Midterm Multiple Choice Flashcards
Risks of Globalization
Cultural Differences (language barriers, likes/dislikes, work culture, tastes, preferences)
Logistics, Distribution and Transportation
Safety, security, and stability
Quality problems
Loss of core competence / capability
Exchange rate fluctuations
Rising Wages in foreign country
Barriers to Entry
Economies of Scale (ex: Walmart, ebay)
Capital Investment (ex: new hospital Vs. day care)
Access to Supply and Distribution Channels (ex: Walmart’s size + info. distr. system provides strong competitive adv.)
Learning Curve (ex: US firms - aerospace industry – experience and expertise, ship building, heart transplant)
Benefits of E-Business
Comparison shopping by customers
Direct contact with customers
Business processes conducted online
Access to customers worldwide
Middlemen are eliminated
Access to suppliers worldwide
Online auctions and e-marketplaces
Better and faster decision making
IT synergy
Expanded supply chains
E-Business Impact on Operations Management
Customer expectations escalate; quality must be maintained and costs lowered
No more guessing about demand; inventory costs go down; build to-order products and services is made possible
Transaction costs are lower; customer support costs decrease; e-procurement saves big bucks
Demand increases; order fulfillment and logistics become major issues; production moves overseas
Logistics change from delivering to a store or distribution center to delivering to individual homes; consumer demand is more erratic and unpredictable than business demand
Outsourcing increases; more alliances and partnerships among firms are formed; supply is less certain; global supply chain issues arise
Competitive bidding lowers cost of materials; supply needs can be found in one location
More timely information is available with immediate access by all stakeholders in decision-making process; customer orders and product designs can be clarified electronically; electronic meetings can be held; collaborative planning is facilitated
Productivity increases as information can be shared more efficiently internally and between trading partners
Order fulfillment, logistics, warehousing, transportation and delivery become focus of operations management; trade barriers fall (ex: language)
Four Steps of Strategy Formulation
- Defining a primary task
- Assessing core competencies
- Determining order winners and order qualifiers
- Positioning the firm (“no firm can be all things to all people”)
Competitive Priorities for Organizations
Cost
Quality
Flexibility
Speed
Operations’ Role in Corporate Strategy
Operations provides support for a differentiated strategy (perform different activities from those of its competitors)
(ex: Southwest vs. United; Kmart Vs. Wal-Mart)
Operations serves as a firm’s distinctive competence in executing similar strategies better than competitors (perform the same activities better)
(ex: Toyota’s lean mfg. techniques)
Strategic Decisions in Operations Pertaining to Products and Services
Make-to-order
products and services are made to customer specifications after an order has been received
(ex: custom-built-homes, custom tailored clothes, wedding invitations, professional services: medical, legal, financial)
Make-to-stock
products and services are made in anticipation of demand
(ex: TV, tooth brush, computer parts, books, ready-to-wear apparel)
Assemble-to-order
products and services add options according to customer specifications
(ex: computers, printers, corporate training)
Strategic Decisions in Operations Pertaining to Capacity and Facilities
Capacity decisions affect: product lead times, customer responsiveness, operating costs, ability to compete
Excess Vs. Inadequate capacity
Capacity strategic decisions include:
When, Where, how much, and in what form to alter capacity
Facility strategic decisions include: (size and location)
few large facilities or several smaller ones
Facilities to focus on certain: geographic regions, product lines, or customers
Strategic decisions: mfg/sell in foreign countries, reln with foreign manufacturers: licencing, JV, partnership, alliances, mergers, etc.
Dimensions of Quality Pertaining to Products
Performance
basic operating characteristics of a product; how well a car is handled or its gas mileage
Features
“extra” items added to basic features, such as rear view camera, auto park, USB adapter, GPS option, upgraded stereo, leather interior
Reliability
probability that a product will operate properly within an expected time frame; (ex: TV will work without repair for about ten years)
Durability
how long product lasts before replacement?
Conformance
degree to which a product meets pre–established standards (Toyota ionic air filter, BMW safety test ratings, UL/CSA, FDA approved)
Serviceability
Cost and ease of getting repairs, speed of repairs, courtesy and competence of repair person
Aesthetics
how a product looks, feels, sounds, smells, or tastes?
