Testbank of fundamental of management 7e by robin ch 14

Fundamentals of Management, 7e (Robbins/DeCenzo/Coulter) Chapter 14 Operations Management 1) The goal of operations management is to manage the process of turning labor and raw materials into goods and services of some type Answer: TRUE Explanation: Operations management is the act of controlling and managing the process that turns inputs, such as raw materials, labor, and equipment into products that customers buy Diff: Page Ref: 374 Objective: 14.1 2) Operations management is part of the transformation process Answer: FALSE Explanation: The opposite is true—the transformation process is part of operations management Operations management is how you manage, control, and apply the transformation process Diff: Page Ref: 374 Objective: 14.1 3) The three inputs in the transformation process are people, equipment, and materials Answer: FALSE Explanation: In addition to people, equipment, and materials, the inputs include capital, technology, and information Diff: Page Ref: 374 Objective: 14.1 4) Operations management includes service industries but not manufacturing firms Answer: FALSE Explanation: Operations management includes both service and manufacturing industries Diff: Page Ref: 374 Objective: 14.1 5) When inputs are turned into goods and services, value is created Answer: TRUE Explanation: By definition, the transformation process creates value when it transforms inputs into goods and services that customers want to buy Diff: Page Ref: 375 Objective: 14.1 6) Manufacturing organizations produce both physical and nonphysical outputs Answer: FALSE Explanation: Manufacturing organizations produce physical outputs only A car company, for example, produces cars Diff: Page Ref: 375 Objective: 14.1 Copyright © 2011 Pearson Education, Inc 7) The majority of U.S companies in 2010 still produce goods rather than services Answer: FALSE Explanation: Currently, 79 percent of U.S economic activity is directed toward producing services Diff: Page Ref: 375 Objective: 14.1 8) For most U.S companies, high productivity is a matter of survival Answer: TRUE Explanation: Productivity not only increases profits for companies, in most cases it makes the difference between surviving and not surviving Highly productive companies thrive; others usually fall by the wayside Diff: Page Ref: 375 Objective: 14.1 9) According to W Edwards Deming, managers should emphasize short-term rather than longterm planning Answer: FALSE Explanation: Deming prescribed the opposite—all planning should keep the long-term future in mind Diff: Page Ref: 376 Objective: 14.1 10) Deming advocated an approach in which managers never get complacent about the quality of their product Answer: TRUE Explanation: Deming claimed that the effort to attain quality was never-ending No matter how good your product is, you always need to be on the lookout for improvements Diff: Page Ref: 376 Objective: 14.1 11) Productivity goals, according to Deming, should be strictly numerical to avoid ambiguity Answer: FALSE Explanation: Though non-numerical goals can sometimes be subject to misinterpretation, Deming thought that they were necessary for a productive organization Diff: Page Ref: 376 Objective: 14.1 12) Deming's 14 points were useful in their time but are now largely considered to be obsolete Answer: FALSE Explanation: Deming's 14 points have withstood the test of time and are still followed by managers today Diff: Page Ref: 376 Objective: 14.1 Copyright © 2011 Pearson Education, Inc 13) Beginning in the 1950s U.S firms began to focus on manufacturing rather than finance and marketing Answer: FALSE Explanation: The opposite is true—after World War II U.S managers felt that they had solved all production problems and began to focus on finance and marketing rather than manufacturing Diff: Page Ref: 377 Objective: 14.1 14) Companies in Japan and Germany in the 1960s and 1970s began to catch up with U.S firms by focusing on quality Answer: TRUE Explanation: Japanese and German firms built modern manufacturing facilities and began focusing on quality Their efforts eventually met with great success Diff: Page Ref: 377 AACSB: Globalizations Objective: 14.1 15) Operations management is likely to play a key role in American firms regaining their preeminence among world companies Answer: TRUE Explanation: Operations management, the control of the process that transforms inputs into goods and services, is key to success in today's competitive business world So if American companies regain dominance, operations management is likely to contribute substantially to their success Diff: Page Ref: 377 AACSB: Globalizations Objective: 14.1 16) Value in a value chain management system is determined by managers Answer: FALSE Explanation: Value is determined by customers, not managers Any feature of a product that customers are willing to pay to have is considered value If customers are willing to pay more for a red bicycle than an identical blue bicycle then the color red, in this case, has value Diff: Page Ref: 378 Objective: 14.2 17) Each link in a value chain adds an equal amount of value to a product Answer: FALSE Explanation: Different steps can add different amounts of value Cutting a diamond adds an enormous amount of value to the diamond Mounting the diamond also adds value, but not as much as cutting Putting the diamond in a nice box adds even less value Diff: Page Ref: 378 Objective: 14.2 Copyright © 2011 Pearson Education, Inc 18) Value chain management is externally oriented Answer: TRUE Explanation: Value chain management focuses on both incoming resources to the organization, but also outgoing products This contrasts with supply chain management, which focuses on incoming resources only Diff: Page Ref: 378 Objective: 14.2 19) Value chain management is efficiency oriented Answer: FALSE Explanation: Value chain management is effectiveness oriented, not efficiency oriented The priority in value chain management is to get the right product that customers want, not the most efficiently made product Diff: Page Ref: 379 Objective: 14.2 20) Productivity is not important to value chain management Answer: FALSE Explanation: Though value chain management is more effectiveness than efficiency oriented, productivity is still important For example, customers may want a great pair of sneakers, but they also want the sneakers to have a reasonable price So steps along the value chain that can increase productivity and therefore keep the price low add value—a selling point—to the customer Diff: Page Ref: 379 Objective: 14.2 21) Customers played a role in IKEA's success by being willing to pay higher prices for high quality furniture Answer: FALSE Explanation: IKEA customers were not willing to pay higher prices They