Performance Measures Flashcards
What is commonly considered the best method to use to minimize failure costs?
Prevention cost.
Explain the difference between “quality of design” and “conformance quality.”
Quality of design is about meeting or exceeding the needs and wants of customers, while quality of conformance is the degree to which a product meets its specifications.
How is quality tied to JIT?
Raw materials must be of consistently high quality. Because, there is little or no excess inventory to fall back on, the entire production process may be delayed if any materials are faulty.
Define “Pull” inventory models
Pull models do not do any work until demanded by customer orders. Thus, customer demand “pulls” material orders, labor, and all other manufacturing activity through the plant.
Define “economic order quantity model.”
A push model that specifies the most efficient quantity to order to minimize inventory costs.
Define “backflush costing.”
A just in time (JIT) product costing approach in which costing is delayed until goods are completed or, in some cases, until the goods are sold.
List some examples of measures of performance from the customer perspective.
Market share, product returns as a percentage of sales, number of new customers, percentage of repeat customers, sales trends, etc.
List the four evaluation perspectives for a balanced scorecard.
- Customer;
- Internal Business Processes;
- Learning, Innovation, and 4.Growth.
List four features of a good balanced scorecard.
- Articulates a company’s strategy;
- Assists in communicating the strategy;
- Limits the number of measures;
- Highlights suboptimal tradeoffs that managers may make.
List five pitfalls that should be avoided with a balanced scorecard.
Don’t assume all linkages to be precise; don’t seek improvements across all measures all the time; don’t use only objective measures on the scorecard; don’t fail to consider both costs and benefits of initiatives such as spending on information technology and research and development; and don’t ignore nonfinancial metrics when evaluating managers and employees.
Define “benchmarking.”
A process in which organizations compare their own processes and performance with the processes and performances of business leaders within or across competing industries.
List three important points and features of benchmarking.
- A company can’t be the best at everything;
- Benchmarking should be an ongoing process within the organization;
- Don’t try to focus on improving in every benchmark area all the time.
List the five forces outlined in Michael Porter’s framework for industry analysis and business strategy development.
(1) Bargaining power of customers; (2) bargaining power of suppliers; (3) threat of new entrants; (4) threat of substitute products; (5) intensity of competition.
Define “market segmentation”.
Customizing the market to meet the demands of a specific customer group; AKA niche marketing or focus strategy.
What does the acronym SWOT stand for?
Strengths, weaknesses, opportunities, and threats.
Define “product differentiation strategy”.
Competitive strategy in which the organization strives to produce a product that is perceived to offer unique features or benefits to the customer and which therefore commands a higher price.
Define “cost leadership strategy”.
Competitive strategy in which the organization seeks to gain an advantage by selling a high volume of low cost products
What is the key to revenue maximization under constrained resources?
Produce the product that offers the highest contribution margin per unit of the constrained resource (e.g., if production in a bakery is constrained by the amount of oven time available, produce the product that maximizes the contribution margin per hour of oven time).
Define “environmental scanning”.
A process in which the organization continuously gathers and evaluates information that could impact its ability to compete using its current organizational strategies.
