Order (ETO): unique, customized productsProject, job shop 2. Make to Order (MTO): similar design, customized during productionJob shop, batch 3. Assemble to Order(ATO): produced from standard components and modulesRepetitive, mass customization 4. Make to Stock(MTS): goods made and held in inventory in advance of customer ordersRepetitive, continuous

Pooling

-Creating a single line for waiting time for one customer to be served at a time

Supply Chain

-Global network of organizations and activities involved in designing, transforming, consuming and disposing of goods and services

Process Management

-Management of processes used to design, supply, produce and deliver valuable goods and services to customers

Process Capacity

-Minimum capacity across all stages OR Capacity of the stage with longest cycle time (Process Capacity = Bottleneck)

Bottleneck

-Stage with the lowest capacity OR Stage with the longest cycle time

Lean Systems

-Systems that maximize productivity by reducing waste and delays (continuously)

Order Winners

-The Value that a product brings compared to competitors

Product Pooling Strategy

-The strategy to reduce the variety offered to customers by combining, or pooling, similar products (universal products).

An effective operations strategy: (three pillars)

1. Aligns with and delivers on the firm's value proposition; i.e., it is externally consistent 2. Develops operational capabilities that align with and reinforce one another; i.e., it is internally consistent 3. Evolves over time to maintain or extend competitive advantage; i.e., it is dynamic

Strategy Map

1. Create a list of value dimensions 2. Organize the list in a column ordered from most important to the firm's value proposition (at top) to least important (bottom) 3. Create an x-axis: poor performance on left; excellent on right 4. Score firm's offering on each dimension and connect with line 5. Score key competitor(s) on each and connect with a line

Building a strategy map

1. Create a list of value dimensions that customers in the firm's market care about 2. Organize the list in a column ordered from most important to the firm's value proposition (at top) to least important (bottom) 3. Create an x-axis: poor performance on left; excellent on right 4. Score firm's offering on each dimension and connect with line 5. Score key competitor(s) on each and connect with a line

Value Proposition (6 attributes of a Value Proposition)

1. Low Cost 2. Time 3. More Sustainable 4. Quality 5. Flexibility 6. Useful Information

8 Different Types of Muda

1. Overproduction 2. Inapprotiate Processing 3. Waiting 4. Transportation 5. Motion 6. Inventory 7. Defects 8. Underutilization of Employees

Product-Process Matrix

1. Project (High Variety) 2. Job Shop (High Flexibility/Low Volume) 3. Batch (Flexible & Medium Volume) 4. Repetitive Process (Low Cost High Volume) 5. Continuous Process (Lowest Cost & Highest Volume)

Shortcomings of value propositions

1. They tell us little about relative positioning -Are firms with the same value proposition identical? 2. They tell us nothing of what the firm does not offer 3. They do not reveal what the firm does to deliver its value proposition Strategy maps will address points 1 and 2 Operational capabilities will address point 3

A well-designed value proposition has four characteristics

1.It offers a combination of product features that customers find attractive and are willing to pay for.2.It differentiates the firm from its competition in a way that is difficult to imitate.3.It satisfies the financial and strategic objectives of the firm.4.It can be reliably delivered given the operational capabilities of the firm and its supporting supply chain.

The following sequence shows four operations for a computer chip assembly process and the effective capacity of each. Step 1: 500 chips/hour Step 2: 250 chips/hour Step 3: 200 chips/hour Step 4: 550 chips/hour Suppose the utilization is 70 percent of effective capacity. What is the actual output of the process? 140 chips/hour 350 chips/hour 175 chips/hour 200 chips/hour

140 chips/hour 200(.7) = 140

Under Juran's Law, whenever a problem occurs, what percentage of the time is the problem the result of a system/process error? 15 percent 50 percent 85 percent 100 percent

85 percent

When

?When should products be made, activities be carried out, services be delivered, or capacities/facilities come on line?

Buffer

A buffer refers to a storage area between stages where the output of a stage is placed prior to being used in a downstream stage.

d. 80% The takt time is the [time available]/customer demand which is [60 minutes/hour]/30 units per hour = 2 minutes. The efficiency is [Sum of all task times/(Actual work stations × takt time)] × 100 which is ((8 minutes)/(5 workstations x 2 minutes)) x 100 = 80%

A company must make 30 units per hour. What is the efficiency if the total time to complete all tasks is 8 minutes and the company is using 5 workstations? a. 63% b. 75% c. 20% d. 80% The takt time is the [time available]/[customer demand]. The efficiency is [Sum of all task times/(Actual work stations × takt time)] × 100.

c. 71% The takt time is the [time available]/customer demand which is [1 shifts per day x 12 hours per shift x 60 minutes per hour]/400 units = 1.8 minutes. The efficiency is [Sum of all task times/(Actual work stations × takt time)] × 100 which is ((23 minutes)/(18 workstations x 1.8 minutes)) x 100 = 71%

A company must make 400 units per day. The company works one 12-hour shift. What is the efficiency if the total time to complete all tasks is 23 minutes and the company is using 18 workstations? a. 88% b. 22% c. 71% b. 50%

d. Marketing

A customer service package would exclude which of the​ following? A. ​Delivery/installation B. Supporting facility C. Explicit services D. Marketing

b. 3.4 defects per million opportunities Six Sigma quality means 3.4 defects per million opportunities.

A process with Six Sigma quality is expected to produce how many defects? a. 66,807 defects per million opportunities b. 3.4 defects per million opportunities c. 6 defects per million opportunities d. Zero defects

e. Kaizen Event. Short-term efforts to improve process performance are called Kaizen Events.

A short-term, highly focused effort for improving a process is known as a: a. Poka-yoke Event. b. Enchilada Event. c. Jidoka Event. d. Chaebol Event. e. Kaizen Event.

b. Designing, transforming, consuming, and disposing of goods and services. The organizations and activities in a supply chain are involved in designing, transforming, consuming, and disposing of goods and services.

A supply chain is a global network of organizations and activities involved in: a. Designing, financing, selling, and disposing of goods and services. b. Designing, transforming, consuming, and disposing of goods and services. c. Producing, buying, servicing, and disposing of goods and services. d. Financing, producing, and marketing of goods and services.

A process is: A set of planned steps used to achieve an objective. A system of activities that transforms inputs into valuable outputs. A system of decisions. A combined effort by people who want to get something done.

A system of activities that transforms inputs into valuable outputs. Processes involve transformation, and they may or may not involve people.

Lean System

A systems that continually search for and eliminates waste and delays throughout the value chain 8 types of waste (muda) Manufacturing, services and even nonprofits!

The following sequence shows for operations for a computer chip assembly process and the effective capacity of each. Step 1: 500 chips/hour Step 2: 250 chips/hour Step 3: 200 chips/hour Step 4: 550 chips/hour Suppose the utilization is 70% of effective capacity. What is the actual output of the process? A) 140 chips/hour B) 200 chips/hour C) 175 chips/hour D) 350 chips/hour

A) 140 chips/hour Actual Output = Utilization * Effective Capacity AO = .7 x 200 = 140

Next year a tire company wants to have an inventory turnover rate of 22 times per year. To achieve this turnover rate, what should be the average number of days of supply? A) 16.6 days B) 36 days C) 0.6 days D) 22 days

A) 16.6 days 365 days/22 turns = 16.6 days

With respect to lead-time performance, most customers would prefer which of the following from a supplier? A) A consistent three-day lead time B) A lead time that averages three days with a range of one to four days C) A lead time that averages two days with a range of one to four days D) All of these are equally preferable

A) A consistent three-day lead time

Which of the following products is most likely to use an assemble-to-order market orientation? A) An upholstered sofa B) A mobile phone C) Shampoo D) A race car

A) An upholstered sofa

Your selection of a layout format for your facility depends on: (Choose all that apply) A) Available space B) Production volume C) The design of the process D) The inventory flow

A) Available space B) Production volume C) The design of the process D) The inventory flow

"Quality at the source" suggests quality should be: A) Built into the product. B) Inspected at multiple points. C) Ensured by the quality control lab. D) An inspector's function.

A) Built into the product.

Wanda Corp. currently uses a job shop process. It wants to maintain the advantages of this but increase efficiency. Wanda should investigate: A) Cellular manufacturing. B) Job shop processes. C) Mass customization. D) Project process.

A) Cellular manufacturing.

Which of the following two effects is directly a result of bottlenecks? A) Decrease in output and increase in lead-times B) Decrease in inspections and increase in costs C) Increase in costs and increase in defects D) Increase in output and increase in lead-times

A) Decrease in output and increase in lead-times

Space on the shop floor, bins, carts, racks are most frequently associated with which of the following process activities? A) Delays B) Transportation C) Inspections D) Operations

A) Delays

Which of the following forms of capacity can only be determined AFTER the completion of activities? A) Demonstrated capacity B) Maximum capacity C) Design capacity D) Effective capacity

A) Demonstrated capacity

Design for Manufacturing and Assembly considers: (Choose all that apply)************* A) Ease of production B) Product mix C) Equipment efficiency D) Costs

A) Ease of production B) Product mix

___________ inventory is the costliest form of inventory one can hold. A) Finished goods B) Raw materials C) Components D) Work-in-process

A) Finished goods

Ordering cost is which type of cost? A) Fixed B) Variable C) Overhead

A) Fixed

Most processes involve two basic types of flows: A) Information flows and material flows. B) Product flows and decision flows. C) Information flows and operator flows. D) Physical flows and security flows.

A) Information flows and material flows.

The primary difference between integrated/concurrent engineering development and functional/sequential development is: A) Integrated development spends more money up front to order to save money in later stages. B) Sequential development is more thorough in addressing development steps. C) In sequential development, multiple functions co-manage design and testing. D) Integrated development usually leads to higher sustaining and warranty costs.

A) Integrated development spends more money up front to order to save money in later stages.

Total Quality Management: (Choose all that apply)***** A) Is managed proactively B) Involves only production processes C) Focuses on the customer D) Ensures on-time delivery

A) Is managed proactively B) Involves only production processes C) Focuses on the customer D) Ensures on-time delivery

When calculating a reorder point (ROP), which of the following factors WOULD NOT affect the calculation? A) Item's EOQ B) Delivery lead time C) Demand during the delivery lead time D) Standard deviation of demand during delivery lead time. E) All of these would affect the ROP

A) Item's EOQ

A low-volume process that produces customized products is called a: A) Job shop B) Repetitive process C) Mass customization process D) Project

A) Job shop

Physical goods can be differentiated from services in the operations management process by: A) Longer lead times and they can be inventoried. B) More capital intensive and short lead times. C) More labor intensive and longer lead times. D) More expensive and easier to control.

