Operations Management (12-16%)

Question 1

Performance Measures

What are the Financial Measures? (4)

B1-31

Answer 1

1–Profit
2–Return on Investment (ROA, ROE)
3–Variance Analysis (spending)
4–Balanced Scorecard

Question 2

Performance Measures

What are the Non-Financial Measures? (2 types)

B1-31

Answer 2

1. External Benchmarks- productivity measures
   a. Total Factor Productivity Ratios
   b. Partial Productivity Ratios
2. Internal Benchmarks- analyze problems
   a. Control Charts
   b. Pareto Diagrams
   c. Cause-Effect (fishbone)

Question 3

Non-Financial Performance Measures

What are the External Benchmarks? (2 types)

B1-31

Answer 3

Productivity Measures- variance/efficiency

1–Total Factor Productivity Ratios (TFP)
2–Partial Productivity Ratios (PPR)

Question 4

Non-Financial Performance Measures
External Benchmarks- Productivity Measures

Total Factor (TFP) vs Partial (PPR)

B1-31

Answer 4

Total Factor Productivity Ratios (TFP)

• -Material AND Labor Costs
• -output/total costs

Partial Productivity Ratios (PPR)

• -Material OR Labor Quantities
• -output/specific quantity

Question 5

Non-Financial Performance Measures

What are the Internal Benchmarks? (3)

B1-32

Answer 5

Techniques to find and analyze problems
1–Control Charts
2–Pareto Diagrams (histogram)
3–Cause-Effect Diagram (fishbone)

Question 6

Non-Financial Performance Measures
Internal Benchmarks-find and analyze problems

Control Charts vs. Pareto vs. Cause-Effect Diagram

B1-32

Answer 6

Control Charts

• -determine “zero” defects
• -compare to a standard
• -keep deviations withing acceptable range

Pareto Diagrams- histogram

• -determines frequency of quality-control
• -frequency from highest to lowest

Cause-Effect- fishbone

• -identifies sources of problems in production process
• -main categories of potential defect causes
• -find defect and trace back to source

Question 7

What are Characteristics of Effective Performance Measures?

B1-35

Answer 7

–Promote the achievement of goals (motivate)

• understood by employee
• objective and easily measured

Question 8

Impact of Marketing Practices on Performance

B1-36

Answer 8

Marketing decisions must consider management’s objectives

Question 9

Impact of Marketing Practices on Performance

What are the 5 Marketing Practices and Methods?

B1-36

Answer 9

1. Transaction Marketing
2. Interaction-Based Relationship Marketing
3. Database Marketing
4. E-marketing
5. Network Marketing

Question 10

Marketing Practices and Methods

What is Transaction Marketing?

B1-36

Answer 10

Attracts customers for:

• • a single sale
• -lowest price
  i. e. used car

Question 11

Marketing Practices and Methods

What is Interaction-Based Relationship Marketing?

B1-36

Answer 11

Attracts customers for:

• -repeat business/ loyalty discount
  i. e. new car

Question 12

Marketing Practices and Methods

What is Database Marketing?

B1-36

Answer 12

Gathers information on customers to segments customers into target groups

Question 13

Marketing Practices and Methods

What is E-marketing?

B1-36

Answer 13

Using the internet to accomplish marketing functions

Question 14

Marketing Practices and Methods

What is Network Marketing?

B1-36

Answer 14

Focuses on relationships and referrals to accomplish marketing functions
–aka Multilevel Marketing

Question 15

Marketing and Performance Incentives

2 kinds of performance incentives

B1-36

Answer 15

1. Sales-volume
   - -well suited for transaction marketing
2. Customer satisfaction and quality measures
   - -significant in relationship-based marketing