1. In Class Review: Midterm Multiple Choice

2. 5. Which of the following is not a franchise establishment?
a. Kentucky Fried Chicken
b. Avis, Inc.
c. Dairy Queen
d. JC Penney
e. Howard Johnson Co.
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3. 6. If Kmart states that it is going to spend $100 million in advertising in the upcoming year to help increase its market share, it is explaining part of its _________ plan.
a. operational
b. strategic
c. directional
d. tactical
e. contingency
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4. b. have a split between decentralized and centralized decision making.
15. The more complex and uncertain a company's environment, the more likely it is that the company will
a. increase the span of control, increasing the number of employees on board.
b. have a split between decentralized and centralized decision making.
c. decentralize the organization.
d. centralize the organization.
e. decrease the span of control, decreasing the work force.
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5. a. a centralized organization. b. the span of control.
16. The number of subordinates reporting directly to one manager is called
a. a centralized organization.
b. the span of control.
c. the management hierarchy.
d. the chain of command.
e. a decentralized organization.
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6. 18. A manager who can make decisions and issue directions that relate to the organization's goals has _________ authority.
a. functional
b. staff
c. line
d. delegation
e. advisory
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7. 23. Which one of the following is an example of Herzberg's motivation factors?
a. Supervision
b. Responsibility
c. Job security
d. Working conditions
e. Pay
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8. Producing Quality Goods and Services
Pride I Hughes I Kapoor 9
Chapter
Producing Quality Goods and Services
PowerPoint Presentation by Charlie Cook
Seventh Edition
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9. What Is Production? (cont’d)
Competition in the Global Marketplace
The United States became the most productive country after World War II.
Competitors in European and Asian countries eventually recovered and began to compete with the U.S. firms in global markets.
The most successful U.S. firms have focused on:
Reducing production costs by carefully selecting suppliers.
Revamping their facilities with state-of-the-art equipment.
Using computer-aided and flexible manufacturing systems.
Improving control procedures to lower manufacturing costs.
Building new manufacturing facilities overseas where labor costs are lower.
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10. What Is Production? (cont’d)
Careers in Operations Management
Analytic process—a process that breaks raw materials into different component parts.
Synthetic process—a process that combines raw materials or components to create a finished product.
Successful operations managers must:
Be able to motivate and lead people.
Understand how technology can make a manufacturer more productive and efficient.
Appreciate the control processes that lower production costs and improve product quality.
Understand the relationship between the customer, the marketing of a product, and the production of a product.
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11. The Conversion Process
The purpose of the resources conversion process is to provide utility to customers.
Utility—the ability of a good or service to satisfy a human need.
Four types of utility—form, place, time, and possession.
Form utility—utility created by the converting raw materials, people, finances, and information into finished products.
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12. The Conversion Process
INPUTS
Concept for an
automobile
Financing •
OUTPUTS
Completed
CONVERSION
Design and product
specifications
Purchase of steel,
glass, engines,
stereo equipment,
etc.
Hiring of employees
The conversion process converts resources such as materials, finances, and people into useful goods, services, and ideas. It is a crucial step in the economic development of any nation.
Figure 9.1
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13. Planning for Production (cont’d)
Design Planning (cont’d)
Use of technology—
Automation—the tradeoff of high initial investment costs and lower operating costs for automated equipment versus the low initial investment costs for manual equipment and high operating costs for human labor.
Labor-intensive technology—a process in which people must do most of the work.
Capital-intensive technology— a process in which machines and equipment do most of the work.
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14. Operational Planning Four Steps in Operational Planning:
Step 1: Selecting a Planning Horizon
The period during which a plan will be in effect; commonly one year in length.
Step 2: Estimating Market Demand
The market demand for a product is the quantity that customers will purchase at the going price. Demand is estimated for the period of the planning horizon.
Step 3: Comparing Market Demand with Capacity
If market demand and capacity are not equal, adjustments may be necessary.
Step 4: Adjusting Products or Services to Meet Demand
Operations managers must be prepared to adjust production schedules to account for variations in customer demands for products or services.
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15. Operations Control Four Aspects of Operations Control Inventory
Purchasing
Scheduling
Quality
Implementing the operations control system in any business requires the effective use of purchasing, inventory control, scheduling, and quality control.
Figure 9.4
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16. Operations Control (cont’d)
Purchasing
All of the activities involved in obtaining required materials, supplies, and parts from other firms.
The objective of purchasing is to ensure that the required materials are available when needed, in the proper amounts, and at minimum cost.
