Chapter 3—Measuring Performance in Operations

21. Of the four performance perspectives of the balanced scorecard model, which is most relevant to operations managers?

a.	financial
b.	customer
c.	innovation and learning
d.	internal

22. Employee satisfaction and other workforce-related measures fall into which perspective in the Balanced Scorecard?

a.	Financial
b.	Customer
c.	Innovation and Learning
d.	Internal

23. In regard to the value chain model, efficiency, cost and cycle time would be most related to

a.	suppliers
b.	inputs
c.	value creation processes
d.	outputs and outcomes

24. Value chain measures would generally be less valuable to

a.	top management
b.	middle managers
c.	first-line supervisors
d.	employees to monitor any control

25. The service-profit chain model

a.	is based on a set of cause-and-effect linkages
b.	is only focused on internal performance
c.	was designed first for manufacturing organizations
d.	is focused on equipment utilization

26. Regarding the service-profit chain model, which of the following is not viewed as internal performance?

a.	customer satisfaction
b.	employee satisfaction
c.	employee retention
d.	employee productivity

27. Which one of the following statements is true regarding FedEx’s Service Quality Indicator (SQI)?

a.	FedEx’s SQI is an example of volume flexibility.
b.	FedEx’s SQI places the most weight (importance) on late pickups.
c.	FedEx’s SQI places the most weight (importance) on damaged and lost packages.
d.	FedEx’s SQI places the most weight (importance) on delivery on the wrong day.

SHORT ANSWER

1. Why is measurement important?

2. What are the major categories of organizational performance measures? Provide an example measure for each category.

3. Explain the difference between goods quality and service quality, and how they are measured.

4. Describe the five key dimensions of assessing service quality.

5. Explain the difference between design flexibility and volume flexibility.

6. Define interlinking. Why is this concept significant?

7. Provide some examples of criteria that can be used to help select and delete performance measures from an organization's information system.

8. Briefly discuss the seven categories of the Malcolm Baldrige National Quality Award.

9. Briefly discuss the four performance perspectives of the Balanced Scorecard Model.

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10. Explain the concepts underlying the service-profit chain model.

PROBLEM

1.Using the information provided in the table below, determine the percentage change in productivity from 2009 to 2010.

	2009	2010
OUTPUTS
Units	110,000	150,000
INPUTS
Direct Labor Costs	$250,000	$310,000
Energy Cost	$6,000	$5,800
Raw Material Cost	$40,000	$42,000

2. Using the information below, determine the productivity (measured as output per dollar input) for the each quarter and calculate the percentage change in productivity.

	First Quarter	Second Quarter
Total Units Sold	12,000	11,500
Labor Hours	10,000	9,500
Labor Cost/Hour	$8.00	$8.00
Material Usage (lbs.)	6,000	5,500
Material Cost/lb.	$12.00	$11.50
Other Costs	$25,000	$23,000

3. Jeff Camm, the president of Biometrics, Inc. has received the following data from his accountant:

	Year 1	Year 2	Year 3	Year 4
Sales	$26,000	$15,000	$17,000	$20,000
Material	$ 8,000	$ 5,000	$ 6,000	$ 6,000
Labor	$10,000	$ 7,500	$ 8,000	$ 8,000
Overhead	$ 4,000	$ 2,000	$ 2,500	$ 4,000

How is productivity changing in Jeff's firm?

4. A manufacturer of business copier workstations has a 75 percent customer retention rate. Their accounting department estimates the incremental contribution to profit and overhead as 40 percent. Customers purchase the workstations every three years at an average cost of $1,500.00. Determine the average value of a loyal customer.

5. A computer manufacturer currently has a 15 percent customer defection rate. Their accounting department estimates the incremental contribution to profit and overhead as 30 percent. Customers purchase computers every four years at an average cost of $1,200.00. In an effort to reduce the defection rate, the company is improving both the quality of its computers and its post-sale service. Determine the increase in the average value of a loyal customer if the defection rate drops to 5 percent.