A) Longer lead times and they can be inventoried.

Which of the following would be considered part of Ordering Cost? (choose all that apply)** A) Minimum shipping charge B) Postage to mail the order to a supplier (who still lives in the early 20th century) C) Renting a truck to haul the order (and only this order, no other business is used for this truck's one time rental) D) Cost of the office building housing your employees.

A) Minimum shipping charge C) Renting a truck to haul the order (and only this order, no other business is used for this truck's one time rental) D) Cost of the office building housing your employees.

Which of the following statements is FALSE regarding process bottlenecks? A) Operations managers should diligently eliminate all bottlenecks in the process B) When an operations manager increases the capacity of a process bottleneck, another bottleneck will appear in a different part of the process C) The process bottleneck determines the maximum capacity of the overall process D) An effective away to increase the capacity of the bottleneck is to create a parallel structure

A) Operations managers should diligently eliminate all bottlenecks in the process

When a snowboard manufacturing shop reduces the time required to produce a custom snowboard, they are improving their ability to compete on the basis of: A) Order-to-delivery lead time B) Quality C) Cost D) Time-to-market lead time

A) Order-to-delivery lead time

The process of "stapling yourself to an order" refers to: A) Pretending you are the workpiece moving through a process. B) Observing a process through multiple iterations to eliminate possible biases from observing "random" events. C) Stapling documents in your process maps to other applicable documents in order not to confuse the "flow." C) Imagining a workpiece in a process and following it through a process map you have developed.

A) Pretending you are the workpiece moving through a process.

A type of process that creates one-of-a-kind products is: (Choose all that apply) ************* A) Repetitive processing B) Job shop C) Project D) Continuous processing

A) Repetitive processing C) Project D) Continuous processing

The performance measurement approach that would be most useful in measuring and describing supply chain processes would be: A) SCOR Model B) Balance scorecard C) Strategic Profit Model D) All of these

A) SCOR Model

A vice president of operations wants to evaluate the impact of reducing manufacturing expenses on the firm's return on assets. A measurement approach that he might consider for this is the: A) Strategic profit model. B) Balanced scorecard model. C) SCOR model. D) None of these.

A) Strategic profit model.

When Zara chooses to manufacture their clothing in Europe instead of locations with lower labor costs, how does that help produce competitive advantage? A) They can respond quickly to changes in fashion B) They can take advantage of favorable tax laws C) They can negotiate lower costs for fabrics and other materials D) They can avoid import tariffs

A) They can respond quickly to changes in fashion

Fast innovators typically gain which advantages? A) They produce a more continuous stream of new product introductions that create a greater and more constant market awareness of their brands. B) They have fewer problems in launching new products and fewer failures in the marketplace. C) They can sell at lower prices or lower the total sales needed for a new product to pay back its initial development costs. D) All of these

A) They produce a more continuous stream of new product introductions that create a greater and more constant market awareness of their brands.

The main purpose of quality function deployment (QFD) is: A) To base product and process design decisions more directly on what the customer thinks is important. B) To clearly identify the functional groups within the organization that have a direct influence on quality. C) To expand the quality function and eliminate the need for statistical process control. D) To set up a plan for the deployment of statistical quality control tools throughout the organization.

A) To base product and process design decisions more directly on what the customer thinks is important.

"Design for the Environment" is concerned with packaging materials and designs. A) True B) False

A) True

Safety stock is inventory held to guard against uncertainty A) True B) False

A) True

The Q-system of inventory submits inventory orders at random times. A) True B) False

A) True

The assembly line layout is sometimes called a product layout because the focus here is on the product itself as it moves through the factory. A) True B) False

A) True

4. With respect to lead-time performance, most customers would prefer which of the following from a supplier? A. A consistent three-day lead time B. A lead time that averages three days with a range of one to four days C. A lead time that averages two days with a range of one to four days D. All of these are equally preferable.

A. A consistent three-day lead time

A firm has established a standard of 96 percent for on-time delivery. Over the past month the firm determined it actually delivered 94 percent on-time. The difference is the: A. Standards gap. B. Performance gap. C. Satisfaction gap. D. Knowledge gap.

A. Standards gap.

a. Scrapping defective raw material. Scrapping raw material is an internal failure cost. The others are external failure costs.

All of the following represent external failure cost EXCEPT the cost of: a. Scrapping defective raw material. b. Repairing items covered by warranty. c. Replacing defective items found by customers. d. Loss of goodwill and reputation.

Which of the following statements are reasons why operations management is important? Efficient and productive operations drive the economic well-being of nations. Operations management is responsible for much of the value created by organizations. Operations management is a key source of competitive differentiation among firms. All of these are reasons why operations management is important.

All of these are reasons why operations management is important. Operations management affects both macroeconomic and individual firm outcomes

Which two things drive the need for safety stock? (choose two)?** A) Demand variability B) Warehouse space C) Delays D) Manufacturing speed E) Customer choice

All?? Demand variability delays

λ

Arrivals: Random, average arrival rate of λ(unit/time)

Minimus throughput time or flow time

Assuming an empty system, time that it take a unit to complete the process, from start to finish.

d. Define, Measure, Analyze, Improve, Control. The acronym DMAIC stands for: Define, Measure, Analyze, Improve, and Control.

At the heart of the Six Sigma program is a five-step process called D-M-A-I-C. These letters denote a major activity that must be completed to achieve the objectives of Six Sigma. These activities are: a. Define, Measure Analyze, Improve, and Compare. b. Define, Measure, Analyze, Inquire, and Compare. c. Define, Measure, Analyze, Involve, and Cost. d. Define, Measure, Analyze, Improve, Control.

Which of the following identifies the most appropriate time to set the metrics when doing a process flow analysis? During the analysis stage At the start of the process When bounding the critical process When recommending the appropriate changes to the process (i.e., the "future state" map)

At the start of the process Metrics should be set at the start where they reflect the desired outcomes for the process.

Capacity

Average number of units processed over a time interval measured as units/time

Process cycle time

Average time between production of two consecutive units. Longest cycle time among all the stages.

cycle time

Average time for completion of a unit at a production stage. Measured as time/unit

Which of the following statements that might be made by a business executive best expresses the overall philosophy of Total Quality Management? A) "We've achieved Six Sigma. That's good enough." B) "There's always room for improvement." C) "The workers need to work harder to prevent quality problems." D) "We never sell defective products to customers."

B) "There's always room for improvement."

Suppose demand is 45 units a month, average inventory is 60 units, and unit cost is $20. What is the annual inventory turnover? A) 10 B) 9 C) 0.75 D) 15

B) 9 (45 x 12) / 60 = 9

A process is: A) A set of planned steps used to achieve an objective. B) A system of activities that transforms inputs into valuable outputs. C) A system of decisions. D) A combined effort by people who want to get something done.

B) A system of activities that transforms inputs into valuable outputs.

Sanford Corp. bought new technological systems to inspect the quality of products as they come off the production line. The expense of operating these systems would be an example of which of the following types of quality-related costs? A) Internal failure cost B) Appraisal cost C) External failure cost D) Prevention cost

B) Appraisal cost

Suppose that you are the general manager of a hotel. For which of the following issues would you first seek help from an operations manager in your firm? A) Our prices seem to be too high. B) Customers complaints are rising. C) We need a new insurance policy. D) We are running out of cash.

B) Customers complaints are rising.

Which of the following is NOT an element of the Strategic Profit Model? A) Advertising B) Debt to Equity Ratio C) Transportation and Shipping D) Purchased Materials

B) Debt to Equity Ratio

You walk into a hair stylist shop. All stylists are busy and you sit in the waiting area. You are in which of the following process activities? A) Operation B) Delay C) Storage D) You are not in a process activity.

B) Delay

If a product includes features that customers care most about, we would say that it has high: A) Conformance quality. B) Design quality. C) Reliability. D) Aesthetics.

B) Design quality.

A supply chain is a global network of organizations and activities involved in: A) Producing, buying, servicing, and disposing of goods and services. B) Designing, transforming, consuming, and disposing of goods and services. C) Financing, producing, and marketing of goods and services. D) Designing, financing, selling, and disposing of goods and services.

B) Designing, transforming, consuming, and disposing of goods and services.

Ordering cost only consists of the shipping cost from supplier to customer. A) True B) False

B) False

The time value of money, opportunity cost, is not part of the calculation of EOQ holding cost (T/F) A) True B) False

B) False

Overall, it is clear that well-managed innovation projects: A) Apply only to manufacturing firms. B) Increasingly involve input from multiple functions in a company. C) Should always be executed sequentially. D) All of these.

B) Increasingly involve input from multiple functions in a company.

Which of the following is NOT considered a key characteristic of a core capability: A) There are few substitutes for it B) It does not need to be extendable to many market opportunities. C) It is hard to imitate D) It is based on factors that are rate or unique to the firm

B) It does not need to be extendable to many market opportunities.

Which of the following statements best describes "process thinking"? A) It is a way to manage thought processes to make better decisions. B) It is a way to view business as a system of inter-related activities. C) It is a way to approach work systematically D) It is a way to categorize elements of work activities

B) It is a way to view business as a system of inter-related activities.

Operations managers view innovation as a "funnel" because: A) Small ideas grow to become broad new strategies B) It often takes many new ideas to yield a few really good innovations C) Good innovators invest in as many new projects as they can afford D) Innovation means launching many new products so that the market can sort out the winners and losers

B) It often takes many new ideas to yield a few really good innovations

Jones Company has calculated that the EOQ for a particular item is 1,000 units. However, Jones does not have enough capital to order that many units each time, so it orders 250 units at a time. This will result in: A) Higher annual inventory carrying cost that ordering the EOQ capacity B) Lower annual inventory carrying cost than ordering the EOQ quantity C) Lower annual ordering cost than ordering the EOQ quantity D) Cannot be determined

B) Lower annual inventory carrying cost than ordering the EOQ quantity

A service strategy that allows customers many different options for ordering and fulfillment of purchases is known as: A) Customer Success B) Omnichannel C) Flexible purchasing D) Customer convenience

B) Omnichannel

Suppose a chief supply chain officer takes the total of all purchasing managers' annual salaries and divides this number by the number purchase orders placed in a year. This calculation would provide insight into what kind of inventory cost? A) Product costs B) Ordering costs C) Holding costs D) System management costs

B) Ordering costs

Which of the following statements about operations management processes is NOT true? A) Inputs to operations management processes can be materials, people, and/or information. B) Outputs of operations management processes are always tangible goods. C) Operations management processes involve transformation of inputs into valuable outputs. D) Design of operations processes should reflect what customers want.