defrayed some of the cost of the furniture by transporting it and putting it together themselves Diff: Page Ref: 380 Objective: 14.3 22) Sharing information is part of the coordination and collaboration requirement for successful value chain management Answer: TRUE Explanation: Coordination and collaboration requires members of the value chain to be flexible and share information Diff: Page Ref: 380 Objective: 14.3 23) The customer is part of the value chain in value chain management Answer: TRUE Explanation: The customer is the most important part of the value chain because it is the customer who ultimately determines value for every part of the chain Diff: Page Ref: 382 Objective: 14.3 Copyright © 2011 Pearson Education, Inc 24) Organizational processes in value chain management refer to how work is done Answer: TRUE Explanation: Organizational processes describe the steps that make up the entire value chain, from the first input to the final product Diff: Page Ref: 382 Objective: 14.3 25) In value chain management activities are eliminated from the organizational process if they not add value to the process Answer: TRUE Explanation: At each step of the organizational process managers ask, "How is value being added here?" If value is not being added, the step is eliminated Diff: Page Ref: 382 Objective: 14.3 26) The goal of value chain management is to meet, but never to exceed the needs and desires of customers Answer: FALSE Explanation: The goal of value chain management is both to meet and to exceed the needs and desires of customers Diff: Page Ref: 382 Objective: 14.3 27) Value in value chain management is driven exclusively from the top down Answer: FALSE Explanation: Value is thought to be driven from two directions—from the top down and from the bottom up Diff: Page Ref: 382 Objective: 14.3 28) Being rigorous about expectations is a key part of leadership in value chain management Answer: TRUE Explanation: Leaders in value chain management must communicate to all parts of the chain that expectations are key For example, managers at American Standard ended up eliminating many of its suppliers when it found they couldn't meet ambitious expectations Diff: Page Ref: 383 Objective: 14.3 29) Employees in a value chain management organization must be flexible Answer: TRUE Explanation: Flexibility is the key to job performance in a value chain management system Employees need to learn to let go of rigid ideas that define their jobs and learn to whatever adds value to the product Diff: Page Ref: 383 Objective: 14.3 Copyright © 2011 Pearson Education, Inc 30) Trust is so important in value chain management that proponents of the system say you can never have too much trust Answer: FALSE Explanation: In fact, trusting too much can be a big problem in value chain management when it allows intellectual property to be appropriated Employees in a shared environment must learn to protect their assets Diff: Page Ref: 385 Objective: 14.3 31) Partners in a value chain management system need to be able to both learn from and educate other partners in the value chain Answer: TRUE Explanation: Partners in the value chain often switch roles They may learn from one partner and turn around and play the role of teacher with a second partner Those roles could also switch at a later date in time Diff: Page Ref: 385 Objective: 14.3 32) One place in which technology has little impact is the fast-food restaurant business Answer: FALSE Explanation: Companies are using technology to all sorts of things to improve productivity in fast-food restaurants For example, one company used computers to count cars in drive-through lanes and subsequently use the information to anticipate demand from the cars in line Diff: Page Ref: 386 AACSB: Technology Objective: 14.4 33) Aesthetics may improve how a product looks but they not contribute to the actual quality of the product Answer: FALSE Explanation: Aesthetics are considered one of the eight defining characteristics of product quality Diff: Page Ref: 387 Objective: 14.4 34) Product quality and service quality are two different things Answer: TRUE Explanation: The two types of quality are evaluated differently Product quality has eight different dimensions Service quality has six different dimensions Diff: Page Ref: 387 Objective: 14.4 35) ISO 9000 certification provides proof that a quality operations system is in place in a facility Answer: TRUE Explanation: ISO certification has been awarded in 175 different countries and is recognized the world over as a measure of quality Diff: Page Ref: 388 Objective: 14.4 Copyright © 2011 Pearson Education, Inc 36) In the Six Sigma system, the higher the sigma value, the greater number of defects you would expect from a product Answer: FALSE Explanation: The opposite is true—a high sigma value signifies a low, not a high, number of defects Diff: Page Ref: 389 Objective: 14.4 37) To find the planned duration of a project on a Gantt chart, simply look at the width of the bar that represents actual progress Answer: FALSE Explanation: The width of the bar that represents the goal shows the planned duration of the project, not the actual progress bar Diff: Page Ref: 390 AACSB: Analytic Skills Objective: 14.4 38) A load chart can tell you how many workers are busy at a given point in time Answer: TRUE Explanation: Reading down on the sample load chart on page 391, for example, shows times when all workers are occupied—at the end of month 4—and when fewest workers are occupied —during week Diff: Page Ref: 391 Objective: 14.4 39) The critical path in a PERT network is the least time-consuming sequence required to complete a project in the shortest period of time Answer: FALSE Explanation: The critical path in a PERT network is the most, not least, time-consuming sequence required to complete a project in the shortest period of time Diff: Page Ref: 392 Objective: 14.4 40) management oversees the transformation process that converts resources such as labor and raw materials into finished goods and services A) Control B) Operations C) Systems D) Planning Answer: B Explanation: B) Operations management is defined as the process that oversees every step of the transformation process, making operations the correct response and ruling out all other responses The transformation process is what turns material and non-material inputs into goods and services, so operations management is the management of this process that converts raw inputs into finished product outputs Diff: Page Ref: 374 Objective: 14.1 Copyright © 2011 Pearson Education, Inc 41) The purpose of operations management is to manage A) inputs B) outputs C) the transformation process D) the manufacturing process Answer: C Explanation: C) Operations management is the management of the transformation