Deck 16: Operations Management: Putting It All Together

Question 1

Tony oversees the activities in creating the right goods and services in the right quantities and distributing them to the right customers. His decisions have a major impact on both the revenue and costs his firm incurs, and therefore on the firm's financial success. This is an example of operations management.

Answer 1

True

Question 2

Land and supply of utilities are factors that affect location decisions.

Answer 2

True

Question 3

A process is a set of activities that transform inputs into outputs.

Answer 3

True

Question 4

An example of product layout is an assembly line where the product being produced moves from one station to another in a fixed sequence.

Question 5

Operations management is concerned with all of the activities involved in creating goods and services and distributing them to customers.

Question 6

Many supply chains today span multiple organizations located in many different countries.

Question 7

Ralph and Dave are business partners in a small manufacturing firm that makes special types of containers for fragile products. Ralph is mainly concerned with product development and works directly with customers to design high-quality containers that meet their specific needs. Dave is more concerned with finding ways to produce the company's products at the lowest possible cost. In this partnership, Ralph is more concerned with effectiveness while Dave is more concerned with efficiency.

Question 8

Over the long run, a firm must choose to either be effective or efficient, because it is impossible to achieve both objectives consistently within the same organization.

Question 9

When operations managers do their job well, a firm produces the right goods and services in the right quantities-and distributes them to the right customers at the right time.

Question 10

A product layout is used by many firms that need to produce small batches of goods that require a degree of customization.

Question 11

The best process approach depends on considerations such as the volume of production and the degree of standardization of the product.

Question 12

Goods are considered tangible, while services are considered intangible.

Question 13

Effectiveness means producing products and services that create value by providing customers with goods and services that offer a better relationship between price and perceived benefits.

Question 14

Operations managers attempt to use effective and efficient methods to produce the right goods and services in the right quantities and distribute them to the right customers at the right time.

Question 15

A local diner makes milkshakes the old-fashioned way: it hand-dips premium ice cream, adds fresh whole milk and other high-quality ingredients, individually mixes the shake when ordered, and puts whipped cream and a cherry on top. The cost of this approach is higher than the cost of producing shakes at most fast food outlets, but the diner is famous among local patrons for having the best shakes in town. This diner clearly focuses more on effectiveness than on efficiency.

Question 16

Durable goods are expected to last three years or longer; examples include furniture, cars, and appliances.

Question 17

Services are activities that yield benefits but do not directly result in a physical product.

Question 18

Operations management is more concerned with efficiency than with effectiveness.

Question 19

Process layout arranges equipment according to the type of task performed.

Question 20

Efficiency means producing a product or service at the lowest cost.

Question 21

The critical path method may illustrate several different paths that must be completed in order to complete the entire project.

Question 22

A major reason Canadian businesses outsource operational activities overseas is to take advantage of the low cost of labour and other resources.

Question 23

Immediate predecessors are activities in a project that are independent of any other project activities, and thus have no effect on when these other activities are performed.

Question 24

In a critical path network, those activities that aren't on the critical path typically have some slack, meaning that a delay in their completion is unlikely to create a delay in the completion of the overall project-as long as the delay isn't too great.

Question 25

A fixed position layout is used for goods that must be produced at a specific site or that are so large and bulky that it is not feasible to move them from station to station.

Question 26

The supply chain involves the flow of materials and physical goods through all the organizations involved in the production and distribution of a product, as well as the services, financial resources, and information that may be involved with the process.

Question 27

One weakness of the critical path method is that it doesn't provide a way to determine the sequence in which the activities involved in a project must be performed.

Question 28

Outsourcing allows a firm to shed functions it does not perform well in order to focus on its areas of strength.

Question 29

The critical path method is a project management tool that illustrates the relationships among the activities involved in completing a project and enables managers to identify those activities that are most likely to create delays in the completion of the overall project.

Question 30

The selection of the best type of process for a given type of production is influenced by the cost of production and the degree to which the output is customized.

Question 31

A cellular layout falls behind the product layout and the process layout as it groups different types of machinery and equipment into self-contained cells. Products move from one station in the cell to the next in a specific sequence.

Question 32

The critical path method (CPM) is a network of relationships that channels the flow of inputs, information, and financial resources through all of the processes directly or indirectly involved in producing goods and services and distributing them to customers.

Question 33

Holding larger inventories helps prevent stock outages and lost sales.

Question 34

Vertical integration means outsourcing all activities in the supply chain with the exception of the very basic things the firm wants to do itself.

Question 35

Offshoring is the same as outsourcing.

Question 36

Vertical integration is the arranging for other organizations to perform supply chain functions that were previously performed internally.

Question 37

The Stock N Stuffer company produces small, inexpensive toys and novelties that are often used as stocking stuffers during the Christmas season. Almost half of all of the company's sales come between November 1st and December 24th. Stock N Stuffer is likely to find that it makes sense to build up relatively large inventories of goods over the summer and fall months.

Question 38

The critical path method focuses on controlling inventory levels during the production process to ensure that enough parts and materials are available to support production.

