Ch.

1 Introduction
Chapter One Summary
Operations Management is responsible for creating value in the form of goods and services. The objective of operations management is to balance supply with demand. Operations Management works in conjunction with both finance and marketing. An operation is the act of converting inputs into outputs. It is concerned with value-added, which is the difference between the cost of inputs and the value or the price of outputs.

The Scope of Operations Management: Operations management is used in producing goods or services. Systems design deals with the layout of facilities. An example is what equipment is necessary to produce a certain capacity. Purchasing involves buying the materials or equipment; managers need evaluate the quality of materials and equipment. Overlooking poor quality of materials can delay project completion and add costs, due to reworking and overtime pay. Industrial engineering handles variances. The methods used to make the products and the product should be uniform and up to standards. Operations managers need to make sure distribution of goods are sent out to their final locations in a timely manner. Maintenance is responsible for keeping the facility running. This may include disposing of scrap, lubing up machines, or keeping security on premises to reduce theft. Operations management can have any number of responsibilities, ranging from product and service design, to making sure machines are operating correctly. Operations management is also responsible for forecasting, capacity planning, scheduling, managing inventories, assuring quality, and motivating employees, deciding where to locate facilities and many more issues to help run the organization efficiently and effectively. Process Management Process management is essential to operations management, and is the central role of all management roles. Process management transforms inputs into outputs. In addition, a business process is composed of three categories: Upper-management processes, Operational processes, and Supporting processes. A major business process may consist of any sub-processes, and each one of them have their own goals that contribute to the overall process. Business processes form a sequence of suppliers and customers. Managers establish the amount of capacity of a process needed to meet demand. Supply Chains A supply chain is a sequence of activities and organizations having some role in providing a product to a customer. Supply chains typically link many different facilities and activities as raw materials are secured, work-in-process is finished, and final output is distributed. Supply chain management integrates the activities of these differing operations, addressing issues such as forecasting, purchasing and logistics. A simple product supply chain consists of suppliers, direct suppliers, producers, distributors, and final customers. Supply chain management also can include partners outside the firm when goods and services are outsourced. Outsourcing has many risks and benefits that must be explored before a company decides to outsource part of its operations. Valued-added is the difference between the cost of inputs and the value or price of outputs. Therefore, a higher value-added is
beneficial for a company.

Current Issues Managers must contend with ever changing globalization, quality 1

and process improvement, the management of technology, and agility. Three issues that have a major impact are supply chain management, e-commerce, and the Internet. (Not enough information) Key Trends and Issues in Business The environment constantly changes so organizations need to adapt and change as their environment does. Globalization and new technologies have stimulated changes in organizations. This varies from how they communicate with other organizations to the manner in which they penetrate other country's markets. The Internet is a great tool that many choose to use as an advantage. E-business is the use of the Internet for business transactions, and e-commerce is consumer-to-business transactions. Three technologies that can have major impacts on costs, productivity and competitiveness are: 1) product and service technology, 2) process technology, and 3) information technology. Information Technology is very important because it is the manner in which businesses store, process, and send information. Industrial Revolution The Industrial Revolution can also be referred to as the "historical evolution of operations management." Before the 18th century, companies relied on workers (humans) to produce the product, the use of craft production. At the start of the 18th century, several developments of the machine increased production levels. The new machine power lead to the creation of various methods such as: mass production, interchangeable parts, and division of labor. All of the following methods revolutionized the way goods were manufactured, along with creating a boom in the economy and increasing the success of businesses throughout the country. It also led to the creation of Scientific Management. This form of management focused on developing the most efficient work methods that would produce the greatest output (assembly lines). Managers were responsible for planning, training, and implementing each step of the production process. Although this style was not very popular with employees, it increased profits and production for the company. Pioneers such as Fredrick Winslow Taylor, Frank Gilbreth, and Henry Ford all developed scientific management and helped to further the progress of the industrial revolution. Basic Functional Areas: Business organizations typically have three basic functional areas: finance, marketing, and operations. Finance is responsible for securing financial resources at favorable prices and allocating those resources throughout the organization; this includes budgeting, analyzing investment proposals, and providing funds for operations. Marketing and operations are the primary or "line" functions. Marketing is responsible for assessing consumer wants and needs, and selling/promoting the organization's goods or services. Operation is responsible for producing the goods or providing the services offered by the organization. Goods and Services Goods are referred to as physical (tangible) products, such as computers or bicycles because you can touch them. Services are abstract and they are actions that are provided by people, like healthcare and education. More interaction with customers is required by the service side. There are more variables 2

involved in services than there are in goods. Goods are usually manufactured under specific conditions, and services have a wide range of possibilities. Services, such as, haircuts, gym training, and product troubleshooting are always different depending on the customer, which makes it harder to tend to the customers' needs. Operations run smoother while manufacturing goods, as opposed to services. Because of this, it is harder to measure how productive employees are in the service department. The value of a good is not realized as fast as a service is. There is a time gap between the production and the sale of a good, where as the value of a service is usually realized soon after. Various companies patent certain goods so that competitors cannot replicate their product. Unfortunately, services cannot be patented, which cause other companies to imitate companies with the best services.
Other Important Trends Companies have switched from ignoring operations strategy to recognizing the importance of incorporating strategies into their business decisions. Companies have reduced the number of workers and have made their companies operate more efficiently by placing an emphasis on cost control and productivity improvement. Companies use revenue management to manipulate prices and influence demand to maximize revenues. Hotels, theme parks and airliners are key examples of companies using revenue management to their benefit. Six sigma is a process of reducing costs, improving quality, and increasing customer satisfaction. Lean production was first incorporated into businesses in the 1990's in an effort to make production more efficient. It uses a highly skilled workforce and flexible equipment to accomplish an increasing level of quality with less resources compared to mass production which uses space, inventory, and workers to produce a comparable amount of output. These workers have higher expectations than in traditional systems. This also leads to more anxiety and stress among workers in the organization. Practice Questions 1) Which of the following functional areas are part of a business organization? A) Accounting B) Marketing C) Operations D) All of the above E) None of the above 2) Which of the following are major trends that affect an organization? A) Globalization B) Outsourcing C) Ethical behavior D) The Internet E) All of the above 3) Which of the following activities is important in achieving effective use of workers and equipment? (page 11) A) Forecasting B) Facilities and Layout C) Locating Facilities D) Assuring quality E) Scheduling 4) Which of the following is NOT part of a Simple Product Supply Chain? A) Direct Suppliers

