# Management Fundamentals

## Quiz 14 :Operations, Quality, and Productivity Endnotes Index

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The following critical-thinking questions can be used for class discussion and/or as written assignments to develop communication skills. Be sure to give complete explanations for all questions. What is your view of the quality of products you have purchased over the past year compared to previous years? Did you have to return and exchange products or have them repaired? Do you think that quality is getting better with time?
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Yes, there were times when I had to get the product repaired but that does not happen always because of ISO 9000 certification. ISO 9000 is concerned with any product that comes into the market needs an approval of ISO 9000 which is a certificate for quality standard.
Yes, I do think that quality is getting better with time as nowadays companies are focusing more on creating customer value which can be enhanced by giving quality products to customers.

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Objective To develop your skill at calculating EOQ. Skills The primary skills developed through this exercise are: 1. Management skill - decision making 2. AACSB competency - analytic 3. Management function - controlling Calculate the EOQ for each of the following four situations: _________ 1. R 5 2,000, S 5 $15.00, H 5$5.00 _________ 2. H 5 $10.00, R 5 7,500, S 5$40.00 _________ 3. R 5 500, H 5 $15.00, S 5$35.00 _________ 4. S 5 $50.00, H 5$25.00, R 5 19,000 Apply It What did I learn from this experience? How will I use this knowledge in the future? ________________________________ ________________________________
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The formula for Economic order quantity (EOQ) is:
Where R is total required over planning horizon, S is cost of preparing one order and H is cost of holding one unit for the planning horizon.
1. Economic order quantity (EOQ) is calculated as:
2. Economic order quantity (EOQ) is calculated as:
3. Economic order quantity (EOQ) is calculated as:
4. Economic order quantity (EOQ) is calculated as:
I learned from this experience that Economic order quantity (EOQ) is the optimal quantity of a product to be ordered. The more often we order, the higher will be ordering cost, but we order less, then our holding cost will go up.
I will apply this knowledge in future by using this mathematical model as we can minimize ordering and holding costs without running out of stock.

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Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system. The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost. In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect. In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company. However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record$48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company. As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition. _______ Which of the four major principles of TQM most apply to this case?
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The answer is (b) continually improve systems and processes
Out of the four major principles of TQM the most apply to this case is continually improve systems and processes.
In 2005, the company introduced an aggressive version of CCC21 dubbed as Value Innovation, which promised more savings by making the entire development process cheaper and faster; further trimming parts, production costs and time to market.
With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months.
Toyota also began to design parts for many of its cars that were cheaper and lighter further cutting cost for the company. Thus it can be rightly said that it focused more on its systems and processes.

