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Chapter 19 Operations and Value Chain Management

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TRUE/FALSE QUESTIONS

A MANAGER’S DILEMMA

1. According to the company profile in “A Manager’s Dilemma,” the primary products produced by

Bobardier, Inc. is jet skis.

(True; moderate; p. 489)

WHAT IS OPERATIONS MANAGEMENT AND WHY IS IT IMPORTANT?

2. Operations management oversees the transformation process that converts resources such as labor and raw

materials into finished goods and services.


3. According to the textbook, it is easy to see the operations management process at work in service organizations.

(False; easy; p. 490)

4. It is estimated that in the United States approximately 35 percent of all private sector jobs are in service

industries.

(False; moderate; p. 491)

5. Productivity includes the overall output of goods and services that is then divided by the inputs.


6. For organizations to improve productivity, they should focus on people and operations.

(True; easy; p. 491)

7. Deming believed that managers were the primary source of increased productivity.



VALUE CHAIN MANAGEMENT

8. The supply chain is the entire series of organizational work activities that add value at each step beginning

with the processing of raw materials and ending with finished product in the hands of end users.


9. In its entirety, the value chain can encompass the supplier’s suppliers to the customer’s customers.


10. Value chain management is efficiency oriented.


11. Value chain management is the process of managing the entire sequence of integrated activities and

information about product flows along the entire value chain.


12. According to the textbook, supply chain management is internally oriented and focuses on efficient flow of

incoming materials to organizations.


13. Value chain management is externally oriented and focuses on both incoming materials and outgoing

products and services.


14. The new business model is a strategic design describing how a company intends to profit from its broad

array of strategies, processes, and activities.


15. According to the textbook, value chain management radically changes corporate visions.



16. The ways in which organizational work is done is described as organizational processes.


17. According to the textbook, innovation is the key description of job design in a value chain organization.


18. According to a survey of manufacturers who have embarked on value chain management initiatives,

improved customer service was the major benefit that companies reported.


19. Proprietary company information that’s critical to a company’s efficient and effective functioning and

competitiveness is called intellectual property.


CURRENT ISSUES IN OPERATIONS MANAGEMENT

20. According to the textbook, the ability of a product or service to reliably do what it’s supposed to do and to

satisfy customer expectations is called quantity.


21. The product quality dimension described as “meeting operating specifications over some period of time” is

called flexibility.


22. According to the textbook, “how a product looks and feels” is a description of the aesthetics dimension of

product quality.


23. According to the textbook, the latest survey of ISO 9000 certificates showed that the number of registered

sites worldwide to be around 50,000.

(False; easy; p. 504)

24. Gaining ISO 9000 certification provides proof that a quality operations system is in place.



25. According to the textbook, the two best-known quality goals are Six Sigma and Seven Beta.


26. ISO 9000 is a series of international quality management standards established by the International

Organization for Standardization, which sets uniform guidelines for processes to ensure that products

conform to customer requirements.


27. The Six Sigma standards have become the internationally recognized standard for evaluating and comparing

companies in the global marketplace.


28. General Electric Corporation popularized the use of stringent quality standards more than 30 years ago

through a trademarked quality improvement program called Six Sigma.


29. ISO 9000 is a quality standard that establishes a goal of no more than 3.4 defects per million units or

procedures.


30. According to the textbook, General Electric realized approximately $8 billion in savings through its Six

Sigma program from 1999-2002.


MULTIPLE-CHOICE QUESTIONS For each of the following choose the answer that most completely answers the question.

A MANAGER’S DILEMMA

31. According to the company profile in “A Manager’s Dilemma,” which of the following describes products

produced by Bombardier, Inc.?

a. computer software

b. corporate jets

c. jet skis


d. b and c

(d; moderate; p. 489)


32. Operations management encompasses which of the following topics?

a. efficiency

b. productivity

c. quality

d. all of the above


33. ______________ management oversees the transformation process that converts resources such as labor

and raw materials into finished goods and services.

a. Control

b. Operations

c. Systems

d. Planning

(b; moderate; p. 490)

