Unfilled Notes (fill the blanks and select the correct word)

Chapter 1: Introduction to Operations Management

Highlights of the chapter include the following:

1. Operations as one of the three main functional concerns of most organizations.

2. The role and job of the operations manager as a planner and decision-maker.

3. Different ways of classifying (and understanding) production systems.

4. System design versus system operation.

5. Major characteristics of production systems.

6. Contemporary issues in operations management.

7. Operations as essentially managerial (planning, staffing, etc.)

8. The historical evolution of production/operations management.

9. Manufacturing operations versus service operations.

Reading: The Challenges of Managing Services

1. In comparison to manufacturing industry, services have:

a. ___________________________________ jobs.

b. ________________ customer contact.

c. ________________ worker skills.

d. ___________________________________ positions.

e. ________________ employee turnover.

f. ________________ input variability.

2. Because of the factors listed in the answer to question 1, in service industry it is more difficult to control costs and quality resulting in (Higher/lower) productivity. In addition the risk of customer dissatisfaction is (greater/smaller) and employee motivation is (higher/lower).

Reading:Why Manufacturing Matters

1. Since the U.S. economy is becoming more (manufacturing/service) based, the percentage of employment in manufacturing is declining while the percentage of employment in service industry is increasing. An __________________ manufacturer is able to switch quickly and economically from one product to another with very little disruption.

2. Yes, the business leaders and the government officials should be concerned about declining percentage of manufacturing jobs because of a variety of reasons including the following:

a. Manufacturing provides ____________% of the U.S. exports.

b. The average compensation for a worker from manufacturing industry is ______% greater than the average of all workers in the U.S.

c. Compared to service industry employees, the manufacturing employees are more likely to have a better benefits package.

d. Productivity growth in manufacturing is much (higher/lower) than productivity growth in the U.S. economy’s overall productivity growth.

e. Even though manufacturing employment accounts for a smaller portion of the employment for U.S. than the service industry, the manufacturing accounts for more than ______% of the Research and Development in the United States.

1. Customers judge the quality of a supermarket based on:

a. Quality of __________________________________.

b. Exterior and interior physical look of the store.

c. _____________________ and _______________________ of service personnel.

2. a. _________________________________ is the major key to the success of any operation, without it the company cannot survive.

b. Forecasting allows the company to plan the ________________ levels, ________________ quantities, inventory levels and ________________________.

c. Capacity planning allows the company to balance the trade-off between _______________ and _________________________ (as in manufacturing) and between ________________ and _______________________ (as in service).

d. A good location can have a significant impact in attracting customers, thus improving ____________.

e. Planning and controlling levels of inventory will assist with avoiding _______________ and avoiding excess inventory levels.

f. Good layout of the store can assist in maximizing customer service and sales by strategically ___________________ customers through the store. An effective layout can also improve the efficiency of the operations.

g. Effective scheduling of company workers and work hours can improve both ___________________ and ________________. An effective schedule provides convenient store hours, minimal customer __________________ and minimal employee __________________.

3. Wegmans uses technology to track inventory and manage its supply chain, which lessens the risk of occurrences of out-of-stock events, and to maintain freshness in its meat and produce departments.

Discussion and Review Questions

1. Briefly describe the term operations management:

Answer: The term production/operations management relates to the management of _________________ or ____________________ that create goods and/or provide services. These _______________________ involve the planning, coordination, and execution of all activities that create goods and services.

2. Identify the three major functional areas of business organizations and briefly describe how they interrelate.

Answer: The three primary functions are ______________________, ________________, and _________________________. ___________________________ is concerned with the creation of goods and services; __________________________ is concerned with provision of funds necessary for operation; and ______________________ is concerned with promoting and/or selling goods or services.

3. Describe the operations function and the nature of the operations manager’s job.

Answer: The operations function consists of all activities that are directly related to _________________________________ or _______________________. It is the core of most business organizations because it is responsible for the creation of an organization’s goods or services. Its essence is to add value during the _____________________ process (the difference between the cost of inputs and value and price of outputs).