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Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system. The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost. In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect. In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company. However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record$48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company. As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition. _______ Based on the resources they require, Toyota's operations are classified as _______.
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Objective To review your course learning, critical thinking, and skill development. Skills The primary skills developed through this exercise are: 1. Management skill - decision making 2. AACSB competency - reflective thinking 3. Management function - controlling Think about and write/type the three or four most important things you learned or skills you developed through this course and how they are or will help you in your personal and/or professional lives. Apply It What did I learn from this experience? How will I use this knowledge in the future? ________________________________ ________________________________
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Objective To review your course Self-Assessments. Skills The primary skills developed through this exercise are: 1. Management skill - decision making 2. AACSB competency - reflective thinking 3. Management function - controlling Break into groups and discuss your answers to the Self- Assessment, Putting It All Together. Focus on helping each other improve career development plans. Apply It What did I learn from this experience? How will I use this knowledge in the future? ________________________________ ________________________________
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Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system. The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost. In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect. In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company. However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record$48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company. As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition. _______ Based on their level of flexibility, Toyota's operations are classified as _______ process operations.
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The following critical-thinking questions can be used for class discussion and/or as written assignments to develop communication skills. Be sure to give complete explanations for all questions. Assume you are planning a major event or project, such as a big wedding. (If you have an actual future event or project, use it rather than selecting an assumed event.) Would you use the planning sheet, Gantt chart, or PERT to plan and control the event? Why? Identify the major things that you need to plan for and make, and put them on the actual form using either Exhibit 14-5, 14-6, or 14-7 as a guide
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The following critical-thinking questions can be used for class discussion and/or as written assignments to develop communication skills. Be sure to give complete explanations for all questions. Many companies are now using radio-frequency identification (RFID) technology. RFID is revolutionary and is helping businesses improve supply chain management. However, critics are concerned about protecting people's privacy. For example, with RFID, businesses will better know consumers' shopping habits and purchases. Do you want businesses to know where you live and the products you have in your house? Explain
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The following critical-thinking questions can be used for class discussion and/or as written assignments to develop communication skills. Be sure to give complete explanations for all questions. Why are some companies (such as Apple) innovative when it comes to changing products and processes, while others (such as Eastman Kodak) are slow to innovate and change?
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The following critical-thinking questions can be used for class discussion and/or as written assignments to develop communication skills. Be sure to give complete explanations for all questions. Is the trend toward broader product mix with unrelated diversification? Why or why not?
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The following critical-thinking questions can be used for class discussion and/or as written assignments to develop communication skills. Be sure to give complete explanations for all questions. Can a standard make-to-stock product (such as soda) also be made-to-order? If so, how?
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Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system. The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost. In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect. In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company. However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record$48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company. As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition. _______ Based on their level of customer involvement, Toyota's operations are classified primarily as _______ operations.
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The following critical-thinking questions can be used for class discussion and/or as written assignments to develop communication skills. Be sure to give complete explanations for all questions. Think about your career and the ideal job you are planning to obtain. Use Exhibit 14-2 to classify the operations systems and Exhibit 14-4 to identify the facility layout where you will work
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The following critical-thinking questions can be used for class discussion and/or as written assignments to develop communication skills. Be sure to give complete explanations for all questions. The balanced scorecard (BSC) calls for measuring performance in four areas. If a business is making good profits, should it bother with the other three nonfinancing measures? Why or why not?
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Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system. The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost. In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect. In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company. However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record$48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company. As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition. Inventory and quality control needs to include Toyota's suppliers.
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Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system. The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost. In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect. In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company. However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record$48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company. As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition. _______ Automobiles produced by Toyota are classified as _______ products.
Multiple Choice
Toyota Motor Corporation, commonly known simply as Toyota, is a Japanese multinational corporation headquartered in Toyota, Aichi, Japan. It is the world's largest automobile manufacturer by sales and production, overtaking GM in 2008. Toyota designs and manufactures a diverse product line of over 70 models that includes sedans, coupes, vans, trucks, hybrids, and crossovers. Popular models include the Camry, Corolla, Avalon, Tundra, and Prius. Its vehicles, specifically the Lexus and Scion brands, consistently rank near the top in quality and reliability surveys. Toyota has long been recognized as an industry leader in manufacturing and production. Its production system, more than any other aspect of the company, is responsible for having made Toyota the company it is today. Toyota received its inspiration for the system not from the American automobile industry, but from visiting a Piggly Wiggly supermarket, where it was inspired by how the supermarket only reordered and restocked goods once they had been bought by customers. Toyota applied the lesson from Piggly Wiggly by reducing the amount of inventory it would hold only to a level that its employees would need for a small period of time, and then subsequently reorder. This would become the precursor of the now-famous just-in-time (JIT) inventory system. The embodiment of character at Toyota, as any new engineering hire there learns, is a man named Taiichi Ohno, the innovator widely credited as the genius behind the Toyota Production System. Ohno's ideas not only changed the auto industry, they changed late-twentieth century manufacturing. At its core was an attention to detail and a noble frugality that shunned waste of every kind. As Ohno's concepts were handed down to successive generations of Toyota executives, however, the purity of the message appears to have been slowly lost. In the late 1990s, Toyota began pushing a program dubbed CCC21 ("Construction of Cost Competitiveness for the 21st Century"). In implementing CCC21, no detail was too small. For instance, Toyota designers took a close look at the grip handles mounted above the door inside most cars. By working with suppliers they managed to cut the number of parts in the handles from 34 to five, which helped cut procurement costs by 40 percent. The change slashed the time needed for installation by 75 percent-to three seconds. By mid-decade, Toyota had incredible numbers to share with Wall Street analysts-CCC21 had wrung out more than $10 billion in savings over six years. However, the company's top U.S. executive, Jim Press, warned his bosses in Japan that vehicle quality was slipping. But his warning had no apparent effect. In 2005, the company introduced an "aggressive version of CCC21," dubbed Value Innovation, which promised more savings by making the entire development process cheaper and faster, further trimming parts, production costs, and time to market. With Value Innovation, Toyota managed to slash the time it took to bring models into production once a design was final to about 12 months, compared with an industry average of between 24 and 36 months. Toyota also began to design parts for many of its cars that were cheaper and lighter, further cutting costs for the company. However, Toyota's fortunes began to change and its focus on cost cutting rather than quality caught up with it. Three separate but related recalls of automobiles occurred at the end of 2009 and start of 2010 after reports that several vehicles experienced unintended acceleration. The first recall, in November 2009, was to correct a possible incursion of an incorrect or out-of-place front driver's side floor mat into the foot pedal well, which can cause pedal entrapment. The second recall, in January 2010, was begun after some crashes were shown not to have been caused by floor mat incursion. This latter defect was identified as a possible mechanical sticking of the accelerator pedal causing unintended acceleration. Following the floor mat and accelerator pedal recalls, Toyota also issued a separate recall for hybrid anti-lock brake software. When all was said and done, Toyota had announced recalls of more than 11 million vehicles for the problems. Sales of multiple recalled models were suspended for several weeks as a result of the recalls, with the vehicles awaiting replacement parts. Toyota's troubles didn't stop there. Some owners that had their recalled vehicles repaired still reported accelerator pedal issues, leading to investigations and the finding of improper repairs. The recalls further led to additional investigations, along with multiple lawsuits against Toyota. As a result from the recalls, Toyota had to pay a record$48.8 million in fines and, as of December 2010, there were still close to 150 pending lawsuits against the company. As grave as Toyota's current troubles are, they are symptomatic of a larger problem: It got carried away chasing high-speed growth, market share, and productivity gains year in and year out. All that slowly dulled the commitment to quality embedded in Toyota's corporate culture. In a bid to win back customers, Toyota is offering incentives such as no-interest loans and discounted leases, which it is hoping will reignite sales. Still, the company will be spending many months, perhaps years, trying to absorb a painful lesson about what happens to a great company when ambition gets too far ahead of tradition. Toyota's inventory is primarily _______ inventory.