Safety
assurance that customer will not suffer injury or harm from a product; (an important consideration for automobiles, ex: Matel Toys)
Perceptions
subjective perceptions based on brand name, advertising, and like
Dimensions of Quality Pertaining to Services
Time and timeliness
how long must a customer wait for service, and is it completed on time?
(ex: is an overnight package delivered overnight?)
Completeness:
is everything customer asked for provided?
(ex: is a mail order from a catalogue company complete when delivered?)
Courtesy:
how are customers treated by employees?
(ex: are mobile phone operators nice and are their voices pleasant?)
Consistency
is same level of service provided to each customer each time?
(ex: is your newspaper delivered on time every morning?)
Accessibility and convenience
how easy is it to obtain service?
(ex:- does service representative answer your calls quickly?)
Accuracy
is service performed right every time?
(ex: is your cell phone/cable service bill correct every month?)
Quality of Conformance
Achieving Quality of Conformance depends on?
Making sure product or service is produced according to design
Achieving Quality of Conformance depends on ?
- design of production process (distinct from product design), performance level of machinery, tools, materials, training and supervision of employees, degree to which SQC techniques are used
Definition of Quality from Consumers’ Perspectives
-Fitness for use
how well product or service does what it is supposed to
-Quality of design
Degree to which quality characteristics are designed into the product or service
A Mercedes and a Ford are equally “fit for use,” but with different design dimensions
Elements/ Principles of TQM
- Customer-satisfaction (top priority, cust. defines qlty.)
- Leadership and commitment (Top Management / supervisors)
- Strategic plan (to achieve long-term org. goals on qlty.)
- Employee empowerment / participation (Toyota, Ritz Carlton)
- Training and education (Ritz Carlton, SQC, Qlty. tools & techniques)
- Continuous improvement (use Kaizen, PDCA - workforce driven C.I over Mgmt. driven periodic improvement, suggestion programs)
- Employee Cooperation (eliminate barrier betn. depts., involvement / participative prob. solving)
TQM and role of Employees (Participative Problems Solving)
Training, mentoring, empowerment, involvement (suggestions, brainstorming), employee satisfaction surveys
every employee has undergone extensive training to provide quality service to Disney’s guests
Ritz-Carlton’s first year employees trained for about 300hrs.
employees identify and solve quality problems (win-win for both, employees and org.)
Continuous Improvement (Kaizen)
Making small, continuous improvements on a scheduled basis (use PDCA, brainstorming, suggestions program, data analyses & prob. solving using Qlty. tools)
Requires total employee involvement
-Employees identify a problem, come up with a solution, consult supervisors, implement improvements themselves
Ex: Dana Corp. (3suggestions/employee/mth., 80% implemented, implement 2 million ideas/year)
Quality Circles
Originated in 1960, Japan, USA 1970s
Small voluntary group (8-10members) of employees + supervisors
From same work area
Meet about once/week (during company time)
Works on probs/projects of their choice: productivity, costs, safety, etc. (not always related to qlty.)
Follow estb. procedure: identify, analyze, solve problems
Steps in Six Sigma - DMAIC
Define Measure Analyze Improve Control
Design for Six Sigma (DFSS)
A systematic method for designing products and processes that meet cust. expectations and are produced at 6 sigma quality levels
More effective & less expensive way to achieve six-sigma goal than fixing problems after product/process already developed
Tools for TQM (Pareto Analysis, Fish Bone Diagram)
Pareto Analysis: Tool to identify causes of poor quality (most quality problems and costs result from only a few causes)
Cause-and-Effect Diagram (Means for thinking through a problem and recording the possible causes in an organized and easily interpretable manner)
Cost of Achieving Good Quality
-Prevention costs (cost of ‘do it right the first time’)
Costs of trying to prevent poor-quality products from reaching the customer
-Appraisal costs
costs of measuring, testing, and analyzing mtls., parts, products, & processes to ensure product quality specs. are being met
Cost of Poor Quality (or ‘costs of non-conformance’)
Largest quality cost category (approx. 70 – 90% of total quality costs)
-Internal failure costs
include scrap, rework, process failure, downtime, and price reductions
-External failure costs (MOSTLY RELATED TO SERVICES)
include complaints, returns, warranty claims, liability, and lost sales
Appraisal Cost are Higher or Lower for Service Organizations or Manufacturing Organizations
Appraisal costs tend to be higher in a service organization than in a manufacturing company and, therefore, are a greater proportion of total quality costs.
