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The selection of a proper site for a business facility is important in the production and operations management processes. Identify and discuss three factors that influence the selection of a site How are MRP and ERP similar? How do they differ? How has the emphasis of quality control changed in recent years? Describe some of the modern quality control techniques that illustrate this change in emphasis. PERT is a popular control method used by organizations. Explain the purpose of PERT analysis, and describe the steps involved in constructing a PERT network. Your explanation should include a discussion of the significance of the critical path in a PERT network.
Chapter 09 - Production and Operations Management TEST PLANNING TABLE FOR CHAPTER Learning Objective LL:1 Knows Basic Terms and Facts LL:2 Understands Concepts and Principles LL:3 Applies Principles Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive 1,2,3,4,5,6,7,8,9, 185,186 10~,11,12,13,14,15,16, 187,188,189 17 Describe the evolution from production to operations management 18,19,20,21,22,23,24,25, 26,27,28,29,30, 190,191,192,193,194,195, 196 39,40,41,42,43,44,45,46, 47,48,49,50,51,52,53,54, 55,56,57,58,59,60,61,62, 63,64,65,66,67,68,69,70, 71,72, 205,206,207,208,209,210, 211,212,213,214,215,216, 217,218,219,220,221 31,32,33, 197,198,199,200 34,35, 36,37,38, 201,202,203,204 73,74,75,76,77,78,79, 80,81,82,83, 222,223,224,225,226, 227,228,229 84,85,86,87,88,89,90, 91, 230,231,232,233,234, 235,236, 237,238,239, 240,241,242,243,244, 245, 322* 92,93,94,95,96,97,98,99, 100,101~,102,103,104,105, 106,107,108,109,110,111, 112,113,114,115,116,117, 118,119,120,121,122,123, 124,125,126,127,128,129, 130,131,132,133,134,135, 136,137,138,139,140,141, 142,143,144,145,146,147, 246,247,248,249,250,251~, 252,253,254,255,256,257, 258,259,260,261,262,263, 264,265,266,267,268,269, 270,271,272,273,274,275, 276,277,278 169,170,171,172,173,174, 175,176,177,178, 301,302,303,304 148,149,150,151,152, 153,154,155, 279,280,281,282,283, 284,285,286~,287,288, 289,290,291 156,157,158,159,160, 160,161,162,163,164, 165,166, 167,168, 292,293,294,295,296, 297,298, 299,300, 315,316,317,319, 320*,321*,323*,324*, 326* 179,180, 305,306,307,308 181,182,183,184, 309,310,311,312,313, 314, 318, 325* Identify various production processes and describe techniques that improve productivity, including computer-aided design and manufacturing, flexible manufacturing, lean manufacturing, mass customization, and robotics Describe operations management planning issues including facility location, facility layout, materials requirement planning, purchasing, just-in-time inventory control, and quality control Explain the use of PERT and Gantt charts to control manufacturing processes Total number of test items: 326 True/false questions are in plain text Multiple choice questions are in bold text Questions on boxed material are in bold text with a tilde~ Essay questions are in bold underlined text Minicase questions are in bold with an asterisk* 9-1 Chapter 09 - Production and Operations Management Chapter 09 Production and Operations Management Answer Key True / False Questions Currently, manufacturing accounts for only around 70% of U.S GDP Answer: False AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Easy Topic: The State of U.S Manufacturing Today The recent recession greatly affected the state of manufacturing in the U.S., resulting in a slowdown in production and the loss of jobs Answer: True AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Easy Topic: The State of U.S Manufacturing Today Today, manufacturers in the U.S have become so efficient, they require fewer workers to produce the same amount of output Answer: True AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Easy Topic: The State of U.S Manufacturing Today One key to the resurgence of U.S firms as world-class competitors has been the implementation of a focus on quality Answer: True AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Easy Topic: The State of U.S Manufacturing Today Evidence suggests that U.S manufacturing firms can no longer compete against the best firms in the rest of the world Answer: False 9-2 Chapter 09 - Production and Operations Management AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Easy Topic: The State of U.S Manufacturing Today American manufacturers have emphasized continuous improvement as one strategy for regaining a competitive advantage in the manufacturing sector Answer: True AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Easy Topic: The State of U.S Manufacturing Today In order to be more competitive globally, production techniques such as enterprise resource planning and lean manufacturing are being used by American manufacturers Answer: True AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Easy Topic: The State of U.S Manufacturing Today To strengthen its manufacturing base, the U.S will need to continue to innovate Answer: True AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Easy Topic: The State of U.S Manufacturing Today The U.S is still manufacturing intensive Only 25% of U.S jobs come from the service sector Answer: False AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Easy Topic: The State of U.S Manufacturing Today 9-3 Chapter 09 - Production and Operations Management 10 The Seeking Sustainability box states that there is no way to redesign the global food system for locally grown food to be available year-round Feedback: Dissatisfied with greenhouses, entrepreneurs have started turning old shipping containers into small, stackable farms This allows people around the world to have locally grown food at