Chapter 09 – Production and Operations Management
1. Currently, manufacturing accounts for only around 70% of U.S. GDP.
2. The recent recession greatly affected the state of manufacturing in the U.S., resulting in a
slow down in production and the loss of jobs.
3. The Green Movement has had a large affect on the service industry, but only a negligible
affect on manufacturing.
4. Today, Manufacturers in the U.S. have become so efficient; they require fewer workers to
produce the same amount of output.
5. One key to the resurgence of U.S. firms as world-class competitors has been the
implementation of a focus on quality.
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6. Evidence suggests that U.S. manufacturing firms can no longer compete against the best
firms in the rest of the world.
7. American manufacturers have emphasized continuous improvement as one strategy for
regaining a competitive advantage in the manufacturing sector.
8. In order to be more competitive globally, production techniques such as enterprise
resource planning and lean manufacturing are being used by American manufacturers.
9.
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To strengthen its manufacturing base, the U.S. will need to continue to innovate.
10. The U.S. is still manufacturing intensive. Only 25% of U.S. jobs come from the service
sector.
11. Companies such as IBM prefer to stay the course and continue to compete by selling
products instead of services.
Feedback: As indicated in the company profile at the beginning of Chapter 9, as well as
information in the text, IBM is an example of a company that transitioned from a product-
based firm to a service-based firm. It has successfully found business in services and
software, and became a cutting-edge information technology company domestically and in
foreign markets.
12.
Chapter 09 – Production and Operations Management
Since U.S. manufacturing competes on price throughout the world, innovation plays a
very small part in the U.S. economy.
Feedback: The U.S. continues to be a world leader in innovation, including innovations in
nanotechnology and biotechnology.
13. U.S. businesses are known for their creativity and their ability to implement change.
Feedback: U.S. businesses are combining services with state-of-the-art production techniques,
in order to remain competitive.
14. The main reason for the recent resurgence of American manufacturing firms has been the
quotas and tariffs imposed by the U.S. government in an attempt to protect domestic firms
from cheap imports.
Feedback: Instead, American manufacturers have regained their competitive edge by
implementing a variety of strategies, such as a consumer focus, continuous improvement,
adoption of new manufacturing techniques such as ERP and CAD/CAM, and a reliance on the
Internet to unite firms.
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15. As the service industries became a larger part of U.S. GDP, companies have become
more concerned about measuring productivity in the service sector.
Feedback: The services industries, together, comprise about 70% of U.S. Gross Domestic
Product. Increasing productivity in these industries will make U.S. business more competitive
abroad.
16. U.S. manufacturers are focusing on quality as a way to become more competitive
globally, assuming that cost is not an issue.
Feedback: U.S. manufacturers are focusing on quality and cost, as they adopt strategies for
competing better globally. From a quality perspective, they focus on continuous
improvement; from a cost perspective, they focus on lean manufacturing, reducing costs by
prudent site selections, and relying on the use of the Internet and other software technologies
that improve efficiency in their operations.
17. In the past, production management was about using the factors of production to create
finished goods.
18.
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Operations management converts resources into goods and services.
19. In the process of operations management, a firm transforms resources such as raw
materials, supplies, and even human resources into goods and services.
20. Firms that specialize in accounting, finance, and management consulting are all part of the
service sector.
21. Operations management involves inventory management, quality control, and production
scheduling.
22.
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Manufacturing firms focus exclusively on the production of goods and allow other firms
to provide services.
23. In recent years, operations management has become more focused on providing services,
because that is where the growth and profit potential is greatest.
24. Operations management in service industries is about creating a good experience for the
customer.
25. Operations management moves from knowing the needs of consumers to actually
satisfying those needs.
26.
Chapter 09 – Production and Operations Management
In service industries such as hotels, quality management training is important to ensure
that all employees are “certified” in their positions.
27. Education and training are less important to workers in the service sector than to workers
who have jobs in the manufacturing sector.
28. The quality standard for service industries such as luxury hotels is meeting the customers’
requests.
29. Service businesses know that in order to delight customers they must be able to anticipate
their needs.
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36. While going through the line at the local grocery store, the clerk asks you if you found
everything you needed, as she continues to scan the goods you are planning to purchase.
At the end of the scan, a coupon emerges that you can use on future purchases of a
product you have just purchased. In reviewing the key concepts from Chapter 9, you
would consider this action, the store’s management of its labor.
Feedback: This is part of the management of the operation – the operation of serving you. The
store is rewarding (delighting) you with a coupon that has value on your next purchase. The
grocer is anticipating if you purchased it once, you may purchase it again, particularly if it is a
name brand.