B) Outputs of operations management processes are always tangible goods.

Xanadu makes HD televisions. It claims that its HD televisions have the clearest picture clarity in the industry. Xanadu is emphasizing which dimension of quality? A) Reliability B) Performance C) Features D) Conformance

B) Performance

Stu Johnson, CEO of Johnson, Inc., attended a seminar on Total Quality Management. Which of the following is NOT something he is likely to have learned at that seminar? A) Some aspects of quality are difficult to measure because they depend on customers' judgments. B) Quality is primarily the responsibility of operations management. C) Quality results from design as well as operations and delivery. D) Cross-functional teams are important in TQM decision making. E) He is likely to have learned all of these things.

B) Quality is primarily the responsibility of operations management.

What is the great benefit of the Q-system? A) Complicated mathematical calculations B) Responsiveness C) Hiding inventory from customers D) Ordering at fixed times

B) Responsiveness

Which of the following is a measure common to both the strategic profit model and the SCOR model? A) Responsiveness B) Return on assets C) Delivery performance D) Lead time

B) Return on assets

An approach that analyzes the interface between customers and service processes is called: A) Service process matrix. B) Service blueprinting. C) Process mapping. D) Product/process matrix.

B) Service blueprinting.

Little's Law suggests that the key to increased throughput is: A) Fewer defects B) Shorter flow times C) Eliminating waste D) Increased inspection

B) Shorter flow times

Xanadu Inc. claims that its manufacturing processes result in fewer greenhouse gases than those of its primary competitors. This suggests that Xanadu has a focus on: A) Risk management. B) Sustainability. C) Flexibility. D) Profitability.

B) Sustainability.

Adam Smith described his company's process as follows: "Under ideal condition we can produce 10,000 units a day. However, our normal production is 6,000 units a day. Today, we actually produced 8,000 units." Which of the following is true? A) Utilization is 60% of maximum capacity B) Utilization was 133% of effective capacity C) Yield is 133% of effective capacity D) All of these are true

B) Utilization was 133% of effective capacity (8000/6000)*100=133%

Holding cost is which type of cost? A) Fixed B) Variable C) Overhead

B) Variable

Which of the following decisions would NOT be under the direct control of operations managers? A) What resources will be used to satisfy customer demand? B) What customers should be targeted with greatest priority? C) What suppliers should provide needed inputs? D) What mode of transportation should be used to ship products?

B) What customers should be targeted with greatest priority?

A batch of Raisin Bran that has been made at Kellogg's but not yet packaged in its final cereal box would be an example of what type of inventory? A) Raw material B) Work-in-process C) Finished goods D) Maintenance, repair, and operating supplies (MRO)

B) Work-in-process

2. Johnson Company has the following data about customer orders for the month of June: Orders Received: 5,000 orders Total Units Ordered: 40,000 units Total Units Delivered: 37,800 Total Orders Delivered Complete: 4,600 What was Johnson's unit fill rate? A. 92 percent B. 94.5 percent C. 12.5 percent D. None of these

B. 94.5 percent

Customer relationship management attempts to: A. Ensure the development of customer success for customers. B. Ensure the development of strategically appropriate relationships with customers. C. Meet the expectations of customers. D. Use technology to replace human interaction with customers.

B. Ensure the development of strategically appropriate relationships with customers.

1. From an operations perspective, companies should strive to: A. Provide customer success to all customers. B. Realize different customer management approaches may be appropriate for different customers. C. Realize that all customers desire close customer success types of relationships. D. Never refuse to do business with a customer.

B. Realize different customer management approaches may be appropriate for different customers.

You are given the following information. Which of these statements can you support with this information? Maximum capacity = 600 pallets of goods per day Effective capacity = 500 pallets of goods per day During the month of July the output averaged 550 pallets per day. More capacity needs to be added in the short term to improve performance in the system. Clearly the employees are not performing as expected because the maximum utilization is only 91.7%. Because the effective utilization is 110%, management should be concerned about the ability to sustain this in the longterm. All the employees deserve a raise because they are exceeding expectations.

Because the effective utilization is 110%, management should be concerned about the ability to sustain this in the longterm Maximum capacity is what your facility can produce under ideal conditions and is not sustainable in the long run.

Adam Smith described his company's process as follows: "Under ideal conditions we can produce 10,000 units a day. However, our normal production is 6,000 units a day. Today, we actually produced 8,000 units." Which of the following is true? Utilization is 60 percent of maximum capacity. Utilization is 80 percent of maximum capacity. Utilization is 133 percent of effective capacity. Both B and C.

Both B and C 8,000/6,000 = 133 percent; this is how utilization of effective capacity is determined. Utilization of maximum capacity is 8000/10000.

Comcast places 10 orders per year with its supplier. Each order is for an amount exactly equal to the EOQ. Comcast has determined its annual inventory carrying cost is $2,000. Comcast carries no safety stock at all. What is Comcast's order cost per order. A) Cannot be determined without further information B) $2,000 C) $200 D) $1,500

C) $200 2000/10 = 200

The managers of a production line that fills cereal boxes would like to reach a Six Sigma level of quality in terms of product weight. The desired range of output extends from 10 to 16 ounces. In order to reach Six Sigma quality, what would the maximum standard deviation of output need to be? A) 1 ounce B) 2 ounces C) 0.5 ounces D) Not enough information is given to answer the question.

C) 0.5 ounces

If a restaurant has (on average) 30 customers being served, and the time required to serve a single customer is 30 minutes, what is the throughput rate in customer per hour? A) 15 customer per hour B) 30 customers per hour C) 60 customers per hour D) 5 customers per hour

C) 60 customers per hour

Under Juran's Law, whenever a problem occurs, what percentage of the time is the problem the result of a system/process error? A) 15 percent B) 50 percent C) 85 percent D) 100 percent

C) 85 percent

Alpha Company has a performance standard of 97% fill rate. Last month it acheived a 94% fill rate. This is an example of: A) A knowledge gap B) A standards gap C) A performance gap D) A perception gap

C) A performance gap

Moderate- to high-risk purchases with low to moderate levels of spend are categorized as: A) Noncritical. B) Leverage. C) Bottleneck. D) Strategic.

C) Bottleneck.

Taxes and insurance costs are an example of which of the following costs? A) Ordering costs B) Governmental costs C) Carrying (or holding) costs D) None of these selections

C) Carrying (or holding) costs

A growing emphasis on involving supply chain partners in product/process innovation is known as: A) Portfolio planning B) Launch and learn C) Codevelopment D) Design outsourcing

C) Codevelopment

What is another name for the "Q-system" of inventory? A) Qualified Inventory Order System B) Controlled Inventory Ordering System C) Continuous Review Inventory System D) Quick Response Inventory System

C) Continuous Review Inventory System

Which of the following types of strategic planning includes decisions such as what businesses to acquire and what businesses to divest? A) Functional Planning B) Finical Planning C) Corporate Strategic Planning C) Business Unit Strategic Planning

C) Corporate Strategic Planning

The use of technology to collect and analyze data concerning customers' buying behavior is an important aspect of: A) Basic customer service B) Customer satisfaction C) Customer relationship management D) Customer success

C) Customer relationship management

Which of these is not a cost of quality? A) External failure cost B) Prevention cost C) Design cost D) Inspection cost

C) Design cost

Which of these is not a principle of DFMA? A) Use standard materials B) Reduce the number of parts C) Design unique processes D) Use modular designs

C) Design unique processes

Zanda Corp. had outsourced its production to a company located in Asia. Recently it decided to continue to outsource but bring the production back to a company located in the United States. This decision was likely made after Zanda: A) Conducted a spend analysis. B) Conducted a make or buy analysis. C) Examined total cost of ownership. D) Developed supplier certification processes.

C) Examined total cost of ownership.

Bill wants to purchase a new machine that is expected to hold tighter tolerances on production parts. What functional managers are likely to have a stake in this decision? A) Logistics, Human Resources, Manufacturing B) Engineers, Manufacturing, Marketing C) Finance, Manufacturing, Engineering D) Sales, Finance, Logistics

C) Finance, Manufacturing, Engineering

Which of the following is NOT a possible outcome when the capacity of the process is less than the demand for the process? A) Customer dissatisfaction B) Poor quality C) Higher expenses due to underutilized resources D) High employee turnover

C) Higher expenses due to underutilized resources

The key to running an efficient assembly line is: A) Cost control B) Inventory management C) Line balancing D) Meeting promised customer delivery dates

C) Line balancing

Which of the following actions will NOT increase output? A) Increasing capacity through physical additions. B) Outsourcing. C) Managing the flow of work into the system. D) Changing the processes to eliminate unnecessary steps.

C) Managing the flow of work into the system.

Using technology, such as self-checkouts in grocery stores, to enable customers to complete the service delivery and transaction themselves is most commonly used for: A) Service factories. B) Service shops. C) Mass services. D) Professional services.

C) Mass services.

The stage of the product life cycle in which process innovation becomes an important way to increase efficiencies is: A) Launch B) Growth C) Maturity D) Decline

C) Maturity

McDonald's recently partnered with Uber Eats to provide home delivery service using then Uber Eats app. If McDonald's is the only fast food restaurant offering this service, this would be an example of an: A) Order loser B) Order qualifier C) Order winner D) Order feature

C) Order winner

Senior management thought customers expected at least of 96% for on time delivery. However, senior management established a standard of 94%. The difference is the: A) Satisfaction Gap B) Performance Gap C) Standards Gap D) Knowledge Gap

C) Standards Gap

The "right" amount of safety stock is often a function of Service Level. Service Level is: A) The probability of making the right product B) The probability of delay C) The probability of meeting demand during a delay D) The probability of delay causing more demand

C) The probability of meeting demand during a delay

"Concurrent engineering" is best described as: A) The simultaneous implementation of engineering projects critical to the manufacture of new products. B) Assigning multiple engineers to a project to ensure the accuracy of the work. C) The simultaneous design and development of all the processes and information needed to manufacture a product, to sell it, to distribute it, and to service it. D) Engineering techniques that seek to capture leading-edge knowledge and technology in the design phase of a new product.