process, the process that turns inputs, such as people and materials, into outputs, such as goods and services Since inputs and outputs are part of the transformation process, they are only partial answers for this question Similarly, the manufacturing process is part of the the transformation process, so it is not a correct response for this question Diff: Page Ref: 374 Objective: 14.1 42) The transformation process transforms A) goods and services into products B) inputs into services only C) materials into goods only D) inputs into goods and services Answer: D Explanation: D) The transformation process takes inputs of various types, including materials, equipment, people, technology, capital, and information and turns them into products, that is, goods and services, making "inputs into goods and services" the correct response for this question The process clearly ends rather than begins with goods and services, making "goods and services into products" an incorrect choice The remaining two choices are both incorrect because the transformation process includes both goods and services and is not limited to either output Diff: Page Ref: 374 Objective: 14.1 43) Value is created during the process of A) inputs being converted into outputs B) inputs being stored C) outputs being measured D) operations being controlled Answer: A Explanation: A) During the transformation process, value is created when inputs—such things as knowledge, capital, and raw materials—are turned into finished products, or outputs, making "inputs being converted into outputs" the correct response for this question and ruling out all other choices A raw material such as petroleum, for example, gains value after it has been transformed into gasoline Value itself is defined as something that customers will pay for, or give up some other resource for Diff: Page Ref: 374 Objective: 14.1 Copyright © 2011 Pearson Education, Inc 44) Inputs in the transformation process include A) physical, material substances only B) both material and non-material items C) non-material items only D) equipment and materials only Answer: B Explanation: B) Inputs can include any material or non-material item that contributes to the transformation process, making "both material and non-material items" the correct response for this question "Physical substances only" and "equipment and materials only" are wrong because they are limited to material items, while "non-material items only" makes the opposite mistake, failing to include any material items Diff: Page Ref: 374 Objective: 14.1 45) All organizations produce goods or services through the process A) transformation B) service C) manufacturing D) operations Answer: A Explanation: A) The transformation process includes sequences that produce both material goods and non-material services, making transformation the correct response Service and manufacturing are limited to either one or the other, the manufacturing or service process, so they are not correct responses since they don't include all organizations Operations is incorrect because the operations process is not a recognized process in this context Diff: Page Ref: 374 Objective: 14.1 46) As a product, piano lessons are A) a good because you can purchase them B) a service because they are non-material C) a good because they can be divided into discrete lessons D) a service because someone needs to give them Answer: B Explanation: B) Goods are physical, material objects and services are non-material, nonphysical objects Being able to purchase or subdivide piano instruction into individual lessons does not make them physical, material objects Being "given" also does not make piano lessons a service because plenty of non-material things are given The correct response for this question is "a service because they are non-material" because it identifies piano lessons as being a non-material service Diff: Page Ref: 374 Objective: 14.1 Copyright © 2011 Pearson Education, Inc 47) In a transformation process people are inputs because they A) are material beings B) are costly C) perform tasks that are needed to create outputs D) have knowledge and information Answer: C Explanation: C) What makes people qualify as inputs in the transformation process is not that they are costly or are material beings Some inputs, such as information, for example, are nonmaterial, so being material is not a necessary characteristic of an input The fact that people have knowledge and information also does not qualify them as inputs People are inputs only because they use that knowledge and information to perform tasks that turn goods and services into outputs, making "performing tasks needed to create outputs" the correct response People are inputs because they help the transformation process transform raw inputs into finished products Diff: Page Ref: 374 Objective: 14.1 48) It is easier to see the transformation process at work in manufacturing organizations than in service organizations because manufacturing organizations A) produce goods and services B) turn inputs into outputs C) turn inputs into physical and nonphysical products D) produce physical goods Answer: D Explanation: D) Producing goods and services and turning inputs into physical and nonphysical products are both untrue because manufacturing organizations produce tangible, physical goods only, not services or nonphysical products All organizations that carry out transformation processes turn inputs into outputs, so turning inputs into outputs is not a correct response Producing physical goods is the correct response because it identifies the key characteristic of manufacturing organizations—they produce material, physical products that are easy to identify as outputs Diff: Page Ref: 375 Objective: 14.1 49) Service organizations A) produce physical and nonphysical outputs B) produce physical outputs only C) require nonphysical inputs only D) produce nonphysical outputs only Answer: D Explanation: D) Service organizations produce service, a nonphysical product or output, making "producing nonphysical outputs only" the correct response Manufacturing organizations are the organizations that produce physical, material products, which rules out "producing both physical and nonphysical outputs" as well as "producing physical outputs only." While service organizations produce nonphysical products, they not necessarily require nonphysical inputs Such things as information and effort are inputs that are routinely used to create service as an output, for example Diff: Page Ref: 375 Objective: 14.1 10 Copyright © 2011 Pearson Education, Inc 111) One of the biggest obstacles to successful value chain management on the organizational level is an organization that A) shares information B) refuses to share information