Accessibility: Keyboard Navigation
Blooms: Remember
Difficulty: 1 Easy
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
83.
Ford Motor Company reorganized its procurement process by simplifying and streamlining
the process itself and as a result was able to cut the size of the accounts payable
department by 95 percent. This is an example of ________.
A.
retrenchment
B.
kanban
C.
kaizen
D.
reengineering
Reengineering is the fundamental rethinking and radical redesign of business processes to
achieve dramatic improvements in performance such as cost, quality, service, and speed.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Apply
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
84.
The job of encouraging improvements by emphasizing the need for continuous
improvement or reengineering is the role of ________.
A.
top management
B.
middle management
C.
first-line supervisors
D.
customers
Top management’s role is to encourage efficiency improvements by, for example,
emphasizing the need for continuous improvement or reengineering. Top management
also must ensure that managers from different functional departments work together to
find ways to increase efficiency.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
14–59
85.
The people in the best position to identify opportunities for improving efficiency are
______.
A.
top-level managers
B.
staff managers
C.
functional-level managers
D.
workers
While top managers might recognize the need for efficiency improvements, functional–
level managers are in the best position to identify opportunities for making efficiency–
enhancing improvements to an organization’s production systems.
AACSB: Analytical Thinking
Accessibility: Keyboard Navigation
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
Essay Questions
86.
Define the three stages of the manufacturing production process and give a practical
business example of each of these stages.
The three stages of the manufacturing production process are the input stage, the
conversion stage, and the output stage.
• The input stage involves procuring the raw materials, component parts and labor.
• The conversion stage involves utilizing the skills, machines, and computers to covert the
inputs to the final output.
• The final stage is the output stage that has the goods and services for the final
consumption of the consumer.
Feedback: Refer: Figure 14.1
AACSB: Analytical Thinking
Blooms: Remember
Difficulty: 2 Medium
Learning Objective: 14-01 Explain the role of operations management in achieving superior quality, efficiency, and
responsiveness to customers.
Topic: Inputs
87.
Discuss the link between customer responsiveness and an organization’s production
system.
Managers try to design production systems that can produce the outputs that have
attributes customers desire. Because customers are vital to the survival of most
organizations, managers must correctly identify customers and promote organizational
strategies that respond to their needs. This is why management writers recommend that
organizations define their business in terms of which customer wants or needs they are
satisfying, not the type of products they are producing.
AACSB: Analytical Thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-01 Explain the role of operations management in achieving superior quality, efficiency, and
responsiveness to customers.
Topic: Customer Relationship Management (CRM)
88.
Describe the products that most customers prefer.
Given that satisfying customer demands is central to the survival of an organization, an
important question is, What do customers want? To specify exactly what they want is not
possible because their wants vary from industry to industry. However, it is possible to
identify some universal product attributes that most customers in most industries want.
Generally, other things being equal, most customers prefer the following:
• A lower price to a higher price
• High-quality products to low-quality products
• Quick service to slow service
• Products with many features to products with few features
• Products that are, as far as possible, customized or tailored to their unique needs
Obviously, the problem is that other things are not equal. For example, providing high
quality, quick service, after-sales service and support, products with many features, and
products that are customized raises costs and thus the price that must be charged to
cover costs. So customers’ demands for these attributes typically conflict with their
demands for low prices. Accordingly, customers must make a trade-off between price and
89.
Discuss the reasons why managers design production systems to be more responsive to
customers.
Because satisfying customers is so important, managers try to design production systems
that can produce the outputs that have the attributes customers desire. The attributes of
an organization’s outputs are determined by the organization’s production system. Since
the ability of an organization to satisfy the demands of its customers derives from its
production system, managers need to devote considerable attention to constantly
improving production systems. Managers’ desire to attract customers with improved
products explains their adoption of many new operations management techniques.
AACSB: Analytical Thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-02 Describe what customers want, and explain why it is so important for managers to be
responsive to their needs.
Topic: Customer Relationship Management (CRM)
90.
Discuss customer relationship management (CRM) and its three interconnected
components with an example.
Customer relationship management (CRM) is a technique that uses IT to develop an
ongoing relationship with customers to maximize the value an organization can deliver to
them over time.