C) The simultaneous design and development of all the processes and information needed to manufacture a product, to sell it, to distribute it, and to service it.

Alpha Company has a performance standard of 97 percent fill rate. Last month it achieved a 94 percent fill rate. This is an example of: A. A knowledge gap. B. A standards gap. C. A performance gap. D. A perception gap.

C. A performance gap.

The difference between a "customer success" focus and a "customer satisfaction" focus is that: A. Customer satisfaction is more difficult to achieve. B. Customer success deals with expectations of customers, satisfaction deals with their requirements. C. Customer satisfaction deals with expectations, customer success deals with requirements. D. There really isn't any difference.

C. Customer satisfaction deals with expectations, customer success deals with requirements.

14. Customers who are both low revenue generators and low profit generators for a firm should be: A. Terminated as customers. B. Provided with a minimum level of customer service. C. Reviewed for possible termination or continuation. D. Treated with customer success relationships to improve revenue and profit.

C. Reviewed for possible termination or continuation.

D. a​ well-trained, flexible workforce.

Core competencies reflect the collective learning of the organization. Core competencies include A. an abundance of competitors. B. an abundance of customers. C. employee benefits. D. a​ well-trained, flexible workforce.

c. What businesses should we be in? Corporate strategic planning is very broad and relates to what businesses the company should be involved in.

Corporate strategic planning involves decisions related to: a. All of these. b. What measures should we use to control strategic initiatives? c. What businesses should we be in? d. What specific product- and market-based initiatives and goals should we establish?

Dimensions of value

Cost, quality, time, flexibility

Maxmo Corporation identified the following costs for the most recent fiscal year: Vendor evaluation = $20,000 Design engineering = $100,000 Scrap = $15,000 Training = $30,000 Warranty = $40,000 What was Maxmo's total prevention cost for the year? A) $205,000 B) $85,000 C) $55,000 D) $150,000

D) $150,000 Vendor+Design+Training

The "house of quality" is best described as: A) An approach in which customers use product prototypes version and provide feedback to developers. B) A template that guides the translation of product features into technical product specifications. C) Research efforts that gather detailed data describing customers' wishes, needs, likes, and dislikes regarding specific product features and functionalities. D) A template that guides identification and translation of customer requirements into product specifications.

D) A template that guides identification and translation of customer requirements into product specifications.

Which of the following groups are NOT likely to be stakeholders for operations in a local bank? A) Customers B) Regulators C) Employees D) All of the above are likely to be stakeholders

D) All of the above are likely to be stakeholders

Which of the following statements are reasons why operations management is important? A) Efficient and productive operations drive the economic well-being of nations. B) Operations management is responsible for much of the value created by organizations. C) Operations management is a key source of competitive differentiation among firms. D) All of these are reasons why operations management is important.

D) All of these are reasons why operations management is important.

Which of the following is NOT true about "order qualifiers"? A) Customers may not be aware of any level of performance in excess of those minimum levels that they have established B) These are product traits that must meet a certain level in order for the product to even be considered by customers C) The firm must perform acceptably on these traits, usually at least as well as competitors' offerings D) All of these items are true

D) All of these items are true

An advantage of "early supplier involvement" is that it: A) Generally leads to higher-quality products. B) Decreases time to launch new products. C) Avoids supply problems once the product is launched. D) All of these.

D) All of these.

Scantron Inc. claims that its competitors have to recall 10 percent of their products to fix defects, while it only has to recall 5 percent. Scantron is emphasizing which dimension of quality? A) Durability B) Reliability C) Performance D) Conformance

D) Conformance

Which process structure is most likely used by a company that makes plastic soda bottles? A) Project B) Batch C) Job shop D) Continuous process

D) Continuous process

The idea that variability is the source of most quality problems was a major contribution of which quality management thought leader? A) Juran B) Imai C) Crosby D) Deming

D) Deming

Johnson Company makes widgets, which it then sends to Smith Company. Smith Company puts the widgets in packages. Smith Company is considered by Johnson to be a: A) Critical customer. B) Upstream product supplier. C) Aftermarket supplier. D) Downstream product supplier.

D) Downstream product supplier.

Process thinking causes managers to address critical process elements, including: A) If you don't like the outcome, focus on the people. B) Processes are guidelines to thinking about to best staff activities. C) Processes drive measurement. D) If you don't like the outcome, change the process.

D) If you don't like the outcome, change the process.

Which of the following traits is NOT one associated with a critical process? A) It is a bottleneck operation B) It is visible to the customer C) It is associated with a core competency D) It has been identified by management as critical

D) It has been identified by management as critical

Internal operations managers work with what function to coordinate inbound and outbound flows of materials and information? A) Finance B) Purchasing C) Marketing D) Logistics

D) Logistics

Joe Jones, plant manager at Waco Industries, told a fiend that if it was necessary, his plant could produce 1,000 items a day if all condition were just right. Joe is describing his plant's: A) Effective capacity B) Utilization C) Yield rate D) Maximum capacity

D) Maximum capacity

Joe Jones, plant manager at Waco Industries, told a friend that if it was necessary, his plant could produce 1,000 items a day if all conditions were just right. Joe is describing his plant's: A) Effective capacity. B) Yield rate. C) Utilization. D) Maximum capacity.

D) Maximum capacity.

If a company can eliminate all sources of variance in a process: A) Continuous improvement will not be necessary B) It will be able to operate at maximum capacity at all times C) There will be no constraints in the process D) None of these are true

D) None of these are true

Which of the following statements is most true regarding ISO 9000? A) ISO 9000 was designed specifically for the electronics industry B) ISO 9000 is a quality award given by the U.S. government C) ISO 9000 tells management specifically how to ensure quality D) None of these statements is true.

D) None of these statements is true.

Which of the following statements is NOT consistent with core values of TQM? A) Front line workers usually have the best ideas for solving problems B) Every employee has a stake in product quality C) Managers should support workers, not the other way around D) Opinions are as important as data.

D) Opinions are as important as data.

Which measure of basic service will most likely show poorest performance for a firm? A) Unit fill rate B) Order fill rate C) Line fill rate D) Perfect orders

D) Perfect orders

Within the supply chain and operation management system, the value proposition is most effectively communicated to the rest of the organization through which of the following mechanisms? A) Management mandates B) Mission statements C) Corporate slogans and promotional materials D) Performance measures

D) Performance measures

Xanadu Inc. decided to increase the training received by new employees. The expense of this training is an example of which of the following costs of quality: A) Appraisal costs B) External failure costs C) Internal failure costs D) Prevention costs E) Quality control costs

D) Prevention costs

The types of costs included in a cost of quality analysis include: A) Production, delivery, and marketing. B) Internal and external. C) Direct and indirect. D) Prevention, appraisal, and failure.

D) Prevention, appraisal, and failure.

Zanadu Corp. has dedicated equipment and workers in a regularly occurring sequence of activities. Zanadu has which type of operations layout? A) Fixed-position layout B) Functional layout C) Service factory layout D) Product layout

D) Product layout

Why are processes that are visible to the customer considered to be critical? A) They often exhibit the greatest variance (thus affecting customer waiting times). B) They are often bottlenecks (thus causing customer delays). C) They are often shared processes. D) They affect the customer perceptions of the firm.

D) They affect the customer perceptions of the firm.

Jones Manufacturing sells a part to Lear Corporation. Lear puts this part into a radio, which Lear then sells to Ford. From Ford's point of view, Jones Manufacturing is a(n) __________ supplier. A) Echelon 1 B) Echelon 2 C) Tier 1 D) Tier 2

D) Tier 2

A firm has found that it provides a 90 percent order fill rate (orders shipped complete), 90 percent on-time delivery, 90 percent of its orders arrive at customers' destination in perfect condition, and 90 percent of the time all documentation is correct. These are all of the elements of a perfect order for this company's customers. What is the best estimate of its perfect order performance? A. 90 percent B. 60 percent C. 0 percent D. 66 percent

D. 66 percent

Zanda Company has told a supplier that it is difficult to contact people in the supplier's company to learn the status of its orders and when they might arrive. Zanda is explaining which type of expectation it has of this supplier? A. Reliability B. Courtesy C. Credibility D. Access

D. Access

Which of the following statements most clearly expresses a company's commitment to customer success? A. "We attempt to meet or exceed the expectations of all of our customers." B. "We attempt to meet our standards of providing perfect order performance to all of our customers." C. "We attempt to meet the requirements of our customers." D. All of these are clear expressions of commitment to customer success.

D. All of these are clear expressions of commitment to customer success.

Jones Company promised a customer that the customer would receive at least 98 percent of all items ordered. In fact, the customer received 95 percent of the items. This is an example of which "gap" in the customer satisfaction model? A. Performance gap B. Knowledge gap C. Standards gap D. Communications gap

D. Communications gap

An example of strategic planning is: Deciding where to locate a new manufacturing plant. Forecasting next week's demand of a given product item. Targeting customer demand for aggregate product families. Setting inventory levels for a given product.

Deciding where to locate a new manufacturing plant. Strategic planning addresses long-term decisions involving large amounts of money.

Suppose you learn that a process has a very long waiting time. Which of the following would decrease the waiting time? Decrease utilization. Increase the coefficient of variation of job arrival times. Increase the coefficient of variation of job processing times. None of these would decrease waiting time.

Decrease utilization Decreasing utilization by adding resources will reduce waiting times. Increasing variance typically increases waiting times.

Order Winner

Dimension of value that differentiates one firm from another. Game Changer McDonalds provides fast service (speed)

Which of the following functions would NOT have to think about "processes"? A) Logistics management B) Production management C) Supply management D) Accounting E) All of these have to think about "processes."

E) All of these have to think about "processes."