C) insists on shaking up the status quo D) collaborates Answer: B Explanation: B) To be successful, value chain management organizations must learn to share, so when companies refuse to share it can be a real obstacle to success, making refusing to share information the correct response for this question Shaking up the status quo and collaboration improve, rather than act as obstacles to value chains, so both of those choices are incorrect Diff: Page Ref: 385 Objective: 14.3 112) Value chains that information technology infrastructure often have problems coordinating and collaborating A) share the same B) fail to share compatible C) purchase up-to-date D) provide their own Answer: B Explanation: B) Just as having a smooth-running IT system can greatly benefit a value chain, when partners in the chain fail to share compatible systems big problems arise, making this choice the correct response for this question and ruling out "sharing the same." Up-to-date systems and companies that provide their own in-house systems can actually benefit, rather than experience trouble, from their systems Diff: Page Ref: 385 AACSB: Technology Objective: 14.3 113) When exist(s) in a value chain, partners will be extremely reluctant to share information A) sophisticated technological infrastructure doesn't B) sophisticated technological infrastructure C) trust doesn't D) trust Answer: C Explanation: C) Sophisticated technological infrastructure has little effect one way or another on whether or not value chain partners will share information, making both choices regarding sophisticated technological infrastructure incorrect responses Trust does affect information sharing—lack of trust prevents sharing, making "no trust" the correct response and eliminating trust Diff: Page Ref: 385 Objective: 14.3 32 Copyright © 2011 Pearson Education, Inc 114) can lead to a value chain management company suffering losses of intellectual property A) Not enough trust B) Too much trust C) Not enough diversity D) Too much diversity Answer: B Explanation: B) Trust is a necessary requirement for successful value chain function However, too much trust can tempt partners to appropriate proprietary intellectual property from one another, so partners should always guard their knowledge systems, making "too much trust" the correct response and eliminating "not enough trust" as a correct response Diversity has little or no effect on loss of intellectual property, so the two remaining choices are both incorrect Diff: Page Ref: 385 Objective: 14.3 115) Some organizations erroneously feel that they when they collaborate with a variety of value chain partners A) lose control of their destiny B) gain control of their destiny C) change their destiny D) control the destiny of other partners Answer: A Explanation: A) When organizations that are used to "going it alone" get involved in a value chain, they sometimes feel that they lose control of their own decision-making power, making "losing control of their destiny" the correct response for this question and ruling out all other choices In most cases, this feeling is mistaken as taking part in a value chain does not cause a company to lose control of its decision-making ability or destiny Diff: Page Ref: 385 Objective: 14.3 116) In many value chains, an organization must have the ability to educate A) internal partners only B) external partners only C) only its own employees D) both internal and external partners Answer: D Explanation: D) Successful partners in value chains need to educate not just internal, external, or their own partners Education must take place both internally and externally, making this choice the correct response Internal education occurs when partners show their own people or related companies how to perform a task External education occurs when an organization must reach beyond its organizational boundaries to teach or become informed about some process or skill that will add value to the transformation process Diff: Page Ref: 385 Objective: 14.3 33 Copyright © 2011 Pearson Education, Inc 117) Managers who are carrying out value chain management invest than managers of conventional organizations A) less time and energy B) more time and energy C) more of their own money D) more of the company's money Answer: B Explanation: B) Value chain management is incredibly time-consuming and labor intensive for managers Motivating and coordinating not just one's own organization, but members of other organizations takes a great deal of effort on the part of managers, making "more time and energy" the correct response for this question and "less time and energy" incorrect Value chain management has little or no effect on how much managers invest monetarily in organizations, so both choices regarding money are incorrect responses Diff: Page Ref: 385 Objective: 14.3 118) A device with e-enabled maintenance control saves money by doing this when it malfunctions or needs maintenance A) fixing itself B) alerting others with e-messages C) self-destructing D) sounding an alarm Answer: B Explanation: B) An e-enabled device doesn't sound an alarm, self-destruct, or fix itself when it needs attention Instead, the device senses when it needs attention and sends out an electronic message—in the form of an email or some other message—that informs the receiver what the problem is and what should be done to fix the problem This makes "alerting others with emessages" the correct response for this question Diff: Page Ref: 386 Objective: 14.4 119) In today's manufacturing operations, managers often monitor capacity, order status, and product quality made A) before the product is B) while the product is being C) after the product is D) both before and after the product is Answer: B Explanation: B) Traditionally, managers would monitor things like order status after, but not while a product was being made This makes "while the product is being made" the correct response and rules out after Monitoring before or both before and after a product is made would not be as useful as monitoring during the manufacturing process, since concurrent monitoring provides instant status information of all operations that relate to the product Diff: Page Ref: 386 AACSB: Technology Objective: 14.4 34 Copyright © 2011 Pearson Education, Inc 120) Apple's problems with the battery of the highly successful iPod show how important is for a product A) efficiency B) design C) quality D) productivity Answer: C Explanation: C) The battery problem that Apple had with their iPod battery had nothing to with design of the product, or the efficiency or productivity of the manufacture of a product Instead, what cost Apple over $100 million was a quality breakdown in the battery Not only did a quality failure cause Apple to lose money in