B) Final Customers C) Management D) Producer E) Distributor 5) Which of the following would NOT be considered a model used by decision makers in operations management? A) Mathematical B) Physical C) Supply D) Schematic E) None of the above 6) Which of following is NOT a supporting function in Operations interface? A) Legal B) MIS C) Accounting D) Marketing E) Financing 7) Which of the following would be considered an input when converting inputs into outputs during the transformation process? A) Land B) Capital C) Raw Materials D) Facilities E) All of the above 8) Which of the following is considered an output during the transformation process? A) Processes B) High service percentage C) Finances D) Equipment E) All of the above 9) Measurements taken at various points in the transformation process for control purposes are called: A) feedback B) control charts C) tracking D) cost control E) productivity measurement 10) Which type of variation is the result of a deliberate choice of a business? A) assignable B) variety C) random D) seasonal E) none of the above 11) Who is considered the "father of scientific management": A) Frank Gilbreth B) Professor Ouskel C) Frederick Winslow Taylor D) Henry Ford E) Pareto

12) The key concept that launched mass production was: A) modular design B) interchangeable parts C) low-skilled workers D) high demand for products E) all of the above 13) I:The operations and sales functions are line functions, and all other functions are support functions. II: A systems approach refers to the systems in an organization, such as its accounting system or transportation system. A) I is true, II is true B) I is true, II is false C) I is false, II is true D) I is false, II is false 14) The Industrial Revolution led to which of the following methods? A) Craft Production B) Mass Production C) Interchangeable Parts D) Division of Labor E) All of the above 15) Accounting, human resources, and IT are considered: A) Upper-management processes B) Operational processes C) Supporting processes D) Business processes E) All of the above 16) High goods percentages such as houses, automobiles, clothing, computers, and machines best relate to what part in the operations function? A) Inputs B) Conversion Process C) Outputs D) Innovating E) None of the above 17) What originator contributed to the concept of "interchangeable parts?" A) Adam Smith B) Eli Whitney C) Henry Gantt D) George Dantzig E) None of the above 18) A Six Sigma Process includes all of the following except: A) Reducing costs B) Improving quality C) Increasing customer satisfaction D) Reducing the number of employees E) All of the above are included 19) Which of the following terms relates to the idea that "the whole is greater than the sum of its individual parts"? A) Systems Management B) Conversion Process C) Modular Design

D) Pareto phenomenon E) Model 20) As outsourcing______, organizations are spending ______amounts on various supply-related activities such as packaging and moving A) decreases, increasing B) increases, decreasing C) decreases, decreasing D) increases, increasing E) None of the above

21) Which of the following is Operations Management Technology not concerned with? A)Product & Service Technology B)Process Technology C) Globalization technology D)Information Technology E)All of the above 22) Which of the following models is most abstract? A) Physical Models B) Schematic Models C) Mathematical Models D) Quantitative Model E) Statistical Model 23) What is the main goal of a company? A) Obtain the highest profit B) Find solutions that will be in the best interests of stakeholders C) Produce as many products as possible D) A and C E) None of the above 24) Which one of these are important trends? A) Operations Strategy B) Revenue Management C) Lean Production D) Working with fewer resources E) None of the above 25) All of these result from lean production except: A) Flattening of organizational structure B) Emphasis on Quality C) Time Reduction D) Product Liability E) Teamwork 26) Which of the following is the correct order of supply chain? A)Direct suppliers--producer--distributor--suppliers' suppliers--final customers B)Suppliers' suppliers--distributor--direct suppliers--producer--final customers C)Suppliers' suppliers--Direct suppliers--producer--distributor--final customers 6

D) Final customers--Suppliers' suppliers--direct suppliers--producer--distributor E)Suppliers' suppliers--final customers--direct suppliers--distributor--producer 27) Which one of the following is a major trend in business? A) Management of supply chains B) Outsourcing C) Agility D) Ethical behavior E) None of the above 28) Which of the following is not a key element of supply chain management? A) Purchasing B) Suppliers C) Location D) Logistics E) Managers decision 29)Which one of the following statements is FALSE? A) e-business involves the use of the Internet to transact business B)E-commerce involve consumer-business transactions C)System is a set of interrelated parts that do not work together D)Pareto phenomenon- a few factors account for a high percentage of the occurrence of some events. E) All of the above are true. 30) Why are models beneficial to managers? A) they decrease understanding of the problem B) they enable managers to analyze "What If?" questions C) they are generally hard to use and more expensive than dealing directly with the actual situation D) they serve as a inconsistent tool for evaluation E) All of the above 31) What is craft production? A) A series of steps designed to shorten lead times. B) A concept developed by the Japanese which emphasizes quality improvement. C) Highly skilled workers producing customized goods. (Production is low) D) A way to take advantage of interchangeable or standardized parts. E) Production costs decreasing as volume increases: Economies of Scale 32) What concept did Adam Smith write about in The Wealth of Nations? A) Division of Labor B) Interchangeable Parts C) Principles of Scientific Management D) Moving Assembly Line E) All of the above 33) What company is most historically recognized for their use of mass production? A) General Electric B) Commonwealth Edison 7

C) Ford D) Toyota E) None of the Above 34) What is the importance of provision of funds? A) careful planning can amount to lesser problems with cash-flow. B) to alter investments in plants and equipment C) to fund operations and create necessary time means for funding layouts D) Both a and c E) Both a and b 35) Which country influenced US manufacturing? A)China B)Japan C) Germany D) All of the above E)Both b and c 36) When dealing with trends, which one of these can be used as a business advantage? A)E-commerce and e-business B) Virtualization C) Social networking sites D) Product and Service Technology? 37) What are the three functions of business organizations? a) distribute, supply, finalize b) finance, operations, marketing c) finance, operations, management d) operations, marketing, management 38) Variations that are caused by defective inputs, incorrect work methods, and out of adjustment equipment are known as: a) random variations b) structural variations c) assignable variations d) operational variation 39) An oil change is an example of a_________. A) Uniformity of input B) Uniformity of output C) Good D) Service E) A & C 40. ----41.----8

42) Which one of the following is neither an input nor an output in the food transformation process? A)Energy B)Water C)Labor D)Cleaning E)Canned Vegetables 43)Which is not a basic function of a business organization? A)Operations B)Accounting C)Marketing D)Finance E) All of the above 44) What is E-Commerce? A)Use of the internet to conduct business B)Business-to-Business transactions (B2B) C)Consumer-to-Business transactions (C2B) D)All of the above 45) What is Agility? A)Ability to respond to demands or opportunities at a rapid pace. B)Ability to switch markets quickly. C)The reducing of inputs while maintaining the same level of outputs. D)System where workers use simple, flexible tools to produce small quantities of customized goods. E)None of the Above 46 )Product packages are a combination of goods and services. A)True B)False 47) Which of the following would not generally be considered an aspect of operations management? A) Work methods B) Secure financial resources C) Maintain quality D) Product or service design E) Manage inventories 48) Which of the following is not a typical question asked by an operations manager? A) How much capacity will be needed in the months ahead? B) What is a satisfactory location for a new facility? C) Which products/services should be offered? D) How to motivate employees? E) How much to sell a product for? 9

