Management Chapter 8 Statistical Quality Control Can Also Transported Fields Outside Production Goods Heres Example

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PPT 8.43

5. Integrating Operations and Supply Chain Management

A. Managing supply chains requires vigilance and the ability to make quick

tactical decisions.

B. Businesses can manage the risks of global supply chains through the

following:

1. Adopting a Global Supplier Code of Conduct

2. Encourage compliance and procurement employees to work

together to ensure ethical sourcing practices at reasonable prices.

3. Create a diverse supply chain to minimize risks

4. Perform regular audits on suppliers to ensure compliance to

standards.

LO 8-6

Evaluate a business’s dilemma and propose a solution.

Key Terms:

PPT 8.44

PPT 8.45

6. Solve the Dilemma—Planning for Pizza

A. McKing Corporation operates fast-food restaurants in 50 states, selling

hamburgers, roast beef and chicken sandwiches, French fries, and

salads.

B. Wants to diversify into the growing pizza business.

1. Ideal pizza to sell was a 16-inch pie in three varieties: cheese,

pepperoni, and deluxe (multiple toppings)

1. Training manuals for employees

2. Advertising materials

3. Rationale to present to the restaurant managers (many stores are

franchised)

D. A problem:

perhaps the product is not ready to be launched

3. There may be other problems yet to be uncovered

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E. Discussion questions

1. What mistake did McKing make in approaching the introduction of

pizza?

McKing failed to consider operations issues when designing the product.

Specifically, it did not ensure that product delivery (the drive-through

service) was feasible for the new pizza product.

2. How could this product introduction have been coordinated to avoid

the problems that were encountered?

Introduction of this product could have been coordinated better by

teaming operations management personnel with the research and

design personnel. Operations managers would know how to evaluate

the product from an operational issue, thus taking into consideration

how the product will be produced and delivered to the customer.

3. If you were an executive at McKing, how would you proceed with the

introduction of pizza into the restaurants?

Students’ answers will vary, but each should demonstrate an

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B O X E D T E X T D I S C U S S I O N Q U E S T I O N S

ENTER THE WORLD OF BUSINESS—Manufacturers Use Remote Monitoring Systems to Detect Problems

When something breaks at a manufacturing plant, an engineer or manager comes in to fix the problem. Loss

of sleep and stress can profoundly affect these employees, particularly as factories are facing a shortage of

1. Describe how suppliers of factory automation equipment are helping manufacturers to solve or

prevent factory malfunctions.

ABB Ltd. works with Bayer AG to remotely monitor equipment at its plant in Berkeley, California, for signs

2. How might these remote monitoring systems create greater efficiencies at factories?

3. What are some of the risks associated with continual monitoring by a third-party supplier?

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RESPONDING TO BUSINESS CHALLENGES—Lenovo Gains a Competitive Advantage through Manufacturing

Lenovo, a Chinese computer company and one of the largest PC manufacturers in the world, has defied the

state of the personal computer market by experiencing rapid growth and increase in market share. In 2013,

1. Despite the decline in PCs, Lenovo has surpassed most of its competitors in the computer market. Do

you think it can do the same in the mobile phone industry?

2. Describe some of the ways Lenovo sets itself apart from competitors.

The manufacturing plant could be used to increase the range of Lenovo’s product lines. The company

3. How might keeping the production process in-house help Lenovo?

GOING GREEN—Automakers Look toward Hydrogen Fuel Vehicles

Electric vehicles are becoming more popular, but a lack of infrastructure, the range of charge, and high prices

are impacting widespread adoption. Automakers are investigating other forms of cleaner energy, including

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1. Why are automakers attempting to develop more eco-friendly vehicles?

2. What are some of the challenges in the manufacturing and adoption of hydrogen fuel cars?

3. Why do you think Toyota is willing to expend resources in developing hydrogen vehicles despite the

high costs of capital involved?

S U P P L E M E N T A L L E C T U R E

Statistical Quality Control

It seems to make sense that if a firm is going to implement a program of quality control, then it would want

to check its products carefully to see that each lived up to whatever standard of quality had been

established. This careful scrutiny of every unit of the product is ideal, but in some cases, it is impossible. A

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An example of sampling is illustrated by television surveys of American viewers. A few thousand monitors on

TV sets scattered across the nation enable rating services to claim that millions of Americans were watching a

If you are a skeptic about sampling, then you will enjoy the anecdote about the 1948 presidential election. All

the learned pollsters, with their scientific sampling methods, picked Thomas Dewey to win the election.

