Operations Management Introduction Assignment 1 Section A - Objective questions – True/ False 1. Operations, marketing, and finance function independently of each other in most organizations. F 2. Goods producing organizations are not involved in service activities. F 3. Service operations require additional inventory because of the unpredictability of consumer demand F 4. The operations manager has primary responsibility for making operations system design decisions, such as system capacity and location of facilities. F 5. Most people encounter operations only in profit-making organizations F 6. Many operations management decisions can be described as tradeoffs T 7. The responsibilities of the operations manager are: (multiple choice questions) b a. planning, organizing, staffing, procuring, and reviewing b. planning, organizing, staffing, directing, and controlling c. forecasting, designing, planning, organizing, and controlling d. forecasting, designing, operating, procuring, and reviewing e. designing and operating 8. Which of the following is not a characteristic of service operations? d a. intangible output b. high customer contact c. high labor content d. easy measurement of productivity e. low uniformity of output 9. Operations and sales are the two line functions in businesses. e a. strategic b. tactical c. support d. value-adding e. line 10. Which is not a significant difference between manufacturing and service operations? a a. cost per unit
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Operations Management Introduction
Assignment 1
Section A - Objective questions – True/ False
1. Operations, marketing, and finance function independently of each other in most
organizations.
F
2. Goods producing organizations are not involved in service activities. F
3. Service operations require additional inventory because of the unpredictability of consumer
demand
F
4. The operations manager has primary responsibility for making operations system design
decisions, such as system capacity and location of facilities.
F
5. Most people encounter operations only in profit-making organizations F
6. Many operations management decisions can be described as tradeoffs T
7. The responsibilities of the operations manager are: (multiple choice questions) b
a. planning, organizing, staffing, procuring, and reviewing
b. planning, organizing, staffing, directing, and controlling
c. forecasting, designing, planning, organizing, and controlling
d. forecasting, designing, operating, procuring, and reviewing
e. designing and operating
8. Which of the following is not a characteristic of service operations? d
a. intangible output
b. high customer contact
c. high labor content
d. easy measurement of productivity
e. low uniformity of output
9. Operations and sales are the two line functions in businesses. e
a. strategic
b. tactical
c. support
d. value-adding
e. line
10. Which is not a significant difference between manufacturing and service operations? a
a. cost per unit
b. uniformity of output
c. labor content of jobs
d. customer contact
e. measurement of productivity
Section B
1. List five difference and five similarities between production and services operations.
Manufacturing and service are often similar in terms of what is done but different in terms of how it is
done.
Major differences between production and services are
1. Production of goods results in a tangible output, such as an automobile, a clock radio, a golf ball, a
refrigerator—anything that we can see or touch. It may take place in a factory, but can occur elsewhere.
Service, on the other hand, generally implies an act. A physician’s examination, TV and auto repair, lawn
care, and projecting a film in a theatre are examples of services.
2. By its nature, service involves a much higher degree of customer contact than manufacturing. The
performance of a service often occurs at the point of consumption. For example, repairing a leaky roof
must take place where the roof is, and surgery requires the presence of the patient. On the other hand,
manufacturing allows a separation between production and consumption, so that manufacturing may
occur away from the consumer. This permits a fair degree of latitude in selecting work methods, assigning
jobs, scheduling work, and exercising control over operations.
3. Service operations are subject to greater variability of inputs than typical manufacturing operations.
Each patient, each lawn, and each auto repair presents a specific problem that often must be diagnosed
before it can be remedied. Manufacturing operations often have the ability to carefully control the amount
of variability of inputs.
4. Quality assurance is more challenging in services when production and consumption occur at the same
time. In manufacturing, errors can be corrected before the customer receives the output.
5. Services often require a higher labour content whereas manufacturing can be more capital-intensive
(i.e., mechanized)
6. Measurement of productivity (i.e., output per unit time) is more straightforward in manufacturing due
to the high degree of uniformity of most manufactured items. In service operations, variations in demand
intensity and in requirements from job to job make productivity measurement considerably more difficult.
Major similarities between production and services are
1. Most service organizations typically sell goods that complement their services. For example, a lawn-
care firm usually sells goods such as weed killers, fertilizers, and grass seed.
2. Both face issues of cost control. Manufacturing operations must find suppliers of raw materials at the
lowest cost and highest quality possible. Likewise, service operations' indirect cost of providing services
must be kept low so that the organization can provide competitive prices to customers and still turn a
profit.
3. Both face the issue of forecasting demand for products and services and staying competitive in the
marketplace.
4. Both production and service operations are links of a specific supply chain.
5. Like products are designed in manufacturing organizations services are also designed as blue prints of
service designs.
2. Describe each of these systems; craft production, mass production and lean production
Craft Production
In craft production goods are produced by highly skilled craftsmen using simple, flexible tools produced
goods according to customer specifications in small shops. Under this system, it is common for one
person to be responsible for making a product, such as a horse-drawn wagon or a piece of furniture, from
start to finish. Since the products are made by skilled craftsmen with custom-fitted parts in craft
production, production is slow and costly. And when parts fail, the replacements also need to be custom
made, which is also slow and costly. Another shortcoming in craft production is that production costs will
not decrease as volume increases; there are no economies of scale. In craft production each small
company will have its own set of standards.