49) Which of the following is not generally considered to be an advantage of using models for decision making? A) Providing a systematic approach to problem solving. B) Emphasizing quantitative information. C) Providing an exact representation of reality. D) Enabling managers to answer "what if" questions E) Requiring users to be specific about objectives 50) Which comes last in the development of manufacturing techniques? A) Lean production. B) Division of labor. C) Mass production. D) Craft production. E) Interchangeable parts

51) Which one of these is specifically related to the globalization of business? A) agility B) the reduction of tariffs C) craft production D) physical models. E) Pareto phenomenon 52) _________ is responsible for the general up keeping and repair of land and equipment. A) Storage B) Maintenance C) Distribution D) Budgeting E) Management 53) Which of the following means giving something up to do another thing? A) System approach B) Process selection C) Trade off D) Outsourcing E) Managing inventories
54) Which of the following incorporates advantages in both mass production and craft production. A) Operating production B) Quality-based strategy C) Project production D) Lean production E) None of the above 55) Product designs are often _________ to patent than service designs. A) easier B) harder

10

C) faster D) slower E) unable 56) The father of "motion science" was: A) Frederick W. Taylor B) Jay Forrester C) F.W. Harris D) Henry Ford E) Frank Gilbreth

Ch. 2 Strategy and Productivity Summary: Competitiveness/Strategy/Productivity

Chapter 2 Covers three important aspects of any business: competitiveness, strategy and productivity. All three aspects are vital to a company succeeding in the world of business. Any firm, whether a manufacturer or a service provider, must employ all three aspects as they all play in growing revenues. A successful organization must have a competitive advantage, a strategy to meet the company's goals, and the ability to produce goods and services in a cost-effective manner. Most organizations have a single company "motto" called a mission statement that summarizes these described aspects of the company. The mission statement should answer the question "What business are we in?". The mission statement is the basis for organizational goals. Summary: Goal, Mission, Strategies and Tactics The three important characteristics of any business are competitiveness, strategy, and productivity. Competitiveness refers to how effective an organization meets the wants and needs of customers in comparison to its competitors that produce the same goods/services. Strategy denotes a plan for achieving organizational goals. The two strategies discussed in this chapter are organizational and functional level strategies. Productivity is a measure of the effective use of resources, usually expressed as the ratio of output to input. Productivity measures are useful for tracking an operating units performance over time and judging the performance of an entire industry or country. A correct goal, mission, tactics, and strategies are the necessary things for an organizations success. These four terms are deeply related to each other. First, an organization needs to know its mission, which is the reason for its existence. Such as what kind of business are they going to pursue. Second, the mission statement gives the organization's purpose.Goals further explain this mission. They are like the marketing position, they express how organization wants its self-image and position in peoples mind. Third, the organization can start planning how to reach its goals, in other words, their strategy. Strategies have long, intermediate or short terms for organizations different needs. Finally, the organization can approach the strategies by using tactics. Tactics tell us how to actually operate and process the organization and its strategies specifically. Chapter 2

11

Describes the importance of competitiveness, strategy, and productivity in a business. Competitiveness describes how an organization meets the needs and wants of customers compared to the competitors of the organization, in other words, demand. Strategy helps the organization achieve their goals by using tactics, which are the methods and actions taken to accomplish strategies. Lastly, productivity helps the organization know what materials are used effectively. Productivity = Output (Goods and services) / Input. (labor, materials, energy, and other resources.) Competitiveness is important to a company because it determines an organizations profits. For example, will the company be prosperous or barely get by. A strategy is important to be defined whether they are long term or short term. Also, they can be very specific, for example as in tactics or, in contrast, very broad. Finally, the chapter gives us a way to measure the companys output relative to input. Measuring productivity is important for analyzing, scheduling, and many other type of managerial or external functions. Many organizations are driven by competition. To be successful in todays competitive business environment, companies must know what combinations of factors are most important to satisfy all of their shareholders while also helping to fulfill their mission. These factors may include, but are not limited to: price, quality, services, time or special features. It is critical that organizations as a whole develop goals and strategies to fulfill their mission. Further, each functional area in the business should also have goals and strategies that coincide with accomplishing the larger goals. Employees of the organization should also focus on using all resources efficiently to maximize the productivity of the organization. Productivity has implications not only for the organization at stake, but society as a whole. TEST QUESTIONS NEED PAGE NUMBERS 1) Which is NOT an example of an external factor: a) political conditions b) technology c) competition d) operations e) all the above 2) Which of the following is an example of an organizational strategy: a) low cost b) high quality c) service d) variety e) all the above 3) Which of the following is NOT an example of a key internal factors: a) suppliers b) human resources c) customers d) financial resources e) legal environments 4) Which factors affect the productivity of a company: a) methods b) quality

12

c) capital d) technology e) all the above 5) Which productivity factor is included in a balanced scorecard: a) labor b) capital c) energy d) machine e) financial 6) Which strategy focuses on reducing the time needed to accomplish a task? a) Time-base strategy b) Quality-based strategy c) Operative strategy d) Global strategy e) None of Above 7) Which answer describes a reason why some organizations fail? a) Neglecting operation strategy b) Failing to consider customer wants and needs b) Neglecting investments in capital and human resource d) Failing to take advantage of strengths and opportunity e) All of the above 8) Coordinating internal and external operations applies to which of the following? a) Inventory management b) Flexibility c) Supply chain management d) Location e) Cost 9) This concept is defined as the consideration of events and trends that present threats or opportunities to a company? a) Core competencies b) Productivity c) The Balanced Scorecard (BSC) d) Environmental scanning e) None of the above 10) What do you call plans for achieving organizational goals? a) Mission b) Goals c) Tactics

13

d) Strategies e) Mission statement 11) Which of the following would NOT be an example of partial productivity measures? a) labor productivity b) economic productivity c) capital productivity d) energy productivity e) machine productivity 12) True/False: The Stock Market is NOT an example of a Strategic OM Decision Area. a) True b) False 13) Which decision areas are affected by supply chains? a) Costs, visibility b) Costs, new products, services, operating systems c) Costs, quality, liability and environmental issues d) Costs, new products, services, or operating systems e) Costs, quality, agility, shortages, vendor relations 14) What are the five time-based strategies? a) Planning, designing, financing, changeover, delivery b) Planning, strategies, financing, changeover, delivery c) Planning, designing, processing, changeover, delivery d) Planning, strategies, processing, changeover, delivery e) Planning, strategies, financing, changeover, delivery 15) True/False: Marketing is a factor that affects productivity. a) True b) False 16) Which of the following approaches is consistent with the organization strategy, which is used to guide the operations function? a) Quality-based strategy b) Time-based strategy c) Operations strategy d) Marketing strategy e) None of the Above 17) This concept deals with the time needed to fill orders. a) Delivery time