Control Charts
2 functions of ctrl charts:
-establishes control limits of a process
-process monitoring
(visually indicates if a sample is within statistical control limits)
Control limits
upper and lower bands of a control chart
Where (at what points) to use a Control Charts in a Process?
- Where the process has a tendency to go out of control (i.e. critical points, where historically the process has shown a tendency to go out of control)
- Where if the process goes out of control it is particularly harmful and costly
Examples
at the beginning of a process because it is a waste of time and money to begin production process with bad supplies
before a costly or irreversible point, after which product is difficult to rework or correct
before and after assembly or painting operations that might cover defects
before the outgoing final product or service is delivered (ex : QC check sticker)
Attributes Versus Variables Charts
Attributes:
- P chart
- C chart
Variables:
- mean (x bar – chart)
- range (R-chart)
Control Charts is Considered to be in Control when
1… no sample points outside limits
2… most points near process average (i.e. centre line) without too many close to control limits
3… about equal number of points above and below centerline
4… points appear randomly distributed
C-Chart uses…, P-Chart uses….
1) C- Chart uses the number of Defects per Item/ Unit in a Sample
2) P- Chart uses Proportion Defective Items in a Sample
Why X- Bar and R Charts are used together?
use of BOTH control charts together provide more complete picture of the overall process variability”)
- BOTH process average and process variability must be in control
- It is possible for samples to have very narrow ranges, but their averages beyond control limits
- It is possible for sample averages to be in control, but ranges might be very large
Design Process in Detail
read ch. 4 powerpoint
Concurrent design
This process of jointly and iteratively developing a design is called concurrent design.
Use of Technology (CAD, CAE)
Computer-aided design (CAD) is a software system that uses computer graphics to assist in the creation, modification, and analysis of a design.
Engineering analysis, performed with a CAD system, is called computer-aided engineering (CAE).
CPC (Collaborative Product Commerce)
Quick product devp. Improved qlty. of design Quickly resolve product launch issues Virtually test “what if” scenarios Assign/track design issues Communicate with multiple tiers of suppliers Create/store/manage project docs.
FMEA
Failure Mode and Effects Analysis (FMEA)
-a systematic method of anticipating, analyzing, and addressing possible/potential product failures before finalizing the design
Value Analysis
eliminates unnecessary features and functions (and thus costs associated with them, improve value – lower costs)
Make or Buy Decisions:
Cost, Capacity, Quality, Speed, Reliability, Expertise
Capacity Lead Strategy
Capacity expanded in anticipation of demand growth
Aggressive strategy – to lure customers from competitors and gain foothold in rapidly expanding market (PLC: growth)
Allows companies to respond to unexpected surges in demand
Superior customer service during peak demand
Used: uncertain/volatile demand, strong competition
Average Capacity Strategy
Capacity expanded to coincide with average expected demand (based on demand forecasts)
Moderate strategy – able to meet some changed demand and otherwise other times
Capacity Lag Strategy
Capacity increased only after increase in demand documented
Conservative strategy (PLC: maturity)
High ROI, but may lose customers in the process
Used in industries with: stable demand - std. products (cost based), weak competition
Economies of Scale
Occur when it costs less per unit to produce high levels of output
Hold True when:
fixed costs can be spread over a larger number of units
quantity discounts are available for material purchases
operating efficiency increases as workers gain experience
Diseconomies of Scale
How much to increase capacity depends on:
Vol. & certainty of anticipated demand
Strategic objectives of Co.: growth, cust. service, competition
Type of product and industry
Costs of expansion