4. List five important differences between goods production and service operations; then list five important similarities.

Answer: Among the important differences between manufacturing and service operations are:

a. _________________________________________________________

b. _________________________________________________________

c. _________________________________________________________

d. _________________________________________________________

e. _________________________________________________________

6. a. The service sector now accounts for more than _________ percent of jobs in the U.S. and that figure continues to __________________.

b. Manufacturing is important in that

(1) ________________________________________________________________

(2) ________________________________________________________________

c. ____________________________________________________________________

8. Why is the degree of customization an important consideration in process planning?

Answer: Degree of customization has important implications throughout a business organization. Generally, higher degrees of customization involve more _________________ in terms of production or service, involve different forms of _____________________ (arrangement of the workplace), require ______________________ worker skills, and have ___________________ productivity. (Words to use: layout, higher, lower, complexity)

10. Describe each of these systems: Craft production, mass production, and lean production:

Answer:

Craft production: involves producing (high/low) variety of customized goods, (High/low) volume output with skilled workers, and utilizing ________________________ equipment. The main advantage is the ______________________ to produce a wide variety of outputs providing many choices for the need of customers. The main disadvantage is its inability to produce at (high/low) cost. Examples: tailoring, machine shop, print shop, and landscaping.

Mass production: involves producing a few standardized goods at (high/low) volume of output with (high/low) skilled workers utilizing specialized equipment. The main advantage is (high/low) cost, efficient production. The main disadvantage is that it does not allow easy changes in volume of output, product or process design. Examples: automobiles, computers, mail sorting, appliances, paper, soft drink bottling, etc.

Lean Production: involves producing more variety of goods than most production at (high/moderate/low) volume of output. It requires (high/low) skilled workers, quality, employee involvement, teamwork and flatter organizational structure with fewer levels of management. It combines the advantages of both __________________ production (high volume, low cost) and ___________________ production (variety, flexibility). Examples: similar to mass production.

13. There are four basic sources of variation:

1. The variety of __________ or ____________ being offered: The greater the variety of goods and

services, the greater the variation in production or service requirements.

2. Structural variation in ___________________, such as trends and seasonal variations. These are

generally predictable. They are particularly important for capacity planning.

3. Random variation. This natural variability is present to some extent in all processes,

and it also present in demand for services and products, and (can/cannot) generally be

influenced by managers.

4. Assignable causes of variation: Variation caused by defective inputs, incorrect work

methods, out of adjustment equipment, and so on. This type of variation can be

________________ or ___________________ by analysis and corrective action.

Variations can be disruptive to operations and supply chain processes, interfering with optimal functioning. Variations result in additional cost, delays and shortages, poor quality, and inefficient work systems. Poor quality and product shortages or service delays can lead to dissatisfied customers and damage an organization’s reputation and image.

15. Value added is defined as the difference between the cost of inputs before the ____________________ process and the value or the price of output after the ____________________ process. In a manufacturing process as the inputs are transformed to outputs, value is added to products in a number of different ways. The value adding can take many different forms. For example, value can be added by changing the product structurally (physical change) or transporting a product (a product may have more value if it is located somewhere other than where it currently is).

16. Outsourcing can result in (higher/lower) costs, the ability to take advantage of others’ expertise, and allow businesses to focus on their core business. Outsourcing generally results in layoffs and some loss of control. Also, outsourcing to companies in other nations may result in problems due to cultural or language differences, and increased shipping times for products.

17. Sustainability refers to service and production processes that use _______________ in ways that

do not harm __________________ systems that support both current and future human existence.

Business organizations are increasingly facing sustainability regulations as well as

pressures from environmental groups to act responsibly toward the environment. Some

organizations are capitalizing on their “green” efforts in their advertising.