14

b) Processing time c) Changeover time d) Planning time 18) Using the data below, find the multi-factor productivity for the combine input of labor and machine time. Output: $10,000 Input Labor $2000 Material: $720 Overhead: $3000 a) 2.13 b) 1.75 c) 1.36 d) 3.12 19) All of the following are NOT external factors EXCEPT: a) Customers b) Human Resources c) Financial Resources d) Competition e) All of the above 20) What determines whether a company meets the wants and needs of customers relative to their competitors? a) Mission and Strategy b) Strategy formulation c) Competitiveness d) Strategy and tactics 21) 12 Workers were able to clean 120 rooms in 3 hours. What is the productivity for each worker? a) 3.33 Rooms/Hour b) 10 Rooms/Hour c) 30 Rooms/Hour d) The workers are not very productive e) None of the above 22) Determine the multi-factor productivity for the combined input of labor and machine time using the following data: Output: 10,050 units Input: Labor: $4,000 Materials: $780 Overhead: $1,470 a) 1.84 units per dollar input

15

b) .62 units per dollar input c) 1.61 units per dollar input d) 4.47 units per dollar input e) Not enough information given 23) Productivity growth is measured by: a) [(Previous Productivity Current Productivity) / Current Productivity] X 100 b) [(Current Productivity Previous Productivity) / Previous Productivity] X 100 c) [Current Productivity / Previous Productivity] X 100 d) [Previous Productivity / Current Productivity ] X 100 e) None of the above 24) True / False: The Balance Scorecard (BSC) has a large role in helping to determine strategy formation within an organization a) True b) False 25) True / False: Workers are the main determinant of productivity. a) True b) False 26) Which strategic organization statement below contains the broadest statement for any given company? a) tactic b) goals c) operational strategies d) mission statement e) all of the above 27) Supermarkets, dry cleaners, ATMs and mall stores are the best example of what kind of operations strategy? a) low cost b) rapid delivery c) superior customer service d) convenience e) none of the above 28) What decisions affect cost, quality, liability, and environmental issues? a) product and service design b) capacity c) process selection and layout d) inventory e) scheduling 29) Which of the following operations, that has a major influence in competitiveness, might involve after-

16

sales activities customers perceive as value-added? a) cost b) location c) supply chain management d) inventory management e) service 30) Characteristics that customers perceive as minimum standards of acceptability are a) order qualifiers b) order winners c) examples of environmental scanning d) None of the Above e) All of the Above 31) Which of the following is the correct productivity growth given the following? Current productivity: 55 Previous productivity: 50 Last years productivity growth: 4% a) 12% b) 10% c) 8% d) 6% e) 4% 32) Formulation of a successful strategy, businesses must take into account: a) Competition and markets b) Products and services c) Quality and flexibility d) Order qualifiers and order winners e) None of the Above 33) Process yield is related to: a) Balanced Scorecard b) Strategy c) Productivity d) Competitiveness e) None of the Above 34) All are internal factors, EXCEPT: a) Equipment b) Suppliers c) Financial resources d) Markets e) None of the Above

17

35) Quality-based strategies focus on reducing the time required to accomplish various activities: a) True b) False 36) It is important to link operation strategy to: a) organization strategy b) Markets c) organization tactics d) economic conditions e) None of the Above

Ch. 4 Product and Service Design

Chapter 4 - Product And Service Design
Summary: When planning on producing a new product and/or service, the key factor is the product and service design. Successful designs come down to these basic principles: translate customers' wants and needs, refine existing products and services, develop new products and services, formulate quality goals, formulate cost targets, construct and test prototypes, document specifications, and translate products and service specification into process specifications. The process of design has certain steps that include motivation, ideas for improvement, organizational capabilities, and forecasting. In the product process innovations, research and development play a significant role. Because of the influence a product and service design can have on an organization, the design process is encouraged to be tied in with the organization's strategy and take into account some key considerations. Technological changes, the competitive market, and economic and demographic changes are some market opportunities and threats that all organizations must be aware of when planning a product and service design. Computer-aided design (CAD) and Computer-aided manufacturing (CAM) are important tools in the design process because they can anticipate what the design will look like, as well as allow for better manufacturing. Businesses also must take in account environmental and legal concerns when designing a new product. Most importantly, the manufacturing process must ensure the product's safety. Product and Service Design Companies choose various ways to design their products and the type of services they provide. Which include: standardization, mass customization, delayed differentiation, modular design, and robust design. Deciding which method to use is very important along with deciding the company's target market. Deciding the right method, establishes good productivity and efficient way fo operations. Service design is an activity of organizing and planning people, communication and material components in order to improve service quality. It is the interaction between the service provider and customers and the customers' experience. A service is anything that is done to or for a client and is created and delivered simultaneously. The two most important issues in service design are the degree of variation in requirements and the degree of customer contact in which determines how standardized the service can be. The greater the degree of customer contact, the greater the opportunity for selling. In

18

addition, concepts and ideas generated are captured in sketches or in service prototypes. The strong visual element, combined with the opportunity to test and rapidly change services and interfaces, delivers real value in today's competitive markets. Product Design combines ergonomics with product and business knowledge to generate ideas and concepts and convert them into physical and usable objects or services. The discipline covers the entire range of activities from concept, manufacturing, testing to product launch. Product Designers conceptualize and evaluate ideas and themes they find profitable. The designers make these ideas tangible through products using a systematic approach. Difference between service design and product design: Service design is an intangible aspect while product design is tangible. Services are generally created and delivered at the same time and can not be held in inventory like actual products. Also, services (especially quality one) are highly visible to customers. Product and Service Life Cycle During their useful life, many services and products go through four stages. Since the demand can vary for each of these 4 stages, different strategies should be applied to achieve optimum product/service performance during each stage. The Four stages are: 1. Introduction: During the first stage, the product is introduced into the market. Proper research and forecasting should be done to ensure the product/service is adequate for a specific market and for a specific time. It is crucial to have a proper amount of supply that can meet the expected demand for the product/service. 2. Growth: The second stage involves the increase in demand for the product/service. Reputation for the product grows and an accurate forecast of demand is needed to determine the length of time the product/service will remain in the market. Enhancements and improvements are common in this stage. 3. Maturity: This third stage deals with the product reaching a steady demand. Few or no improvements or product changes are needed at this stage. Forecasting should provide an estimate of how long it will be before the market dies down, causing the product to die out. 4. Decline: The last stage involves choosing to discontinue the product/service, replacing the product with a new product, or finding new uses for the product. Standardization may be great for a company creating products like mops because there are not many things you can do to make them unique and keep the price down.Standardization products have interchangeable parts, which increases productivity and lowers the costs of production. Standardization has many important benefits and certain disadvantages. Some advantages are the design costs for standardization products are low. The scheduling of work inventory handling, purchasing, and accounting activities are routine, making the quality more consistent. The disadvantages with standardization are that they decrease variety offered to consumers leading to less of an appeal. Also, the high cost of design change makes it relentless to improve. Mass customization is a strategy that some companies can use to incorporate customization while practicing standardization. This strategy keeps costs low while adding variety to a product. The two tactics that make mass customization possible is delayed differentiation and modular design. Some companies may consider delayed differentiation if the company chooses to not finish a product due to unknown customer preferences. However, another tactic of modular design is a form of standardization in which components' parts are grouped into modules to allow easy replacement or interchangeability. Producing a computer is an example of modular design. Companies will also have to consider what their competitors are doing in order to be successful. There are 3 ways of idea generation: supply based, competitor based, and research based. Which ever a company chooses, they must consider who is competing against them and what else is going on in the