the case, it also caused Apple to lose prestige and some trust of its customers Diff: Page Ref: 386 Objective: 14.4 121) In evaluating quality, the performance of a product is measured in A) how the product looks and feels B) how well the product operates C) how long it takes the product's operation to deteriorate D) what special characteristics a product has Answer: B Explanation: B) The performance of a product is measured in its operating characteristics, making "how well the product operates" the correct response for this question How a product looks and feels reflects the aesthetics of the product How long it takes for a product's normal operation to break down or fail in some way shows the durability of the product Special characteristics of a product are its features Diff: Page Ref: 387 Objective: 14.4 122) Courtesy and timeliness are measures of A) product quality B) service quality C) product appeal D) service cost Answer: B Explanation: B) Service quality measures such dimensions as courtesy, timeliness, and consistency, making service quality the correct response for this question Product quality measures dimensions such as performance, features, and flexibility, so this choice is not correct Product appeal and service cost are not measured in terms of such categories as courtesy and timeliness Diff: Page Ref: 387 Objective: 14.4 35 Copyright © 2011 Pearson Education, Inc 123) A high quality product that doesn't break down and doesn't suffer from significant performance deterioration over a long period of time is said to have A) conformance B) aesthetics C) features D) durability Answer: D Explanation: D) The durability of a product measures how long it takes for the product's performance to break down or fail in some way, making durability the correct response for this question How a product looks and feels reflects the aesthetics of the product How well the product meets standards is a measure of its conformance The functional characteristics that a product has are its features Diff: Page Ref: 387 Objective: 14.4 124) Durability and features are measures of A) product quality B) service quality C) product value D) service value Answer: A Explanation: A) Product quality measures such dimensions as durability, performance, and features, making this choice the correct response for this question Service quality measures dimensions such as timeliness, courtesy, and consistency, so this choice is not correct Product and service value are not quantifiable measurements that managers make in assessing quality Diff: Page Ref: 387 Objective: 14.4 125) High quality service that gives customers an experience that doesn't vary from time to time is called A) convenience B) accuracy C) completeness D) consistency Answer: D Explanation: D) Consistency is providing the same customer experience from time to time, making this choice the correct response for this question Convenience measures how accessible service is Completeness measures whether or not all aspects of service were delivered Accuracy measures whether or not service tasks were performed correctly each time Diff: Page Ref: 387 Objective: 14.4 36 Copyright © 2011 Pearson Education, Inc 126) A product such as an iPod that has a design that is appealing to customers is said to have good A) durability B) aesthetics C) features D) conformance Answer: B Explanation: B) The design of a product and how it looks and feels to the customer is a measure of the product's aesthetics, making this choice the correct response for this question How well the product meets standards is a measure of its conformance The functional characteristics that a product has are its features The durability of a product measures how long it takes for the product's performance to break down or fail in some way Diff: Page Ref: 387 Objective: 14.4 127) High quality service that gives customers a cheerful and helpful experience is called A) consistency B) accuracy C) courtesy D) convenience Answer: C Explanation: C) Courtesy is providing a helpful, polite, cheerful customer experience making this choice the correct response for this question Convenience measures how accessible service is Consistency is providing the same customer experience from time to time Accuracy measures whether or not service tasks were performed correctly each time Diff: Page Ref: 387 Objective: 14.4 128) When a customer service customer gets frustrated from being put on hold during a service call for 30 minutes, the company is having problems with which service quality dimension? A) timeliness B) consistency C) convenience D) courtesy Answer: A Explanation: A) How long it takes for service to occur and whether or not the service task gets completed in its designated time period is a measure of timeliness, making this choice the correct response for this question Consistency is providing the same customer experience from time to time Courtesy is providing a helpful, polite, cheerful customer experience Convenience measures how accessible service is Diff: Page Ref: 387 Objective: 14.4 37 Copyright © 2011 Pearson Education, Inc 129) Northrup Grumman Corporation empowers employees to about products throughout the manufacturing process as a means of monitoring quality A) accept decisions B) reject decisions C) make accept/reject decisions D) obey decisions Answer: C Explanation: C) Northrup Grumman's employees something different than simply accept, reject, or obey decisions made by others The company's employees get to determine product acceptability in the form of an accept/reject decision, making this choice the correct response If for any reason the employees judge that the product is not satisfactory, they can reject it on the spot rather than wait for management to make the decision Diff: Page Ref: 388 Objective: 14.4 130) ISO 9000 is a series of standards that ensure that products A) are of minimal quality B) conform to customer requirements C) conform to industry rules D) exceed government requirements Answer: B Explanation: B) Though operations that receive ISO 9000 certification almost certainly have minimal quality, conform to industry rules, and exceed government rules, the main purpose of the program is to make sure that products meet requirements that are set by customers This makes "conforming to customer requirements" the correct response for this question Diff: Page Ref: 388 Objective: 14.4 131) In the Six Sigma system, this is the highest level of quality A) Zero Sigma B) One Sigma C) Four Sigma D) Six Sigma Answer: D Explanation: D) In the Six Sigma system, the higher the Sigma level, the fewer defects a product has At level One Sigma, only two thirds of the items being measured fall within the bell curve of having an acceptably low number of defects At Two Sigma, 95 percent lie within