Exam 18: Managing Service and Manufacturing Operations

ISO 9000 is a series of five international standards for achieving consistency in quality management and quality assurance because they ensure that companies carefully document the steps they take to create and improve product quality.

Pamela makes cloth dolls,which she sells to friends and relatives.She currently has more than 200 m of fabric,100 m of ribbon,a box of 500 eyes,stuffing,20 dolls in various stages of completion,and 15 completed dolls.How many items are in Pamela's finished goods inventory?

The United Kingdom's Royal Mail (the equivalent of Canada Post)needed to transform the image its customers had of it.A key part of the transformation was to permanently pass decision-making authority and responsibility to its workforce and allow them to develop and implement their ideas on how to improve performance and service to customers.According to one manager,"We understand now that people who work here care as much as managers do about the business." Which of the following did the Royal Mail use to improve its image?

Narrative 18-1 In recent years, Japanese companies such as Mitsubishi, NEC, Fujitsu, and Sony began turning to North America to manufacture Japanese products. While Sony, Panasonic, and other Japanese giants still excel at cranking out high-quality consumer electronics products-such as camcorders and TVs-by the millions, it's a different story in industries with short product cycles and factories that must build what customers order instead of churning out products in anticipation of demand. Japan's great strength-repetitive manufacturing-is becoming its greatest weakness. This production-on-demand form of management cannot depend on JIT. Instead, the North American companies rely on raw-in-process inventory, or RIP. RIP calls for keeping a reasonable quantity of varied raw materials or components on hand to meet changing customer demand. -Refer to the Narrative 18-1.Hyundai's generous warranty means that the company will assume responsibility for the costs of all repairs for five years or until the car has been driven an astounding 100,000 km.To which quality-related service characteristics does the Hyundai warranty show a commitment?

Narrative 18-2 Because of the poor quality of its cars, Hyundai watched its U.S. sales drop from 264,000 cars to 90,000 cars in just two years. Hyundai cars ranked 26th out of 35 car brands in terms of initial car quality as measured by the influential J.D. Power initial car quality survey. With $6.6 billion in debt, a $1 billion investment for a new manufacturing plant in Alabama, and the company's first-ever loss, Hyundai's new chairman, Chung Mong Koo, declared that improving quality was the only way to fix the company. The challenge for Chung was to get his managers to put quality, not costs, first. So he sent a visible, meaningful message that poor quality would no longer be tolerated. During one plant visit, Chung demanded to see under the hood of a car on the production line. He was furious when he saw loose wires, tangled hoses, bolts painted four different colours-a tremendous deviation from what the engine compartment was supposed to look like. On the spot, he instructed the plant chief to paint all bolts and screws black and ordered workers not to release any car unless all was orderly under the hood. He then publicly declared that Hyundai would produce higher-quality cars than Toyota by 2008, and that Hyundai would produce the best quality cars in the auto industry. Today, each workweek starts with a demanding three-hour meeting attended by managers, engineers, designers, and suppliers. In his large boardroom, Chung displays Hyundai cars on rotating turntables or mechanical lifts-whatever is required for those in attendance to see up close what problems need to be fixed. Hyundai managers now measure everything. Hundreds of charts on the walls of every Hyundai factory measure the number of times and the degree to which a process has produced parts that differ meaningfully from the quality standards for those parts. The quality department at Hyundai has grown from 100 to 1,000 people, who now report directly to CEO Chung. All employees share their ideas about how to improve quality because Chung communicated to workers that their ideas were critical and welcomed. To prove it, he rewarded them with bonuses averaging $150 per employee. At one Hyundai factory, workers have suggested 25,000 ideas for improving quality, 30 percent of which have been implemented in the factory. For instance, a worker noticed that the Hyundai Sonata and SG 350 sedans had identically sized spare tires, but different-sized spare tire covers. Though it may sound trivial, using the same spare tire cover for both cars saves Hyundai $100,000 a year. Hyundai addresses customer complaints as quickly as possible, and these quick responses to customer complaints have had dramatic results, such as reducing Hyundai Santa Fe's score in J.D. Power's initial car quality survey from 149 problems per 100 cars to 93 problems per 100 cars in just one year. Finally, if the greatly improved quality isn't enough to convince prospective buyers to buy a Hyundai, the company believes that its 5-year/100,000 km warranty may be enough. The longest, most comprehensive warranty in the auto industry shows the confidence the company has in its cars. And those extensive warranties probably won't cost Hyundai much either, as the improved quality of its cars has cut the cost of warranty repairs, which are paid for by headquarters, by 35 percent over the last three years. -Refer to the Narrative 18-2.What kind of inventory do North Americans who manufacture NEC,Fujitsu,and Sony products maintain?

