MGT 3200 CH 1 and 2 Study Guide

8/3/2019 MGT 3200 CH 1 and 2 Study Guide

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Chapter 1

1-1. Define Operations Management (OM). Provide an example of OM, including inputs,

outputs, resources, and transformation.

OM is the process of managing resources to transform inputs into outputs to create value.Can be goods or services.

Internal facing = cost , quality , productivity/efficiency = firm competitivenessExample Resources Transformation

InputsOutputs

Value

Automotive

factory

Plant,workers,

machines,

tools

Assembly

Materials,

partscars

Quality,

design, cost,

performance

23. Operations management is applicable d. to all firms, whether manufacturing andservice

93. Define operations management. Will your definition accommodate bothmanufacturing and service operations? Operations management can be defined as the

management of all activities directly related to the creation of goods and/or services

through the transformation of inputs into outputs.

1-2. List and clearly describe reasons why OM is important

1. OM produces products/services Producing products (goods or services) is the mainactivity (core function) of any type of business

2. Product/service performance defines success It delivers and satisfies customersexpectations, and a satisfied customer is the main goal of all business

3. OM costs dominate profitability is based on operations activities such as COGS,facilities, Direct Labor or Transportation.

28. Reasons to study Operations Management include d. learning about a costly part ofthe enterprise

29. Reasons to study Operations Management include learning abouta. why people organize themselves for productive enterprise

b. how goods and services are producedc. what operations managers do

d. a costly part of the enterprise

e. all of the above


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1-3. Recognize and describe the critical decisions of OM that we will study in this class

Quality mgt, SPC Programs to improve process quality? Process/capacity design Process design and capacity required? Supply chain mgtMake or buy? If buy, from whom? Inventory, MRPInventory needed to serve demand? 37. The Ten Critical Decisions of Operations Management include: c. Process and

capacity design

1-4. Recognize important events in OM history and their impacts on OM practice

40. Eli Whitney, in the _____, provided the foundations for ______ in operationsmanagement. d. nineteenth century; interchangeable parts

o 41. The person most responsible for popularizing interchangeable parts inmanufacturing was: Eli Whitney

o 47. Which of the following statements is true? a. The person most responsiblefor initiating use of interchangeable parts in manufacturing was Eli Whitney.

43. Henry Ford is noted for his contributions to: c. assembly line operations Alfred Sloan (1923) Increased production complexity by providing a huge variety of

models (GM). The more complex the process is the slower or less efficient.

Quality focus (post WWII) Process improvement, quality outputs Outsourcing/offshoring (current) Cost reduction vs. control. By outsourcing you

have lower costs but less control over the product quality

1-5. List and describe key differences between producing products and services

Attributes of Productso Tangibleo Storableo Production demando Production unimportanto Quality pre-assessable

Attributes of Serviceo Intangibleo Not storableo Production = demando Production importanto Quality not pre-assessable

49. Typical differences between goods and services do notinclude a. cost per unit


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50. Which is not true regarding differences between goods and services? d. Goods tendto have higher customer interaction than services.

51. Which of the following is nota typical attribute of goods? c. aspects of qualitydifficult to measure

52. Which of the following services is least likely to be unique: d. elementary education 53. Which of the following is not a typical service attribute? b. easy to store 96. Why are services typically more difficult to standardize, automate, and make

efficient? Services typically require customer interaction, which makes it difficult to

standardize, automate, and make efficient.

97. How do services differ from goods? Identify five ways. A service is usuallyintangible; it is often produced and consumed simultaneously; often unique; it

involves high customer interaction; product definition is inconsistent; often

knowledge-based; and frequently dispersed.

98. Services are often knowledge-based. Provide two examples, and explain why they areknowledge based. Educational, medical, and legal services.

1-6. Describe the importance of services to the US economy

Throughout the latter half of the twentieth century, the service sector has been both thelargest and the fastest growing component of the U.S. economy.

