Chapter 1: Operations and Productivity

Question 1

1.1: Introduction: Operations And Productivity Notes: operations management is a disappointment applies to Hard Rock Cafe as well as to factories like Ford and Whirlpool.
This technique of OM applies throughout the world to virtually all productive enterprises.

Answer 1

Does it matter application is in an office, a hospital, a restaurant, a department store, or a factory Dash the production of goods and services requires operations management.

Question 2

Production is…

1.1: Introduction: Operations And Productivity

Answer 2

The creation of goods and services.

Question 3

Operations management is…

1.1: Introduction: Operations And Productivity

Answer 3

The set of activities that creates value in the form of goods and services by transforming inputs into outputs.

Question 4

1.2: Organizing to Produce Goods and Services
Operations is one of the three functions that every organization performs. To create goods and services, all organizations perform three functions. These functions are the necessary ingredients not only for production but also for an organization’s survival. They are:

Answer 4

1. Marketing, which generates the demand, or at least takes the order for a product or service (nothing happens until there is a sale).
2. Production/operations, which creates, produces, and delivers the product.
3. Finance/accounting, which tracks how well the organization is doing, paying the bills, and collects the money.

Question 5

1.3: The Supply Chain: through the three functions – marketing, operations, and finance Dash value for the customers created. However, firms seldom create this value by themselves. Instead they rely on a variety of suppliers who provide everything from raw materials to accounting services. The suppliers when taken together, can be thought of as a supply chain. A supply chain is…

Answer 5

A global network of organizations in activities that supply affirm with goods and services.

Question 6

1.3: The Supply Chain notes: As a society becomes more technologically oriented, We see increasing specialization. Specialized expert knowledge, instant communication, and cheaper transportation also foster specialization in world supply chains. It is not pay for a firm to try to do everything itself.

Answer 6

The expertise that comes with specialization exists up and down the supply chain, adding value at each step. When members of the supply chain collaborate to achieve high levels of customer satisfaction, we have a tremendous force for efficiency and competitive advantage. Competition in the 21st-century is not between companies; it is between supply chains.

Question 7

1.4: Why study Operations Management?: four reasons. 1) OM is one of the three major functions of any organization, and it is integrally related to all the other business functions. All organizations market (sell), finance (account), and produce (operate), and it is important to know how the OM activity functions.

Answer 7

Therefore, we study how people organize themselves for productive enterprise.

Question 8

1.4: Why study Operations Management?: four reasons. 2) The production function is a segment of our society that creates the products and services we use.

Answer 8

We study OM because we want to know how goods and services are produced.

Question 9

1.4: Why study Operations Management?: four reasons. 3) Regardless of your job in an organization, you can perform better if you understand what operation managers do. In addition, understanding OM will help you explore the numerous and lucrative career opportunities in the field.

Answer 9

We study OM to understand what operations managers do.

Question 10

1.4: Why study Operations Management?: four reasons. 4) A large percentage of the revenue of most firms is spent in the OM function. Indeed, oh and provides a major opportunity for an organization to improve its profitability and enhance its service to society.

Answer 10

We study OM because it is such a costly part of an organization.

Question 11

1.5: What Operations Managers Do: all good managers perform the basic functions of the management process. The 10 strategic OM decisions require planning, organizing, stuffing, leading, and controlling.

Answer 11

1. Design of goods and services
2. Managing quality in statistical process control
3. Process and capacity strategies
4. Location strategies
5. Layout strategies
6. Human resources, job design and work measurement
7. Supply chain management
8. Inventory management
9. scheduling
10. Maintenance

Question 12

1. 5: What Operations Managers Do:

1) Design of goods and services

Answer 12

Defines much of what is required of operations in each of the other OM decisions. For instance, product design usually determines the lower limits of cost and the upper limits of quality, as well as major implications for sustainability and human resources required.

Question 13

1.5: What Operations Managers Do: 2) Managing quality and statistical process control

Answer 13

Determines the customers quality expectations and establishes policies and procedures to identify and achieve quality.

Question 14

1.5: What Operations Managers Do: 3) process and capacity strategies

Answer 14

Determines how a good or service is produced (i.e., the process for which production) And commits management a specific technology, quality, human resources, and capital investments that determine much of the firm’s basic cost structure.

Question 15

1.5: What Operations Managers Do: 4) Location strategies

Answer 15

Requires judgements regarding nearness to customers, suppliers, and talent, while considering costs, infrastructure, logistics, and government.

Question 16

1.5: What Operations Managers Do: 5) Layout strategies

Answer 16

Requires integrating capacity needs, personnel levels, technology, and inventory requirements to determine the diffident flow of materials, people, and information.

Question 17

1.5: What Operations Managers Do: 6) Human Resources, job design and work measurement

Answer 17

Determines how to recruit, motivate, and retain personnel with the required talent and skills. People are an integral and expensive part of the total system design.

Question 18

1.5: What Operations Managers Do: 7) supply chain management

Answer 18

Decides how to integrate the supply chain into the firm’s strategy, including decisions that determine what is to be purchased, from whom, and under what conditions.