all times, even in the dead of winter Answer: False AACSB: Reflective Thinking Bloom’s: Understand Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Medium Topic: The State of U.S Manufacturing Today 11 The Reaching Across Our Borders box asserts that Germany is the most powerful and respected economy in the European Union Feedback: Many financial crises have hit the European Union in recent years However, Germany’s economy has continued to succeed due to its powerful industrial sector Answer: True AACSB: Reflective Thinking Bloom’s: Understand Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Medium Topic: The State of U.S Manufacturing Today 12 Since U.S manufacturing competes on price throughout the world, innovation plays a very small part in the U.S economy Feedback: The U.S continues to be a world leader in innovation, including innovations in nanotechnology and biotechnology Answer: False AACSB: Reflective Thinking Bloom’s: Understand Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Medium Topic: The State of U.S Manufacturing Today 13 U.S businesses are known for their creativity and their ability to implement change Feedback: U.S businesses are combining services with state-of-the-art production techniques, in order to remain competitive Answer: True AACSB: Reflective Thinking Bloom’s: Understand Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Medium Topic: The State of U.S Manufacturing Today 9-4 Chapter 09 - Production and Operations Management 14 The main reason for the recent resurgence of American manufacturing firms has been the quotas and tariffs imposed by the U.S government in an attempt to protect domestic firms from cheap imports Feedback: American manufacturers have regained their competitive edge by implementing a variety of strategies, such as a consumer focus, continuous improvement, adoption of new manufacturing techniques such as ERP and CAD/CAM, and a reliance on the Internet to unite firms Answer: False AACSB: Reflective Thinking Bloom’s: Understand Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Medium Topic: The State of U.S Manufacturing Today 15 As the service industries became a larger part of U.S GDP, companies have become more concerned about measuring productivity in the service sector Feedback: The services industries, together, comprise about 70% of U.S Gross Domestic Product Increasing productivity in these industries will make U.S business more competitive abroad Answer: True AACSB: Reflective Thinking Bloom’s: Understand Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Medium Topic: The State of U.S Manufacturing Today 16 U.S manufacturers are focusing on quality as a way to become more competitive globally, assuming that cost is not an issue Feedback: U.S manufacturers are focusing on quality and cost, as they adopt strategies for competing better globally From a quality perspective, they focus on continuous improvement; from a cost perspective, they focus on lean manufacturing, reducing costs by prudent site selections, and relying on the use of the Internet and other software technologies that improve efficiency in their operations Answer: False AACSB: Reflective Thinking Bloom’s: Understand Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Medium Topic: The State of U.S Manufacturing Today 9-5 Chapter 09 - Production and Operations Management 17 Companies such as IBM prefer to stay the course and continue to compete by selling products instead of services Feedback: IBM is an example of a company that transitioned from a product-based firm to a service-based firm It has successfully found business in services and software, and become a cutting-edge information technology company domestically and in foreign markets Answer: False AACSB: Knowledge Application Bloom’s: Apply Learning Objective: 09-01 Describe the current state of U.S manufacturing and what manufacturers have done to become more competitive Level of Difficulty: Hard Topic: The State of U.S Manufacturing Today 18 In the past, production management was about using the factors of production to create finished goods Answer: False AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Easy Topic: Operations Management 19 Operations management converts resources into goods and services Answer: True AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Easy Topic: Operations Management 20 In the process of operations management, a firm transforms resources such as raw materials, supplies, and even human resources into goods and services Answer: True AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Easy Topic: Operations Management 21 Firms that specialize in accounting, finance, and management consulting are all part of the service sector Answer: True AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Easy Topic: Operations Management 9-6 Chapter 09 - Production and Operations Management 22 Operations management involves inventory management, quality control, and production scheduling Answer: True AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Easy Topic: Operations Management 23 Manufacturing firms focus exclusively on the production of goods and allow other firms to provide services Answer: False AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Easy Topic: Operations Management 24 In recent years, operations management has become more focused on providing services, because that is where the growth and profit potential is greatest Answer: True AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Easy Topic: Operations Management 25 Operations management in service industries is about creating a good experience for the customer Answer: True AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Easy