A firm has found that it provides a 90 percent order fill rate (orders shipped complete), 90 percent on-time delivery, 90 percent of its orders arrive at customers' destination in perfect condition, and 90 percent of the time all documentation is correct. These are all of the elements of a perfect order for this company's customers. If the firm improves its performance in on-time delivery to 98 percent, what is its new perfect order performance? A. 88 percent B. 98 percent C. 0 percent D. 80 percent E. 71.4 percent

E. 71.4 percent

b. Fixed-position layout In a fixed-position layout, all of the necessary resources must come to the work site.

Ensuring that all the right people, equipment, and materials arrive on time is especially challenging when using which layout? a. Functional layout b. Fixed-position layout c. Product layout d. Service factory layout

Which of the following is considered a "process-related" competitive priority? Flexibility Quality Cost All of these

Flexibility Quality and cost are product-related. Flexibility is process related.

Stakeholders' demands often differ from the demands of customers or suppliers

For example, customers might care most about the price and quality of products, whereas some stakeholders might care most about environmental concerns. Like customers and suppliers, stakeholders can significantly affect how a firm operates. Customer management: is the management of the customer interface, including all aspects of order processing and fulfillment. Functional groups directly concerned with customer management have names such as distribution, sales, order fulfillment, and customer service. Managers in these functions are always thinking about ways to improve customer satisfaction in efficient ways.

g goods-manufacturing operations can use inventory to smooth out imbalances between production capacity and customer demand, a producer of services must maintain enough capacity to meet demand during peak periods; otherwise, it must postpone (backlog) the demand

For example, when you go into a restaurant during its busy time and the greeter asks you to wait in the lounge, you become part of a backlog of demand. Service operations managers often use reservation and appointment systems to help customers avoid long wait times. the customer may take part in producing and consuming the service at the same time: think of your roles as co-designer and quality inspector in getting a haircut

Strategy maps

Highlight the value dimensions that are most critical for the firm to deliver on Highlight the dimensions that are less important for the firm Provide a visual for how the firm is positioned in the market

How?

How is the good or service to be designed, made, and delivered?How much should our transformation process be able to deliver (and under what conditions)?How should we measure and assess performance?

Currently, our system is characterized by a lack of fit between what the customer wants and what the SCM system is best able to provide. As a result, which of the following would apply? I. The only way to restore fit is for the firm to change the market segment it is going after. II. Unless something is done, our firm will not be the most effective and efficient long-term supplier. III. Any firm can successfully counter such inconsistencies through the use of patents and aggressive advertising. I only. II only. III only. I and II only. I, II, and III.

II only This question looks at the issue of fit within the business model.

a. Business quality management. ISO 9000 is a broad set of standards applied to business quality management, not just product quality, quality control, or operations management.

ISO 9000 defines a set of internationally accepted standards for: a. Business quality management. b. Quality control. c. Operations management quality. d. Product quality.

a. Failure costs will go down. Appraisal costs are a choice, independent of prevention costs, whereas failure costs are likely to go down with well-framed prevention efforts. Some costs need to be impacted, otherwise the investment in prevention cost is not of any value.

If a company spends more on prevention, what would be the expected impact on other costs of quality? a. Failure costs will go down. b. Other costs will be unaffected. c. Appraisal costs will go up. d. Failure costs will go up.

c. Design quality. Design quality occurs when product features meet customers' desires and needs.

If a product includes features that customers care most about, we would say that it has high: a. Conformance quality. b. Aesthetics. c. Design quality. d. Reliability.

b. Reliability. Reliability is the length of time (or number of instances) a product performs as planned before a failure occurs.

If a tangible good or service performs the promised function dependably, we say that it has high: a. Conformance. b. Reliability. c. Durability. d. Perceived quality.

A well-designed value proposition possesses four characteristics. Which of the following is NOT one of those characteristics? It offers the highest product quality in each quality dimension. It differentiates the firm from its competition in a way that is difficult to imitate. It satisfies the financial and strategic objectives of the firm. It can be reliably delivered given the operational capabilities of the firm and its supporting supply chain.

If offers the highest product quality in each quality dimension. Providing value does not require the highest quality in each dimension of quality.

Process thinking causes managers to address critical process elements, including: If you don't like the outcome, focus on the people. Processes are guidelines to thinking about to best staff activities. Processes drive measurement. If you don't like the outcome, change the process.

If you don't like the outcome, change the process.

c. Costs associated with defects Failure costs are both internal and external expenses incurred when a product or service has defects.

In a Cost of Quality analysis, "failure costs" refers to: a. Costs of not considering customer needs b. Costs of not achieving goals c. Costs associated with defects d. Costs associated with mistakes

Processes can also transform information, or even people (customers), from one condition into another

In decision making, for example, managers transform data into actionable information and decisions. Think about how you are "transformed" by going to a movie—this is a process in which you are both an input and an output! Other processes transform things by transporting them from one location to another, or by storing them (e.g., a warehouse stores finished goods). design processes: to develop new goods and services

d. Conformance quality. Conformance quality is meeting design specifications.

In its promotional material for bed linens, Scarsdale Corporation states that all sheets and pillowcases sold to customers should have and actually do have a thread count of exactly 600 threads per inch. Scarsdale is apparently emphasizing: a. Design quality. b. Total quality management. c. Reliability. d. Conformance quality. e. Product quality.

d. the time at each workstation is driven by actual customer demand When designing a process, the time at each workstation is what is needed to meet customer demand.

In line balancing, _______ rev: a. efficiency is not affected by the takt time b. the number of actual workstations should always equal the theoretical number of workstations c. once determined, the balanced line should not be changed d. the time at each workstation is driven by actual customer demand

c. Precedence diagram A precedence diagram shows the relationships among tasks in a process.

In line-balancing, the relationships between tasks in a process is shown in a: a. Service blueprint b. Followers diagram c. Precedence diagram d. Product families diagram

Which of the following statements best describes "process thinking"? It is a way to manage thought processes to make better decisions. It is a way to view business as a system of inter-related activities. It is a way to approach work systematically It is a way to categorize elements of work activities

It is a way to view business as a system of inter-related activities. Process thinking looks at all operations as systems of activities that are related by material, information, and people flows, and by shared resources.

c. Functional layout. Unique routes and high processing times are characteristics of functional layouts.

John Jones, CEO of Joes Corp., is unhappy because each product his company makes takes a unique route through the facility, so processing times tend to be high. His company most likely has a: a. Fixed-position layout. b. Sequential action layout. c. Functional layout. d. Product layout.

a. Continuous process structure. Continuous process structures are used for make-to-stock orientations. The others are primarily make-to-order.

Jones Company has a make-to-order orientation. It most likely does NOT use: a. Continuous process structure. b. Cellular manufacturing process structure. c. Job shop process structure. d. Batch process structure.

a. Tier 2 A supplier's supplier is known as a Tier 2 supplier.

Jones Manufacturing sells a part to Lear Corporation. Lear puts this part into a radio, which Lear then sells to Ford. From Ford's point of view, Jones Manufacturing is a(n) __________ supplier. a. Tier 2 b. Echelon 1 c. Tier 1 d. Echelon 2

Buffer

Keeping inventoru between stages

d. Shorter flow times. According to Little's Law, decreasing flow times results in increased throughput.

Little's Law suggests that the key to increased throughput is: a. Eliminating waste. b. Fewer defects. c. Increased inspection. d. Shorter flow times.

Formulas for Waiting Lines (Single-Server Queue)

Look in Canvas if have access

Manufacturing vs. Services

Manufacturing vs services

Joe Jones, plant manager at Waco Industries, told a friend that if it was necessary, his plant could produce 1,000 items a day if all conditions were just right. Joe is describing his plant's: Effective capacity. Yield rate. Utilization. Maximum capacity.

Maximum capacity The output possible under ideal conditions is maximum capacity.

Process Capacity

Minimum capacity across all the stages

Order Qualifier

Minimum level of value required from a set of criteria for a firm to do business. Typical American restaurants provides low cost (price) of food, aswell as connivence.

d. The management of processes. "Processes" comprehends all of the aspects of operations management. The other answers are just possible components of operations management.

Operations management is: a. The management of production. b. The management of services. c. The management of physicians. d. The management of processes.

Lofty Inc. produces organic granola cereal. They are evaluating new suppliers for their nuts and grains. They started with a list of 10 potential suppliers. Three suppliers have been taken off the list for consideration because their grains cost too much. The remaining 7 suppliers have all been certified as organic and their quality is consistent. Lofty wants their final preferred supplier to have the ability to help them formulate new cereal recipes and provide the ingredients quickly so they can get to market before the competition. What are the order winners and order qualifiers in this scenario? ORDER WINNERS ORDER QUALIFIERS A. Cost, Quality Speed, Flexibility B. Flexibility, Quality Speed, Cost C. Speed, Cost Flexibility, Quality D. Speed, Flexibility Quality, Cost Option A. Option B. Option C. Option D.

Option D. Key is to understand the scenario and to apply the definitions of order winners, order qualifiers, and order losers. All alternatives would need to provide adequate quality and cost of ingredients. Speed and flexibility will be the winners as Lofty formulates new recipes ahead of their competition.

Eight Types of Waste

Overproduction, Inappropriate processing, waiting, transportation, motion, inventory, defect, underutilization of employees

Which three elements make up the triple bottom line? Planet, Pollution, Profit. Pollution, Equality, People. Profit, Equality, Pollution. People, Profit, Planet.

People, Profit, Planet

Xanadu makes HD televisions. It claims that its HD televisions have the clearest picture clarity in the industry. Xanadu is emphasizing which dimension of quality? Reliability Performance Features Conformance

Performance Picture clarity is a basic performance dimension of HD televisions.

c. Longer lead times and they can be inventoried. Physical goods typically have longer lead times than services and can be inventoried (services typically cannot). See Table 1-1.

Physical goods can be differentiated from services in the operations management process by: a. More labor intensive and longer lead times. b. More expensive and easier to control. c. Longer lead times and they can be inventoried. d. More capital intensive and short lead times.

Order Losers

Poor performance on these product traits can cause the loss of either current or future business. For example, when an online retailer fails to deliver an order in a timely manner, a customer might cancel the order and refuse to place orders in the future.

Four cost of quality dimensions

Prevention costs, appraisal costs, internal failure costs, external failure costs

Process Structure

Process Structure

b. If you don't like the outcome, change the process. This is strict definition and it comes from the textbook.

