Chapter 09 – Production and Operations Management
74. Manufacturers use CAM (computer aided manufacturing) to create three-dimensional
designs of products before they are built.
Feedback: CAD (computer-aided design) is used to create three-dimensional designs of
products before they are built. CAM (computer-aided manufacturing) is used to build the
product.
75. Mass customization is not exclusive to product intensive businesses. Service businesses
have learned how to use mass customization to serve their customers.
Feedback: Service businesses use sophisticated software programs to tailor insurance plans,
travel plans, nutrition programs, and healthcare plans to individual customers.
76. Businesses that provide services typically cannot use mass customization because
services are not tangible products that can be customized.
Feedback: Many service firms practice mass customization. The fact that a service is
intangible can actually make mass customization easier, because no tangible good has to be
adapted.
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88. Alice’s Cookie Company makes a variety of cookies for corporate accounts and
restaurants. On a good day, the orders can range from 600 – 800 cookies, with a variety of
uniqueness, although the company is known for delicate shortbread and butter cookies.
Some cookies have round shapes, but others are elongated rectangles, and yet others are
triangles. The bakers can quickly change the cookie cutting machine to reflect the orders
for the day, while computers program the ovens to make those cookies the light golden
color they are known for across town. Refrigeration is also computer controlled. Alice’s
Cookie Company embraces flexible manufacturing and mass customization.
Feedback: Flexible manufacturing means the company is using machines that can multi-task –
they can be quickly retrofitted to create a variety of products. The manufacturer can design
and create customized orders, by changing the shape, color, and size depending upon the
customer’s preference.
89. Facility location is the process of selecting a geographic location for a company’s
operations.
90. When considering the issue of facility location, it is important to find an isolated location
so that work can get done without interruption from customers.
91.
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Operations management planning is concerned with finding the ideal location for a
business and also with materials requirement planning. It leaves decisions about
purchasing and inventory control to marketing.
92. When it comes to location decisions, labor costs are no longer an important consideration
for most manufacturing firms.
93. The Internet is a very popular place to locate your business today.
94. Manufacturing firms that want to minimize time-to-market are likely to choose facility
sites that give them easy access to their preferred modes of transportation.
95.
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Some companies will locate their production facilities near their suppliers.
96. Many state and local governments offer tax incentives and government services to attract
businesses.
97. In making a location decision, businesses seldom consider “quality of life” in various
locations, because factors that influence quality of life have little or no impact on profits.
98. According to the Making Ethical Decisions box, titled, “Stay or Leave”, by law a firm
must give employees 60 days notice of a facility or plant closing.
99.
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Internet-focused strategies don’t affect operations managers since it is not progressive for
operations managers to negotiate in an interfirm environment.
100. For many firms, operations management has become an interfirm process.
101. Facility layout is the function of operations management that considers the physical
arrangement of resources (including people) in the production process.
102. For service intensive businesses, facility layout is usually designed to centralize the
decision-making process.
103.
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Telecommuting has diminished in popularity as a strategy for linking employees with
work.
104. The production of a bridge, ship, or large airplane usually involves a variable-position
facility layout.
105. The process layout simplifies production by using the same sequence of processes
regardless of the design of the item being produced.
106. In an assembly line manufacturing layout workers do only a few tasks at a time.
107.
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In a modular manufacturing layout teams of workers combine to produce more complex
units.
108. A process manufacturing layout is frequently used in operations that serve different
customers’ different needs.
109. Facilities layout will depend upon the processes that are to be accomplished in the
firm’s operation.
110. Materials requirement planning (MRP) enables a firm to make sure that the right
amount of each material or component is available at the right time to satisfy its
production needs.
111.
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Materials requirement planning relies on the firm’s balance sheet to make sure that the
right quantities of finished goods are produced.
112. One limitation of materials requirement planning (MRP) is that it is not a computer-
based approach.