Topic: Operations Management 26 Operations management moves from knowing the needs of consumers to actually satisfying those needs Answer: True AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Easy Topic: Operations Management 9-7 Chapter 09 - Production and Operations Management 27 In service industries such as hotels, quality management training is important to ensure that all employees are certified in their positions Answer: True AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Easy Topic: Operations Management 28 Education and training are less important to workers in the service sector than to workers who have jobs in the manufacturing sector Answer: False AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Easy Topic: Operations Management 29 The quality standard for service industries such as luxury hotels is meeting the customers' requests Answer: False AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Easy Topic: Operations Management 30 Service businesses know that in order to delight customers they must be able to anticipate their needs Answer: True AACSB: Reflective Thinking Bloom’s: Remember Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Easy Topic: Operations Management 31 One important issue with respect to managing the operation of a business is to make certain that customers leave feeling as though they had a good experience with your service and with your company in general Feedback: Operations management transforms resources of all kinds into finished products and services Due to the fact that services dominate the U.S landscape, it is vital to a firm's survival that customers perceive that they had a good experience The quality at every step of the service must be measured and evaluated Answer: True 9-8 Chapter 09 - Production and Operations Management AACSB: Reflective Thinking Bloom’s: Understand Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Medium Topic: Operations Management 32 Manufacturing companies are concerned with production management, while service companies are concerned with operations management Feedback: Manufacturing companies are as concerned with operations management as are service-based companies In reality, most companies today blend a component of product and service Answer: False AACSB: Reflective Thinking Bloom’s: Understand Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Medium Topic: Operations Management 33 An important strategy in operations management is using technology to anticipate customer needs In the hotel industry, this is known as guest-recognition services Feedback: Guest-recognition service is one way that hotels can delight customers Part of your business's operational plan might include using technology to collect intelligence information on customers in order to serve them better Answer: True AACSB: Reflective Thinking Bloom’s: Understand Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Medium Topic: Operations Management 34 Operations management transforms resources into goods and services, such as a landscape company that utilizes equipment, labor, and materials to develop a landscape Managing this operation may also involve maintenance services Feedback: Operations management transforms resources of all kinds into finished products and services They utilize raw materials, equipment, and labor, but they are also concerned with anticipating customer needs and managing the entire operation including the customer's needs beyond the point of sale Answer: True AACSB: Analytical Thinking Bloom’s: Analyze Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Hard Topic: Operations Management 9-9 Chapter 09 - Production and Operations Management 35 Jason recently graduated with a degree in operations management from a respected university The knowledge he gained and skills he developed while obtaining this degree could make him an attractive employee for either a manufacturing firm or a service firm Feedback: Operations management is a broad term that encompasses the tasks involved in creating both intangible products (services) and tangible goods Thus, firms in both the service sector and the manufacturing sector may be interested in hiring Jason Answer: True AACSB: Knowledge Application Bloom’s: Apply Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Hard Topic: Operations Management 36 Justin Tyme is a manager at Elastic Plastic, Inc His duties include production scheduling and keeping tabs on the company's inventory These activities suggest that Justin is involved in promotions management Feedback: Justin's responsibilities suggest he is involved in operations management Operations management is a specialized area of management that converts resources into goods and services It includes inventory management and production scheduling, as well as several other functions Answer: False AACSB: Knowledge Application Bloom’s: Apply Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Hard Topic: Operations Management 37 While going through the line at the local grocery store, the clerk asks you if you found everything you needed, as she continues to scan the goods you are planning to purchase At the end of the scan, a coupon emerges that you can use on future purchases of a product you have just purchased In reviewing the key concepts from Chapter 9, you would consider this action to be the store's management of its labor Feedback: This is part of the management of the operation—the operation of serving you The store is rewarding (delighting) you with a coupon that has value on your next purchase The grocer is anticipating that if you purchased it once, you may purchase it again, particularly if it is a name brand Answer: False AACSB: Analytical Thinking Bloom’s: Analyze Learning Objective: 09-02 Describe the evolution from production to operations management Level of Difficulty: Hard Topic: Operations Management 9-10 Chapter 09 - Production and Operations Management 305 Which of the following would be most helpful to a production manager who wanted to determine the minimum time required to complete a proposed project? A TQM B CAD/CAM C ERP D PERT Feedback: PERT, which stands for program evaluation and review technique, is a method of analyzing the tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the total project Answer: D AACSB: Reflective Thinking Bloom’s: Understand Learning Objective: 09-05 Explain the use of PERT and Gantt charts to control manufacturing processes Level of Difficulty: Medium Topic: Total Quality Management 306 The first step in the development of a PERT chart is: A assigning an estimated cost to each task B analyzing the tasks and determining the sequence in which they must be performed C estimating the time needed to complete each task D identifying the probabilities that each step in the project can be successfully completed without exceeding the estimated cost Feedback: PERT consists of four steps: (1) analyzing and sequencing the tasks that need to be done, (2) estimating the time needed to complete each task, (3) drawing a PERT network to illustrate the information from the first steps, and (4) identifying the critical path Answer: B AACSB: Reflective Thinking Bloom’s: Understand Learning Objective: 09-05 Explain the use of PERT and Gantt charts to control manufacturing processes Level of Difficulty: Medium Topic: Total Quality Management 307 The purpose of determining the critical path on a PERT network is to: A identify the sequence of tasks that takes the longest to complete B estimate a payment schedule so that a budget can be established C find the sequence of events that is the most expensive to complete D establish a delivery schedule for a just-in-time inventory control program Feedback: The critical path is the sequence of tasks in a project that takes the longest to complete Answer: A 9-96 Chapter 09 - Production and Operations Management AACSB: Reflective Thinking Bloom’s: Understand Learning Objective: 09-05 Explain the use of PERT and Gantt charts to control manufacturing processes Level of Difficulty: Medium Topic: Total Quality Management 308 Both PERT diagrams and Gantt charts are useful to managers concerned with: A calculating the rate of profit earned in a particular market B making sure that projects are completed on time C estimating the cost of completing a project D establishing formal lines of authority and responsibility within an organization Feedback: PERT diagrams and Gantt charts are tools used by managers to help ensure that projects are carried out in a timely manner PERT diagrams help managers sequence the various tasks needed to complete a project, and identify the critical path, which is the sequence of tasks that takes the longest to complete This information helps the manager focus on completing the tasks that have the greatest potential for delaying the overall project A Gantt chart is simpler, but this bar graph provides a visual way for managers to track progress on a project and identify which tasks are on time and which are behind schedule Answer: B AACSB: Reflective Thinking Bloom’s: Understand Learning Objective: 09-05 Explain the use of PERT and Gantt charts to control manufacturing processes Level of Difficulty: Medium Topic: Total Quality Management 309 Becca works as a new-product development engineer for a company that makes solar panels for residential and commercial purposes Her company uses PERT network software for all development projects As she nears the final month of her timeline for completing a new panel, Becca will focus on those activities that are: A most costly to complete B on the priority bar of the PERT chart C near the end of the PERT network D on the critical path of the PERT network Feedback: The critical path is the sequence of tasks that takes the longest to complete Delays in activities on this path are likely to result in delays in the completion of the project Answer: D AACSB: Knowledge Application Bloom’s: Apply Learning Objective: 09-05 Explain the use of PERT and Gantt charts to control manufacturing processes Level of Difficulty: Hard Topic: Total Quality Management 9-97 Chapter 09 - Production and Operations Management 310 A PERT network consists of activities linked by arrows Suppose two of the activities on the network are labeled "A" and "B." An arrow from "A" to "B" indicates that: A the same resources used to complete "A" are also used to complete "B." B "A" and "B" can be completed at the same time C "A" takes longer to complete than "B." D "A" must be completed before "B" can begin Feedback: The arrows in a PERT network indicate the sequence in which activities must be performed An arrow from "A" to "B" means "A" must be completed before "B" can begin Answer: D AACSB: Knowledge Application Bloom’s: Apply Learning Objective: 09-05 Explain the use of PERT and Gantt charts to control manufacturing processes Level of Difficulty: Hard Topic: Total Quality Management 311 Courtney was planning a new product launch She knew that the art department was ready to work on the promotional pieces now, but they couldn't start until the strategy group established the price point and the purchasing group obtained the paper needed to make the promotional piece Establishing price points would take about a week and was dependent on manufacturing getting the costs to the strategy group This was expected a week from today The purchasing group