34. Which of the following is an example of an input as described by an organization’s operations system?

a. people

b. technology

c. capital

d. all of the above


35. Which of the following are examples of inputs as described by an organization’s operation system?

a. technology

b. materials


c. information

d. all of the above


36. Which of the following is an example of an output as described by an organization’s operations system?

a. sales

b. increased market share

c. new products

d. all of the above


37. Which of the following is an example of an output as described by an organization’s operations system?

a. motivated employees

b. high rates of return on capital

c. accounting reports

d. all of the above

(d; moderate; p 490)

38. Which of the following is mentioned in the textbook as a reason why operations management is important

to organizations and managers?

a. it encompasses both services and manufacturing

b. it’s important in effectively and efficiently managing productivity

c. it plays a strategic role in an organization’s competitive success

d. all of the above

(d; difficult; p. 490)

39. According to the textbook, it is easy to see the operations management process at work in ______________.

a. service organizations

b. financial organizations


c. consulting organizations

d. manufacturing organizations

(d; easy; p. 491)

40. It is estimated that in the United States, approximately ______________ of all private sector jobs are in

service industries.

a. 15 percent

b. 35 percent

c. 55 percent

d. 80 percent


Page 491

41. Productivity includes the overall output of goods and services that is then ______________ by the inputs.

a. multiplied

b. added

c. subtracted

d. divided


42. According to the textbook, Latex, Inc. investments in information technology enhancements resulted in

both its workforce and technology resulting in which of the following?

a. increased retention

b. increasing production capacity

c. increased sales

d. all of the above

(b; difficult; p. 491)

43. Which of the following is an accurate statement?

a. Operations managers are not found in the service sector.

b. Operations management concerns only the input stage of product development.

c. The outputs of the operations system include both goods and services.

d. Labor is part of the transformation stage and is not considered an input.

(c; moderate; p. 491)


44. For organizations to improve productivity they should focus on which of the following?

a. operations variables only

b. people only

c. it depends on the industry

d. people and operations


45. Deming believed which of the following?

a. high productivity comes from good people management

b. managers are the primary source of increased productivity

c. employees should learn movement efficiency not statistical methods

d. training is generally wasted time


46. Deming outlined _________ points for improving management’s productivity.

a. 10

b. 12

c. 14

d. 15


47. Where did the modern era of manufacturing begin?

a. the coal industry

b. Detroit automobile factories

c. southern cotton mills

d. northeastern textile mills


48. Which of the following statements is true regarding manufacturing management activities from the late

1940s through the mid 1970s?


a. it was most companies’ primary focus

b. it was a critical factor in management career promotion

c. by the late 1970s manufacturers were in a crisis

d. the United States remained the world leader in this area

(c; difficult; p. 493)

49. Which of the following is one of Deming’s 14 points for improving management’s productivity?

a. plan for a long-term future

b. raise the quality of your line supervisors

c. train your employees in new skills as the need arises

d. all of the above



a. plan for the immediate future

b. product quality is relative—balance improvements against costs

c. establish statistical control over product processes

d. reduce cost by dealing with multiple suppliers


51. Which of the following is mentioned as one of Deming’s 14 points for improving management’s

productivity?

a. raise the quality of your line supervisors

b. drive out fear

c. encourage departments to work closely together

d. all of the above



a. Don’t bother training employees to understand statistical methods.

b. Train your employees in new skills continuously.

c. Make top managers responsible for implementing the 14 principles.

d. Encourage departments to compete.




53. _____________ is the performance characteristics, features and attributes, and any other aspects of goods

and services for which customers are willing to give up resources.

a. Value

b. Cost

c. Convenience

d. Performance

(a; easy; p. 494)

54. The ______________ is the entire series of organizational work activities that add value at each step

beginning with the processing of raw materials and ending with finished product in the hands of end users.

a. supply chain

b. value chain

c. ethical chain

d. financial chain


55. In its entirety, the ______________ can encompass the supplier’s suppliers to the customer’s customers.

a. supply chain

b. ethical chain

c. financial chain

d. value chain


56. In value chain management, ultimately ____________ are the ones with the power.

a. suppliers

b. customers

c. employees

d. buyers



57. ______________ is the process of managing the entire sequence of integrated activities and information

about product flows along the entire value chain.

