Exam 18: Managing Service and Manufacturing Operations

Make a list of the characteristics that define quality for goods.Then,make a second list of characteristics that define quality for services.Why do these lists differ? Why does one characteristic appear on both lists?

What kind of cost is associated with maintaining an inventory?

What does TQM state a company's primary goals should be?

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.Cao decided to reduce her inventory by lowering her price.Her plan to get rid of excessive inventory was so successful that she found herself sold out in just a couple of days.Which of the following did Cao experience?

List and describe the four kinds of inventory that a manufacturer stores.

What is inventory? Explain the potential costs associated with it.Briefly describe the systems of inventory management that are available to managers to control these costs,and specify which method of inventory management is best.

What is a difference between goods and services?

In general,the lower the number of inventory turns,the more efficiently the marketing department is operating.

What is the definition of quality according to the American Society for Quality?

What kind of costs are downtime and lost efficiency?

What is materials requirement planning (MRP)used with?

At their core,companies are systems that combine inputs,such as labour,raw materials,capital,and knowledge,to produce finished products and other types of outputs.Which term best describes the type of system a company is?

Extrinsic productivity indicates how much labour,capital,materials,and energy it takes to produce an output.

Briefly explain the difference between ISO 9000 certification and the ISO 14000 certification.

The maker of Beecham's barbecue sauces uses 3,000 bottles annually.The optimal order quantity for bottles is 300.The company fills about 150 bottles daily.How often should the manufacturer place an order for more bottles?

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.In which area are many of the repetitive Japanese manufacturing firms weak,in terms of the characteristics of quality service?

Briefly explain how production and productivity relate to the financial success of companies as well as the countries in which the companies are located.Given the nature of today's global economy,comment on how these relationships might be particularly important in developing (as opposed to industrialized)countries,where the industrial base and standard of living are low.

Explain why operations management is potentially relevant to every employee in every organization in the 21st century.

Chris has started his own computer manufacturing company.Realizing each of his customers will have different specifications,he creates an inventory of the basic computer platform then adds storage,memory,and other components as specified by each customer.What type of operation does Chris have at his company?

Assuming the optimal order quantity of integrated circuits for a manufacturer of security timers is 1,000,and the company uses 55 circuits daily,the manufacturer should place an order approximately every 10 days.