A relatively large Swiss population lives in northern London,England.For three years,the Swiss newspaper Neue Zurcher Zeitung shipped in 800 copies of the newspaper daily.Only about 40 percent sold because the papers did not arrive until almost lunchtime,and potential readers perceived that the news was already old.Which type of operation did the newspaper publisher use,in terms of the amount of processing?

Narrative 18-1 In recent years, Japanese companies such as Mitsubishi, NEC, Fujitsu, and Sony began turning to North America to manufacture Japanese products. While Sony, Panasonic, and other Japanese giants still excel at cranking out high-quality consumer electronics products-such as camcorders and TVs-by the millions, it's a different story in industries with short product cycles and factories that must build what customers order instead of churning out products in anticipation of demand. Japan's great strength-repetitive manufacturing-is becoming its greatest weakness. This production-on-demand form of management cannot depend on JIT. Instead, the North American companies rely on raw-in-process inventory, or RIP. RIP calls for keeping a reasonable quantity of varied raw materials or components on hand to meet changing customer demand. -Refer to the Narrative 18-1.Which of the following is most likely one of the primary methods used to measure inventory in the Japanese-based firms operating in North America?

The five characteristics that typically distinguish a quality service are reliability,tangibles,responsiveness,assurance,and empathy.

Studies clearly show that customers care more about responsiveness than anything else when buying services.

Briefly identify the three different methods of inventory management.Specify the circumstances under which each should be used.

What is ISO 14000?

Higher productivity is good not only for individual companies that achieve it,but also for the countries in which they do business.

Wacker Corp.,one of the leading light construction equipment suppliers to the rental industry,has purchased new software,which will allow its employees to extend its electronic support skills and parts-ordering efficiencies for its customers.Which aspect has been improved,likely leading to greater employee satisfaction?

Hattie Cao operates Peachy Keen and sells her products through catalogue orders.Cao produces and sells seven kinds of peach pies,three kinds of peach cakes,two kinds of peach cookies,and a peach salsa.She normally keeps 250 jars of salsa in stock,but she noticed today that she has more than 500 bottles in her inventory.According to the textbook,what should Cao do with her excess inventory?

Which of the following inventories includes the basic inputs in a manufacturing process?

Briefly describe total quality management (TQM).

In which of the following operations does the lowest degree of processing occur?

The single characteristic of service quality that is most important to customers is empathy.

Judy is arranging the end of year party at a restaurant for the company's employees.Judy considered a new restaurant but decided to make a reservation at the one she has used in the past since she has never been disappointed.What characteristic of the restaurant keeps Judy returning?

Narrative 18-1 In recent years, Japanese companies such as Mitsubishi, NEC, Fujitsu, and Sony began turning to North America to manufacture Japanese products. While Sony, Panasonic, and other Japanese giants still excel at cranking out high-quality consumer electronics products-such as camcorders and TVs-by the millions, it's a different story in industries with short product cycles and factories that must build what customers order instead of churning out products in anticipation of demand. Japan's great strength-repetitive manufacturing-is becoming its greatest weakness. This production-on-demand form of management cannot depend on JIT. Instead, the North American companies rely on raw-in-process inventory, or RIP. RIP calls for keeping a reasonable quantity of varied raw materials or components on hand to meet changing customer demand. -Refer to the Narrative 18-1.Which of the following is Hyundai demonstrating by addressing customer complaints as quickly as possible-even in the middle of a model year?