Chapter 1: Operations

Question 1

Twelve standard forms of value

Answer 1

product
service
shared resource
subscription
resale
lease
agency
audience aggregation
loan
option
insurance
capital

Question 2

Return on Assets

Answer 2

reflects effectiveness of operations

= profit/ total assets

a way to communicate from operations to finance

Question 3

Major decision areas of operations

Answer 3

capacity
supply networks
process technology
process managment

Question 4

ROA breakdown

Answer 4

Profit / total assets = (output/total assets * profit / output)

Profit / output = (revenue/ output) - (cost/output)

Output/total assets = (output/capacity)* (fixed assets/total assets) *(capacity/ fixed assets)

Question 5

Output/ capacity ratio

Answer 5

(part of output/total assets)

Shows utilization of resources

improved by strategic capacity decisions to improve balance between demand and supply

Question 6

Fixed assets/ total assets ratio

Answer 6

(part of output/total assets)

total assets = fixed assets + working capital

if working capital is large, ratio will be small

working capital may be reduced by managing inventories (depends on supply networks)

Question 7

Capacity/fixed assets ratio

Answer 7

part of output/total assets ratio

shows the productivity of fixed assets - or how much the operation has to spend to acquire/enhance capacity

changed by process technology decisions

Question 8

How operations influences ROA

Answer 8

• keeping costs down
• revenue generation via volume flexibility, process design, inventory management

Question 9

Positioning

Answer 9

deliberately focusing on product attributes (or a combination of attributes) different from competitors

Question 10

Core processes

Answer 10

• supplier relationship
• new service/product development
• order fulfillment
• customer relationship

Question 11

Supplier relationship process

Answer 11

selects suppliers and facilitates timely and efficient flow of supplies into company

Question 12

New service/product development process

Answer 12

design and develop new services or products

Question 13

Order fulfillment process

Answer 13

production and delivery of products

Question 14

customer relationship process

Answer 14

identifies, attracts, and builds relationships with external customers

Question 15

Supply chain process

Answer 15

businesses with external customers or suppliers

Question 16

Core competencies

Answer 16

unique resources and strengths an organization’s management considers when formulating strategy

includes:
- workforce
- facilities
- market and financial know how
- systems and technology

these competencies drive core processes

Question 17

use of market analysis

Answer 17

market research –> market segmentation –>
needs assessment of market segment (service/ product, delivery, volume needs) –> choice of market positioning

Question 18

competitive priorities

Answer 18

critical dimensions a process or supply chain must possess to satisfy internal and external customers

all relate to basic performance objective/ competitive capabilities

ex:
- low cost operations
- top quality
- consistent quality
- delivery speed
- on time delivery
- development speed
- customization
- variety of product/service
- volume flexibility

Question 19

volume flexibility capability

Answer 19

ability to accelerate or decelerate rate of production quickly to adapt to demand

Question 20

Competitive capabilities

Answer 20

aka performance objectives
cost
quality
time (aka speed)
flexibility
(also dependability)

Question 21

time based competition

Answer 21

competitive priorities of delivery speed and development speed

Question 22

Order winner

Answer 22

qualities a product or service must have to WIN customer orders - what differentiates it from other products and services

order winners are derived from competitive strategies

Question 23

Order qualifier

Answer 23

minimum qualities a product or service must meet from a set of criteria for a firm to do business in a market segment

Question 24

Productivity

Answer 24

value of outputs produced / value of inputs used

(expressed as output per input)

Question 25

Hard qualities

Answer 25

performance
features
reliability
safety/security

Question 26

Soft qualities

Answer 26

helpfulness
attentiveness
communication
friendliness

Question 27

Conformance

Answer 27

ability to reliably and consistently produce goods and services to specifications

Question 28

Types of flexibility

Answer 28

product/ service
mix
volume
delivery

Question 29

Range flexibility

Answer 29

how much of an operation can be changed

Question 30

Response flexibility

Answer 30

how fast an operation can be changed

Question 31

Components of cost

Answer 31

operating expenses
capital expenses
working capital

Question 32

Working capital

Answer 32

= current assets - current liabilities

funds the time between inflows and outflows of cash

Question 33

Activity mapping

Answer 33

technique of mapping out all the activities that go into operations to look for waste to remove

Question 34

Value metrics

Answer 34

Product quality
service quality
(an increase increases value to customer)

Cost
Cycle time
(an increase decreases the value to the customer)

Question 35

customer value

Answer 35

(quality x service)/ (cost x cycle time)

Question 36

product-process matrix

Answer 36

connects product attributes with process attributes

effective matches occur on the diagonal - off diagonal can create high cash or opportunity cost

(one showed in class matched process flexibility and product variety)

Question 37

Low product variety

Answer 37

creates a need for high standardization, allows for high volume

Question 38

High product variety

Answer 38

does not allow for high standardization or high volume

Question 39

low process flexibility

Answer 39

continuous-flow processes, all very standardized

Question 40

High process flexibility

Answer 40

very flexible jumbled processes, usually low-volume, high-customization