CRM IT monitors, controls, and links each of the functional activities involved in
marketing, selling, and delivering products to customers. CRM systems have three
interconnected components, sales and selling, after–sales service and support, and
marketing. Suppose that a sales manager has access only to sales data that show the
Blooms: Apply
Difficulty: 3 Hard
Learning Objective: 14-02 Describe what customers want, and explain why it is so important for managers to be
responsive to their needs.
Topic: Customer Relationship Management (CRM)
91.
Describe the importance of improving quality and its impact on organizational
performance.
To increase quality, managers need to develop strategic plans that state goals exactly and
spell out how they will be achieved. Managers should embrace the philosophy that
mistakes, defects, and poor-quality materials are not acceptable and should be eliminated.
First-line managers should spend more time working with nonmanagerial employees and
providing them with the tools they need to do the job. Managers should create an
environment in which subordinates will not be afraid to report problems or recommend
improvements. Output goals and targets need to include not only numbers or quotas but
also some notion of quality to promote the production of defect-free output. Managers
also need to train employees in new skills to keep pace with changes in the workplace.
Finally, achieving better quality requires managers to develop organizational values and
norms centered on improving quality. The Six Sigma approach is one technique that is
being used by managers increasingly to improve quality.
AACSB: Analytical Thinking
Blooms: Understand
Difficulty: 2 Medium
92.
Explain improving efficiency and the factors that help enhance this process.
Increasing the efficiency of an organization’s production system is a goal of operations
management. The fewer the inputs required to produce a given output, the higher will be
the efficiency of the production system. Managers can measure efficiency at the
organization level in two ways. The measure, known as total factor productivity, looks at
how well an organization utilizes all of its resources—such as labor, capital, materials, or
energy—to produce its outputs. Though sometimes a useful measure of efficiency overall,
total factor productivity obscures the exact contribution of an individual input—such as
labor—to the production of a given output. Consequently, most organizations focus on
specific measures of efficiency, known as partial productivity, that measure the efficiency
of an individual unit. Labor productivity is most commonly used to draw efficiency
comparisons between different organizations.
AACSB: Reflective Thinking
Blooms: Understand
Difficulty: 3 Hard
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
93.
Describe the three basic facility layouts.
The three facility layouts are product, process, and fixed-position.
• In a product layout, machines are organized so that each operation needed to
manufacture a product is performed at workstations arranged in a fixed sequence.
Typically, workers are stationary in this arrangement, and a moving conveyor belt takes
the product being worked on to the next workstation so that it is progressively assembled.
Mass production is the familiar name for this layout.
• In a process layout, workstations are not organized in a fixed sequence. Rather, each
workstation is relatively self-contained, and a product goes to whichever workstation is
needed to perform the next operation to complete the product.
• In a fixed-position layout, the product stays in a fixed position. Its component parts are
produced in remote workstations and brought to the production area for final assembly.
Increasingly, self-managed teams are using fixed-position layouts. Different teams
assemble each component part and then send these parts to the final assembly team,
which makes the final product.
AACSB: Analytical Thinking
Blooms: Understand
Difficulty: 2 Medium
94.
Define facilities layout and state why it is important. Describe product layout with
examples.
Facilities layout is the way in which machines, robots, and people are grouped together. It
is important, since it affects how productive they can be.
In a product layout, machines are organized so that each operation needed to
manufacture a product is performed at workstations arranged in a fixed sequence.
Typically, workers are stationary in this arrangement, and a moving conveyor belt takes
the product being worked on to the next workstation so that it is progressively assembled.
Mass production is the familiar name for this layout; car assembly lines are probably the
best-known example. It used to be that product layout was efficient only when products
were created in large quantities; however, the introduction of modular assembly lines
controlled by computers makes it efficient to make products in small batches.
AACSB: Analytical Thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
95.
Describe what is meant by flexible manufacturing systems. Discuss how flexible
manufacturing systems can improve an organization’s responsiveness to customers.
Flexible manufacturing systems aim to reduce the setup time in production. By
redesigning the manufacturing process to reduce setup times, costs can be reduced, and
possibly the company is able to produce many more varieties of a product than before in
the same amount of time. In a manufacturing company, a major source of costs is the
costs associated with setting up the equipment needed to make a particular product. One
of these costs is the cost of production that is forgone because nothing is produced while
the equipment is being set up.