a. Supply chain management

b. Value chain management

c. Ethical chain management

d. Financial chain management

(b; easy; p. 494)

58. ______________ management is externally oriented and focuses on both incoming materials and outgoing

products and services.

a. Supply chain

b. Value chain

c. Ethical chain

d. Financial chain


59. All of the following are characteristics of value chain management except it ________________.

a. is externally oriented

b. focuses on efficient flow of incoming materials to the organization

c. is efficiency oriented

d. is effectiveness oriented

(c; moderate; pp. 494-495)

60. In value chain management, it is ultimately ______________ that are the ones with the power.

a. suppliers

b. distributors

c. manufacturers

d. customers


61. The new______________ model is a strategic design describing how a company intends to profit from its

broad array of strategies, processes, and activities.

a. financial


b. operations

c. management

d. business


62. Which of the following is mentioned as a main requirement for successful value chain management?

a. coordination

b. competition

c. R&D

d. organizational structure

(a; difficult; p. 496)

63. Which of the following are mentioned in the textbook as main requirements for successful value chain

management?

a. power over suppliers

b. technology

c. employees

d. competition


64. For the value chain to achieve its goal of exceeding customer needs, ___________ must be developed.

a. collaborative relationships

b. new products and services

c. technology

d. none of the above


65. Investment in which of the following types of information technology allows Shell Chemical Company

better anticipates customer demand?


a. an ERP system

b. a supplier inventory management order network

c. an E-Marketplace

d. a corporate intranet


66. According to the textbook, value chain management radically changes _______________.

a. ethical issues

b. corporate goals and objectives

c. mission statements

d. organizational processes


67. The ways in which organizational work is done is described as _________________.

a. organizational processes

b. goals and objectives

c. policies and procedures

d. corporate visions

(a; moderate; p. 496)

68. Which of the following is mentioned in the textbook as a question that should be asked for each and every

organizational process?

a. “Where can internal knowledge be leveraged to improve the flow of material and information?”

b. “How can we better configure our product to satisfy both customers and suppliers?”

c. “How can the flow of material and information be improved?”

d. all of the above


69. According to the textbook, Wal-Mart and Pfizer collaborated on improving _______________.

a. inventory management

b. joint marketing programs

c. joint product development

d. product demand forecast information



70. The main human resource requirements for value chain management include _______________.

a. flexible approaches to job design

b. an effective hiring process

c. ongoing training

d. all of the above


71. According to the textbook, ______________ is the key description of job design in a value chain organization.

a. structure

b. strategy

c. flexibility

d. innovation


72. Which of the following is mentioned in the textbook as a cultural attitude that supports the successful

implementation of value chain management?

a. competition

b. collaborating

c. benchmarking

d. business intelligence

(b; easy; p. 500)

73. According to a survey of manufacturers who have embarked on value chain management initiatives,

______________ was the major benefit that companies reported.

a. increased sales

b. cost savings

c. increased market share

d. improved customer service



74. According to a survey of manufacturers who have embarked on value chain management initiatives, which

of the following was the least-effective benefit that companies reported?

a. increased sales

b. cost savings


d. inventory reductions


75. Which of the following are mentioned in the textbook as obstacles in managing the value chain?

a. organizational barriers

b. cultural attitudes

c. required capabilities

d. all of the above


76. Which of the following obstacles is mentioned in the textbook as the most difficult for managers to handle?

a. organizational barriers

b. cultural attitudes

c. required capabilities

d. people


77. Organizational barriers that are among the most difficult obstacles for managers to handle include

____________.

a. refusal to share information

b. incompetent employees

c. reluctance to conform to the status quo


d. privacy issues


78. Proprietary company information that’s critical to a company’s efficient and effective functioning and

competitiveness is called _____________.

a. real property

b. intellectual property

c. tangible property

d. management property


79. According to the textbook, unsupportive cultural attitudes—especially trust and ___________—can be

obstacles to value chain management.

a. commitment

b. respect

c. communication

d. control


80. According to the textbook, since value chain management relies heavily on information technology,

__________ should always be addressed.

a. standardized information exchange protocols

b. software compatibility

c. system security




81. What is the amount that Toshiba Corporation paid to settle a lawsuit over defects in its laptop computers?

a. $21 million

b. $210 million

c. $2.1 billion

d. $21 billion



82. According to the textbook, the ability of a product or service to reliably do what it’s supposed to do and to

satisfy customer expectations is called _______________.