Mass production
Mass production is a system of production in which large volumes of standardized goods are produced by
low-skilled or semiskilled workers using specialized equipment. The key concept of mass production is
based on inter-changeable parts and division labour.
Lean production
Lean production systems use much less of certain resources than mass production systems use less space,
less inventory, and fewer workers to produce a comparable amount of output. Lean production systems
use a highly skilled workforce and flexible equipment. In effect, they incorporate advantages of both mass
production (high volume, low unit cost) and craft production (variety and flexibility). And quality is
higher than in mass production. Lean production is a broad approach to just-in-time
3. Read the emirates Air lines annual report 2013 – 2014 and identify the challenges in Air line operations
management.
4. Why do people do things that are unethical?
There are three basic theories that explain what motivates managers to misconduct / behave unethically;
a). The personality trait theory,
b). Agency theory, and
c). Psychological contracts theory
According to trait theory, individual behavior is the result of inherited or acquired traits. Trait theorists
subscribe to the premise that certain traits will be disposed to react to a given situation in a certain way.
Agency theory has been developed from economic assumptions of self-interest behavior and utility
maximization with consideration of the situations that influence employees’ behavior. Agency theory
suggests that the employer as the “principal” wants to obtain maximum performance from the employee
as the “agent”. Therefore, agency theory assumes that agents will behave opportunistically if given the
chance. For example, employees will always shirk or misrepresent their capabilities if they can get away
with doing so.
Psychological contract theory is the idiosyncratic set of reciprocal expectations held by employees
concerning their obligations and their entitlements. For example, the employee will work for an employer
with the expectation that they will receive something in return. Unlike agency theory, psychological
contract theory considers trust in the organization by assuming that employees are honest and ethical.
Misconduct occurs in an organization when the psychological contract is violated with perceptions of
injustice or unfair treatment in the workplace. In other words, honest and ethical employees may commit
acts of misconduct when they feel that they work in an unjust environment and that their trust has been
violated.
Other considerable reasons are;
In some cases where assets are of low cost or little commercial value, the manager may feel that it is
alright to take some assets for personal use. The manager may justify the wrongdoing by reasoning that
such misconduct is small scale dishonesty that does no harm to the company as a whole.
At managerial position, the employee feels some degree of pressure to meet job expectations, such as
meeting sales targets, performing correct budget expenditures, conducting activities on time. These
pressures may lead to unethical conduct by an employee, whereby he/she has chosen to commit an act of
misconduct in order to fulfill the job requirement.
Facility Location and Layout
Assignment 2
Section A - Objective questions – True/ False
1. Location decisions are basically one-time decisions usually made by new organizations F
2. The first step in developing location alternatives is identifying important factors.
The first step is deciding on the criteria for evaluating the alternatives.
F
3. For service organizations, the dominant factors in location analysis usually are market-related T
4. Retail businesses generally prefer locations that are not near other retailers, as this reduces
their competition.
Retailers prefer to locate near customers, which means they often locate near one another
F
5. The center of gravity method is a location planning technique that determines a composite
score from weighted factor evaluation.
Factor scoring determines a composite score from weighted factor evaluation.
F
6. The center of gravity method is useful in location planning for the location of a distribution
center.
T
7. Nearness to raw materials would be most important to a c
a. grocery store
b. tax preparation service
c. manufacturing company
d. post office
e. hospital
8. Which statement best characterizes a typical search for location alternatives? e
a. identify the best location choice
b. minimize cost consequences
c. maximize associated profits
d. locate near markets
e. identify acceptable locations
9. Which of the following is the last step in the procedure for making location decisions? d
a. determine the evaluation criteria
b. identify important factors
c. develop location alternatives
d. evaluate alternatives and make a selection
e. request input regarding alternatives
10. The center of gravity method is used to Minimize travel time, distance and costs d
a. Normalize.
b. Eliminate
c. Average
d. Minimize
e. Document
Section B
1. The administration at State University wants to construct a new student athletic, shopping, and dining
complex on campus. The university planning office is considering possible sites around the campus.
They have studied a number of factors related to the location of the complex and they have scored the
most important ones for each site as follows
Score (0 to 100)
Location Weight Site 1 Site 2 Site 3 Site 4
1. Auto traffic flow 0.25 70 75 84 68
2. Student/dorm concentration 0.20 65 91 85 96
3. Parking availability 0.15 100 83 90 92
4. Utilities 0.15 87 96 80 85
5. Proximity to local merchants 0.10 69 85 80 95
6. Drainage 0.10 50 68 92 77
7. Aesthetic considerations 0.05 86 100 95 80
Determine the best site using the factor rating method.
Score (0 to 100) Score (0 to 100) Score (0 to 100) Score (0 to 100)
Location Weight Site 1 WS Site 2 WS Site 3 WS Site 4 WS