indicated the paper could be obtained locally the same day it was requested Assuming things go as planned and based on this information, when will the art department be able to begin work on the promotional pieces? A Immediately B week C weeks D month Feedback: A PERT chart could be used to determine the critical path The art department is dependent on the strategy group for information that will take week to obtain The strategy group is dependent on manufacturing for cost information that will take an additional week The purchasing department is not part of the critical path as the paper can be obtained on the same day The art department will be able to begin in weeks Answer: C AACSB: Analytical Thinking Bloom’s: Analyze Learning Objective: 09-05 Explain the use of PERT and Gantt charts to control manufacturing processes Level of Difficulty: Hard Topic: Total Quality Management 9-98 Chapter 09 - Production and Operations Management 312 Joel was planning a new product launch He knew that the art department was ready to work on the promotional pieces now, but they couldn't start until the marketing strategy group established the price point and the purchasing department obtained the paper needed to design the promotional piece Establishing price points would take about a week and was dependent on manufacturing getting the costs to the marketing strategy group This was expected a week from today The purchasing group indicated the paper could be obtained locally the same day it was requested Assuming things go as planned and based on this information, which of the following tasks could be as much as a week late without jeopardizing the deadline for the entire project? A Marketing strategy's determination of the price point B Manufacturing's determination of the costs C Purchasing obtaining the paper D The art department taking a month-long vacation Feedback: A PERT chart could be used to determine the critical path The art department is dependent on the strategy group for information that will take week to obtain The strategy group is dependent on manufacturing for cost information that will take an additional week The purchasing task is not on the critical path of the project and thus is the only one that would not jeopardize the deadline for the entire project Answer: C AACSB: Analytical Thinking Bloom’s: Analyze Learning Objective: 09-05 Explain the use of PERT and Gantt charts to control manufacturing processes Level of Difficulty: Hard Topic: Total Quality Management 9-99 Chapter 09 - Production and Operations Management 313 Review the PERT Network below: If it takes 1, 2, or weeks for each activity (represented by a box) to be completed, the critical path is represented by: A the path that begins with "Start" and continues with all boxes labeled with No B the path that begins with "Start," continues with all boxes labeled with No 2, and concludes with "Finish." C the path that begins with "Start," continues with one box labeled with No 2, proceeds with all boxes labeled with No 3, and concludes with "Finish." D the path that begins with "Start," continues with all boxes labeled with No 1, and concludes with "Finish." Feedback: The critical path in a PERT Network is the project activity path that takes the longest time to complete In this diagram, the path of boxes labeled [Start, 2, 3, 3, 3, 3, Finish] make up the critical path Answer: C AACSB: Knowledge Application Bloom’s: Understand Learning Objective: 09-05 Explain the use of PERT and Gantt charts to control manufacturing processes Level of Difficulty: Medium Topic: Total Quality Management 314 Manny is a production and operations manager who likes to keep track of how various projects are progressing One of Manny's favorite tools is a bar graph that shows how much work has been completed on the projects that are currently under way and which processes are behind schedule Manny likes to use a(n): A CAD/CAM diagram B input-output graph C Gantt chart D Targeted Completion Date graph Feedback: A Gantt chart is a bar graph that shows what projects are being worked on and how much work has been completed on each project Answer: C AACSB: Knowledge Application Bloom’s: Apply Learning Objective: 09-05 Explain the use of PERT and Gantt charts to control manufacturing processes Level of Difficulty: Hard Topic: Total Quality Management 9-100 Chapter 09 - Production and Operations Management Essay Questions 315 The selection of a proper site for a business facility is important in the production and operations management processes Identify and discuss three factors that influence the selection of a site Answer: Students can select from the following: (A) Firms often choose to locate in an area because it has inexpensive labor, or labor with the right kinds of skills Even though labor costs are a declining percentage of total costs in highly automated industries, they still account for a large share of the production costs of many firms and must be carefully considered (B) Availability of nonlabor resources can also be a major reason cited for a move Most companies need access to inputs such as water, electricity, wood, coal, and other basic resources Some industries can cut their costs significantly by moving to areas where such resources are abundant and inexpensive (C) Companies often choose to locate near good transportation facilities, such as interstate highways, rail facilities or airports in order to reduce time-to-market They may also remain in certain areas or locate to specific areas where their customers primarily reside for the same reason (D) Government support and tax situations can sway the decision to locate or relocate to different areas Some states have