Chapter 09 – Production and Operations Management
Recent developments in information technology will discourage companies from allowing
employees to telecommute.
Feedback: Recent developments in information technology are actually giving firms more
flexibility in choosing locations. With increasing numbers of workers able to telecommute,
for many firms the need to locate near population centers has diminished.
147. Areas with higher than average labor costs are almost always at a major disadvantage
when trying to attract new businesses.
Feedback: Although the cost of labor is an important consideration in the location decision of
some firms, it is far from the only factor that firms must consider. Other considerations might
include the availability of cheap resources (such as water, coal, or electricity), proximity to
customers or to preferred modes of transportation, low taxes or special government
incentives, and quality of life considerations (such as climate, recreational opportunities,
education systems, and crime rates). High wage areas that have some or all of these
advantages might be attractive to many firms despite the high labor costs.
148. Retailing is one area where technology is unlikely to make a big difference in how
services are provided.
Feedback: Technology has made a big difference in retailing. For brick-and-mortar
businesses to beat Internet competition, they have to choose good locations and offer
outstanding service to those who do come to shop.
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152. Operations managers have learned that quality control is not a never- ending process.
Just before you add packaging to the finished product, official company inspectors do a
random spot-check. All inspections have to occur at the end of a production run because,
only then can the inspector see the total finished product in order to determine if quality is
jeopardized.
Feedback: Today, quality control tries to catch errors before they happen. Standards and
methods such as six sigma, statistical quality control, and statistical process control focus on
what is happening at each stage of the production process.
153. Jamal, an operations manager for a product manufacturer accepted an operations
position with a company that produces a service. Jamal will find that operations
management at the new job is significantly different from operations management at the
old firm.
Feedback: Operations management in the service sector involves many of the same functions
as in the manufacturing sector, including concerns about facility location, facility layout,
quality control, and MRP and ERP.
154.
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Andre is an outdoorsman whose love of hunting and fishing led him to start a mail order
company specializing in hunting and fishing gear. He decided to locate his business near
the Ozarks in southwestern Missouri, partly because of low labor costs, but mainly
because the area offered excellent fishing and hunting opportunities, a low crime rate, and
a pleasant climate. Ken’s location decision was strongly influenced by quality of life
considerations.
Feedback: Quality of life includes weather and climate, crime rates, and recreational
opportunities.
155. Amalia is an operations manager at a medium sized service firm. Amalia is
recommending that her firm use the Internet to make its services more readily available to
its customers. Amalia’s recommendation reflects a growing trend in service sector firms.
Feedback: The ultimate in convenience is never having to leave home at all to get services.
That’s why there is so much interest in Internet banking, education, and other services.
156.
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Solarsys Aeronautics was awarded a contract to build a large lab module that will be
attached to a new space station. The module is approximately 48 feet long, 17 feet in
diameter, and weighs over sixty tons. Solarsys should use an assembly line plant layout to
produce this module.
Feedback: Firms are moving away from assembly line layouts. Moreover, a product as large
as this module would be awkward and difficult to move along an assembly line. When
producing a large, bulky, one of a kind item such as a bridge or ship (or a large space station
module), firms normally use a fixed-position layout.
157. Millwell Manufacturing redesigned its facility layout to group similar equipment and
functions together, and to allow flexibility in the sequence in which products are produced
using these functions. Millwell’s new layout is an example of the fixed-position layout.
Feedback: This is an example of a process layout. A process layout is a flexible layout in
which similar equipment and functions are grouped together and the sequence in which the
functions are performed depends on the design of the product.
158.
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Impact Computers wants to set up a planning system that enables it to integrate its
production and operations system with those of its suppliers. As its operations
management consultant, you explain that it needs a Material Requirement Planning
(MRP) system.
Feedback: MRP is a computer application that is used within a single company, not multiple
firms.
159. Rysler Motors currently uses an ERP system to manage all of its production operations
and coordinate them with the other operations of the company. The company also wants to
implement a just-in-time (JIT) inventory system. Unfortunately for Rysler, ERP is
incompatible with JIT, so if it adopts the new inventory system it will have to abandon
ERP.