the curve At Six Sigma, the highest level, there are no more than 3.4 defects per million units, making Six Sigma the correct response and ruling out all other responses Diff: Page Ref: 389 Objective: 14.4 38 Copyright © 2011 Pearson Education, Inc 132) Each work activity in a Gantt chart is represented by two horizontal bars that identify the A) goal and the date B) the date and the manager's name C) goal and actual progress D) actual progress and manager's name Answer: C Explanation: C) A Gantt chart shows the goal with one bar and the actual progress being made for the activity with a second, adjacent bar, making this choice the correct response for this question The date and manager's name are used for the other three choices, making them all incorrect responses Diff: Page Ref: 390 Objective: 14.4 133) To find out how many activities are taking place at a given time in a Gantt chart, A) read across a single row B) read down a single column C) count the total number of bars D) count the total number of actual progress bars Answer: B Explanation: B) A strength of a Gantt chart is that it allows users to read down a single column and get an instant assessment of how many activities are taking place at a given time, making reading down a single column the correct response for this question The more bars that the line goes through, the more activities that are taking place at that point in time Reading across or counting bars not provide simultaneous activity information so they are incorrect responses Diff: Page Ref: 390 AACSB: Technology Objective: 14.4 134) A load chart is a that schedules capacity by A) graph; activity B) PERT; workstation C) modified Gantt chart; workstation D) modified Gantt chart; activity Answer: C Explanation: C) The major difference between a load chart and a Gantt chart is that a load chart schedules by workstation while a Gantt chart schedules by activity A load chart is actually a modified Gantt chart making "modified Gantt chart; workstation" the correct response Load charts measure by workstation, not activity, ruling out the two choices indicating activity Load charts have nothing to with PERT analysis, eliminating "PERT; workstation" as a possible correct response Diff: Page Ref: 390 Objective: 14.4 39 Copyright © 2011 Pearson Education, Inc 135) The critical path in a PERT is the sequence of events that is required to complete the project in the period of time A) longest; longest B) shortest; shortest C) longest; shortest D) shortest; longest Answer: C Explanation: C) In a PERT, the critical path is a measure of how long the project will take if all possible steps in the process are taken with no shortcuts or skipped steps In other words, the critical path is the shortest amount of time it takes to complete the entire sequence of events with all possible steps taken This makes "longest; shortest" the correct response and rules out all other responses Diff: Page Ref: 392 Objective: 14.4 136) In PERT, the time difference between the critical path and any other path is called A) slack time B) critical time C) network time D) lost time Answer: A Explanation: A) Rather than measure lost time, the difference between the critical path and other paths in PERT makes up slack time, which is extra time that can be used if things fall behind schedule This makes slack time the correct response Critical time, network time, and lost time all are terms that are not officially recognized in PERT Diff: Page Ref: 392 Objective: 14.4 137) In a short essay, define and describe operations management Answer: The term operations management refers to managing and controlling the transformation process that converts such resources as labor and raw materials into goods and services that are sold to customers The process takes in inputs—people, technology, capital, equipment, materials, and information—and transforms them into finished goods and services Operations management encompasses both services and manufacturing sectors of the economy Operations management is a way to control and manage productivity—the key to almost every organization's success Diff: Page Ref: 374 AACSB: Analytic Skills Objective: 14.1 40 Copyright © 2011 Pearson Education, Inc 138) In a short essay, define value and explain how it is obtained Answer: Value is any part of a good or service that customers are willing to pay for in terms of money or some other resource For example, a laptop computer has value because customers are willing to pay money for it The RAM memory inside of the computer also has value because customers are willing to pay more for a computer with more RAM memory The color of the computer's case is an important feature of the computer, but it does not add value because customers are not willing to pay more for a black computer (for example) than a white computer Diff: Page Ref: 378 AACSB: Analytic Skills Objective: 14.2 139) In a short essay, explain what a value chain is Answer: When inputs go through the transformation process to produce outputs, value is added to the original inputs at each step of the way creating a value chain For example, when you bake a cake you start with original ingredients—inputs—and during each step of the process you add value to the cake Mixing the flour, sugar, and butter adds value Folding in chocolate adds value Pouring the batter into a greased pan adds value Baking at the right temperature adds value Each step of the process adds value because it contributes to making a better cake A better cake has more value because customers are willing to pay for it Diff: Page Ref: 378 AACSB: Analytic Skills Objective: 14.2 140) In a short essay, explain what value chain management is Answer: Value chain management is the control and management of a value chain A value chain is a series of steps that add value to a product If the product is a car then all of the steps in design, planning, supplying materials, making, and marketing the car add to the car's value chain This value chain must be managed, and according to value chain management theory it must be managed with value in mind at every step For example, if customers state that they require a GPS in every car model, then the value chain must be modified so it includes this value-adding feature That might entail new suppliers, new design plans, new assembly procedures, and so on The management of these changes is what takes place in value chain management Note that the process is driven by customer value If the customers—typically expressing themselves through sales totals—indicate that a specific feature of the car, such as a GPS or a cupholder, has value, then it is the responsibility of the managers of the value chain to make sure that these features are included in the product Diff: Page Ref: 378 AACSB: