Week 8 - Control (Ch. 16)

Question 1

Control process

Answer 1

1. Set standard: acceptable performance vs unacceptable performance

2. Measure actual performance: go out and do the work and measure the results

3. Compare with standard: step two minus step one

4. Identify deviations: identify differences, where has the performance differed from the standard? (identify zeros)

5. Analyze deviations: analyze those differences (interpret it) is it beneficial? is it bad?

6. Take corrective action:decide what we need to do to correct the discrepancy between our standard and performance (slow down, speed up, adjust the standard if out of reach)

Question 2

Planning/control tools: PERT & Gantt

Answer 2

1. PERT Networks
–what order things should be done
–What things can be done simultaneously
–How long they should take

2. Gantt Charts (same info different way)
–what order should be done (top to bottom)
–what can be done simultaneously
–How long they should take

Question 3

3 Types of Controls

Answer 3

1. Feedforwards Control
Monitoring inputs & Anticipoating and preventing problems
2. Concurrent Control
Monitoring processes & Adjusting ongoing activities
3. Feedback Control
Monitoring products & Learning from past mistakes

Question 4

Budgets, perf. reports, variance analysis

Answer 4

Variance Analysis: The difference between the budget and the actual amount

• Cash flow analysis
• Balance sheets
• Income statements
• Financial ratios
• Budgets
• Zero-based budgeting (down to the number of color photocopies to garbage bags used)

BBA: Favorable (+) and Unfavorable (-) –normally

Question 5

Balanced scorecard

four main components

Answer 5

1. Financial perspective–market value, seat revenue, plane lease costs
2. Customer perspective–on-time arrival rating, ticket pricing compared to others
3. Internal business perspective (quality of mgmt)–percentage of planes that depart on time, how long plane takeoff time takes
4. Innovation and learning perspective–workers who own company stock and have received company training

**Suboptimization occurs when performance improves in one area at the expense of decreased performance in another