Factors affecting the choice of suppliers:
Price
Quality
Reliability
Credit terms
Shipping costs
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17. Operations Control (cont’d)
Inventory Control
The process of managing inventories in such a way as to minimize inventory costs, including both holding costs and potential stock-out costs.
Types of Inventory
Raw materials inventory—materials that will become part of the product during the production process
Work-in-process inventory—partially completed products
Finished-goods inventory—completed goods
Costs of Inventory
Holding costs—the investment and storage costs of inventory
Stock-out costs—the costs of not having inventory available when needed
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18. Operations Control (cont’d)
Inventory Control (cont’d)
Materials requirements planning (MRP)—a computerized system that integrates production planning and inventory control.
Manufacturing resource planning (MRP II)—extends planning to the entire organization by providing a single common set of facts to be used by all managers to make decisions.
Enterprise resource planning (ERP)—a sophisticated software system that can monitor all aspects of the organization and its associates such as suppliers.
Just-in-time inventory system—a system designed to ensure that materials or supplies arrive at the facility just when they are needed so that storage and holding costs are minimized.
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19. Operations Control (cont’d)
Scheduling
The process of ensuring that materials and other resources are at the right place at the right time.
Routing of materials—the sequence of work stations that the materials will follow.
Timing of materials—when the materials will arrive at each work station.
Gantt Chart
A graphic scheduling device that displays the tasks to be performed on the vertical axis and the time required for each task on the horizontal axis.
PERT (Program Evaluation and Review Technique)
A scheduling technique that identifies the major activities necessary to complete a project and sequences them based on the time required to perform each one.
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20. A Gantt Chart
This chart details the job of building three dozen electric golf carts between August 1 and August 25. 1.
Design on computer
Completed
Planned 1 2 3
Week 1 4 5 2.
Purchase parts 3.
Fabricate fiberglass bodies 4.
Fabricate frames 5.
Build drive trains 6.
Assemble carts 7.
Test carts 8 9 10
Week 2 11 12 15 16 17
Week 3 18 19 22 23 24
Week 4 25 26
Source: Robert Kreitner, Management, 8th ed. Copyright © 2001 by Houghton Mifflin Company. Reprinted with permission.
Figure 9.5
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21. Simplified PERT Diagram for Producing This Book
START
FINISH
Design
the book
(6)
Edit
manuscript
(10)
Activity
Event
Critical path
Number of weeks to complete activity
( )
Mark manuscript
for typesetting
(2)
Set
type
(4)
Print
and bind
(9)
Obtain
design
sample
(1)
cost
estimates
(3) 1 5
Prepare pages
for printing
(5)
Obtain and
approve
cover proof 9 2 3 4
Prepare
cover
Make up
pages 6 10 7 8
A PERT diagram identifies the activities necessary to complete a given project and arranges the activities based on the total time required for each to become an event. The activities on the critical path determine the minimum time required to complete the project.
Figure 9.6
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22. Operations Control (cont’d)
Quality Control
The process of ensuring that goods and services are produced in accordance with specifications.
The major objective of quality control is to see that the organization lives up to the standards it has set for itself.
Statistical Process Control (SPC)
An information-gathering system that plots data on control charts and graphs to identify and pinpoint problems in product quality.
Statistical Quality Control (SQC)
A set of techniques used to sample both work in progress and finished products to find problems in the production process and improve product quality.
Inspection
The examination of the quality of work in process.
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23. Operations Control (cont’d)
Quality Control (cont’d)
Improving Quality Through Employee Participation
Total Quality Management (TQM)
Quality Circles
World Quality Standards
International Organization for Standardization (ISO)
ISO 9000—certification for meeting quality control standards in procedures for the development and production of products.
ISO 14000—certification for incorporating environmental concerns into operations and product standards.
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24. The Management of Productivity
A measure of output per unit of time per worker.
Productivity Trends
The United States has the highest level of productivity in the world, but other nations are catching up as the U.S. rate of productivity growth lags behind other nations.
Causes of U.S. Productivity Declines
Major changes in the composition of the U.S. work force with the entry of younger, less experienced workers
A slowing of the rate of investment by U.S. businesses
Growth of the U.S. service sector without a corresponding increase in the rate of productivity growth
Increased government regulation
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25. The Management of Productivity
Improving Productivity
Eliminate government policies hindering productivity growth.
Increase cooperation between management and labor.
Increase employee motivation and participation.
Change the incentives for work by paying for what employees contribute, and not just for their time.
More investment by business in facilities, equipment, and employee training.
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