Analytic Skills Objective: 14.2 41 Copyright © 2011 Pearson Education, Inc 141) In a short essay, describe the coordination and collaboration that is necessary for successful value chain management Answer: For the value chain to achieve its goal of meeting and exceeding customers' needs and desires, integration among all members of the chain is necessary All partners in the value chain must participate in identifying features of the product that have value For example, if marketers of an electronic book learn that customers really want to be able to write notes and mark pages in their electronic books, it is the responsibility of those marketers to share that information with people in other parts of the value chain who can implement those changes into the product Sharing information and being flexible as far as who in the value chain does what are important steps in building coordination and collaboration There must be a constant back and forth between different parts of the chain Marketers must listen to customers Engineers must listen to marketers Designers must listen to engineers, and so on Diff: Page Ref: 380 AACSB: Analytic Skills Objective: 14.3 142) In a short essay, identify and discuss the leadership requirements for successful value chain management Answer: Successful value chain management isn't possible without strong and committed leadership At all levels, managers must support, facilitate, and promote the implementation and ongoing practice of value chain management Managers must make a serious commitment to identifying what value is, how that value can best be provided, and how successful those efforts have been Leaders should outline expectations for what is involved in the organization's pursuit of value in its products Ideally, this should start with a vision or mission statement that expresses the organization's commitment to identifying, capturing, and providing the highest possible value to customers Throughout the organization, managers should clarify expectations regarding each employee's role in the value chain Being clear about expectations also extends to partners outside of the organization Diff: Page Ref: 382 AACSB: Analytic Skills Objective: 14.3 42 Copyright © 2011 Pearson Education, Inc 143) In a short essay, identify and explain the three main human resource requirements for value chain management Answer: The three main human resource requirements for value chain management are flexible approaches to: job design, an effective hiring process, and ongoing training Flexibility is the key to job design in a value chain management organization Traditional functional job roles—such as marketing, sales, accounts payable, customer service, and so forth —are inadequate in a value chain management environment Instead, jobs must be designed around work processes that create and provide value to customers To carry out flexible jobs successfully, organizations need flexible employees In a value chain organization, employees may be assigned to work teams that tackle a given process and may be asked to different things on different days depending on need In such an environment, an employee's ability to be flexible is critical Therefore, the organization's hiring process must be designed to identify those employees who have the ability to learn and adapt Finally, the need for flexibility also requires that there be a significant investment in continual and ongoing employee training Whether training involves learning basic information or how to perform some specific task, managers must see to it that employees have the knowledge and tools they need to their jobs efficiently and effectively Diff: Page Ref: 383 AACSB: Analytic Skills Objective: 14.3 144) In a short essay, explain how organizational barriers can be an obstacle to effective management of a value chain Answer: Organizational barriers are among the most difficult obstacles that managers handle These barriers include refusal or reluctance to share information, reluctance to shake up the status quo, and security issues Without shared information, close coordination and collaboration in a value chain are impossible The reluctance or refusal of employees to change the way they things can impede efforts toward value chain management and prevent its successful implementation Finally, because value chain management relies heavily on a substantial information technology infrastructure, system security and Internet security breaches are issues that need to be addressed Diff: Page Ref: 384 AACSB: Analytic Skills Objective: 14.3 43 Copyright © 2011 Pearson Education, Inc 145) In a short essay, explain how cultural attitudes can be an obstacle to effective management of a value chain Answer: Unsupportive cultural attitudes can be major obstacles to successful value chain management Trust can work against a value chain management system in two different ways— both lack of trust and too much trust can be a problem To be effective, partners in a value chain must trust one another to perform their duties along the chain When trust and mutual respect don't exist, partners will be reluctant to share information, capabilities, and processes Too much trust also can be a problem for a value chain Since partners in a chain must work together and share all kinds of proprietary information, they must take care that important organizational information does not end up being appropriated or disseminated on the Internet To guard against loss of intellectual property value, chain partners should always share only what needs to be shared and make sure that firewalls and other security measures are in place Diff: Page Ref: 385 AACSB: Analytic Skills Objective: 14.3 146) In a short essay, explain how required capabilities can be an obstacle to effective management of a value chain Answer: Required capabilities are the special abilities that value chain partners must have Several of these, including effective coordination and collaboration, the ability to learn new skills and tasks, the ability to adapt to new situations and adopt new procedures are capabilities that are difficult to acquire Nevertheless, these skills and abilities are essential for a successful value chain, so managers must constantly press to make sure that all members of the chain have the qualities that are needed Diff: Page Ref: 385 AACSB: Analytic Skills Objective: 14.3 147) In a short essay, explain how people can be an obstacle to effective management of a value chain Answer: People can be obstacles to successful value chain management by failing to commit fully to the idea of meeting customer needs and desires Without their unwavering commitment and willingness to whatever it takes, a value chain can suffer If employees decide to just "do their job" rather than to focus on