It follows that if setup times for complex production equipment can be reduced, so can
setup costs, and efficiency will rise. In other words, if setup times can be reduced, the
time that plant and employees spend in actually producing something will increase. This
simple insight has been the driving force behind the development of flexible
manufacturing techniques.
AACSB: Analytical Thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
96.
Describe a just-in–time (JIT) inventory system.
Inventory is the stock of raw materials, inputs, and component parts that an organization
has on hand at a particular time. Just-in-time (JIT) inventory systems play a major role in
the process of identifying and finding the source of defects in inputs. When an
organization has a just-in-time inventory system, parts or supplies arrive at the
organization when they are needed, not before. Under a JIT inventory system, defective
parts enter an organization’s production system immediately; they are not warehoused for
months before use. This means that defective inputs can be quickly spotted. Managers
can then trace a problem to the supply source and fix it before more defective parts are
produced. JIT systems were originally developed as part of the effort to improve product
quality; they have major implications for efficiency. One drawback of JIT systems is that
they leave an organization without a buffer stock of inventory. Although buffer stocks of
inventory can be expensive to store, they can help an organization when it is affected by
shortages of inputs brought about by a disruption among suppliers. Moreover, buffer
stocks can help an organization respond quickly to increases in customer demand.
AACSB: Analytical Thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Just-in–time (JIT) Inventory System
97.
Explain an advantage of using the JIT inventory system. Also explain the disadvantage of
using this system.
An advantage under the JIT inventory system is that defective parts enter an organization’s
production system immediately; they are not warehoused for months before use. This
means that defective inputs can be quickly spotted. Managers can then trace a problem to
the supply source and fix it before more defective parts are produced.
One drawback of JIT systems is that they leave an organization without a buffer stock of
inventory. Although buffer stocks of inventory can be expensive to store, they can help an
organization when it is affected by shortages of inputs brought about by a disruption
among suppliers (such as a labor dispute in a key supplier). Moreover, buffer stocks can
help an organization respond quickly to increases in customer demand—that is, they can
increase an organization’s responsiveness to customers.
AACSB: Analytical Thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Just-in–time (JIT) Inventory System
98.
Explain why self-managed work teams can boost efficiency. If a firm is considering
creating self-managed work teams, how should it prepare workers?
Self-managed work teams can increase productivity and efficiency through greater
motivation of workers and resulting higher productivity; elimination of supervisors’
salaries, and consequent cost savings; and more efficient communication and faster
decision making due to a flatter organizational hierarchy. Further, having one member of a
work group absent is no longer an impediment to productivity, as team members will take
over for a missing person. Firms should prepare workers by training them in tasks such as
ordering materials, scheduling, and hiring, as well as cross-training them in the work of all
members of the team.
AACSB: Analytical Thinking
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Inputs
99.
What is process reengineering?
Process reengineering is the fundamental rethinking and radical redesign of business
processes to achieve dramatic improvements in critical measures of performance such as
cost, quality, service, and speed. It can boost efficiency because it eliminates the time
devoted to activities that do not add value.
AACSB: Analytical Thinking
100.
What are the ethical implications of adoption of techniques like JIT, flexible manufacturing,
self-managed work teams, and reengineering? Do the benefits gained through the use of
such techniques outweigh their costs?
Achieving superior responsiveness to customers through quality and efficiency often
requires a profound shift in management operations and in the culture of an organization.
Many reports have appeared in the popular press about widespread disillusionment with
JIT, flexible manufacturing, and reengineering. It is possible that many of the disillusioned
organizations are those that failed to understand that implementing these systems
requires a marked shift in organizational culture. Managers also need to understand the
ethical implications of the adoption of many of the production techniques. JIT, flexible
manufacturing, and reengineering can all increase quality, efficiency, and responsiveness
to customers, but they may do so at great cost to employees. Employees may see the
demands of their job increase, or, worse, they may see themselves reengineered out of a
job.
AACSB: Analytical Thinking
AACSB: Ethics
Blooms: Understand
Difficulty: 2 Medium
Learning Objective: 14-04 Explain why achieving superior efficiency is so important.
Topic: Ethical Dilemma