As it turned out, Harry Truman won the election.

The QC veteran would conclude that when each item in the population is thoroughly checked, fatigue of the

inspector becomes a factor. If the sample has a problem, the assembly line can be stopped immediately and

the necessary corrections made. Therefore, statistical quality control through sampling can be efficient, less

costly, and, if set up properly, effective. Statistical quality control can also be transported to fields outside

production of goods. Here’s an example. Mary Witcher is in charge of the administrative section of BW

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“Okay. Here it is.”

“Everything seems to be in order except that we have not notified Dr. Mafferson that we are not going to

make her an offer, and she was here for an interview some three weeks ago.”

“Anything else, Ms. Witcher?”

“No, that takes care of what I needed. Just as a suggestion, Alicia, you might go through your files and be

sure that we have notified each candidate who has come here whether we want to see them further or

discontinue contact.”

1. What is the purpose of statistical quality control?

2. Is it important how Mary Witcher selected the two files that she “spot checked” in Alicia’s filing

system?

Yes, it is important. For instance, Mary asked Alicia about the people that didn’t make it in. Since the

communication Alicia was sending would be rejection letters (or emails), it probably wasn’t as high a

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C O N T R O V E R S I A L I S S U E

How Much Robotics Is Too Much?

This is an age of automation and computerization. Marvels are possible in our time, but sometimes certain

citizens become frustrated with these modern innovations.

For example, there are people who are annoyed by solicitations via the telephone. Such solicitations are

often timed for the dinner hour so that family members will be at home, which doubles the bother. Add to

1. Suppose you are traveling down the highway in a new car. Would you gain more comfort and security

from the knowledge that your car was carefully assembled by ultra-conscientious and highly-skilled

artisans or some experimental robots being broken in at the factory?

Student answers will vary.

2. Would you react favorably to a doctor being assisted by a robot? How would you like the idea of a

robot being involved in an operation on you?

Student answers will vary.

3. Would the use of a robot save the patient money? If so, would insurance firms opt for robotics

operations all the time to cut costs?

It may save money if it makes the doctor’s job easier and more efficient. Insurance firms may like these

cost-cutting measures, but they would likely experience much resistance on the part of stakeholders.

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S O Y O U W A N T A J O B I N O P E R A T I O N S M A N A G E M E N T

What role do supply chain managers play in the success of businesses?

Supply chain managers have a tremendous impact on the success of an organization. These managers are

C H E C K Y O U R P R O G R E S S

1. What is operations management?

2. Differentiate among the terms operations, production, and manufacturing.

3. Compare and contrast a manufacturer versus a service provider in terms of operations management.

Manufacturers and service providers both must schedule and control operations as well as allocate

4. Who is involved in planning products?

The functions involved in planning products include research, engineering, and operations management.

In larger corporations, these functions may be separate departments; however, in smaller companies,

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5. In what industry would the fixed-position layout be most efficient? The process layout? The product

layout? Use real examples.

A fixed-position layout uses a central location for the basic product, and all resources required to create

the product are moved to that location. Students’ examples will vary, but a bridge under construction

would be one example of fixed-position layout.

6. What criteria do businesses use when deciding where to locate a plant?

The following factors are considered for plant location:

a. Proximity to market

b. Availability of raw materials

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i.

7. What is flexible manufacturing? How can it help firms improve quality?

8. Define supply chain management and summarize the activities it involves.

Supply chain management refers to connecting and integrating all parties or members of the distribution

9. Describe some of the methods a firm may use to control inventory.

A firm may use a variety of methods to control inventory including economic order quantity (identifies

10. When might a firm decide to inspect a sample of its products rather than test every product for

quality?

Whether to inspect 100 percent of the output or only part of it is related to the cost of the inspection

their food products

needs of specific customers

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G E T I N V O L V E D

1. Compare and contrast OM at McDonald’s with that of Honda of America. Compare and contrast OM at

McDonald’s with that of a bank in your neighborhood.