higher taxes than others, some give tax incentives or subsidies to businesses, and others provide zoning privileges or other forms of assistance (E) Climate, educational facilities, recreational opportunities and other factors that influence the quality of life can also influence the decision to locate or relocate a particular enterprise AACSB: Knowledge Application Bloom’s: Apply Learning Objective: 09-04 Describe operations management planning issues including facility location, facility layout, materials requirement planning, purchasing, just-in-time inventory control, and quality control Level of Difficulty: Hard Topic: Operations Management 9-101 Chapter 09 - Production and Operations Management 316 How are MRP and ERP similar? How they differ? Answer: Materials requirement planning (MRP) and enterprise resource planning (ERP) are computer applications that help managers schedule and use the resources needed to produce goods and services These techniques differ in the following ways: MRP is a computer application that uses sales forecasts to make sure that needed parts and materials are available at the right time and place in a specific company ERP is a computer application that enables firms to combine the computerized functions of all the divisions and subsidiaries of the firm—such as finance, human resources, order fulfillment, etc.—into a single integrated software program that uses a single database By entering customer and sales information in an ERP system, a manufacturer can generate the next period's demand forecast, which in turn generates orders for raw materials, production scheduling, and financial projections AACSB: Knowledge Application Bloom’s: Apply Learning Objective: 09-04 Describe operations management planning issues including facility location, facility layout, materials requirement planning, purchasing, just-in-time inventory control, and quality control Level of Difficulty: Hard Topic: Operations Management 9-102 Chapter 09 - Production and Operations Management 317 How has the emphasis of quality control changed in recent years? Describe some of the modern quality control techniques that illustrate this change in emphasis Answer: In the past, quality control was done by a separate quality control department and primarily consisted of testing products at the end of the production line However, this approach proved to have several drawbacks It led to having to use more workers and other resources than necessary and to higher costs to correct problems It sometimes also resulted in dissatisfied customers These drawbacks led to the realization that quality control should not be viewed as an outcome, but rather as a never-ending process of continually improving what the company produces Thus modern operations managers believe that quality control should be part of the operations management planning process rather than an inspection tacked on at the end of the production line This new perception of quality control has resulted in a variety of new quality control standards and techniques One of the most famous standards is Six Sigma quality, which translates into achieving a standard of only 3.4 defects per million units Statistical quality control (SQC) and statistical process control (SPC) are two modern quality control techniques In SQC, managers continually monitor all processes within production to ensure quality is built into the product from the very beginning SPC is the process of examining statistical samples at each stage of the production process to identify and correct any undesirable deviations from quality standards AACSB: Knowledge Application Bloom’s: Apply Learning Objective: 09-04 Describe operations management planning issues including facility location, facility layout, materials requirement planning, purchasing, just-in-time inventory control, and quality control Level of Difficulty: Hard Topic: Total Quality Management 9-103 Chapter 09 - Production and Operations Management 318 PERT is a popular control method used by organizations Explain the purpose of PERT analysis, and describe the steps involved in constructing a PERT network Your explanation should include a discussion of the significance of the critical path in a PERT network Answer: PERT (Program Evaluation and Review Technique) is a method for analyzing the tasks involved in completing a given project, estimating the time needed to complete each task, and identifying the minimum time needed to complete the total project PERT network steps are: (1) Analyze and sequence the tasks that need to be done (2) Estimate the time needed to complete each task (3) Draw a PERT network illustrating the information from steps & (4) Identify the critical path, which is the sequence of tasks that takes the longest time to complete The significance of the critical path is that, since it represents the sequence of tasks taking the longest time to complete, the length of this path represents the earliest a project can be completed Moreover, a delay in the activities along the critical path is likely to delay the completion of the project as a whole AACSB: Knowledge Application Bloom's: Apply Learning Objective: 09-05 Explain the use of PERT and Gantt charts to control manufacturing processes Level of Difficulty: Hard Topic: Total Quality Management 9-104 Chapter 09 - Production and Operations Management 319 What are the ISO 9000 and ISO 14000 standards? Why are they important? Answer: The International Organization for Standardization (ISO) is a worldwide federation of national standards bodies from more than 140 countries that set the global measures for the quality of individual products ISO 9000 is the common name given to quality management