37. Marci Costas is majoring in operations management at Brunau University. Unfortunately,
the evolution of the U.S. from a manufacturing-oriented to a service-oriented economy
means that Marci will probably find few job openings in her field of study.
Feedback: The U.S. economy is becoming more service oriented. However, this is not bad
news for students who major in operations management, because the tasks involved in
operations management are just as relevant to the production of services as they are to the
production of goods.
38. When firms successfully produce products, they create form utility.
39.
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Only firms in the manufacturing sector can create true form utility.
40. The three basic requirements of production are: (1) creating a finished good (2) making
sure you created it at the lowest cost possible, and (3) selling it.
41. The value added by the creation of finished goods and services from inputs is called
ownership utility.
42. Process manufacturing refers to combining components and raw materials to make a
product.
43.
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Process manufacturing physically or chemically alters materials to create finished goods.
44. An assembly process involves physically or chemically manipulating raw materials to
create a product.
45. A continuous production process is characterized by long production runs that turn out
finished goods over time.
46. Intermittent production processes are characterized by short production runs and frequent
changes of machinery in order to produce different products like customized furniture.
47.
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Contemporary manufacturers in the U.S. lack the flexibility to use intermittent production
processes.
48. One drawback of intermittent production processes is that they tend to be much slower
than continuous processes.
49. The production process requires inputs, controls, and outputs.
50. Mass production techniques allowed firms to respond quickly to the individual needs of
consumers.
51.
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One of the reasons mass production techniques lost favor is that, despite their ability to
keep costs relatively low, mass production lacks flexibility.
52. The ability to integrate computers into the design and manufacture of products has had
the greatest impact on production techniques in recent years.
53. CAD/CAM has made it possible to custom-design products to meet the tastes of small
markets with very little increase in costs.
54. CAD systems allow designers to work in three dimensions.
55.
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Despite its early promise, computer-aided design has not met with much success in
increasing productivity.
56. The purpose of computer-integrated manufacturing (CIM) is to unite computer-aided
design with computer-aided manufacturing.
57. The advantage of computer integrated manufacturing software is that it allows computer
aided design machines to communicate directly with computer aided manufacturing
machines.
58. So far, the high cost of CAD/CAM techniques has limited their use to large, expensive
manufactured goods such as automobiles.
59.
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Flexible manufacturing systems use machines that are designed to do a multitude of tasks
so that they can produce a variety of goods.
60. A disadvantage of flexible manufacturing systems is that they usually require a great deal
of labor because machines are rarely capable of handling a wide variety of tasks.
61. One way to compete with cheap labor is to use robots.
62. Lean manufacturing is a strategy of producing standardized products that have no frills or
extra features in order to keep prices low.
63.
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Companies that achieve lean manufacturing use less of everything (raw materials, labor,
etc.) to produce the same amount of products.
64. Technological improvements are largely responsible for the increase in productivity and
efficiency of U.S. plants.
65. The higher productivity of U.S. plants makes it possible to pay higher wages.
66. Mass customization is tailoring products to meet the needs of individual customers.
67.
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Mass customization is a strategy of convincing customers to choose from a relatively
small number of alternatives in order to achieve the efficiencies of mass production.
68. While mass customization works well for producers it is not used in the service sector.
69. Actually, it is much easier to custom-design service programs than it is to custom-make
goods.
70. Speeding up the process of responding to consumer wants and needs is a key to global
competitiveness.
71.
Chapter 09 – Production and Operations Management
Companies that employ lean manufacturing and flexible manufacturing produce better
quality products, but have costlier production lines.
Feedback: The purpose in lean manufacturing and flexible manufacturing is to produce
products and services more efficiently and for less cost.
72. When a company has the ability to produce the same amount of goods with only half the
floor space and half the labor that it used in the past, the firm is practicing flexible
manufacturing.
Feedback: Using half the floor space and half the labor are characteristic of lean
manufacturing. Flexible manufacturing refers to the ability to designing machines with
interchangeable parts so that the same machine can perform multiple tasks and/or produce a
variety of products.
73. Improvements in technology have significantly increased the quality of products, as well
as helped reduce costs.
Feedback: The introduction of CAD (computer-aided design), CAM (computer-aided
manufacturing), and CIM (computer integrated manufacturing) has increased the quality of
the product (output) and the time it takes to produce custom designed products. It has reduced
the cost of labor, and decreased waste in the production process.