113. Enterprise resource planning (ERP) is simpler and less sophisticated than
manufacturing resource planning (MRP).
114. Enterprise resource planning (ERP) software combines all functional units of a firm,
into the production of goods and services, and may even include subsidiaries and other
firms.
115.
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ERP software enables multiple firms to manage all of their operations on the basis of a
single, integrated set of corporate data.
116. The purchasing function involves searching for quality resources and finding the best
suppliers as well as negotiating the best price for the needed items.
117. Over the past few years, Internet-based companies have emerged to help businesses
find the best supplies at the best prices.
118. Modern companies tend to deal with many different suppliers in order to avoid
problems that can arise when one supplier is unable to provide needed parts or materials.
119.
Chapter 09 – Production and Operations Management
Today, rather than purchase goods and services from a large number of firms,
manufacturers often try to develop a close relationship with one or two key suppliers.
120. The purchasing function of operations management seldom uses the Internet to make
purchasing decisions.
121. The primary characteristic of a just-in-time inventory system is that suppliers deliver
parts and materials right at the time that the buyer is going to use them in the production
process.
122. The concept: “Just-In-Time” (JIT) works well if a company works with lots of
suppliers. It also helps avoid the breakdowns that occur when operating with an enterprise
resource planning system.
123. In a just-in-time inventory system, the producer holds large quantities of the materials
and components used in the production process in its inventory to ensure that it always has
enough on hand.
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124. Overall, American firms that have tried to use just-in-time inventory systems generally
report disappointment with the results.
125. In JIT inventory systems a manufacturer normally communicates its production plans
to suppliers so that they can deliver needed parts and materials just in time for the
manufacturer to use them.
126. Quality control is a continual process of checking to make certain that there is
consistency in the quality of products being produced.
127.
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Six Sigma is a benchmark of quality standards that many product and service industries try
to achieve.
128. Under the Six Sigma quality standard the idea is to detect potential problems, in order
to prevent their occurrence.
129. Six Sigma is a quality measure that allows only 3.4 defects per million opportunities.
130. A key element of the statistical quality control (SQC) process is the reliance on quality
control experts to inspect at the end of the production line to make sure that no defective
products are shipped to final customers.
131.
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Statistical quality control (SQC) is the process some managers use to continually monitor
all phases of the production process to assure that quality is being built into the product
from the beginning of the production process.
132. Statistical process control (SPC) is the process of taking statistical samples of product
components at each stage of the production process and plotting those results on a graph.
Any variances from quality standards are recognized and can be corrected if beyond the
set standards.
133. The Deming Cycle is designed to catch errors before they happen.
134. The Deming Cycle approach to quality control consists of: Plan, Do, Check, Act.
135.
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Service organizations find it difficult to provide outstanding service every time because
the process is so labor intensive.
136. If a company achieves Six Sigma quality standards, they automatically win the
Malcolm Baldrige award.
137. The Baldrige standards measure a firm’s quality in several key areas including
planning, leadership, and customer and market focus.
138. ISO is a worldwide, non-governmental federation that sets global measures of quality.
139.
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The International Organization for Standardization continually updates acceptable
international requirements in the areas of process control, product testing, storage, and
delivery.
140. ISO 9000 refers to a set of international standards for quality management and
assurance.
141. ISO 14000 is a new set of product quality standards that has replaced the old ISO 9000
standards.
142. The European Union demands that all firms that want to do business with its member
nations must satisfy ISO 9000 standards.
143.
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ISO 14000 is a collection of the best practices for managing an organization’s impact on
the environment.
144. Firms that satisfy the ISO 9000 and ISO 14000 standards have demonstrated a world-
class management system in both quality and environmental standards.
145. One valid criticism of modern production planning methods such as ERP and MRP is
that there is no way to use recent advances in information technology (IT) with these
systems.
Feedback: Both ERP and MRP are involved with computer advances that have occurred in
information technology that are used in production planning methods.
146.