Feedback: The first step in a just-in-time inventory system requires the firm to determine
what parts and materials will be needed and when they will be needed. An enterprise
requirement planning (ERP) system can help the firm accomplish this step efficiently. The
firm then informs suppliers of its needs. Suppliers are expected to deliver the parts and
materials just in time to go on the assembly line.
160.
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Mypartz, Inc. is a major supplier of components used by Idle Time Gaming Systems. Idle
Time Gaming wants to implement a just-in-time inventory system. Mypartz should benefit
from this approach, since JIT systems greatly simplify the task of suppliers.
Feedback: In just-in-time systems, suppliers deliver only the amount needed to meet
production requirements. Thus, Mypartz will be required to coordinate its shipments with the
production needs of Idle Time Gaming. This will mean it must make smaller and much more
frequent shipments, thus increasing its costs.
161. In an effort to improve the quality control process at the Southern Peanut Corporation,
management is introducing the importance of the Deming Cycle to employees. This
suggests that managers are aware of the need to find potential problems before they
occur.
Feedback: The Deming Cycle (named after the father of the quality control movement)
consists of four stages: plan, do, check, and act. Modern quality control techniques such as
SQC and SPC provide ways to implement this cycle. The idea behind these approaches is to
find problems before they occur.
162.
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Northern States Electric is in the process of trying to achieve ISO 14000 certification.
Although the criteria for certification involve several milestones, we can be assured they
will be evaluated on the regularity and thoroughness of their environmental audits, and
how well top management reviews the firm’s adherence to policies that are
environmentally friendly.
Feedback: ISO 14000 is not a measure of environmental performance. Instead it is a measure
how well a firm puts in place best practices for measuring its environmental impact. It does
not specify the level of performance in any environmental category.
163. Star Performance, Inc. a sporting good company and Fairview Community College are
interested in following the lead of other companies and implement criteria that will lead
toward receiving the Baldrige Award. As their advisor, you emphasize that focusing on
the measurement of customer satisfaction is one important area where both will need to
excel.
Feedback: To qualify for the Baldrige Award, firms must show exceptional quality in seven
key areas: strategic planning, customer and market focus, leadership, information and
analysis, human resources focus, process management, and business results.
164.
Chapter 09 – Production and Operations Management
Antoine’s Creamery, an eastern seaboard ice cream producer wants to license firms in
Europe to produce and sell its products. We can conclude that this is good strategy if it
wants to save the money it would cost to be ISO 9000 certified because the EU (European
Union), unlike U.S. firms has not yet adopted these standards.
Feedback: ISO 9000 deals with the quality of individual products. The EU has adopted ISO
9000 quality standards and expects any company doing business with companies who do
business within the European Union to adopt similar standards. Some U.S. firms are also
demanding ISO 9000 certification of its business partners.
165. Perry manages an X-ray imaging services clinic housed adjacent to a large hospital in
a major metropolitan area. Although customers are regularly surveyed to determine the
level of service they perceive to be receiving, Perry finds it difficult to determine if the
clinic is providing the level of service, which would qualify it as an ISO 9000 firm. He
explains that the volume of patients requiring urgent care on some days is more acute than
on other days. He is confident that the staff is providing the same level of quality on busy
days, but surveys indicate that patients do not particularly rate their clinic experience as
particularly good on those days. He expects this dilemma because he understands from his
recent business class that service companies find it challenging to provide the same high
level of service all the time.
Feedback: Although service companies are very serious about improving the quality of
service in their firms, they find it difficult to maintain the same quality level all the time.
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170. PERT is a popular technique for analyzing the tasks involved to complete a given
project, estimating the time required to complete each task, and identifying the minimum
time needed to complete the project.
171. An advantage of PERT diagrams is that they are usually so simple to draw that a
computer is not needed.
172. In a PERT network, a critical path is the sequence of tasks that takes the longest time
to complete.
173. Compared to PERT networks, Gantt charts provide a more basic way to track progress
on a given project.
174.
Chapter 09 – Production and Operations Management
A Gantt chart is a bar graph showing production managers what projects are being worked
on and the stage of development at any given time.