Sample answer (not exhaustive):

McDonald’s

Honda of America

Local bank

Inputs

Human labor, money,

management, energy,

cooking oil, meat,

condiments, pickles,

ketchup, mustard, bread,

soft drinks, milk, coffee

grounds, juice concentrate,

water, potatoes, plastic toys,

menus, ice cream cones,

wrappers

Human labor at factory,

salespeople, money,

management, energy,

engines, braking systems,

steel, glass, door panels,

windows, rubber, tires,

dashboard needles,

transmission gears,

steering wheel, seats, air

conditioner vents, radios,

mirrors, paint

Human labor, money,

management, information

and customer data, paper,

calculators, knowledge

Equipment

Metal forming equipment,

machining equipment, car

lifts, robotics, conveyor

systems, lubrication

equipment, wheel spoke

spinning machine, assembly

line, welding machines,

hydraulic press machines,

stamping parts, rotational

equipment

Drive-thru equipment

(loudspeaker, signs), cash

registers, ovens, cutlery,

playground equipment,

fryer, ice cream machine,

coffee maker, soda

dispensers, ice makers,

shelves, food preparation

tables (assembly line)

Teller machines, drive-thru

equipment, computers,

filing systems, ATM

machines, counters, drawers

Method of

manufacturing

Assembly line

_________________

Output

Finished automobiles

A quality food product and

an enjoyable environment

Financial services that can

be customized to the needs

of customers

Physical Good

Yes

Possibly (money)

Contact with

customer (services)

None except at dealerships

Extensive

Extensive, including online

and in-person (high touch

and high tech)

Control over

uniformity of

outputs

Large amount of control

Strong control over

consistency of food

products; less control over

service

Financial services must

comply with regulatory

requirements, although

service may vary

Level of

standardization

Very standardized although

car models might differ

Some customization as

consumers can request

varying adjustments to

Mass customization

provides opportunities to

adjust financial products to

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2. Find a real company that uses JIT, either in your local community or in a business journal. Why did the

company decide to use JIT? What have been the advantages and disadvantages of using JIT for that

particular company? What has been the overall effect on the quality of the company’s products or

services? What has been the overall effect on the company’s bottom line?

Students’ answers will vary based on the company they choose.

3. Interview someone from your local Chamber of Commerce and ask him or her what incentives the

community offers to encourage organizations to locate there. (See if these incentives relate to the

criteria firms use to make location decisions.)

Students’ answers will vary.

B U I L D Y O U R S K I L L S

The goal of this exercise is to help students understand the concept of cycle time and the five dimensions of

cycle time: speed, connectivity, interactive relationships, customization, and responsiveness. During the role

B U I L D Y O U R B U S I N E S S P L A N

You need to stress to the students the growth in the service industry and the effect this has had on all of

them. Sometimes students are confused and view the service industry as replacing the manufacturing

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S E E F O R Y O U R S E L F V I D E O C A S E:

H O M E R U N I N N’ S O P E R A T I O N A L E X C E L L E N C E P R O P E L S I T T O

T O P S P O T

Case Overview

Home Run Inn’s frozen cheese pizza is considered tastier than the fresh deep dish and original pizzas from

Domino’s and Pizza Hut. Home Run Inn is a family-run business with headquarters in Chicago. In the 1980s,

Nick’s son Joe Perrino, currently the president and CEO of the business, realized that they needed to expand

1. Describe how taking risks to increase its operational capacity turned Home Run Inn pizza into the top

player in the frozen pizza industry.

2. Why is Home Run Inn able to compete at prices higher than its rivals?

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3. Why has self-distribution been so beneficial for Home Run Inn? Do you think it would be successful for

every manufacturing company?

T E A M E X E R C I S E

T E R M P A P E R O R P R O J E C T T O P I C S

These topics may be assigned as individual or collaborative projects:

1. The Influence of W. Edwards Deming on Modern Quality Control

G U E S T S P E A K E R S U G G E S T I O N S

1. A professor of production and operations management to talk about different production and operations

processes.

3. A quality-control manager from a local firm to talk about quality-control techniques, statistical sampling,

quality circles, or other quality programs employed at that firm.

4. A software representative to demonstrate CAD or CAM applications. Many of these software

5. A representative of a firm that markets industrial robots. As in the case of CAD and CAM software,

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T E A C H I N G S U G G E S T I O N S

1. This chapter offers the instructor an opportunity to relate experiences of a visit to a manufacturing plant.

3. Emphasize the boxed material and cases in the textbook. Use “Boxed Text Discussion Questions” and

5. A student tour of a manufacturing facility would be ideal, but time and travel considerations often

preclude such plans. An alternative is for the instructor to tour a local manufacturing facility and report