19

marketplace. Product design is key to the success of the company. Customer Satisfaction and Sustainability Product and service design are very important factors to customer satisfaction. Organizations need to continually satisfy their customers to be successful in the marketplace. They are able to do this by improving current products or by designing new ones. The design consists of the following: research, design, production, life cycle, safety in use, reliability, maintainability, regulatory and legal issues. Organizations also need to look at "sustainability" when designing their product/service. The four aspects of Sustainability are: (1) Life Cycle Assessment (2) Value Analysis (3) Remanufacturing (4) Recycling. Life cycle assessment focuses on the environmental impact the specific product will have over the course of its life. Value analysis looks at the parts within a product and seeks to minimize the cost. Remanufacturing has become more important over the past few years and involves replacing worn-out and defective products. This is common practice in high price machinery industries. Recycling involves recovering older materials for future use. This not only saves money, but satisfies environmental concerns. The Kano Model includes three aspects: Basic quality, performance quality, and excitement quality. Basic quality is the requirements placed on a product that do not lead to customer satisfaction when present, but can lead to dissatisfaction if absent. Performance quality is the middle ground and can either lead to satisfaction or dissatisfaction depending on their usefulness. Excitement quality is the notion that an unexpected feature can cause customer excitement. Reliability Reliability is a measure of the ability of a product, a part, or service, or an entire system to perform its intended function under a prescribed set of conditions. Reliability can have an impact on repeat sales and reflect positively on a products image. However, if the product is faulty, it can create legal problems. The term "failure" is used to describe a situation in which an item does not perform as intended. Reliabilities are always specified with respect to certain conditions, called normal operating conditions. These conditions can include load, temperature, and humidity ranges in addition to operating procedures and maintenance schedules. To improve reliability, manufacturers should improve the reliability of individual components or use back up components. A few other suggestions include improving testing, improving user education, and improving system design. The optimal level of reliability is the point where the incremental benefit received equals the incremental cost. Legal and Ethical Consideration Many organizations are regulated by governmental agencies and these regulations are responsible for preventing harmful substances from being used in product design. Harm caused by the product is the responsibility of the manufacturers. Manufacturers are liable for any injury or damages caused by their product due to its design or workmanship, also known as product liability. When the product is defective and potentially causes harm, manufacturers have several options to remedy the situation. They may have to recall their products or fix the problem in the manufacturing stage. It is also possible that they may face lawsuits if their products cause injury to consumers. Managers must ask themselves if there is demand for their organizations product or service. If the company develops its products or services according to the customers demands, their product will be successful. Questions: 1).-------2.) What is the purpose of a value analysis? A. To cut down on production time

20

B. To reduce cost and/or improve product performance C. To analyze the potential profitability of the product D. To ensure customer satisfaction and profits E. None of the above 3.) What are the four phases of the Product Life Cycle? A. Introduction, Growth, Maturity, Decline B. Research, Design, Introduction, Maturity, Decline C. Design, Introduction, Maturity, Decline D. Growth, Maturity, Decline, Re-Design E. Introduction, Maturity, Decline, Re-Design 4.) Which of the following is an advantage of standardization? A. Design may be frozen with too many imperfections remaining. B. High cost of design changes increases resistance to improvements. C. More routine purchasing, handling and inspection of procedures. D. Decreased variety results in less consumer appeal. E. All of the above are disadvantages of standardization. 5.) Which of the following is NOT a phase in the service design process? A. Conceptualize (idea generation, Asses customer needs and demand). B. Identify service package and components needed. C. Determine performance specifications. D. Only a & b are phases in the service design process. E. All of the following are phases in the service design process. 6.) Which is an important factor that gives rise to market opportunities and threats for product and service design? A. Economic B. Social and demographic C. Political and Competitive D. A & B E. All of the above 7.) Which of the following is NOT a key question about product and service design from an organization's standpoint? A. Is there demand for it? B. Can we do it? C. What level of management is appropriate? D. What level of quality is appropriate? E. None of the above 8.) The assessment of the environmental impact of a product or service throughout it's useful life is known as? A. Product liability B. Uniform commercial code C. Life cycle assessment D. Value analysis E. Recycling

21

9.) Which of the following is NOT a phase in the product and service life cycle? A. Introduction B. Growth C. Conclusion D. Research E. Re-Design 10.) Which term refers to a design that results in products or services that can function over a broad range of conditions? A. Robust Design B. Global Product Design C. Reverse Engineering D. Concurrent Engineering E. Research and Development 11.) How many stages are there in the product or service useful life cycle? A. 2 B. 3 C. 4 D. 5 E. Depends on the type of product/service 12). -----13.) Which of these are sources used to generate new ideas? A. Supply chain, Competitor, Research B. Distributors, Suppliers, Employees C. Supply Chain D. Maintenance Personnel, Surveys, Customers E. All of the above 14.) The Kano Model is a theory of product and service that employs "Excitement, Performance, and what other type of quality"? A. Long-Term B. Basic C. Design D. Versatile E. Unique 15.) Which of these is NOT a potential way of improving reliability? A. Improve component design B. Improve testing C. Improve production and/or assembly techniques D. Use backups E. These are all potential ways of improving reliability 16.) Which approach integrates the "voice of the customer" into both product and service development? A. Quality for development B. Quality function design C. Quality function deployment

22

D. Quantity function deployment E. None of the above 17.) What concept refers to refurbishing used products by replacing worn-out or defective components? A. Reduce B. Re-manufacturing C. Value Analysis D. Recycle E. None of the above 18.) Which of the following is a reason why companies choose to recycle? A. Environmental concerns B. Cost savings C. Environmental Regulations D. None of the above E. All of the above 19.) Which of these is NOT involved in research and development? A. Functional research B. Basic research C. Applied research D. Development E. None of the above 20.) What is the term 'DFM' referred to as? A. Designing for marketability B. Diverse financial management C. Design for materials D. Design for manufacturing E. None of the above 21.) Which of the following is NOT included in the overall service package: A. Explicit services B. Implicit services C. Accompanying goods/services purchased or consumed D. Physical resources needed E. All of the Above 22.) Which of the following are NOT related to phases in Product Design and Development A. Process Specifications B. Prototype C. Feasibility Analysis D. Modular Design E. Design Review 23.) Which is a benefit of research and development: A. Patents B. Licensing C. Royalties D. both a & b E. All of the above

