978-1285451374 Chapter 1 Solution Manual Part 1

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OM5 Chapter 1: Goods, Services, and Operations Management

Discussion Questions

1. Explain how operations management activities affect the customer experiences described in the

Museum of Science + Technology anecdote at the beginning of this chapter. What “moments of

truth” would a customer at Chicago’s Museum of Science + Technology encounter?

The anecdote at Chicago’s Museum of Science + Technology focuses on the role of goods,

services, and processes in creating customer experiences and satisfaction. Students will have

many great examples of their museum experiences. Moments of truth might include (a) buying

Whatever the student describes make sure you lead them into a discussion of key lessons that

focus on the role of OM such as (1) process and job design and customer flows, (2) service

encounter design and employee training, (3) integrating goods and services into a

2. Explain why a bank teller, nurse, or flight attendant must have service management skills. How

do the required skills differ for someone working in a factory? What are the implications for

hiring criteria and training?

Service-providers need technical/operations skills plus human interaction and marketing skills

(i.e., service management skills). A bank teller, for example, must be able to complete many

3. Why is process thinking important in operations management? Thinking of yourself as an

“operations manager” for your education, how could process thinking improve your

performance as a student?

Process thinking is important since processes describe “how work gets done and performance

objectives are achieved” in all functional areas such as finance and human resource

At this early point in the course students know only a little bit about primary, support, and

4. Do you think you will be working in manufacturing or services when you graduate? What do

you think will be the role of manufacturing in the U.S. economy in the future?

This question is designed to get students to explore job opportunities and industries as

documented in Exhibit 1.5. Use the exhibit of “where are the jobs in the USA?” to enhance this

discussion. The location of your institution may have some bearing on the answers, as some

Another issue is that the average U.S. college graduate will change industries and/or jobs about

seven times during their careers. Thus, it is very important to be flexible and develop a good set

5. Select one of the OM challenges and investigate it in more detail. Be ready to present to the

class in a less than 10-minute class presentation what you found.

Technology has been one of the most important influences on the growth and development of

Globalization has changed the way companies do business and must manage their operations.

With advances in communications and transportation, we have passed from the era of huge

Consumers’ expectations continually rise. They demand an increasing variety of high-quality

Today’s workers demand increasing levels of empowerment and more meaningful work than in

Despite more than a half-century of intense focus on quality, it continues to be a challenge, even

To compete in today’s environment, manufacturers must stay ahead of consumers’ needs by

increasing product innovation, speeding up time-to-market, and operating highly effective

Problems and Activities

1. Describe a customer experience you have personally encountered where the good or service or

both were unsatisfactory (for example, defective product, errors, mistakes, poor service, service

upsets, and so on). How might the organization have handled it better and how could operations

management have helped?

The objective of this type of question is for the student to describe what they know and you, the

instructor, help put it into the OM framework. This question is also designed to help students

internalize the concept of customer satisfaction and dissatisfaction, and potential operations

2. Interview a manager at a local company about the work he or she performs. Identify (a) the

aspects of the job that relate to OM (like the OM activities in the box “What Do Operations

Managers Do?”) and (b) example primary, support, and general management processes.

Some of the key activities that operations managers perform include

Forecasting: Predict the future demand for raw materials, finished goods, and services.

Facility Layout and Design: Determine the best configuration of machines, storage, offices,

Quality Management: Ensure that goods, services, and processes will meet customer

Resource and Capacity Management: Ensure that the right amount of resources (labor,

Process Design: Select the right equipment, information, and work methods to produce high

Service Encounter Design: Determine the best types of interactions between service providers

work.

Sustainability: Decide the best way to manage the risks associated with products and

Try to help students identify primary, support, and general management processes in their

example(s). The Human Resource Management functions, for example, are good situations to

3. Evaluate how the activities described in the box “What Do Operations Managers Do?” can be

4. Review the box for Pal’s Sudden Service and find Pal’s Web site. Based on this information,

Pal’s has an interesting Web site (www. pals web.com) that students would probably enjoy.

The instructor might note that Pal’s was a recipient of the Baldrige Award and might briefly

5. Interview a working friend or family member as to how they use operations management

principles in their job and write a short paper summarizing your findings (maximum two pages).

6. Choose one of the following services and explain, using specific examples, how each of the

ways that services differ from manufactured goods apply.

a. a family practice medical office

 Goods are tangible while services are intangible.

Customers participate in many service processes, activities, and transactions.

Services especially in the “front office” (at points of contact with the customer) require different

skills than producing physical goods, and therefore, it is difficult for firms to do both well. Yes,

for example, physical inventory can compensate for poor demand forecast accuracy while

7. Provide some examples similar to those in Exhibit 1.3, and explain the degree of goods and

services content for these examples.