and assurance standards The standards require that a company must determine what customer needs are, including regulatory and legal requirements The company must also make communication arrangements to handle issues such as complaints Other standards involve process control, product testing, storage, and delivery Improving quality is an investment that can pay off in better customer relations and higher sales What makes ISO 9000 so important is that the nations of the European Union are demanding that firms that want to business with them must be ISO 9000 certified Some major U.S companies are also demanding that suppliers meet such standards There are several accreditation agencies in Europe and in the U.S whose function is to certify that a company meets the standards for all phases of its operations, from product development through production and testing to installation ISO 14000 is a collection of the best practices for managing an organization's impact on the environment It does not prescribe a performance level ISO 14000 is really an environmental management system that requires having an environmental policy, establishing specific improvement targets, conducting audits of environmental programs, and maintaining top management review of the processes Certification in both ISO 9000 and ISO 14000 means that a firm has a world-class management system for both quality and environmental standards Today, the ISO 9000 and 14000 standards have been blended so that firms can work on both at once ISO is now working on social responsibility guidelines to go with the other standards AACSB: Knowledge Application Bloom’s: Apply Learning Objective: 09-04 Describe operations management planning issues including facility location, facility layout, materials requirement planning, purchasing, just-in-time inventory control, and quality control Level of Difficulty: Hard Topic: Total Quality Management 9-105 Chapter 09 - Production and Operations Management Multiple Choice Questions Mini-Case "These are exciting times for our company We've made a lot of changes over the past two years that have really improved our operations and lowered our costs Now we are ready to expand into new markets Minimotors is on its way to becoming a global player." The speaker was Sparky Weyer, president and CEO of Minimotors, Inc., a growing manufacturer of small (some of them downright tiny) electric motors used in a variety of power tools and appliances Sparky was meeting with potential financial backers in an effort to obtain funding for some expensive new machinery he wanted to purchase "You may have heard about some of the ways we've cut costs," Sparky continued "We've developed a new arrangement with several of our biggest suppliers They've agreed to make more frequent deliveries tied directly to our production schedules This will help us reduce our inventory costs dramatically We've also greatly reduced the number of defective motors we produce by carefully keeping tabs on all of our manufacturing processes In fact, we have set a goal of reducing our defects to 3.4 parts per million The main purpose of my meeting with you today is because we want to install some sophisticated new machinery and software that will allow us to quickly design and produce motors to the exact specifications of our customers The machinery is computercontrolled and can produce custom-designed products at very little increase in cost compared to our mass-produced motors We feel this flexibility and quick response time will give us a tremendous competitive advantage and help us attract new customers Installing the new equipment and training our workers to use it properly will be a complex project, but I'm confident that once we get everything up and running we'll be able to strengthen our position as the leading maker of high-quality electric motors." 9-106 Chapter 09 - Production and Operations Management 320 One of Sparky's goals is to expand globally He is most interested in doing business with the nations of the European Union In order to business with the European Union, Sparky's company should: A gain ISO 9000 certification B make sure his production workers all belong to an international union C put more emphasis on low cost rather than product quality D buy at least 50 percent of its supplies from countries belonging to the European Union Feedback: ISO 9000 refers to quality management and assurance standards These standards provide a common denominator of business quality that is accepted around the world The EU is demanding that firms wanting to business with it must be certified as meeting the ISO 9000 standards Answer: A AACSB: Analytical Thinking Bloom’s: Analyze Learning Objective: 09-04 Describe operations management planning issues including facility location, facility layout, materials requirement planning, purchasing, just-in-time inventory control, and quality control Level of Difficulty: Hard Topic: Total Quality Management 321 The arrangements Minimotors has worked out with its suppliers to reduce the amount of inventory the company holds at any one time shows that it is committed to a(n) _ A priority inventory scheduling system B first in, first out inventory processing system C just-in-time inventory control system D ABC inventory system Feedback: In a just-in-time inventory control system, suppliers deliver just enough supplies just in time for their use in a production process While this requires frequent deliveries, it also allows the producer to greatly reduce the amount of parts and materials held in inventory Answer: C AACSB: Reflective Thinking Bloom’s: Apply Learning Objective: 09-04 Describe operations management planning issues including