23

24.) To achieve a smoother transition from product design to production, companies are using simultaneous development and ? A. Computer Aided Design (CAD) B. Design for Disassembly (DFD) C. Component Commonality D. Concurrent Engineering E. Design for Assembly (DFA) 25.) Idea Generation comes from which source/s? A. Competitor Based B. Customer Based C. Supply Chain Based D. Research Based E. A, C, & D 26.) Which of the following are NOT benefits of Component Commonality Products or Services? A. High degree of similarity B. High degree of components C. Reduce Inventory Dealers D. Savings in Design time E. Ensure Customer Quality 27).-----28.) Factors that give rise to market opportunities and threats are: A. Competitive B. Political, liability, or legal C. Social and demographic D. Economic E. All of the above 29). Which of the following is not an example of of political, liability, or legal change? A.) Government changes B.) Excessive warranty claims C.) Safety Issues D.) New regulations 30.) What is the purpose of Value Analysis? A. Find the value of every functional area in an organization B. To determine the benefit of supplying a product or service C. To decide if supplying a service or product will gain market share D. To examine the design process and determine its value to the organization E. To examine the function of parts and materials in an effort to reduce cost and/or improve product performance 31.) What is a key question of manufacturability and serviceability? A. Is there demand for it? B. Can we do it? C. What level of quality is appropriate?

24

D. Does it make sense from an economic standpoint? E. All of the above 32.) Which of the following is NOT a way to improve reliability? A. The use of backup components B. Preventive maintenance procedures C. Production or assembly techniques D. Delayed differentiation E. User education 33.) Which is the optimal level of reliability? A. Point where the incremental benefit received equals the incremental cost of obtaining it. B. Point where the incremental benefit received is higher than the incremental cost of obtaining it. C. Point where the incremental benefit received is lower than the incremental cost of obtaining it. D. Point where the incremental benefit received is half than the incremental cost of obtaining it. E. Point where the incremental benefit received is double than the incremental cost of obtaining it. 34.) Which code addresses the issue of responsibility of a manufacturer for any injuries or damages caused by a faulty product because of poor workmanship or design? A. Uniform Commercial Code B. Design for disassembly C. Product liability D. Robust design E. Concurrent engineering 35.) The three Rs stand for which of the following? A. Render, Rebuilt, Rearrange B. Reduce, Renew, Recycle C. Reduce, Reuse, Rebuild D. Recycle, Remanufacture, Rebuild E. Reuse, Recycle, Reduce 36.) Which of the following is NOT a characteristic of a service? A. Services are generally intangible. B. Services cannot be inventoried C. Some services have high barriers to entry and exit D. In many instances services are created and delivered at the same time E. Services are highly visible to consumers 37.) Who is generally responsible for product liability for any injuries or damages caused by a faulty product? A. The Retail Store B. The Consumer C. The Manufacturer D. The Government E. None of the above 38.) What of the following products has a robust design? A. High heels B. Leather sandal

25

C. Rubber Boots D. Gym shoes E. Slippers 39.) Who regulates organizations concerning legal and ethical matters? A. Competitors B. Designers C. Government agencies D. Lawsuits E. Consumers 40.) Which of these statements is False in regards to service designs: A. Are generally intangible B. Are not visible to consumers C. Cannot be inventories D. Have low barriers to entry and exit E. All are correct 41.) A method for describing and analyzing a service process is: A. Service layout B. Service blueprint C. Service design D. Product design E. Product process 42.) Service refers to a/an: A. Act pg B. Design C. Target market D. Resource E. Organization 43.) Service packages include(s): A. Physical resource B. Accompanying good C. Explicit services D. Implicit services E. ALL THE ABOVE 44.) Which of the following statements is false: A. Services are highly visible to consumers B. Some services have low barriers to entry and exit C. Service can be inventoried pg 154 D. Services are generally intangible E. Usually Services are created and delivered at the same time 45).------46.) Guidelines for a successful service design include all except: A. Define service package in detail B. Maximizing profits should be your main concern Page 156 C. Focus on operation from the customer perspective

26

D. Make sure managers will support the design once it is implemented E. Define the quality of the intangibles and tangibles. 47.) The responsibility of a manufacturer for any injuries or damages caused by a faulty product is: A. Life cycle assessment B. Value analysis C. Re-manufacturing D. Design for dis-assembly E. Product liability 48.) The extent to which a product, service, or process lacks variety is: A. Standardization B. Reverse engineering C. Reliability D. All of the above E. serviceability 49).------50.) Manufacturability is: A. The ease of fabrication and/or assembly B. Product design using computer graphics C. Product standardization D. A characteristic of services E. Manufacturer's capacity 51.) All are ways to improve reliability EXCEPT: A. Use backups B. Improve vision C. Improve testing D. Improve system E.none of the above 52.) Which is not a method of a product design? A. Mass standardization B. Mass customization C. Delayed Differentiation D. Robust Design E. Modular design 53.) Which one is not part of idea generation? A. Supply-chain based B. Competitor based C. Research based D. All are part of idea generation E. None of the above 54.) Which of the following is an advantage of standardization? A. Fewer parts to deal with B. Reduced training costs

27

C. Opportunities for automation D. More routine purchasing E. All are advantages 55.) What is meant by the term standardization? A. Creating a product but not finishing it until customer preferences are realized. B. Absence of variety in a product, service or process. C. Variety in a product, service or process. D. None of the above. E. All of the above 56).------

57.) Which term refers to a feature or attribute that was unexpected by the customer and causes excitement A. Performance Quality B. Excitement quality C. Basic Quality D. None of the above E. Awesome quality 58.) What is NOT an advantage of standardization? A. Fewer parts to deal with in inventory and management B. More routine purchasing C. Opportunities for long production runs and automation D. Decreased variety E. Reduced training time. 59.) The Kano Model was developed by A. Dr. Noriaki Kano B. Scott Adams C. Chris Chapman D. Wayne Cascio E. Robert L. Englund 60.) Delayed differentiation is common in which of the following: A. Pens B. Men's Suits C. Screws D. Cement E. Books 61.) What is NOT part of sustainability? A. Life Cycle Assessment B. Remanufacturing C. Recycling D. Polluting E. Value Analysis

28

62.) Dismantling and inspecting a competitor's product to discover product improvements (Hint: Ford Co. used this tactic) is A. Research and Development B. Employee recommendations C. Concurrent Engineering D. Computer Aided Design E. Reverse Engineering 63.) The Uniform Commercial Code states that products carry an implication of: A. Merchantability and fitness B. Merchantability and finess C. Cost and quality D. Sustainability and reliability E. None of the Above 64.) Organizations want designers to adhere to the following guidelines except: A. Produce designs that are consistent with goals of the organization B. Give customers the value they expect C. Make health a primary concern D. Make safety a primary concern E. Reduce costs as much as possible 65.) Which of the following is an advantage of Standardization? A. Reducing training costs and time B. Orders fillable from inventory C. Opportunities for long production runs and automation D. More routine purchasing, handling, and inspection procedures E. All of the Above 66).-----67.) What are some reasons why companies choose to recycle? Pg 141 A. Cost savings B. Environment concerns C. Environmental regulations D. All of the above E. None of the above 68.) Which best describes a disadvantage of standardization? Pg 145 A. Fewer parts to deal with in inventory B. Order fillable from inventory C. High cost of design changes D. Long production runs and automation E. Low cost of design changes decrease in resistance to improvements 69).-------70). Ideas for products can come from which of the following sources? A. Supply-chain based B. Competitor based C. Research based D. All of the above E. None of the Above

