Page 612 - Introduction to Business

586 PART 6 Managing Business Operations, Management Information Systems, and the Digital Enterprise

outsource goods and services, value analysis to provide Scheduling decisions for job processes can be analyzed
a cost justification of the function that each purchased via a Gantt chart. Quality is the ability of a product to
part serves, and the evaluation of suppliers based on meet or exceed customers’ expectations. There is also
price, quality, service, location, and flexibility. The quality of design and quality of conformance, and for
inventory decision consists of finding an inventory level operations managers these three dimensions hold for
at which the sum of the ordering cost and the holding both goods and services. However, the factors that
cost is minimized. customers use to judge quality in goods are different
from those they use to judge quality in services.
LEARNING OBJECTIVE 8 Operations managers mostly deal with quality of
Outline the control decisions about scheduling and conformance. Quality control is the set of activities
quality. aimed at ensuring that the production system is
achieving quality of conformance. One of the most
Scheduling decisions allocate available production widely used tools for quality control is the process
resources to tasks, jobs, orders, activities, or customers control chart.
in a given period. A production schedule indicates what
is to be done, when, by whom, and with what resources.

Chapter Questions Interpreting Business News

1. What is operations management? 1. It has been said that one of the major forces behind
2. Compare the production of goods with the the success of Japanese car manufacturers is their
production of services. excellent operations management. Based on the
3. How can operations management help businesses design, planning, and control decisions presented
compete? in this chapter, offer at least three reasons in
4. What are the milestones in the historical support of this statement.
development of operations management? 2. The productivity of service industries tends to be
5. What are the decisions that operations managers lower than the productivity of manufacturing
make? industries. Why do you think this is the case? (Hint:
6. What is the relationship between the product and Read the section “Goods and Services” again.)
process design decisions? 3. The costs of health care are escalating in most
7. What are the advantages of simultaneously world economies. Explain how operations
considering the capacity, location, and layout management could help contain these costs. (Hint:
decisions? Use the design, planning, and control decisions
8. What is the production rate planning decision? presented in this chapter.)
9. What is the material requirements planning
decision? Web Assignments
10. What is the quality control decision?
11. Consider the capacity example using decision 1. One of the student and professional organizations
trees. What capacity design would you recommend for operations management is called APICS: The
if the probabilities of high, medium, and low Educational Society for Resource Management. Visit
demand respectively, are .2, .4, and .4? its website at www.apics.org and learn more about
12. Consider the material requirements example. operations management, student membership,
Estimate the requirements for seat cushions, base and the APICS certification program for operations
units, and fasteners. managers. What does it take to become certified?
13. Consider the outsourcing example. If the in-house 2. Use a search engine to look for operations
variable production cost is $80, for what volume management jobs. What kinds of things do the jobs
should the company outsource the item? have in common? Comment on the differences
14. Consider the inventory example. If the annual between manufacturing-related and service-
demand increases from 600 units to 1200 units, related jobs.
find the procurement quantity and its associated 3. Use a search engine to search for undergraduate
average inventory level that minimize the total and graduate programs in operations
annual ordering and holding cost. management. Describe the kinds of courses
15. Consider the scheduling example. Find two more involved in this program of study.
schedules.

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