175. The significance of the critical path on a PERT chart is that it identifies the least costly
method of producing a given product.
Feedback: The critical path on a PERT chart identifies the sequence of events in a project that
takes the longest time to complete.
176. The first step in the PERT method is to assign a cost to each activity.
Feedback: The first step in a PERT network is to identify, analyze, and determine the
sequence of tasks that must be completed in order to complete the overall project.
177. The PERT network provides a project manager with a plan that puts all the activities
of a project in the correct order that they must be accomplished; shows which activities
can be accomplished simultaneously, and, also gives the manager a good estimate of how
long each activity will take to complete.
Feedback: A PERT Chart shows the sequence of activities or events that must occur in order
for a project to be successfully completed. It also provides an indication of which activities
can be accomplished simultaneously and provides an estimate of the time it will take to
accomplish each activity.
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178. Gantt charts will show the production manager if certain activities in the production
process are lagging behind their acceptable time of completion.
Feedback: Using a Gantt Chart or a Gantt-like computer program, a manager can trace the
production process minute by minute to determine which tasks are on time and which are
behind, so that adjustments can be made to allow the company to stay on schedule.
179.
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Brian is a construction manager who wants to determine how long a new project will take
to complete and which tasks in the project have the greatest potential for delaying the
project. The PERT Network model will help Brian answer these questions.
Feedback: PERT refers to program evaluation and review technique, which is a method of
determining the tasks, the sequence of tasks, the time it takes to complete each task, and
minimum time required to complete a project. The PERT method also identifies the critical
path, which is the sequence of tasks that takes the longest to complete. If a task on the critical
path is delayed, it can delay the completion of the project as a whole.
180. Casper is in charge of a complex project. He wants to see how all the different
activities involved in completing the project are related to each other. One way to
illustrate these relationships would be to construct a PERT chart.
Feedback: As figure 9.3 illustrates, a PERT chart identifies all of the activities that must be
performed in order to complete a project and the minimum time it will take to complete each
task. The arrows in a PERT chart indicate the sequence in which activities must be performed.
For example, if an arrow goes from activity “A” to activity “B” this means that “A” must be
completed before “B” can begin.
181.
Chapter 09 – Production and Operations Management
In order to determine overall progress on her current project, production manager
Michelle Hudson often refers to a bar graph that shows what activities are being worked
on, and how much of each task has been completed on a daily basis. Michelle is using a
Gantt chart.
Feedback: A Gantt chart is a bar graph that shows what projects are being worked on and how
much of each project has been completed on a daily basis.
182. Reviewing the PERT Network below: If it takes 2 weeks for each activity (represented
by a box) to be completed, it can be determined that the boxes labeled with No.1 create
the critical path because this path of activities takes the shortest time to complete.
Feedback: The critical path in a PERT Network is the project activity path that takes the
longest time to complete. In this diagram, if each box = 2 weeks completion time, the path of
boxes labeled [2, 3, 3, 3, 3, Finish] is the critical path.
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183. U.S. companies that participate in the manufacturing sector:
A. depend on government imposed tariffs on foreign goods to remain competitive.
B. are growing much more rapidly than firms in the service sector.
C. have focused on innovative operations management techniques in order to regain their
competitive edge.
D. have become increasingly reliant on mass production techniques as they put more
emphasis on keeping costs as low as possible.
184. In recent years, the service sector of the U.S. economy has:
A. grown much more rapidly than the manufacturing sector.
B. become the low-wage sector of the U.S. economy.
C. achieved extremely high productivity gains according to government reports.
D. focused less on quality and more on reducing costs of production.
185. Manufacturing output in the U.S. continues to increase. The high unemployment of
skilled workers who previously worked in the manufacturing sector
_________________________.
A. Is the result of untrained laborers.
B. Is strictly a factor of U.S. manufacturing companies outsourcing the majority of their
work.
C. Can be reconciled by the fact that manufacturing is very efficient and requires fewer
workers to produce the same amount, or even more output.
D. Can be attributed to manufacturing going “green.”