a. quantity

b. quality

c. efficiency

d. effectiveness


83. Which of the following are dimensions of product quality?

a. performance

b. features

c. flexibility

d. all of the above


84. Organizations with extensive and successful quality improvement programs tend to rely on two important

people approaches: ______________ and ______________.

a. cross-functional work teams; closely supervised work teams

b. closely supervised work teams; empowered work teams

c. empowered work teams; cross-functional work teams

d. self-directed work teams; transgenerational work teams


85. According to the textbook, which of the following is a dimension of product quality?

a. conformance

b. intuitiveness

c. ascetics

d. accuracy



86. The product quality dimension described as “meeting operating specifications over some period of time” is

called ______________.

a. performance

b. features

c. flexibility

d. durability


87. Which of the following product quality dimensions is described as “matching with preestablished standards”?

a. performance

b. features

c. flexibility

d. conformance


88. According to the textbook, “how a product looks and feels” is a description of which of the following

product quality dimensions?

a. conformance

b. durability

c. serviceability

d. aesthetics


89. The product quality dimension described as “subject assessment of characteristics” is called

_____________.

a. conformance

b. durability

c. serviceability

d. perceived quality



90. According to the textbook, the two best-known quality goals are ______________ and ______________.

a. ISO 250; Six Sigma

b. Six Sigma; Seven Beta

c. ISO 9000; Six Sigma

d. ISO 250; Seven Beta


91. _______________ is a series of international quality management standards established by the International

Organization for Standardization, which set uniform guidelines for processes to ensure that products

conform to customer requirements.

a. ISO 250

b. ISO 9000

c. Six Sigma

d. Three Theta


92. The ______________ standards have become the internationally recognized standard for evaluating and

comparing companies in the global marketplace.

a. ISO 250

b. ISO 9000

c. Six Sigma

d. Seven Beta


93. Which of the following companies popularized the use of stringent quality standards more than 30 years

ago through a trademarked quality improvement program called Six Sigma?

a. IBM

b. General Electric

c. Motorola

d. Wal-Mart

(c; easy; p. 504)


94. ISO 9000 is a quality standard that establishes a goal of no more than 3.4 defects per ______ units or

procedures.

a. 1000

b. 10,000

c. 100,000

d. 1,000,000


95. According to the textbook, General Electric realized approximately _______________ in savings through its

Six Sigma program from 1999 - 2002.

a. $80 million

b. $800 million

c. $8 billion

d. $80 billion


96. According to the textbook, mass customization requires flexible manufacturing techniques and

______________.

a. managerial flexibility

b. continual dialogue with customers

c. a Web presence

d. a recognizable brand name


97. According to the textbook, ____________ is a good example of a company that uses flexible manufacturing

techniques to their products to customer specifications.

a. Motorola

b. Gateway

c. HP

d. Dell

(d; easy; p. 505)


98. According to the textbook, Levi Strauss has found that customers who design their own jeans are a good

source of ____________.

a. repeat business

b. customer referrals

c. information for producing mass-designed jeans

d. new revenue


SCENARIOS AND QUESTIONS For each of the following choose the answer that most completely answers the question.


Celeste had been asked to attend training in operations management. Her background and training had previously

been in accounting, but with the reorganization looming, it was either learn a new skill or be decruited. She was

actually looking forward to the training. She felt her background with numbers should prove valuable in

operations management, but she admitted that she knew little about the field. Until now, she had been in a support

staff function and had little feel for how their product went from raw materials to finished product. Celeste’s first

class would be tonight at Central University, and she was excited about the opportunity.