adding value to the value chain, productivity will suffer and products will not be successful To make sure that employees are committed to value chain management practices, managers need to a lot of urging, coaching, encouraging, and motivating Diff: Page Ref: 385 AACSB: Analytic Skills Objective: 14.3 44 Copyright © 2011 Pearson Education, Inc 148) In a short essay, define and discuss quality control in an organization Answer: Controlling for quality is the responsibility of every member of the organization Quality control refers to monitoring quality—weight, strength, consistency, color, taste, reliability, finish, or any one of many characteristics—to ensure that the product, whatever it is, meets some pre-established standard Quality control is typically needed at one or more points in the transformation process, beginning with the receipt of inputs It will continue with work in process and all steps up to the final product Assessments at intermediate stages of the transformation process typically are part of a quality control program Early detection of a defective part or process can save the cost of further work on the item Diff: Page Ref: 388 AACSB: Analytic Skills Objective: 14.4 149) In a short essay, define the practice of project management and explain why many organizations are turning to this approach Answer: A project is a one-time-only set of activities with a definite beginning and ending point; project management is the task of accomplishing the set of activities on time, within budget, and according to specifications More and more organizations are turning to project management because the approach fits well with their need for increased managerial flexibility and rapid response Organizations are increasingly undertaking projects that are somewhat unusual or unique, have specific deadlines, contain complex interrelated tasks requiring specialized skills, and are temporary in nature These sets of activities don't lend themselves well to the traditional operating procedures that guide routine and continuous organizational activities, but they are a good fit for the project management approach Diff: Page Ref: 390 AACSB: Analytic Skills Objective: 14.4 150) In a short essay, explain the difference between a Gantt chart and a load chart, identifying possible uses for each tool Answer: The Gantt chart is a planning tool that is essentially a double bar graph, with time on the horizontal axis and the activities to be scheduled on the vertical axis The bars show output, both planned and actual, over a period of time The Gantt chart visually shows when tasks are supposed to be done and compares the assigned date with the actual progress on each Managers can easily see what has yet to be done to complete a job or project and to assess whether it is ahead of, behind, or on schedule A modified version of the Gantt chart that organizes by workstation is called a load chart Instead of listing activities on the vertical axis, load charts list either whole departments or specific resources This information allows managers to plan and control for capacity utilization by workstation rather than by activity Diff: Page Ref: 390-391 AACSB: Analytic Skills Objective: 14.4 45 Copyright © 2011 Pearson Education, Inc 151) In a short essay, identify and explain the first three steps in developing a PERT network Answer: The first step in developing a PERT network is to identify every significant activity that must be achieved for a project to be completed The accomplishment of each activity results in a set of events or outcomes The second step is to determine the order in which these events must be completed The third step in developing a PERT network is to diagram the flow of activities from start to finish, identifying each activity and its relationship to all other activities Use circles to indicate events and arrows to represent activities This results in a flowchart diagram called a PERT network Diff: Page Ref: 392 AACSB: Analytic Skills Objective: 14.4 152) In a short essay, identify and explain the final two steps in developing a PERT network Answer: The fourth step in developing a PERT network is to compute a time estimate for completing each activity This is done with a weighted average that uses an optimistic time estimate (to) of how long the activity would take under ideal conditions, a most likely estimate (tm) of the time the activity normally should take, and a pessimistic estimate (tp) that represents the time that an activity should take under the worst possible conditions Using the network diagram that contains time estimates for each activity, the final step is to determine a schedule for the start and finish dates of each activity and for the entire project Any delays that occur along the critical path require the most attention because they can delay the whole project Diff: Page Ref: 392 AACSB: Analytic Skills Objective: 14.4 153) In a short essay, discuss technology's role in manufacturing Answer: To connect more closely with customers, and to avoid bottlenecks and slowdowns, production in any organization must be synchronized and coordinated across the enterprise What makes this kind of coordination possible is technology For example, enterprise resource planning (ERP) software is a system that links all parts of an organization and its partners to the same database, allowing people across the organization to have access to sales, production, scheduling, budgets, and other forms of data Technology is also allowing organizations to control costs, particularly in the areas of predictive maintenance, remote diagnostics, and utility cost savings For instance, new types of Internetcompatible equipment contain embedded Web servers that can communicate proactively to inform users that a device needs maintenance or servicing These devices can more than simply beep or light up an indicator button For example, some devices have the ability to initiate email or signal a pager at a supplier, the maintenance department, or contractor describing the specific problem and requesting parts and service Diff: Page Ref: 393-394 AACSB: Technology Objective: 14.4 46 Copyright © 2011 Pearson Education, Inc ... supply chain management, which focuses on incoming resources only Diff: Page Ref: 378 Objective: 14. 2 19) Value chain management is efficiency oriented Answer: FALSE Explanation: Value chain management. .. chain management B) Value chain management C) Supply management D) Customer management Answer: B Explanation: B) Value chain management is the control of the entire value chain (both inputs and... things that value chain jobs typically not ask of workers Diff: Page Ref: 382 Objective: 14. 3 107) Because the nature of jobs can change quickly, value chain management companies often need to make