Today, the service sector's share of the U.S. economy has risen to roughly 80 percent1-7. Define, calculate, and interpret productivity

Productivity (units produced) / (inputs used) 59. A foundry produces circular utility access hatches (manhole covers). If 120 covers are

produced in a 10-hour shift, the productivity of the line is c. 12 covers/hr 60. A foundry produces circular utility access hatches (manhole covers). If 120 covers are

produced in a 10-hour shift. If labor productivity can be increased by 20%, it would then

be a. 14.4 covers/hr

61. Gibson Valves produces cast bronze valves on an assembly line. If 1600 valves areproduced in an 8-hour shift, the productivity of the line is d. 200 valves/hr

62. Gibson Valves produces cast bronze valves on an assembly line, currently producing1600 valves each 8-hour shift. If the productivity is increased by 10%, it would then be c.

220 valves/hr

63. Gibson Valves produces cast bronze valves on an assembly line, currently producing1600 valves per shift. If the production is increased to 2000 valves per shift, labor

productivity will increase by c. 25%

64. The Dulac Box plant produces 500 cypress packing boxes in two 10-hour shifts. Whatis the productivity of the plant? a. 25 boxes/hr

65. The Dulac Box plant works two 8-hour shifts each day. In the past, 500 cypresspacking boxes were produced by the end of each day. The use of new technology has

enabled them to increase productivity by 30%. Productivity is now approximately b. 40.6

boxes/hr


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66. The Dulac Box plant produces 500 cypress packing boxes in two 10-hour shifts. Dueto higher demand, they have decided to operate three 8-hour shifts instead. They are now

able to produce 600 boxes per day. What has happened to production? c. It has

increased by 20%.

67. Productivity measurement is complicated by b. the fact that precise units ofmeasure are often unavailable

70. Productivity can be improved by d. decreasing inputs while holding outputs steady 101. Identify the three productivity variables used in the text. The three common

variables are labor, capital, and management.

106. Susan has a part-time "cottage industry" producing seasonal plywood yardornaments for resale at local craft fairs and bazaars. She currently works 8 hours per dayto produce 16 ornaments.

o a. What is her productivity? a. 16 ornaments/8 hours = 2 ornaments/houro b. She thinks that by redesigning the ornaments and switching from use of wood

glue to a hot-glue gun she can increase her total production to 20 ornaments perday. What is her new productivity? b. 20 ornaments/8 hours = 2.5

ornaments/houro c. What is her percentage increase in productivity? c. Change in productivity =

0.5 ornaments/hour; percent change = 0.5/2= 25%

107. A firm cleans chemical tank cars in the Bay St. Louis area. With standardequipment, the firm typically cleaned 70 chemical tank cars per month. They utilized 10

gallons of solvent, and two employees worked 20 days per month, 8 hours a day. The

company decided to switch to a larger cleaning machine. Last April, they cleaned 60 tankcars in only 15 days. They utilized 12 gallons of solvent, and the two employees worked

6 hours a day.

o 1. What was their productivity with the standard equipment?o 2. What is their productivity with the larger machine?o 3. What is the change in productivity?

Resource Standard Equipment Larger Machine Percent Change

Solvent 70/10=7 60/12=5 (57)/7= 28.57%

Labor 70/320=0.22 60/180=0.33 (0.330.22)/0.22=50%

108. The Dulac Box plant produces wooden packing boxes to be used in the local seafoodindustry. Current operations allow the company to make 500 boxes per day, in two 8-

hour shifts (250 boxes per shift). The company has introduced some small changes in

equipment, and conducted appropriate job training, so that production levels have risen to300 boxes per shift. These changes did not require any change in the amount of capital

spending or energy use. What is the firm's new labor productivity? 600 boxes per day /

16 hours = 37.5 boxes per hour

1-8. Explain how labor, capital, and management affect productivity


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Labor = education, training, well-being of society Positive impact on productivity Capital (cost of borrowing) = interest rate, taxes Negative impact on productivity Management = effect use of labor, capital Positive impact on productivity 69. Which of the following inputs has the greatest potential to increase productivity? c.

management

72. The factor responsible for the largest portion of productivity increase in the U.S. is b.management

74. Three commonly used productivity variables are: b. labor, capital, andmanagement

Chapter 2

2-1. Explain differentiation, cost leadership, and response as strategic approaches. Apply the

appropriate approach to a given example.