99. On the first night of class, Celeste learned that the central focus of operations management was

___________.

a. people

b. capital

c. the transformation process

d. goods


100. Until now, Celeste had thought more about “profitability” than “productivity.” She found it hard to

remember that the formula for productivity was “the overall output of goods and services produced

______________ the inputs needed to generate that output.”

a. squared with

b. added to

c. subtracted from


d. divided by


101. Celeste also had to keep straight what factors were considered inputs versus those considered outputs.

Inputs included which of the following?

a. materials

b. information

c. technology

d. all of the above


102. Celeste realized that outputs include which of the following _______________.

a. motivated employees

b. high rates of return on capital

c. accounting reports

d. goods and services

(d; easy; p. 490)

103. Celeste must remember that productivity is a composite of ______________ variables.

a. people and operations

b. task and relationship

c. structural and procedural

d. unpredictable


Non-Deming (Scenario)


On Monday, the big news arrived. Bob’s company announced they would be implementing a Total Quality

Management system in their company. Their goals, they said, were to “plan for the now, impress stockholders,

and take advantage of this system for increasing short-term profits. Those who don’t agree can begin looking for a

new job.” Bob, along with everyone else, grumbled under his breath. What in the world was top management

thinking? Their “zero quality defects” program had failed and now they were jumping on this new bandwagon.

Training was nonexistent in the company, and managers were fond of pushing responsibility for these programs

down to the lowest level. Top management was happy with the quality of the product, and now they wanted total

quality concerning the employees. At lunch, he read the note board, which said, “Statistical process control

classes will begin immediately, see your supervisor for a training date.” Bob sighed and wondered what fad was

next.

104. Which of the following Deming points was Bob’s company violating concerning their view of planning?

a. plan for the long-term

b. never be complacent concerning product quality

c. deal with the fewest number of good suppliers

d. raise the quality of your supervisors


105. Which of the following is a Deming point that Bob’s company was definitely violating?

a. encourage stressful management

b. push employees to their greatest level

c. drive out fear

d. encourage fear in supervisors


106. Deming, unlike Bob’s company, suggested that a company should ______________ concerning the quality

of their product.

a. always be complacent

b. never be complacent (easy)

c. strive for zero defects

d. strive for 5 percent defects

(b; easy; p. 492)

107. Differing from Bob’s company, Deming suggested that ______________ should be responsible for

implementing total quality management principles.

a. top managers

b. middle managers

c. supervisors

d. team leaders



108. Which of the following is true concerning Deming’s view about training?

a. Train workers for future jobs, rather than current jobs.

b. Train supervisors in statistical methods.

c. Training is a second-tier concern.

d. Train employees in new skills as the need arises.



Randy is the new strategic manager for Solutions Tech, Inc., a management consulting firm dedicated to assisting

small businesses in the pursuit of success. He is currently in a meeting with Rob, who is the owner of a successful

small business that creates computer displays for Fortune 500 companies. Randy is reviewing the business

strategy at Rob’s business and has some recommendations.

109. Before making any recommendations, Randy informed Rob that a _______________ is the entire series of

organizational work activities that add value at each step beginning with the processing of raw materials

and ending with finished product in the hands of end users.

a. supply chain

b. value chain

c. ethical chain

d. financial chain


110. Noticing that Rob seemed a bit confused, Randy informed Rob that ______________ is the process of

managing the entire sequence of integrated activities and information about product flows along the entire

value chain.

a. supply chain management

b. value chain management

c. ethical chain management

d. financial chain management



111. Rob seemed to understand the theory behind value chain management, but was curious about the

requirements for a successful value chain. Randy informed Rob that the main requirements for successful

value chain management includes all of the following except ________________.

a. collaboration

b. leadership

c. employees

d. competition


112. Randy tells Rob that the value chain management approach radically changes organizational processes. Rob

asks Randy if he could elaborate on this point a bit more. Randy says “when managers decide to manage

operations using value chain management, old processes are no longer appropriate. Managers must

critically evaluate all organizational processes to determine _________.”

a. the organization’s core competencies

b. where value is being added

c. gaps in the value chain

d. needed critical skills


113. Rob asks Randy about the role of human resources in the value chain management process. Randy replies

“employees are the most important resource of any organization, so not surprisingly, employees play a vital

role in value chain management. The three main human resource requirements for value chain management

are flexible job design, an effective hiring process, and ___________.

a. an effective firing process

b. goal compatible compensation plans

c. a commitment to Management by Objectives (MBO)




114. Randy tells Rob that flexibility in job design means that jobs should be redesigned around work processes

that ______________________.