Question 19

1.5: What Operations Managers Do: 8) inventory management

Answer 19

Considers inventory ordering and holding decisions and how to optimize them as customer satisfaction, supplier capability, and production schedules are considered.

Question 20

1.5: What Operations Managers Do: 9) scheduling

Answer 20

Determines and implements intermediate- and short-term schedules that effectively and efficiently use both personnel and facilities while meeting customer demands.

Question 21

1.5: What Operations Managers Do: 10) maintenance

Answer 21

Requires decisions that consider facility capacity, production demands, and personnel necessary to maintain a reliable and stable process.

Question 22

1.6: The Heritage of Operations Management: Eli Whitney (1800) is credited for the early popularization of interchangeable parts, which was achieved through standardization in quality control.

Answer 22

Through a contract is signed with the US government for 10,000 muskets, he was able to command a premium price because of their interchangeable parts.

Question 23

1.6: The Heritage of Operations Management: Frederick W Taylor (1881), known as the father of scientific management, contributed to personnel selection, planning and scheduling, Ocean City, and then I’ll popular field of ergonomics. One of his major contributions was his believe that management should be much more resourceful and aggressive in the improvement of work methods. Taylor and his colleagues, Henry L Gantt and Frank and Lillian Gilbreth, were among the first to be systematically seek the best way to produce.

Answer 23

Another of Taylor’s contributions was the belief that management should assume more responsibility for:

• matching employees to the right job
• providing the proper training
• Providing proper work methods and tools
• establishing legitimate incentives for work to be accomplished.

Question 24

1.6: The Heritage of Operations Management: by 1913, Henry Ford and Charles Sorensen combined what they knew about standardized parts with the quasi-assembly line of the meatpacking and mail order industries and added the revolutionary concept of the assembly line, where men stood still and materials moved.

Answer 24

Quality control is another historically significant contribution to the field of OM. Walter Shewart (1929) combined his knowledge of statistics with the need for quality control and provide the foundations for statistical sampling in quality control. W. Edwards Deming (1950) believed, as did Frederick Taylor, that management must do more to improve the work environment and processes so that quality can be improved.

Question 25

1.6: The Heritage of Operations Management: Operations management will continue to progress is contributions from other disciplines, including industrial engineering, statistics, Management, analytics, and economics, improve decision making.

Answer 25

Innovations from the physical sciences (biology, anatomy, chemistry, physics) have also contributed to advances in OM. These innovations include new adhesives, faster integrated circuits, gamma rays to sanitize food products, and specialized glass for iPhones and plasma TVs. Innovation in products and processes often depend on advances in the physical sciences.

Question 26

1.6: The Heritage of Operations Management: Especially important contributions to OM have come from information technology, which we define as a systematic processing of data to yield information. Information technology – with wireless links, Internet, and e-commerce – is reducing costs and accelerating communication.

Answer 26

Decisions in operations management require individuals who are well-versed in analytical tools, in information technology, and often in one of the biological or physical sciences.

Question 27

1.7: Operations for Goods and Services: Manufacturers produce a tangible product, well service products Are often intangible. But many products are a combination of a good and a service, which complicates the definition of a service. Even the US government has trouble generating a consistent definitions because definitions vary, much of the data and statistics generated about the service sector are inconsistent. However we define services as…

Answer 27

Including repair and maintenance, government, food and lodging, transportation, insurance, trade, Financial, real estate, education, legal, medical, entertainment, and other professional occupations.

Question 28

1.7: Operations for Goods and Services: The operation activities for both goods and services are often very similar. For instance, both have quality standards, are designed and produced on a schedule that meets customer demand and are made in a facility where people are employed. However, some major differences do exist between goods and services.

Answer 28

Include picture

Question 29

1.8: The Productivity Challenge: | growth of services

Answer 29

The huge productivity increases in agriculture and manufacturing have allowed more of our economic resources to be devoted to services. Consequentially, much of the world can now enjoy the pleasures of education, health services, entertainment, my right of other things that we all services.

Question 30

1.8: The Productivity Challenge: Why is productivity important? Because it determines our standard of living. The creation of goods and services requires changing resources into goods and services. The more efficiently we make this change, the more productive we are in the more value was added to the goods or services provided productivity is…

Answer 30

The ratio of outputs (goods and services) divided by the inputs (resources, such as labor and capital). The operations managers job is to enhance (improve) this ratio of outputs to inputs. Improving productivity means improving efficiency.

Question 31

1. 8: The Productivity Challenge: this improvement can be achieved in two ways: 1) reducing inputs while keeping output constant 2) increasing output while keeping inputs constant.

Answer 31

In an economic sense, inputs are labor, capital, and management, which are integrated into a production system. Management creates this production system, which provides the conversion of inputs and outputs. Outputs are goods and services, including such diverse items as guns, butter, education, improved judicial systems, and ski resorts. Production is the making of goods and services. High production may imply only that more people are working and that employment levels are high (low unemployment), but it does not imply high productivity.