29

ANSWERS
Chapter 1: Introduction to OM 1. D 2. E 3. B 4. C 5. C 6. E 7. E 8. B 9. A 10. B 11. C 12. B 13. B 14. E 15. C 16. C 17. B 18. D 19. A 20. D

21. 22. 23. 24. 25.D 26. 27. 28. 29. 30. 31. 32. 33. 34. 35.B

C C B E

37. 38. 39. 40. 41.

B C D ----D B D A A B

C E E C B C A C D

42. 43. 44. 45. 46. 47.

48. E 49. C 50. A 51. B 52. B 53. C 54. D 55. A 56. E

36.Although all of these can be applied to the question, only A and D are mentioned in the book.

Ch. 2 Strategy and Productivity

1. D 2. E 3. E 4. E

30

5. E 6. A 7. E 8. C 9. D 10. D 11. B 12. A 13. E 14. C 15. B 16. C 17. A 18. B 19. D 20. C 21. A 22. C 23. B

24. B

25. Answer: B (This is a common

misconception of productivity. In the past, gains in productivity have come from technological improvements such as automation, fax machines, the internet, cell phones, e-mail, computers, copiers, and calculators) 26. D 27. D 28. A 29. E 30. A 31. B 32. D 33. C 34. D

35. B (Time-based strategies focus on

reducing the time required to accomplish various activities. On the other hand, quality-based focus on maintaining or improving quality) 36. A

Chapter 4 - Product and Service Design

1. -----2. B 3. A 4. C 5. E 6. E 7. C 8. C 9. C 10. A 11. C 12. ----13. E 14. B 15. E 16. C 17. B 18. E 19. A 20. D 21. E 22. D 23. E 24. D

31

25. E 26. E 27. ----28. E 29. B 30. E 31. B 32. D 33. A 34. C 35. E 36. C 37. C 38. C 39. C 40. B

41. B 42. A 43. E 44. C 45. ----46. B 47. E 48. A 49. -----50. A 51. B 52. E 53. D 54. E 55. B 56. ------

57. B 58. D 59. A 60. B 61. C 62. E 63. A 64. E 65. E 66. ---67. D 68. C 69. -----70. D

Ch. 9 Management of Quality

Edit 0 0 155

32

Chapter 9: Management of Quality

Chapter 9 focuses on the importance of quality. It discusses various concepts and tools that can be used to achieve high quality and continuous improvement. Broadly defined, qualityrefers to the ability of a product or service to consistently meet or exceed customer requirements or expectations. Different customers will have different expectations, so a working definition of quality is customer-dependent. When discussing quality one must consider design, production, and service. In a culmination of efforts, it begins with careful assessment of what the customers want, then translating this information into technical specifications to which goods or services must conform. The specifications guide product and service design, process design, production of goods and delivery of services, and service after the sale or delivery. Some of these consequences of poor quality include loss of business, liability, decreased productivity, and increased costs. However, good quality has its own costs, including prevention, appraisal, and failure. A recent and more effective approach is discovering ways to prevent problems, instead of trying to fix them once they occur.This will ultimately decrease the cost of good quality in the long run. There are several costs associated with quality: Appraisal costs - costs of activities designed to ensure quality or uncover defects Prevention costs - costs of prevention defects from occurring Failure costs - Costs caused by defective parts or products or by faulty services Internal failures - failures discovered during production External failures - failures discovered after delivery to the customer Return on quality (ROQ) - an approach that evaluates the financial return of investments in quality Chapter 9 discusses key contributors of quality management and several awards for companies who possess traits of excellent quality management. This chapter defines total quality management (TQM) as a philosophy that involves everyone in the organization in a continual effort to improve quality and achieve customer satisfaction. This philosophy concentrates on continuous improvement and quality at the source. Six sigma is a concept that stresses improving quality, reducing costs, and increasing customer satisfaction. Lastly, this chapter gives several examples of quality tools, which include flowcharts, check sheets, histograms, pareto analysis, scatter diagrams, controls charts, and cause-and-effect diagrams. Successful management of quality requires that managers have insights on various aspects of quality. These include defining quality in operational terms, understanding the costs and benefits of quality, recognizing the consequences of poor quality and recognizing the need for ethical behavior. Understanding dimensions that customers use to judge the quality of a product or service helps organizations meet customer expectations.

Dimensions of Product Quality

Performance main characteristics of the product Aesthetics appearance, feel, smell, taste Special features extra characteristics Conformance how well the product conforms to design specifications Reliability consistency of performance Durability the useful life of the product Perceived quality indirect evaluation of quality Service-ability handling of complaints or repairs

33

Dimensions of Service Quality

Convenience the availability and accessibility of the service Reliability ability to perform a service dependably, consistently, and accurately Responsiveness willingness to help customers in unusual situations and to deal with problems Time the speed with which the service is delivered Assurance knowledge exhibited by personnel and their ability to convey trust and confidence Courtesy the way customers are treated by employees Tangibles the physical appearance of facilities, equipment, personnel, and communication materials Consistency the ability to provide the same level of good quality repeatedly

The Determinants of Quality Quality of Design intention of designers to include or exclude features in a product or service. The starting point of producing quality in products begins in the design phase. Designing decisions may involve product or service size, shape and location. When making designs, designers must keep in mind customer wants, production or service capabilities, safety and liability, costs, and other similar considerations. Quality of conformance- refers to the degree to which goods and services conform to the intent of the designer. Quality of conformance can easily be affected by factors like: capability of equipment used, skills, training, and motivation of workers, extent to which the design lends itself to production, the monitoring process to assess conformance, and the taking of corrective action. Ease of use - refers to the ease of usage of the product or services for the customers. The term ease of use refers to user instructions. Designing a product with ease of use increases the chances that the product will be used in its intended design and it will continue to function properly and safely. Without ease of use, companies may lose customers, face sales returns, or legal problems from product injuries. Ease of use also applies to services. Manufacturers must make sure that directions for unpacking, assembling, using, maintaining, and adjusting the product are included. Directions for What to do when something goes wrong should also be included. Ease of use makes a consumer very happy and can help retain customers. Services offered to the customer after delivery. There will be times when products may fail or problems with usage may occur. This is when Service after delivery is important through recall and repairs of the product, adjustment, replacement or buys back, or reevaluation of a service.

