Operations Management

Question 1

Operations management

Answer 1

Operations management is the management of the process of transforming materials, labor, and other resources into goods and/or services.

Manufacturing businesses and service businesses differ in their operations management. Production is associated with manufacturing.

Question 2

Transformation processes: converting basic resources into finished products

Answer 2

Resources (inputs) > grapes
Transformation processes > fermentation
Finished products (outputs) > wine

Question 3

Factory assembly line

Answer 3

A factory assembly line consists of a series of steps for assembling a product, each step using the same interchangeable parts and each being performed repetitively by the same worker.
> ex: ford car

Question 4

Mass production

Answer 4

Mechanization, standardization, assembly lines, automation and robotics have reduced production costs and made possible the development of mass production, the production of uniform goods in great quantities.

Question 5

Lean manufacturing

Answer 5

Lean manufacturing is the production of products by eliminating unnecessary steps and using the fewest resources, as well as continually striving for improvement.
> optimize the slowest steps

Question 6

Manufacturing businesses and service businesses

Answer 6

Manufacturing businesses, which mainly deal with things, produce goods; they convert raw materials into finished products.

Service businesses, which deal mainly with people, perform services; they convert people’s unmet needs into satisfied needs.

Question 7

Facility location
+ main factors to consider

Answer 7

Facility location is the process of selecting a location for company operations, whether it’s an office, a store, a gas station, a warehouse, a factory, or a cattle ranch.

Main factors to consider:
- Nearness to Customers: Reducing Time to Market
• The benefit of locating a production facility close to customers is that it can reduce time to market—the length of time it takes from a product being conceived until it is available for sale.
- Availability & Cost of Resources: Materials, Energy, & Labor
• How Materials & Energy Affect Facility Location;
• How Labor Affects Facility Location.
- Proximity to Suppliers
- Tax Relief & Local Government Support

Question 8

Facility layout

Answer 8

Facility layout is the physical arrangement of equipment, offices, rooms, people, and other resources within an organization for producing goods or services. The arrangements can be similar for delivering both goods and services.

Question 9

Product layout

Answer 9

Product Layout: The Assembly-Line Arrangement
• In the product layout, equipment and tasks are arranged into an assembly line—a sequence of steps for producing a single product.

Question 10

Process layout

Answer 10

Process Layout: Work Grouped by Function
• In the process layout, similar work is grouped by function

Question 11

Fixed-position layout

Answer 11

Fixed-Position Layout:
- In the fixed-position layout, materials, equipment, and labor are transported to one location

Question 12

Purchasing

Answer 12

Purchasing is the activity of finding the best
resources for the best price from the best suppliers
to produce the best goods and services.

Question 13

Dealing with suppliers: two strategies

Answer 13

• Use Many Suppliers to Ensure Constant Resources.
• Use a Few Trusted Suppliers to Ensure Reliability

Question 14

Inventory

Answer 14

Inventory is the name given to goods kept in stock to be used for the production process or for sales to customers.
• Raw materials
• Work in process
• Finished goods

Question 15

Inventory control

Answer 15

Inventory control is the system for determining the right quantity of resources and keeping track of their location and use.
• The objective is to have enough but not too much.
• Holding a storeroom or warehouse full of inventory can be expensive.

Question 16

Just in time (JIT)

Answer 16

Many businesses rely on a concept called just-in-time (JIT) inventory control, in which only minimal supplies are kept on the organization’s premises and others are delivered by the suppliers on an as-needed basis.

Question 17

Supply chain management

Answer 17

Many businesses now engage in a process known as
supply-chain management, in which companies
produce goods and services by integrating many
facilities, functions, and processes, from suppliers to
customers.

Question 18

Enterprise resource planning (ERP)

Answer 18

Enterprise resource planning (ERP) is a computer-
based system that collects and provides information
about a company’s entire enterprise, including identifying customer needs, receipt of orders,
distribution of finished goods, and receipt of payment.
(Ex: SAP)

Question 19

Efficiency

Answer 19

Efficiency – producing output or achieving a goal at the lowest cost

Question 20

Effectiveness

Answer 20

Effectiveness – completing tasks and producing products that create the greatest value

Question 21

Offshoring

Answer 21

Offshoring
• Low-wage labour is a key reason firms focus overseas
• Key to balance advantages with drawbacks:
– Different laws and customs
– Inadequate infrastructure
– Inexperienced workers
– Political instability

Question 22

Vertical integration

Answer 22

Vertical integration
• Gain control over supply chain
• Begin producing own parts
• Buying suppliers

Question 23

Quality

Answer 23

Quality refers to the total ability of a product or service to meet customer needs.

Question 24

Quality assurances

Answer 24

Quality assurance is defined as the process of
minimizing errors by managing each stage of
production.

Question 25

Total quality management (TQM)

Answer 25

Led by top management and supported throughout the organization, total quality management (TQM) is a comprehensive approach dedicated to continuous quality improvement, training, and customer satisfaction.
- Make Continuous Improvement a Priority
- Get Every Employee Involved
- Listen to and Learn from Customers and Employees
- Use Accurate Standards to Identify and Eliminate Problems