a. help organizations learn more about their customers

b. link functions charged with creating value to customers

c. solidify the commitment of members to the goals of their respective work unit



115. Randy tells Rob that an effective hiring process is important to value chain management because

______________.

a. value chain management requires highly experienced and knowledgeable employees

b. flexible job designs require flexible people to fill them

c. value chain management requires a diverse group of highly specialized employees


(b; easy; p. 498)

116. Randy tells Rob “organizational culture is also a very important component of value chain management.

Those cultural attitudes include sharing, openness, respect and trust and these attitudes must encompass not

only employees, but _______________ as well.”

a. extend to management

b. extend to customers

c. extend to external partners

d. their families


117. Rob asks Randy about the barriers commonly faced by organizations looking to implement value chain

management. Randy replies that organizational barriers are among the most difficult for managers to

reconcile.” An example of such a barrier might include ______________.

a. reluctance to share information

b. concerns over the security of sensitive information and plans

c. preference for status quo arrangements

d. all of the above



118. At the conclusion of the meeting, Randy wanted to convince Rob that the value chain was very important

and practical. Randy briefly reviewed the results of a survey of manufacturers who had embarked on value

chain management. Sharing the results of the survey with Rob, Randy indicated that ______________ was

the major benefit that companies reported on this survey.

a. increased sales

b. cost savings


d. improved customer service



Upon graduating from college, Steve Jungman began his career as a management trainee at Felcher & Sons, Inc.,

a manufacturer of mid-priced office furniture. The firm has recently decided to expand overseas with

manufacturing plants in Singapore and Thailand and sales offices in the Far East, Europe and Australia. In

conjunction with this investment in new plants and technologies, the firm plans develop an online presence that

will enable customers to individually tailor the products they order from Felcher & Sons. Terry Tate, VP of

Operations for Felcher & Sons, has been tasked with overseeing the development of these plants and new

capabilities. Mr. Tate has asked that Steve be assigned to him to help him in this process.

119. Steve tells Mr. Tate that he is excited to be working with him on this project. While he was in school, he did

a research project on ___________, which is the concept that provides for customers to tailor manufactured

products to their individual specifications.

a. mass personalization

b. mass customization

c. design to order manufacturing

d. one to one marketing

(b; easy; p. 505)

120. Mr. Tate and Steve have scheduled a site visit to a nearby Dell computer assembly facility in order to see

firsthand many of the technologies available to Felcher & Sons. Dell Computer uses technologies such as

computer controlled factory equipment, industrial robot, bar code scanners, and logistics software that

enable them to manufacture, assemble and ship custom-designed computers in a very short time. Such

technologies characterize _________, which gives companies the ability to quickly readjust their assembly

lines to make products to order.


a. design to order manufacturing techniques

b. mass production techniques

c. flexible manufacturing techniques


(c; moderate; p. 505) 121. Mr. Tate asks Steve to contact managers at several consumer products firms that have adopted such

manufacturing techniques. A manager at Levi Strauss told him that their research found that customers who

design their own jeans _____________.

a. are extremely loyal and a good source of repeat business

b. are good sources of ideas for new styles of mass-produced jeans

c. are willing to pay more money, giving the firm a greater profit margin

d. provide excellent word of mouth for Levi’s


Felcher & Sons, Inc., has recently decided to expand overseas with manufacturing plants in Singapore and

Thailand and sales offices in the Far East, Europe and Australia. Terry Tate, VP of Operations for Felcher &

Sons, has been tasked with bringing these new plants into compliance with ISO 9000 standards. Mr. Tate has

asked that Steve be assigned to him temporarily to help oversee this process.