Process thinking causes managers to address critical process elements, including: a. If you don't like the outcome, focus on the people. b. If you don't like the outcome, change the process. c. Processes are guidelines to thinking about to best staff activities. d. Processes drive measurement.

Manufacturing: Product-Process Matrix

Product-process matrix

A. Processes

Regardless of how departments and functions are individually​ managed, they are always linked together through A. processes. B. procedures. C. executive oversight. D. information systems.

d. Appraisal cost Inspection is an appraisal cost.

Sanford Corp. bought new technological systems to inspect the quality of products as they come off the production line. The expense of operating these systems would be an example of which of the following types of quality-related costs? a. Internal failure cost b. Prevention cost c. External failure cost d. Appraisal cost

a. Conformance Defects are an indication of lack of conformance.

Scantron Inc. claims that its competitors have to recall 10 percent of their products to fix defects, while it only has to recall 5 percent. Scantron is emphasizing which dimension of quality? a. Conformance b. Durability c. Reliability d. Performance

D. logistics

Selecting the transportation mode​ (train, ship,​ truck, airplane, or​ pipeline) and scheduling both​ in-bound and outbound shipments is typically accomplished by which supply chain​ process? A. sourcing B. ​cross-docking C. warehousing D. logistics

Service: Customer-Contact Matrix

Service: Customer-Contact Matrix

μ

Service: Random, average service rate of μ(unit/time)

Bottleneck

Stage with the lowest capacity of stage with the longest cycle time. (process capacity)

Starving

Stoppage of activity because of lack of incoming material

Blocking

Stoppage of flow because of lack of storage place

A vice president of operations wants to evaluate the impact of reducing manufacturing expenses on the firm's return on assets. A measurement approach that he might consider for this is the: Strategic profit model. Balanced scorecard model. SCOR model. None of these.

Strategic profit model The strategic profit model provides a framework to analyze the impact of operations decisions on ROA.

a. Technology has facilitated globalization. Communications and transportation technologies have made global outsourcing easier, thus raising the need to focus on supply chains.

Supply chain management has grown as a prevalent perspective on operations management because: a. Technology has facilitated globalization. b. Firms have become more vertically integrated. c. Governments have become less open to trade. d. Purchasing managers now have stronger roles in companies.

a. Prevention is better than rework PDCA is a tool, not a core value (underlying belief).

Ted wants to hire more inspection personnel to insure that all products shipped are free of defects. What TQM core value would this action violate? a. Prevention is better than rework b. Workers are more valuable than managers c. Better quality leads to long term success d. A PDCA cycle should always be followed

Little's Law

The average amount of inventory in a system is equal to the product of the average demand rate and the average time a unit is in the system. λ< μ 𝑳= 𝝀𝑾 or 𝐿= 𝜆𝑊

a. IoT The Internet of Things (IoT) allows products and machines to connect to the Internet and share data with other devices.

The connection of products and machines for sharing data with other devices is: a. IoT b. ERP c. RFID d. UAV

C. capacity expansion.

The finance function influences operating decisions about A. demand forecasts. B. employee training. C. capacity expansion. D. delivery promises.

B- operations strategy

The foundation for managing processes and value chains is A. project management. B. operations strategy. C. globalization. D. a market orientation.

c. To prevent an improved process from becoming highly variable again. In the control step, workers devise ways to monitor the process and prevent variation from rising to unacceptable levels.

The objective of the "control" step in the DMAIC process is: a. To create controlled experiments to analyze sources of variation b. To consider differing opinions regarding the root causes of problems c. To prevent an improved process from becoming highly variable again. d. To be rigourous in following the DMAIC steps

Order Qualifiers

These are product traits such as availability, price, or conformance quality that must meet a certain level in order for the product to even be considered by customers. The firm must perform acceptably on these traits (i.e., the products must meet certain threshold values of performance), usually at least as well as competitors' offerings.

Order winners

These product traits cause customers to choose a product over a competitor's offering; for example, better performance or lower price. These are traits on which the operations management system must excel.

Why are processes that are visible to the customer considered to be critical? They often exhibit the greatest variance (thus affecting customer waiting times). They are often bottlenecks (thus causing customer delays). They are often shared processes. They affect the customer perceptions of the firm.

They affect the customer perceptions of the firm As discussed in the text, processes visible to the customer affect customer expectations and perceptions of the firm and the value that it delivers.

c. Internal production Over the last 50 years, globalization and outsourcing have caused a shift in operations management from an internal focus to a combined internal and external focus.

Up until the latter parts of the 20th century, operations management mainly focused on: a. Design b. Globalization c. Internal production d. External Outsourcing

Utilization

Utilization of a Stage = Capacity of the Process /Capacity of the Stage

Utilization Formula equation

Utilization: 𝜌= 𝜆 (arrivals)/𝜇 (service)

c. Cellular manufacturing. Cellular manufacturing attempts to maintain flexibility of job shops but at lower costs.

Wanda Corp. currently uses a job shop process. It wants to maintain the advantages of this but increase efficiency. Wanda should investigate: a. Job shop processes. b. Mass customization. c. Cellular manufacturing. d. Project process.

b. 1.9 minutes The takt time is the [time available]/customer demand. In this case [2 shifts per day x 8 hours per shift x 60 minutes per hour]/500 units = 1.9 minutes.

What is the takt time in minutes, if 500 units are needed per day? The company works 2, 8-hour shifts per day. a. 0.5 minutes b. 1.9 minutes c. 31.3 minutes d. 62.5 minutes

c. How many manufacturing plants should the company operate? Strategic planning deals with long term issues (years) at a business level, including making changes to a physical network of facilities.

What kinds of question does an operations manager who is responsible for strategic planning address? a. Which employees should work the day shift tomorrow? b. Should we make this part or buy it? c. How many manufacturing plants should the company operate? d. How should this process be organized?

What?

What types of activities and what types of goods or services are to be delivered by the system?What product features do our intended customers care about?What activities and resources are needed, and how should they be developed, allocated, and controlled?

Where and Who?

Where should certain activities be done, and who should do them: suppliers, partners, or the firm?

A. order fulfillment process

Which core process includes the activities required to produce and deliver the service or product to the external​ customer? A. order fulfillment process B. supplier relationship process C. new​ service/product development process D. customer relationship process

B. Perishable outputs

Which of the following are characteristics of service provider​ operations? A. Low customer contact B. Perishable outputs C. Low labor requirements D. Tangible output

a. Customers are more directly involved in service processes, so their perceptions need to be consideredIt is a way to categorize elements of work activities Customers are often intimately a part of the operations process. The process is the product, and customers directly and immediately observe the process.

Which of the following challenges are more likely to be faced by service operations managers, rather than manufacturing operations manager? a. Customers are more directly involved in service processes, so their perceptions need to be consideredIt is a way to categorize elements of work activities b. The "total product experience" is more important in services c. Pure service operations need to be separated from pure goods producing operations d. Operations is typically less financially important in service businesses

b. All of these have to think about "processes." All functions must think about processes.

Which of the following functions would NOT have to think about "processes"? a. Supply management b. All of these have to think about "processes." c. Production management d. Logistics management e. Accounting

d. All of the above are likely to be stakeholders A bank must consider the needs of its customers and employees, while also complying with government and other regulators.

Which of the following groups are NOT likely to be stakeholders for operations in a local bank? a. Customers b. Regulators c. Employees d. All of the above are likely to be stakeholders

a. Desired outcome statement This is based on the discussion of the business model.

Which of the following is NOT a component of the business model? a. Desired outcome statement b. System capabilities c. Value proposition d. Critical customer

d. All of the items are true. The characteristics described are all characteristics of order qualifiers, not order winners or losers.

Which of the following is NOT true about "order qualifiers"? a. These are product traits that must meet a certain level in order for the product to even be considered by customers. b. Customers may not be aware of any level of performance in excess of those minimum levels that they have established. c. The firm must perform acceptably on these traits, usually at least as well as competitors' offerings. d. All of the items are true.

c. A computer repair shop A computer repair shop tends to have a high degree of customization and customer interaction and relatively low labor intensive since much of the diagnosis is automated making it the best example of a service shop.

Which of the following is the best example of a service shop? a. A dentist b. A fast food restaurant such as McDonald's c. A computer repair shop d. An electrical utility company

b. Production/design processes unique to the firm. Core capabilities are skills, processes, and systems that are unique to the firm and desired by the customer.

Which of the following is the most appropriate definition of a core capability? a. A set of products unique to a firm. b. Production/design processes unique to the firm. c. Technical capabilities of a firm. d. Reputation.

b. A product characteristic that causes customers to choose the product over that of a competitor. Order winners are traits that cause customers to actually choose a specific product.

Which of the following is the most appropriate definition of an "order winner"? a. A product characteristic that permits the product to compete in a market. b. A product characteristic that causes customers to choose the product over that of a competitor. c. A product that generates the highest dollar sales volume. d. A product that has the highest profit margin.

d. An upholstered sofa For an upholstered sofa using an assemble-to-order orientation, the premade frames are held in inventory but the fabric is not added until a customer order is placed. Sofas can also be make to stock.

Which of the following products is most likely to use an assemble-to-order market orientation? a. Shampoo b. A mobile phone c. A race car d. An upholstered sofa

A. Ken had always been fascinated by shiny​ objects, so he plucked the​ chrome-plated thermos from the shelf and raced to the nearest checkout line.

Which of the following scenarios illustrates an order​ winner? A. Ken had always been fascinated by shiny​ objects, so he plucked the​ chrome-plated thermos from the shelf and raced to the nearest checkout line. B. A safety conscious customer considers only vehicles that have side air bags and​ anti-lock brakes. C. As part of her initial​ search, Janice screened mutual funds based on a​ five-year return of twenty percent and the manager tenure of at least ten years. She planned to study the prospectus for each of those funds before investing her nest egg. D. A company specifies that they will purchase materials only from suppliers that have achieved a specific certification.

d. Economies of scale refers to the fact that as volume increases, total cost of production decreases. Economies of scale refer to cost per unit of production, not total cost of production (which increases as volume goes up).

Which of the following statements about economies of scale is NOT true? a. One reason economies of scale occur is because employees become more efficient as volume increases. b. Economies of scale may not exist at all levels of production. c. One reason economies of scale occur is because fixed costs can be spread over more units of production as output increases. d. Economies of scale refers to the fact that as volume increases, total cost of production decreases.

