Chapter 16: Control Systems and Quality Management

Question 1

Controlling

Answer 1

Monitoring performance, comparing it with goals, and taking corrective action as needed

Question 2

Control process steps

Answer 2

The four steps in the process of controlling: (1) establish standards; (2) measure performance; (3) compare performance to standards; and (4) take corrective action, if necessary

Question 3

Control standard

Answer 3

The first step in the control process; the performance standard (or just standard) is the desired performance level for a given goal

Question 4

Control charts

Answer 4

A visual statistical tool used for quality-control purposes

Question 5

Management by exception

Answer 5

Control principle that states that managers should be informed of a situation only if data show a significant deviation from standards

Question 6

Feedforward control

Answer 6

Focuses on preventing future problems

Question 7

Concurrent control

Answer 7

Entails collecting performance information in real time

Question 8

Feedback control

Answer 8

Collecting performance information after a task or project is done

Question 9

Balanced scorecard

Answer 9

Gives top managers a fast but comprehensive view of the organization via four indicators: (1) customer satisfaction, (2) internal processes, (3) the organization’s innovation and improvement activities, and (4) financial measures

Question 10

Budgets

Answer 10

A formal financial projection

Question 11

Incremental budgeting

Answer 11

Allocating increased or decreased funds to a department by using the last budget period as a reference point; only incremental changes in the budget request are reviewed

Question 12

Fixed budgets

Answer 12

Allocation of resources on the basis of a single estimate of costs

Question 13

Variable budgets

Answer 13

Allowing the allocation of resources to vary in proportion with various levels of activity

Question 14

Financial statements

Answer 14

Summary of some aspect of an organization’s financial status

Question 15

Balance sheet

Answer 15

A summary of an organization’s overall financial worth—assets and liabilities—at a specific point in time

Question 16

Income statement

Answer 16

Summary of an organization’s financial results—revenues and expenses—over a specified period of time

Question 17

Statement of cash flows

Answer 17

Reports the cash generated and used over a specific period of time

Question 18

Financial ratios

Answer 18

Indicators determined from a company’s financial information and used for comparison purposes

Question 19

Customer satisfaction

Answer 19

Measure of how products or services provided by a firm meet customer expectations

Question 20

Customer retention

Answer 20

Refers to the actions companies take to reduce customer defections

Question 21

Best practices

Answer 21

A set of guidelines, ethics or ideas that have been shown to produce optimal results

Question 22

Strategy map

Answer 22

A visual representation of the four perspectives of the balanced scorecard that enables managers to communicate their goals so that everyone in the company can understand how their jobs are linked to the overall objectives of the organization

Question 23

Quality

Answer 23

The total ability of a product or service to meet customer needs

Question 24

Quality control

Answer 24

A means of ensuring quality whereby errors are minimized by managing each stage of production

Question 25

Quality assurance

Answer 25

A means of ensuring quality that focuses on the performance of workers, urging employees to strive for “zero defects,”

Question 26

Deming management

Answer 26

Ideas proposed by W. Edwards Deming for making organizations more responsive, more democratic, and less wasteful

Question 27

PDCA cycle

Answer 27

A Plan-Do-Check-Act cycle using observed data for continuous improvement of operations

Question 28

Total quality management (TQM)

Answer 28

A comprehensive approach—led by top management and supported throughout the organization—dedicated to continuous quality improvement, training, and customer satisfaction

Question 29

Two core principles of TQM

Answer 29

(1) People orientation—everyone involved with the organization should focus on delivering value to customers—and (2) improvement orientation—everyone should work on continuously improving the work processes

Question 30

Continuous improvement

Answer 30

Ongoing, small, incremental improvements in all parts of an organization

Question 31

Outsourcing

Answer 31

Using suppliers outside the company to provide goods and services

Question 32

Reduced cycle time

Answer 32

The reduction of steps in the work process

Question 33

Statistical process control

Answer 33

A statistical technique that uses periodic random samples from production runs to see if quality is being maintained within a standard range of acceptability

Question 34

Lean Six Sigma

Answer 34

Quality-control approach that focuses on problem solving and performance improvement—speed with excellence—of a well-defined project

Question 35

ISO 9000 series

Answer 35

Quality-control procedures companies must install—from purchasing to manufacturing to inventory to shipping—that can be audited by independent quality-control experts, or “registrars,”

Question 36

ISO 14000 series

Answer 36

Set of quality-control procedure that extends the concept of the ISO 9000 series, identifying standards for environmental performance

Question 37

Supply chain

Answer 37

The sequence of suppliers that contribute to creating and delivering a product, from raw materials to production to final buyers

Question 38

Kaizen

Answer 38

A Japanese philosophy of small continuous improvement that seeks to involve everyone at every level of the organization in the process of identifying opportunities and implementing and testing solutions

Question 39

Six Sigma

Answer 39

A rigorous statistical analysis process that reduces defects in manufacturing and service-related industries