122. Mr. Tate asks Steve if he is familiar with ISO 9000. Steve admits that while he remembers hearing about it

in school, he’s not 100 percent sure what ISO 9000 really is. Mr. Tate tells him that ISO 9000 is a

_______________.

a. a quality standard that establishes a goal of no more than 3.4 defects per 10,000 units

b. a quality standard that establishes a goal of no more than 3.4 defects per 100,000 units

c. a quality standard that establishes a goal of no more than 3.4 defects per 1,000,000 units

d. a series of international quality management standards


123. Steve asks Mr. Tate why obtaining ISO 9000 is so important to Felcher & Sons, Inc. Mr. Tate responds that

______________.

a. this type of certification is a prerequisite for doing business internationally

b. quality is often a big problem for overseas plants because labor is less highly skilled


c. U.S. law requires manufacturers bring their operations into compliance by 2007

d. a and b


124. Steve asks Mr. Tate whether there are many firms that have achieved ISO 9000 certification. Mr. Tate tells

Steve that according to most recent figures he’d seen, the number of registered sites is about

_____________.

a. 100,000

b. 250,000

c. 500,000

d. 1,000,000


125. Mr. Tate and Steve attend a seminar put on by a Big 5 Consulting firm with vast experience with ISO 9000

and an excellent reputation in implementing various quality-based initiatives. The speaker, John Dillon,

begins by asking a question: “When you consider a product or service to have quality, what does that

mean?” While there are several dimensions of quality, the definition specified by your textbook states that

it “the ability of a product or service to _______________.”

a. to reliably do what it is supposed to do

b. to exceed customer expectations

c. to provide good value

d. all of the above


126. Mr. Dillon tells the audience that firms, such as their client Rockwell Collins, have found that successful

quality management programs tend to rely on two important approaches, cross-functional work teams, and

_________.

a. managerial flexibility

b. self-directed work teams

c. ongoing employee education and training

d. an overall learning orientation within the firm.



127. After the presentation, Mr. Tate approaches John Dillon and asks him about his company’s experience with

quality improvement efforts in overseas operations. Mr. Dillon tells Terry Tate about the experience of one

of his customers Delphi Automotive Systems Corporation. Mr. Dillon just returned from visiting their plant

in Matamoros, Mexico, where Delphi had implemented a quality initiative. According to the textbook, the

Delphi plant was able to reduce their customer reject rate by almost ________________.

a. 50 percent

b. 100 percent

c. 200 percent

d. 300 percent


128. Mr. Tate tells John Dillon about Felcher & Sons efforts to achieve ISO 9000 certification. He explains that

Felcher is pretty far along with this effort; quality control is an ongoing concern for Felcher & Sons and

asks Mr. Dillon if there might be other quality management issues or trends that the consultant might be

able to help them with. John Dillon tells them a little about Six Sigma. After the show, Steve asks Mr. Tate

what Six Sigma stands for and Steve replies that _________________.

a. Sigma is the Greek letter statisticians use to define a standard deviation.

b. Six Sigma is a trademarked quality improvement program

c. Six Sigma is an ambitious quality standard that helped GE save $8 billion dollars over a 3 year period

d. all of the above

(d; easy; p. 504)

ESSAY QUESTIONS


129. In a short essay, define operations management and discuss the importance of this management process.

Answer


a. The term operations management refers to the design, operation, and control of the transformation

process that converts such resources as labor and raw materials into goods and services that are sold

to customers. The system takes in inputs—people, technology, capital, equipment, materials, and

information—and transforms them through various processes, procedures, and work activities into

finished goods and services. Marketing, finance, research and development, human resources, and

accounting convert inputs into outputs such as sales, increased market share, high rates of return on

capital, new and innovative products, motivated and committed employees, and accounting reports.

b. Operations management is important because it encompasses both services and manufacturing, it’s

important in effectively and efficiently managing productivity and it plays a strategic role in an

organization’s competitive success.

(easy; p. 490)


130. In a short essay, list and discuss five benefits of value chain management.

Answer

Improved customer service was the major benefit of value chain management reported by companies.

Managing from a value chain perspective gives organizations a better handle on customer needs at all points

along the chain. As value chain partners collaborate and optimize their processes to better meet customers’

needs, customer service should improve. The next two most cited benefits from value chain management

reported by companies were cost savings and accelerated delivery times. As inefficiencies and non-value-

added activities are driven out of the value chain, companies will achieve cost savings in different work

activities and areas. In addition, as value chain partners collaborate by sharing information and linking

important activities, delivery times can be accelerated. Improved quality was also an important benefit cited by

survey respondents. As work processes are evaluated for value-added potential, quality should be one of the

measures used. Inventory reductions were another important benefit identified by survey respondents. Inventory

storage can represent significant costs for organizations. Through close and careful collaboration among value

chain partners, the flow of materials and information through the chain can be improved, leading to inventory

reductions. Improved logistics management, increased sales, and increased market share were also mentioned as

benefits of value chain management.