D. Multifactor inputs must be expressed in a common unit of measure.

Which of the following statements about productivity is​ correct? A. The value of the input resources used divided by the values of the outputs produced. B. The number of workers used. C. The number of items produced. D. Multifactor inputs must be expressed in a common unit of measure.

a. It is a way to view business as a system of inter-related activities. Process thinking looks at all operations as systems of activities that are related by material, information, and people flows, and by shared resources.

Which of the following statements best describes "process thinking"? a. It is a way to view business as a system of inter-related activities. b. It is a way to manage thought processes to make better decisions. c. It is a way to approach work systematically d. It is a way to categorize elements of work activities

d. None of these statements is true. ISO 9000 certification can be applied to almost all industries. It guides managers in what to do but not how to do it.

Which of the following statements is most true regarding ISO 9000? a. ISO 9000 was designed specifically for the electronics industry b. ISO 9000 is a quality award given by the U.S. government c. ISO 9000 tells management specifically how to ensure quality d. None of these statements is true.

c. People, Profit, Planet. Simple definition.

Which three elements make up the triple bottom line? a. Pollution, Equality, People. b. Planet, Pollution, Profit. c. People, Profit, Planet. d. Profit, Equality, Pollution.

d. All these answers are correct. Quality has both objective and subjective elements. Operations managers tend to emphasize conformance, marketing managers tend to emphasize features, engineering managers tend to emphasize performance, reliability, and durability.

Why is product quality sometimes poorly defined in a firm? a. Managers are not clear on what characteristics customer care most about. b. Holistic measures of quality are difficult to develop. c. Managers in different functional areas tend to emphasize different dimensions of quality. d. All these answers are correct.

a. Sustainability. Maintaining operations that are profitable and nondamaging to the environment is sustainability.

Xanadu Inc. claims that its manufacturing processes result in fewer greenhouse gases than those of its primary competitors. This suggests that Xanadu has a focus on: a. Sustainability. b. Flexibility. c. Profitability. d. Risk management.

c. Performance Picture clarity is a basic performance dimension of HD televisions.

Xanadu makes HD televisions. It claims that its HD televisions have the clearest picture clarity in the industry. Xanadu is emphasizing which dimension of quality? a. Features b. Conformance c. Performance d. Reliability

Product-Process Matrix

a framework depicting when the different production process types are typically used depending on product volume and how standardized the product is

Process

a system of activities that transforms inputs into valuable outputs. Processes use resources (workers, machines, money, and knowledge) to transform inputs (such as materials, energy, money, people, and data) into outputs (goods and services). For example, one uses a grill (a resource) and heat (an input) to convert a raw hamburger patty (an input) into a cooked hamburger (an output).

Planning systems

access and development of sources of information, and use of proprietary decision support systems and processes.

Infrastructural decisions

affect the workforce, production planning and control, process innovation, and organization. Decisions in these areas determine what is done, when it is done, and who does it. Decisions in all of these areas are interrelated

Lead time

amount of time that passes between the beginning and ending of a set of activities, is often an order winner, especially for nonstandardized products. There are two types of lead time that are typically important.

SWOT

analysis helps managers match strategies with strengths and opportunities while also reducing risks associated with weaknesses and threats. It can be used in various ways—to kick off strategic thinking or as a serious detailed strategic assessment/planning tool.

Triple bottom line

approach to performance measurement. Using this approach, managers prepare three different measures of profit and loss. The first is the traditional measure of performance—monetary profit; the second is an assessment of its "people account"—how socially responsible the firm has been throughout its operations; and the third is the company's "planet account"—how environmentally responsible the firm has been. Together, these three Ps (Profit-People-Planet) capture the total impact of a firm's business.

Capabilities

are operational activities that the firm can perform well; these define the types of problems and solutions that operations can address proficiently.

Core capabilities

are the skills, processes, and systems that are unique to the firm and that enable it to deliver products that are both valued by the customer and difficult for competitors to imitate. These are strategically critical, and often the source of a stream of new products and market opportunities. For example, over the years Honda has developed successful products in a wide range of very different markets—motorcycles, power generators, cars, marine engines, lawn mowers, snow blowers, and now jet airplanes. In each market, Honda moved from being an outsider to become one of the major players.

Capabilities

are unique and superior operational abilities that stem from the routines, skills, and processes that the firm develops and uses. As we stated earlier, it is difficult for an operations system to simultaneously deliver high levels of performance on many different dimensions. Thus, it is important to develop capabilities in the few areas that are of greatest strategic value for the firm.

. Quality control is more difficult for services

as it is not always easy to objectively measure a service product's attributes. Service operations managers often evaluate both methods of delivery and customer perceptions.

service rate

average number of customers that can be processed over the same period of time when the facility is operating at maximum capacity

Inventory management

can make processes more or less efficient, depending on whether the inventory is used wisely or unwisely

Corporate strategy

communicates the overall mission of the firm and identifies the types of businesses that the firm wants to be in. For a large, multidivisional firm, key decisions in corporate strategy address what businesses to acquire and what businesses to divest. Corporate strategy typically covers a long time horizon, setting the overall values, direction, and goals of the firm as a whole.

a supply chain involves

connections and relationships among organizations that play various roles for a given set of products.

The McEasy Model is best in helping a company develop a _________ strategy.

corporate

External failure costs

costs associated with defects found after delivery to customer (warranty, recall)

Prevention costs

costs associated with preventing defects before they happen (training, improvement, projects, data gathering, analysis)

internal failure costs

costs from defects found before delivery to the customer (Rework, scrap, etc)

Appraisal costs

costs of the inspection and testing to ensure that the product or process is acceptable, asses quality levels. (staff, tools, inspection, etc)

Operations managers answer questions by

defining both the structural and infrastructural aspects of the operations management system.

Other terms sometimes substituted for supply chain include

demand chain, extended enterprise, supply network, or supply web

Operations management is about

designing, executing, and improving business processes.

Downstream stages of the supply chain are made up of layers of partners and customers commonly referred to as

echelons A single echelon might contain partners in locations all over the world. For example, there are usually many distributors for a given movie. These distributors can be thought of as suppliers of distribution services to the movie production company. The downstream supply chain can also be broken into different channels of distribution; theaters, direct/home delivery, and retail DVD/Blu-Ray sales are three channels

Formulas for waiting lines

equations

Business unit strategy

essentially deals with the question, "How should our business unit compete?" To answer this question, managers make choices regarding what customers and market segments they will deem critical, what products they will offer, and specifically how they will create advantages over the business unit's competitors. These choices collectively form the business model that the unit will pursue. For example, long ago Gillette developed the "razor and blades" business model—give away the razor but make your money on the replacement blades.

Fit

exists when operational capabilities support the value proposition and the outcomes desired by key customers. If strategic planning processes are neglected, over time the dynamics of changing market trends, technologies, and competition can destroy the fit between customer-desired outcomes, value propositions, and capabilities. A company can find itself with capabilities and value propositions that no customers care about, either because it made improper investments, or because existing customers changed, or both. For example, a firm may find itself using technologies that have become obsolete. Under such conditions, management has three options: (1) live with the mismatch (which means reduced profits and potential opportunities for the competition); (2) change the key customers to those who value the solutions provided by the firm; or (3) change the operational capabilities. Each option requires top management involvement, resources, and time

SBU consists of

functional groups such as internal operations, marketing, accounting, engineering, supply management, logistics, and finance (to name a few). Each function has to generate a strategic plan—one that is coordinated with and supportive of the SBU plan.

Most businesses integrate a mix of

goods-producing and service-producing operations activities.

Key customers

have the greatest impact on product designs, sales, and future growth opportunities. Often, but not always, the consumer is the key customer. For example, you are the consumer of this book, yet another customer (your professor) has had greater impact on the product design, sales, and growth opportunities for this product.

Utilization

how much time work is being conducted Utilization of a stage= Capacity of the process/ Capacity of the stage.

The bottom three blocks represent the foundational principles that describe

how operational processes work, how product and process characteristics are intertwined, and how certain process structures are related to operational objectives. In order to make good decisions, operations managers need to understand the "physics" that govern processes, as well as understand how they relate to product design and development.

Operations management is mainly concerned with

how resources will be developed and used to accomplish business goals.

How operations management effects quality of life example

in an emergency, the speed and efficiency of a relief organization might even save your life

Operational activities exist

in order to produce both tangible goods and intangible services

Customers

include anyone (individuals or organizations) that uses or consumes the products of operations management processes. An organization cannot structure an effective or efficient operations management function unless it has clearly identified its customers.

Stakeholders

include employees and unions, the local community, social groups (such as animals' rights or environmental concerns), government, and financial investors

Operations management activities located throughout a supply chain create and enhance the value of goods and services by

increasing their economic value (e.g., lowering delivered cost), functional value (e.g., improving product quality or convenience), and psychosocial value (e.g., improving product aesthetics and desirability)

Operations management deals with processes that transform

inputs, including materials, information, energy, money, and even people, into goods and services.

Operations managers

interacts with managers in other business functions, both inside and outside the operations manager's own company

Types of customers include

internal customers, intermediate customers, and final customers. For example, consider a car manufacturer. A company-owned distribution center might be considered an internal customer of the manufacturing group; a dealership is an intermediate customer; and people who buy the car and drive it off the dealer's lot are the final customers, or consumers.

Operational planning

inventory and requirements planning activities address demands, materials, and capacities at the individual product level. Tactical planning usually spans months, whereas operational planning usually addresses weeks or days of activity.

Product quality

is a result of how people and technologies work together to execute processes

2 Operations strategy

is a set of competitive priorities coupled with supply chain structural and infrastructural design choices intended to create capabilities that support a set of value propositions targeted to address the needs of critical customers. Strategic decisions define the competitive objectives of an organization, establishing both the specific performance targets and the means by which the targets will be achieved.

The value proposition

is all of the tangible and intangible "benefits" that customers can expect to obtain by using the products offered by the firm.

Flexibility

is generally defined as an operation's ability to respond efficiently to changes in products, processes (including supply chain relationships), and competitive environments. The words respond efficiently mean that an operation can cope with a wider range of changes faster or with less cost than competitors can.