Students should provide a variety of practical examples. One example is watching a sporting

event on television; this is close to a pure service with no goods content but very high service

8. Draw the customer benefit package (CBP) for one of the items in the following list and explain

how your CBP provides value to the customer. Make a list of a few example processes that you

think would be necessary to create and deliver “each good or service” in the CBP you selected

and briefly describe issues that must be considered in designing these processes.

a trip to Disney World

The objectives of this exercise are for the student to define a CBP (a bundle of goods and

services a customer buys) and its features (like in Exhibit 1.2 and then recognize and define the

process that creates and delivers each good or service to customers. How are these goods and

9. One of our students, who had worked for Taco Bell, related a story of how his particular store

developed a “60-second, 10-pack club” as an improvement initiative and training tool. The goal

was to make a 10-pack of tacos in a minute or less, each made and wrapped correctly, and the

total within one ounce of the correct weight. Employees received recognition and free meals for

a day. Employees strove to become a part of this club, and more importantly, service times

dropped dramatically. Techniques similar to those used to improve the taco-making process

were used to improve other products. Explain how this anecdote relates to process thinking.

What would the employees have to do to become a part of the club?

At a business like Taco Bell, consistency in food quality and service are vital to customer

satisfaction. By focusing on a goal such as this, employees were forced to think in terms of the

10. Research and write a short one-page paper that describes two new examples of how

organizations are using biztainment to gain competitive advantage.

Biztainment is adding entertainment content to a bundle of goods and services (called a

customer benefit package) to gain competitive advantage. The objectives of this article are to

(1) document and define the phenomenon of using entertainment in a wide variety of businesses

Biztainment initiatives must be carefully designed and executed using service management

concepts and methods (Collier, 1994, 2006). Exhibit 4 provides examples of the economic

Examples of the Economics of Biztainment

Examples of Biztainment Example Economics

Agriculture – farm tours, hay rides, horseback rides, camp

Bateson Farms of Ohio, for example, offers concession

Manufacturing – old and new factory tours, showroom,

In 2004, Ford Rouge Factory tour operating at sold-out

Retail – shopping malls, simulators, product demonstrations,

Libby Lu’s sales per foot are substantially higher than Sak’s

Restaurants – toys, themes, wildlife, contests, games, videos,

Hard Rock Café operating at 11.4% net profit margin in 2004

Hotels – kid’s spas, health clubs, dances, casinos, cable T.V.,

Holiday Inns found that hotel with holidomes have a 20

Telecommunications – cell phones, download songs,

text and video messaging, cool ringer tones and voice



Fantasy-football, for example, illustrates intangible outcomes that are controlled by the

customer. Eight million customers played fantasy-football in 2004 and Fantasy Sports Trade

Holiday Inn has resurrected the hotel holidome that it invented in the early 1970s. The

new holidomes create a huge indoor space for indoor pools, water parks, spas, mini-geysers,

11. Search the Web for either (a) an organization that has defined its sustainability strategy and

policy, and give examples of how they are implementing it, or (b) an organization that has

received negative or controversial media coverage for its ethical or sustainability practices.

Write a paper describing what you found (maximum of two typed pages).

Almost all organizations are now on the sustainability bandwagon so students will find a rich

discussion of sustainability focused on everything ranging from setting carbon standards to

On the flip side, there have been many reports that deal with issues such as unsafe

clothing factories (e.g. the case of Nike) or manufacturing facilities (particularly in foreign

12. Describe new ways for how your college or university can apply the sustainability practices in

Exhibit 1.6. Summarize your results in a short paper.

Exhibit 1.6 Examples of Sustainability Practices

Environmental Sustainability

Waste management: Reduce waste and manage recycling efforts

Energy optimization: Reduce consumption during peak energy demand times

Social Sustainability

Product safety: Ensure consumer safety in using goods and services

Workforce health and safety: Ensure a healthy and safe work environment

Economic Sustainability

Performance excellence: Build a high-performing organization with a capable leadership and

workforce

Operations management plays an important role in all three of these sustainability perspectives.

13. Discuss how the three perspectives of sustainability influence (or perhaps, should influence)

your personal purchasing decisions. For example, do you consider whether apparel is made in

safe and ethical factories? Should companies exploit their sustainability efforts for marketing

purposes? Why or why not?

Environmental responsibility is often conveyed in packaging (for example, “made from 100%

recycled materials…”). However, social responsibility is not that easy to identify. As one news

14. Research and write a short paper describing how business analytics have been applied to

problems and decisions in operations management. Use the information in the box “What do

Operations Managers Do?” to help your search process.

There are many examples for students to write a paper on such as

sports analytics (Moneyball, etc.)

credit card approval

Sourcing decisions (Procter & Gamble, Nike, Victoria Secrets)

15. Search recent articles in your local newspaper and business magazines such as Fortune,

Business Week, Fast Company, and so on and identify OM concepts and issues that are

discussed. How do these fit into the classification in the box “What Do Operations Managers

Do?” in this chapter?

Please see Discussion Question #2 for generic OM topics. The objective of this question is

simply to show how OM ties to company success and problems and/or begin to identify key