facility location, facility layout, materials requirement planning, purchasing, just-in-time inventory control, and quality control Level of Difficulty: Hard Topic: Operations Management 9-107 Chapter 09 - Production and Operations Management 322 The equipment and software Sparky wants to acquire will allow the computers used to design motors to be linked directly to the computer-aided equipment on the factory floor Sparky is proposing to set up a(n): A modular manufacturing system B computer-integrated manufacturing system C E-hub that relies on network software to control the production process D first-in, first-out production system Feedback: Computer-integrated manufacturing unites CAD (computer-aided design) with CAM (computer-aided manufacturing) Answer: B AACSB: Analytical Thinking Bloom’s: Analyze Learning Objective: 09-03 Identify various production processes and describe techniques that improve productivity, including computeraided design and manufacturing, flexible manufacturing, lean manufacturing, mass customization, and robotics Level of Difficulty: Hard Topic: Technology in the Production Process 323 In order to schedule deliveries, Minimotors's suppliers need detailed information about when parts are needed Minimotors will purchase a sophisticated computer application that will link its operation to sales forecasts to make sure needed parts and supplies are available at the right time to meet customer demands This planning system is known as: A materials requirement planning (MRP) B program evaluation and review technique (PERT) C minimum daily requirements scheduling (MDRS) D sales-based requirements forecasting (SBRF) Feedback: MRP is a computer-based planning system that uses sales forecasts to make sure needed parts and materials are available at the right time and place Answer: A AACSB: Analytical Thinking Bloom’s: Analyze Learning Objective: 09-04 Describe operations management planning issues including facility location, facility layout, materials requirement planning, purchasing, just-in-time inventory control, and quality control Level of Difficulty: Hard Topic: Operations Management 9-108 Chapter 09 - Production and Operations Management 324 Sparky sees quality control in terms of detecting potential problems to prevent their occurrence and thus save Minimotors money The quality control process that is most closely linked to Sparky's goal is known as: A Six Sigma B Quality function deployment C ERP D PERT analysis Feedback: Quality control concepts such as Six Sigma tend to focus on detecting potential problems to prevent their occurrence Answer: A AACSB: Analytical Thinking Bloom’s: Analyze Learning Objective: 09-04 Describe operations management planning issues including facility location, facility layout, materials requirement planning, purchasing, just-in-time inventory control, and quality control Level of Difficulty: Hard Topic: Total Quality Management 325 Sparky knows that installing the new equipment and training workers to use it efficiently will be a long and complex process consisting of many different tasks Which of the following methods would help him determine how long this project is likely to take? A TPSM (task priority scheduling method) B Dependency Analysis C TRSS (task and resource scheduling system) D PERT (program evaluation and review technique) Feedback: PERT enables managers to estimate how long it will take to complete a project by identifying the project's critical path, which is the sequence of tasks in a project that takes the longest to complete Answer: D AACSB: Analytical Thinking Bloom’s: Analyze Learning Objective: 09-05 Explain the use of PERT and Gantt charts to control manufacturing processes Level of Difficulty: Hard Topic: Total Quality Management 9-109 Chapter 09 - Production and Operations Management 326 While Minimotors has focused on improving production efficiencies, global customers are inquiring about its environmental policies In light of its strategy to serve European customers, Sparky has requested two of its lead engineers to investigate what it would take to meet the environmental standards of its socially responsible customers The engineers should investigate _ as best practices for managing a firm's impact on its environment A the EPA's minimum pollution standards B ISO 14000 C RG3 Regulations D WTO environmental policy Feedback: ISO 14000 is a collection of best practices for managing an organization's impact on the environment Companies that are ISO 14000 certified show that they have an environmental management system in place and are able to demonstrate that they maintain an environmental policy; they have improvement targets; they conduct regular environmental audits; and top management reviews the process Answer: B AACSB: Analytical Thinking Bloom’s: Analyze Learning Objective: 09-04 Describe operations management planning issues including facility location, facility layout, materials requirement planning, purchasing, just-in-time inventory control, and quality control Level of Difficulty: Hard Topic: Total Quality Management 9-110 ... Objective: 0 9- 0 2 Describe the evolution from production to operations management Level of Difficulty: Easy Topic: Operations Management 9- 6 Chapter 09 - Production and Operations Management 22 Operations. .. Objective: 0 9- 0 2 Describe the evolution from production to operations management Level of Difficulty: Easy Topic: Operations Management 9- 7 Chapter 09 - Production and Operations Management 27... production to operations management Level of Difficulty: Hard Topic: Operations Management 9- 9 Chapter 09 - Production and Operations Management 35 Jason recently graduated with a degree in operations