(moderate; p. 499)

131. In a short essay, list and discuss four obstacles that managers must deal with in managing the value chain.

Answer


a. Organizational barriers. These are among the most difficult obstacles that managers handle. These

barriers include refusal or reluctance to share information, reluctance to shake up the status quo, and

security issues. Without shared information, close coordination and collaboration are impossible.

And, the reluctance or refusal of employees to shake up the status quo can impede efforts toward

value chain management and prevent its successful implementation. Finally, because value chain

management relies heavily on a substantial information technology infrastructure, system security and

Internet security breaches are issues that need to be addressed.

b. Cultural attitudes. Unsupportive cultural attitudes also can be obstacles to value chain management.

The trust issue is a critical one, both lack of trust and too much trust. To be effective, partners in a

value chain must trust each other. There must be a mutual respect for, and honesty about, each

partner’s activities all along the chain. When that trust doesn’t exist, the partners will be reluctant to

share information, capabilities, and processes. But, too much trust also can be a problem. A study by

the American Society for Industrial Security found that those cultivating a trusting relationship with a

company pose the most serious threat for intellectual property loss.

c. Required capabilities. There are a number of capabilities that value chain partners must have. Several

of these, including extreme coordination and collaboration, the ability to configure products to satisfy

customers and suppliers, and the ability to educate internal and external partners, aren’t easy to

develop. But they’re essential to capturing and exploiting the value chain.

d. People. The final obstacles to successful value chain management can be an organization’s members.

Without their unwavering commitment and willingness to do whatever it takes, value chain

management isn’t going to be successful. If employees refuse or are reluctant to be flexible, it’s going

to be difficult to make the necessary changes to meet changing situational demands. In addition, value

chain management takes an incredible amount of time and energy by an organization’s employees.

Managers must motivate those high levels of effort from employees.

(difficult; p. 500)


132. In a short essay, list and discuss the two best-known quality goals that many organizations worldwide have

pursued.

Answer


a. ISO 9000. This is a series of international quality management standards established by the

International Organization for Standardization, which set uniform guidelines for processes to ensure

that products conform to customer requirements. These standards cover everything from contract

review to product design to product delivery. The ISO 9000 standards have become the

internationally recognized standard for evaluating and comparing companies in the global

marketplace. In fact, this type of certification is becoming a prerequisite for doing business globally.

Gaining ISO 9000 certification provides proof that a quality operations system is in place.

b. Six Sigma. Motorola popularized the use of stringent quality standards more than 30 years ago through a

trademarked quality improvement program called Six Sigma. Six Sigma is a quality standard that

establishes a goal of no more than 3.4 defects per million units or procedures. Sigma is a Greek letter that

statisticians use to define a standard deviation from a bell curve. The higher the sigma, the fewer the

deviations from the norm—that is, the fewer the defects. At One Sigma, two-thirds of whatever is being

measured falls within the curve. Two Sigma covers about 95 percent. Six Sigma is about as close to defect

free as anyone can get.

(moderate; p. 504)


133. Define the concept of mass customization, providing several relevant examples. Briefly discuss how

technology is vital to the success of mass customization efforts.

Answer

Mass customization is an emerging business trend that utilizes advanced information technology and

flexible manufacturing processes to provide consumers with a product, when, where and how they prefer it.

For instance, Levi Struass’s Web site allows customers to create their own virtual model to get a custom

fitted pair of jeans. Proctor and Gamble uses its Reflect.com site to customize beauty products for

customers. Mass customization requires flexible manufacturing techniques and continual dialogue with

customers to be successful. Using technology such as computer controlled factory equipment, intranets, and

logistics software, companies can manufacture, assemble, and ship customized products in incredibly short

timeframes. Dell Computer uses flexible manufacturing techniques and technology to custom-build

computers to customer’s specifications. Technology also plays an important part in maintaining an ongoing

dialogue with companies’ customers, enabling organizations to establish, maintain, and strengthen

relationships with customers.

(moderate; p. 505)

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