A Strategyis a long term plan that creates value for target customers. The main objectiveis to make customers buy a business product instead of its competitors.

46. The impact of strategies on the general direction and basic character of a company isc. long range

54. A strategy is a(n) e. action plan to achieve the mission 116. What is the difference between a firm's mission and its strategy? A firm's mission is

its purpose or rationale for an organizations existence, whereas a firm's strategy is

how it expects to achieve its mission and goals.

Approacheso Cost Tradeoff of other value services (the cheapest the product the better). Has

a more efficient capacity, many low cost suppliers, and low inventories. (EX:Making just one breakfast option for three kids)

o Differentiation brand loyaltyo Response flexible reaction to market. Has a flexible rather than efficient

capacity and works with few responsive suppliers. Is more customized than cost.

(EX: three different breakfast options for three kids)

49. According to the authors, which of the following strategic concepts allow firms toachieve their missions? b. differentiation, cost leadership, and quick response

52. The ability of an organization to produce goods or services that have someuniqueness in their characteristics is e. competing on differentiation

56. Which of the following is an example of competing on the basis of differentiation? d.A firm offers more reliable products than its competitors do.

60. Which of the following is the best example of competing on low-cost leadership? a.A firm produces its product with less raw material waste than its competitors.

118. Provide an example of an organization that achieves competitive advantage throughexperience differentiation. Explain. Competing on experience differentiation implies

providing uniqueness to your service offering through immersion of the consumer

into the service, with visual or sound elements to turn the service into an experience.


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2-2. Describe how the OM critical decisions relate to the three strategic approaches

Approacheso Cost Tradeoff of other value services (the cheapest the product the better). Has

a more efficient capacity, many low cost suppliers, and low inventories. (EX:

Making just one breakfast option for three kids)o Differentiation brand loyaltyo Response flexible reaction to market. Has a flexible rather than efficient

capacity and works with few responsive suppliers. Is more customized than cost.

(EX: three different breakfast options for three kids)

2-3. Define value

123. Define core competencies: A set of skills, talents, and activities that a firm doesparticularly well

2-4. Define order qualifier and order winner. Determine order qualifiers and winners for a

given company.

Order qualifier: the standards customers set to consider a specific product Order winner: what drives the customer to choose a product over a competitor EX: to choose a computer order qualifier may be: RAM, hard drive, system operator.

And the order winner may be: price, warranty, battery efficiency.

Cost Quality Service Convenience These can be order qualifier, winner or loser Style, Features depending of the customer and the product Flexibility, customization Sustainability, ethics

2-5. Recognize and describe reasons to globalize operations

Reasons to globalize (facilities, suppliers, outsourcing, etc.) Cost Lower wages and materials cost, therefore having lower operating costs

o Response to competition Quality May outsource for higher product quality (EX: GM outsourcing to plants in

Germany)

Demand, respond faster serve international demand for one product (EX: outsourcethe production of KFC to China since the demand there is huge)


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Talent Take advantage of education and skills overseas 100. Why are organizations becoming more global? Organizations are becoming more

global with the decline in the cost of communication and transportation.

Additionally, resourcescapital, material, talent, and labor--are also becoming

more global

113. How can global operations improve the supply chain? The supply chain can oftenbe improved by locating facilities in countries where unique resources exist.

114. How do global operations attract new markets? Since international operationsrequire local interaction with customers, suppliers, and other competitive

businesses, international firms inevitably learn about unique opportunities for new

products and services.

MGT 3200 CH 1 and 2 Study Guide

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