Question 39

The critical path in a project is the sequence of activities expected to take the longest to complete. Any delay in an activity on the critical path is likely to create a delay in completing the project.

Question 40

Wages earned by workers in the nation of Ruritania are only a third as high as the wages paid to Canadian workers. This clearly means that Canadian firms that outsource production to Ruritania will enjoy much lower costs of production.

Question 41

Outsourcing is essentially the opposite of vertical integration.

Question 42

With services quality is based mainly on customer perceptions.

Question 43

Goods must be consumed when they are produced.

Question 44

Enterprise resource planning (ERP) is a software-based approach to integrating an organization's systems in order to improve communication and coordination among all departments and operating units. The newest versions of ERP extend this coordination to other organizations within the supply chain.

Question 45

Factors that contribute to the cost and challenge of implementing ERP systems include the complexity of the software itself, the need to transfer data and information into the new system, and the challenge of training employees to use the system.

Question 46

Functionality within a servicescape means that the goods function as they are expected to.

Question 47

Outsourcing is an arrangement with outside organizations to perform supply chain functions that were previously performed internally.

Question 48

Because customers often participate in the provision of services, service providers have less control over how the process is carried out and whether the result is satisfactory.

Question 49

Although enterprise resource planning software is very easy to implement, once it is in place many organizations find it difficult to use because it makes data entry much more complex.

Question 50

Supply chains focus exclusively on coordinating the flow of materials and physical goods. The corresponding flows of information, financial resources, and other services are coordinated by enterprise planning systems that are separate from the supply chain.

Question 51

Computer-aided manufacturing (CAM) is software that enables users to test, analyze, and optimize their designs. This type of software frequently allows engineers to catch design flaws before production.

Question 52

Computer-integrated manufacturing (CIM) takes the electronic design for a product and creates the programmed instructions that robots must follow to produce that product as efficiently as possible.

Question 53

Vertical integration means performing functions in a supply chain internally rather than having them outsourced.

Question 54

The design of servicescapes centres on three types of factors: ambience; type of customers; and signs, symbols, and artifacts.

Question 55

If the capacity of a service facility is too small, customers facing long waits during periods of peak demand may well take their business elsewhere.

Question 56

A servicescape is the environment in which the customer and service provider interact.

Question 57

Ambience refers to factors such as décor, background music, lighting, noise levels, and even scents.

Question 58

One way a movie theatre may attempt to spread out demand is to offer lower prices for matinée showings.

Question 59

In recent years the trend has been to rely less on outsourcing.

Question 60

Computer-aided design/computer-aided manufacturing (CAD/CAM) is a combination of software that is used to design output and send instructions to automated equipment to perform the steps needed to produce this output.

Question 61

Automation replaces the direct human operation of machinery, but it has no impact on human control.

Question 62

John Stevens is a design engineer who uses powerful software to test and analyze his designs before the company goes to the expense of producing any real prototypes. The kind of software John is using is called computer-integrated manufacturing software.

Question 63

The Baldrige National Quality Program is an international program to promote operational procedure guidelines for all business practices.

Question 64

One advantage of computer-aided engineering is that it often allows engineers to catch design flaws before production occurs.

Question 65

Lean production emphasizes the elimination of waste in all aspects of production processes.

Question 66

In order to participate in the Baldrige National Quality Program, firms are required to incorporate the Six Sigma quality program.

Question 67

Computer-aided design (CAD) software provides powerful drawing and drafting tools that enable users to create and edit blueprints and design drawings quickly and easily.

Question 68

Total quality management (TQM) is based on customer focus, building quality throughout the organization, empowering employees, pursuing a strategy of preventing mistakes, and demonstrating a long-term commitment to continuous improvement.

Question 69

ISO 9000 is a set of generic standards for quality management systems established by the International Organization for Standardization.

Question 70

W. Edwards Deming taught that improving quality was a key to business success.

Question 71

Six Sigma shares some characteristics with TQM, such as an organization-wide focus on quality and a long-term commitment to continuous quality improvement.

Question 72

Total quality management (TQM) relies on a small cadre of quality experts to exert complete control over the organization's quality assurance efforts.

Question 73

Just-in-time production is called a pull system because actual orders "pull" the goods through the production process.

Question 74

Just-in-time production is a production system that emphasizes the production of goods to meet actual current demand, thus minimizing the need to hold inventories of finished goods and work-in-process at each stage of the supply chain.

Question 75

Just-in-time production may leave producers vulnerable to supply disruptions.

Question 76

Robots are often used to perform tedious, dangerous, or dirty work that otherwise would be performed by reluctant employees.

Question 77

Japanese firms embraced the ideas of quality experts such as W. Edwards Deming and revolutionized their manufacturing by adopting a strategy of a continuous quality improvement.

Question 78

TQM attempts to reduce defects by using simple procedures built into the production process that prevent workers from making mistakes or allows them to catch and correct mistakes quickly if they do occur.

Question 79

Computer-aided engineering (CAE) software enables users to test, analyze, and optimize their designs.

Question 80

The Deming Chain Reaction refers to the compounding of interest that explains why a dollar today is worth more than a dollar tomorrow.