Quality

is its fitness for consumption by the customer who bought it. It is an assessment of how well the customer's expectations are met. Some dimensions of quality are often viewed by customers as minimum requirements (order qualifiers) for most products. For example, poor conformance quality (many defects) is not tolerated in most markets. At the same time, superiority in other dimensions of quality can significantly differentiate a product

The result of the core capabilities approach

is supply chains in which each of the partnering organizations focuses on what it does best. The overall effect is to produce greater product value through higher quality and greater efficiencies.

The key customer

is the customer or customer segment receiving priority because it is highly important to the firm's current or future success.

Supply chain management

is the design and execution of relationships and flows that connect the parties and processes across a supply chain.

A supply chain

is the global network of organizations and activities involved in (1) designing a set of goods and services and their related processes, (2) transforming inputs into goods and services, (3) consuming these goods and services, and (4) disposing of these goods and services

Supply chain management

is the integration of operations management decisions across organizational boundaries

Operations Management

is the management of processes used to design, supply, produce, and deliver valuable goods and services to customers

Supply management

is the management of processes used to identify, acquire, and administer inputs to the firm. Related functional groups are called by names such as purchasing, sourcing, and procurement. Managers in these functions are always thinking about insourcing and outsourcing opportunities and ways to improve supply transactions and relationships.

Logistics management

is the management of the movement of materials and information within, into, and out of the firm. Logistics functions go by names including transportation/traffic management, warehousing, materials managers, and so on. Managers in these functions are always thinking about ways to optimize these flows through better scheduling and the use of alternative transportation, storage, and information technologies

Time to market

is the total time that a firm takes to conceive, design, test, produce, and deliver a new or revised product for the marketplace. This lead time is a once-in-product-life-cycle event. That is, a firm may spend 18 months designing a car and getting the supply chain ready for production, but once production has been ramped up and the cars begin rolling off the assembly line, there is no significant design product lead time needed to make subsequent copies of that car. Time to market can be an order winner if the new product offers features or performance that is not available in other products.

Contributor to apple's success

managing operations across supply chain

Operations management focuses on

managing processes (design, supply, production, delivery); supply chain management focuses on managing relationships and flows (flows of information, materials, energy, money, and people). Think of supply chain management as a way of viewing operations management. You can also think of the supply chain as a network of organizations in which operations activities are conducted. Operations managers interact with three important groups that are external to the firm: (1) customers, (2) suppliers, and (3) stakeholders

Structural decisions affect

physical resources such as capacity, facilities, technology, and the supply chain network. Once made, decisions in these areas determine what the operations management system can and cannot do well. Altering these decisions often requires significant investments and lots of time

Operations management is a ??? discipline

process-oriented

Lean operation

produces maximum levels of efficiency and effectiveness using a minimal amount of resources.

Technology

proprietary usage of hardware or software that enables the firm to do things differently and/or better than competitors

Resource and technology suppliers

provide equipment, labor, product and process designs, and other resources needed to support a firm's processes.

Aftermarket suppliers

provide product service and support such as maintenance, repair, disposal, or recycling.

Total product experiesnce

refers to all of the outputs of an operation, both goods and services, that are combined to define a customer's complete consumption experience. The experience includes all aspects of purchasing, consuming, and disposing of the product.

Innovation

refers to both radical and incremental changes in processes and products. Especially in highly industrialized countries, innovation is an important way to create new demand. Through the creation of new and improved products, firms can appeal to new market segments or take away business from competitors. Innovation may be a response to emerging customer needs, or it can even be a way to create new needs. For example, with the creation of the iPod, Apple combined existing technologies in a way that created a new business for selling online music and other content.

A "loyalty" business model

rewards customers for continuing to deal with the firm. This model has been widely implemented in the airline industry

Dell successfully applied the "direct sales" business model in computers

sell computers directly to the end consumer.

goods can be produced in advance and stored in inventory until a customer buys or consumes them

services are intangible, they cannot be stored. The production and consumption of a service usually occur at the same time

It is valuable to think about operations as

sets of processes and subprocesses with many interrelationships and linkages. Consider the operations of an airport. There are flight-scheduling processes, ticketing processes, facilities-management processes, security processes, vendor-management processes, and on and on

People and culture

skills, associated training programs, and cultural norms for the company that produce better motivation and performance. The impact of culture must be recognized at both a corporate and at a national level.

Processes

specialized routines, procedures, and performance measurement systems that guide operational activities.

Value proposition

statement of product and service features that the firm offers to its customers. A value proposition needs to be both attractive to customers and different from what is offered by the firm's competitors.For example, Walmart's value proposition has been to offer everyday low prices on a wide variety of products. The value proposition is critical because it not only defines how the firm competes, it also determines the types of products that the firm will (and will not) offer.

because products and markets differ across business divisions, a separate management team (usually headed by a president or vice president) is usually needed to run each of these semi-independent organizations

strategic business unit (SBU)

Tactical planing

such as sales and operations planning, seeks to identify and target customer demands for aggregate product families and to establish the inventory and capacity plans needed to satisfy these overall demands.

Book helps us study operations management from the perfective of

supply chain

Just-in-time philosophy

the belief that waste can be eliminated by cutting unnecessary capacity or inventory and removing non-value-added activities in operations Only produce what is needed Make problems visible, act immediately when they occur

value proposition

the constellation of value dimensions that matter to a customer, with some of those dimensions qualifying the product or service for consideration, one dimension distinguishing it from the competition. A value proposition is essentially a promise made to the customer

A business unit's strategy and business model are both shaped by

the corporate strategy, by the specific requirements of the SBU's products and markets, and by the SBU's operating capabilities.

Timeliness

the degree to which the product is delivered or available when the customer wants it, are a primary indicator of customer service in many businesses. These dimensions can serve as order winners or qualifiers, depending on the situation. On-time delivery of a product is in many cases an order qualifier (or order loser, if the product is late). Similarly, availability of a good or service is usually a qualifier. For example, grocery store customers expect products to be on the shelf.

Within a supply chain context, operations management brings together four major sets of players

the firm, customers, suppliers, and stakeholders.

sustainability

the focus is on maintaining operations that are both profitable and nondamaging to society or the environment

"Supply chain management" represents

the latest technological shift in operations management. More and more nations have moved away from centrally controlled economies to pursue free market systems: Russia, India, and China represent a few important examples. These falling political barriers have opened up new opportunities to develop global supply chains. Core capability: is a unique set of skills that confers competitive advantages to a firm, because rival firms cannot easily duplicate them. For example, Honda was one of the first companies to outsource many non-core activities such as component manufacturing, logistics, and other services. This allowed Honda to concentrate on design and assembly of motors and engines, its core capabilities.

Operations Management

the management of processes used to design, supply, produce, and deliver goods and services

Operations Strategy

the means by which operations implements the firm's corporate strategy and helps to build a customer-driven firm requires intentional trade-offs An operating system is like any other system; it can't do everything exceptionally well Does certain things exceptionally well: value proposition While placing less emphasis on other, less important dimensions

Operations management includes

the planning and execution of tasks that may be long-term (yearly) or short-term (daily) in nature

interarrival time

the time between customer arrivals to a system

Order-to-delivery lead time

this encompasses the time interval starting at the moment that the customer places an order for a product, including the time required to place and fulfill an order, and ending at the moment that the customer takes delivery of the product. In services, customers often judge the value of a service largely on the operation's order-to-delivery performance. For example, a dining experience is marred by slow service, or it is irritating when a salesperson seems to have gotten lost in the back room. Order-to-delivery lead time is also important for highly customized, made-to-order products; a piece of customized jewelry, for example.

each upstream stage of supply is known as a

tier. tier number refers to how directly the supplier works with the firm. A first-tier supplier provides goods and services directly to the firm. For example, the stock film wholesaler is a first-tier supplier to the movie production company

Risk management

to build operations that anticipate and deal with problems resulting from natural events (e.g., earthquakes), social factors (e.g., strikes), economic issues (e.g., the bankruptcy of a critical supplier), or technological issues (e.g., finding a major flaw in software). In addition to these operational types of risks, safety and security are growing key concerns, especially as supply chain operations become more global and dispersed. A famous example is provided by Mattel in 2007. The company recalled over nine million toys because of concerns over lead in the paint that was introduced by the actions of a lower-tier supplier located in China. In a more recent example, Volkswagen was ordered in 2015 to recall nearly a half million cars because these cars had software intentionally designed to circumvent environmental standards for reducing smog.

strategic planning processes

to determine how the firm should compete

evaluation processes

to measure and report how well they are meeting their goals or using their resources.

production processes

to plan and execute the supply, manufacture, and delivery of goods and services to customers

Downstream product suppliers

typically provide enhancements to finished goods such as assembly, packaging, storage, and transportation services.

Upstream product suppliers

typically provide raw materials, components, and services directly related to manufacturing or service production processes.

Supply chain relationships

unique and exclusive relationships with customers and suppliers that are unmatched by competitors.

Operational capabilities

unique and superior abilities based upon the firm's routines, skills and processes that enable the firm to meet customer expectations and are difficult imitate How an organization delivers the value proposition

Costs

usually treats certain dimensions of quality and timeliness as givens and focuses on reducing cost.Different types of costs may be more or less important to customers, depending on the product type. Purchase cost (price) is usually most important for consumer goods. However, maintenance and operating costs are often much more important for customers buying long-life items such as industrial machinery. Disposal costs are becoming more important considerations for durable goods (cars, washing machines) due to environmental concerns.

Strategic planning

which includes high-level product and resource design decisions that define the overall operations objectives and capabilities for the firm and its partners. For example, strategic planning decisions would include what new products to develop, where to locate new plants, and what new technologies to buy. These types of decisions take a long time to implement, and the choices made put limits on the capacities and capabilities governing operational processes.

C- processes

​_______ are the fundamental activities that organizations use to do work and achieve their goals. A. Inputs B. Tasks C. Processes D. Operations

Average number of customers in the system equation

𝐿= 𝜆/(𝜇-𝜆) Arrivals/ (Service-Arrivals)

Average number of customers in the line:

𝐿𝑞 = 𝜌*𝐿

Probability of n customers in the system equation

𝑃𝑛= (1 −𝜌)𝜌^𝑛

Average time spent in the system:

𝑊 = 1/𝜇−𝜆