Question 32

1.8: The Productivity Challenge: measurement of productivity is an excellent way to evaluate a countries ability to provide an improving standard of living for its people. Only through increases in productivity can the standard of living improve. Moreover, only through increases in productivity can labor, capital, and management receive additional payments.

Answer 32

If returns to labor, capital, or management are increased without increased productivity, prices rise. On the other hand, downward pressure is placed on prices when productivity increases because more is being produced with the same resources.

Question 33

1.8: The Productivity Challenge: The measurement of productivity can be quite direct. Such as the case when productivity is measured by labor-hours per ton of a specific type of steel. Although labor-hours is a common measure of input, other measures such as capital (dollars invested), materials (tons of ore), or energy (kilowatts of electricity) can be used.

Answer 33

Single factor Productivity = units produced/inputs used 1000/250= 4 units per labor-hour The use of just one resource input to measure productivity is known as single factor productivity.

Question 34

1.8: The Productivity Challenge: However, a broader view of productivity is multifactor productivity, which includes all inputs ( e.g. capital, labor, material, energy). Multifactor productivity is also known as total factor productivity. Multifactor productivity is calculated by combining the input units as shown here:

Answer 34

Multifactor productivity: output/ (labor+material+energy+capital+ miscellaneous) Both the labor (single factor) and multifactor productivity measures show an increase in productivity in the example. However, the multi factor measures provides a better picture of the increase because it includes all the costs connected with the increasing output.

Question 35

1.8: The Productivity Challenge: Use of productivity measures aid managers in determining how well they are doing. But results from the two measures can be expected to vary. If labor productivity growth is entirely the result of capital spending, measuring just a lever distorts the results. Multifactor productivity is usually better, but more complicated. Labor productivity is the more popular measure. The multifactor productivity measures provide better information about the trade-offs among factors, but substantial measurement problems remain. Some of these measurement problems are:

Answer 35

1. may change while the quantity of inputs and outputs remain constant. Compare a smart LED TV of this decade with a black-and-white TV of the 1950s. Both are TVs but few people were denied the quality has improved. The unit of measure – a TV – is the same, but the quality has changed. 2. may cause an increase or a decrease in productivity for which the system understudy may not be directly responsible. I’m more reliable electric power service me greatly improve production, thereby improving the firms productivity because of the support system rather than because of managerial decisions made within the firm. 3. may be lacking. Not all automobiles require the same inputs: some cars are subcompacts, others are 911 Turbo Porsches.

Question 36

1.8: The Productivity Challenge: Productivity measurement is particularly difficult in the service sector, where the end product can be hard to define. For example, economic statistics ignore the quality of your haircut, the outcome of a court case, or the service at a retail store.

Answer 36

Note the quality-measurement problems in a law office, where each case is different, altering the accuracy of the measure “cases per labor-hour“ or “cases per employee“.

Question 37

1.9: Current Challenges in Operations Management: globalization

Answer 37

The rapid decline in the cost of communication and transportation has made markets global. Similarly resources in the form of capital, materials, talent, and labor are also now global. As a result, countries throughout the world are contributing to globalization as they vie for economic growth. Operations managers are rapidly seeking creative designs, efficient production, and high-quality goods via international collaboration.

Question 38

1.9: Current Challenges in Operations Management: supply chain partnering

Answer 38

Shorter product life cycles, demanding customers, and fast changes and technologies, materials, and processes require supply-chain partners to be in tune with the needs of end users. And because suppliers may be able to contribute unique expertise, operations managers are outsourcing and building long-term partnerships with critical players in the supply chain.

Question 39

1.9: Current Challenges in Operations Management: sustainability

Answer 39

Operations managers’ continuing battle to improve productivity is concerned with designing products and processes that are ecologically sustainable. This means designing green products and packaging that minimize resource use, can be recycled or reused, and are generally environmentally friendly.

Question 40

1.9: Current Challenges in Operations Management: rapid product development

Answer 40

Technology combined with rapid international communication avenues, entertainment, and lifestyles is dramatically chopping away at the lifespan of products. OM is answering with new management structures, enhanced collaboration, digital technology, and creative alliances that are more responsive and effective.

Question 41

1.9: Current Challenges in Operations Management: mass customization

Answer 41

Once managers recognize the world as the market place, the cultural and individual differences become quite obvious. In a world where consumers are increasingly aware of innovation and options, substantial pressure is placed on firms to respond in a creative way. And OM must rapidly respond with product designs and flexible production processes that cater to the individual whims of consumers. The goal is to produce customized products, whenever and wherever needed.

Question 42

1.9: Current Challenges in Operations Management: lean operations

Answer 42

Lien is the management models sweeping the world and providing the standard against which operations managers must compete. Lean can be thought of as the driving force in a well run operation, or the customer satisfied, employees are respected, and waste does not exist. The theme of this text is to build organizations that are more efficient, where management creates enriched jobs that help employees engage in continuous improvement, and we are goods and services are produced and delivered when and where the customer desires them. These ideas are also captured in the phrase Lean.