Having good quality is a competitive advantage against others who offer similar products or services in the marketplace. In addition, good quality can:

Raise Company's Reputation Rationalize Premium Prices Decrease Liability Costs Increase Productivity Increase Customer Loyalty Increase Customer Satisfaction Consequence's include:
loss of business and existing market share legal liability

34

lack of productivity increased costs

Failure to meet quality standards can damage a company's image, reputation or lead to external criticism. In the manufacturing field, the quality of raw materials or equipment can affect the whole manufacturing process. If defects or poor quality are not detected on time, companies may face various costs to solve problems. Discovering and fixing problems on time reduces costs. Quality costs include prevention (prevent defects from occurring by planning system, training and control procedures), appraisal (ensure quality or uncover defects by inspections, testings and audits), and failure (caused by defective parts, products or by faulty services discovered during the production process - internal or after delivery to the customer - external). Three well- known awards given annually to recognize quality are: 1. Baldrige Award (given by the U.S. government) 2. European Quality Award 3. Deming Prize (established by the Japanese).
There are also worldwide known quality certifications like ISO 9000 (which is a set of international standards on quality management and quality assurance, critical to international business) and ISO 14000 (a set of international standards for assessing a company's environmental performance).

35

Total quality management (TQM) is a constant pursuit of quality that involves everyone in an organization. The driving force is customer satisfaction; a key philosophy is continuous improvement. The Japanese use the term kaizen to refer to continuous improvement. Training of managers and workers in quality concepts, tools, and procedures is an important aspect of TQM. Teams are an integral part of TQM. Two major aspects of the TQM approach are problem solving and process improvement. Six-sigma programs are a form of TQM. A six-sigma improvement project typically has one or more objectives such as: reducing delivery time, increasing productivity, or improving customer satisfaction. They emphasize the use of statistical and management science tools on selected projects to achieve business results. There are seven basic quality tools that an organization can use for problem solving and process improvements. A flowchart is a visual representation of a process. As a problem-solving tool, a flowchart can help investigators in identifying possible points in a process where problems occur. The diamond shapes in the flowchart represent decision points in the process, and the rectangular shapes represent procedures. They show the direction of flow of the

36

steps in the

process.arrows

37

A check sheet is a simple tool frequently used for problem identification. Check sheets provide a format that enables users to record and organize data in a way that facilitates collection and analysis.

A histogram can be useful in getting a sense of the distribution of observed values. It is a chart of an empirical frequency distribution.

38

Pareto analysis is a technique for focusing attention on the most important problem areas. The idea is to classify the cases according to degree of importance, and focus on resolving the most important, leaving the less important.

As catter diagram can be useful in deciding if there is a correlation between the values of two variables. It is a graph that shows the degree and direction of relationship between two variables. A correlation may point to a cause of a

39

problem. A control chart can be used to monitor a process to see if the process output is random. It can help detect the presence of correctable causes of variation. It is a statistical chart of time-ordered values of sample statistic.

40

A cause-and-effect diagram offers a structured approach to the search for the possible cause(s) of a problem. It is also known as a fishbone diagram because of its shape, or an Ishikawa diagram, after the Japanese professor who developed the approach to aid workers overwhelmed by the number of possible sources of problems when problem solving. This helps to organize problem-solving efforts by identifying categories of factors that might be causing problems.

41

A run chart can be used to track the values of a variable over time. This can aid in identifying trends or other patterns that may be

42

occurring.

Important People in Quality

Walter Shewart father of statistical quality control Control charts Variance reduction W. Edwards Deming Special vs. common cause variation The 14 points -- Deming Prize- Prize estabolished by the Japanese and awarded annually to firms that distinguish themselves with quality management programs. Joseph Juran Quality Control Handbook, 1951 Viewed quality as fitness-for-use Quality trilogy quality planning, quality control, quality improvement Armand Feigenbaum Quality is a total field The customer defines quality Philip B. Crosby Zero defects Quality is Free, 1979 Kaoru Ishikawa Cause-and-effect diagram Quality circles Recognized the internal customer Genichi Taguchi Taguchi loss function Taiichi Ohno and Shigeo Shingo Developed philosophy and methods of kaizen

43

Contributor Key Contributions Shewhart Deming Control Charts; variance reduction 14 points; special versus common causes of variation Quality is fitness-for-use;quality trilogy

Juran

Feigenbaum Quality is a total field; the customer defines quality Crosby Ishikawa Taguchi Ohno and Shingo Quality is free; zero defects Cause-and-effect diagrams; quality circles Taguchi loss function Continuous improvement

DIMENSIONS OF QUALITY Dimension Example

Performance Everything works: fit and finish, ride, handling, acceleration Aesthetics Features Exterior and interior design Convenience: placement of gauges High tech: GPS system Safety: anti-skid, airbags

Conformance Car Matches manufacturer's specifications Reliability Durability Perceived quality Infrequent need for repairs Useful life in miles, resistance to rust Top-rated

Serviceability Ease of repair

44

An emphasis on quality control heightened during WWII. Quality control then evolved to quality assurance and is now better known as a Strategic Approach, a tool for improving not only products but also processes and services. Quality can be thought of as the degree to which performance of a product or service meets or exceeds expectations. Quality should be measured differently for products and services, and therefore product and service quality are judged on their own set of dimensions. Responsibility for overall quality lies with top management. Top management must establish strategies, institute programs for quality, and motivate managers and workers. Most times managers are on a quest for the quality of an organization as a whole; this is referred to as Total Quality Management (TQM). TQM involves a continual effort for quality improvement by everyone in an organization. So in essence, for an organization to meet and exceed goals of quality control the entire supply chain needs to be involved. Consequences of poor quality There are numerous consequences with poor quality products which can affect a business and a customer in many different ways. Whether it is a small or large problem, the
magnitude of the problem always affects someone at some point. When a product is designed poorly or lacks in quality, customers recognize that very quickly, and it can quickly lead to a problem for the business. It does not matter whether the company is a product or a service oriented company because poor quality will always, most likely, create negative affects for the firm. Eventaully, the low cost input in the R&D department and the using cheaper materials will lead to loss of business . Therefore, due to the cost associated with satisfying the customer, it is best to fix problems in the design phase rather than dealing with it after it's in the hands of a customer. The sooner the problem with a product or service is identified and remedied, the better!

Methods for Generating Ideas Additional tools that are useful for problem solving and process control include: Brainstorming Affinity diagram Quality circles Interviewing Benchmarking 5W2H approach o Who o What o When o Where o Why o How o How much

Brainstorming is used to communicate thoughts and ideas without any criticism. Everyone has equal input and ideas are shared in order to facilitate problem solving.

45

Affinity Diagram is used to arrange data into categories that may be analyzed. One of its uses is to group many responses to similar ideas. It uses the right side of the brain (generates ideas) and the left side of brain (analyze and organize). Quality Circles are usually informal meetings between employees to exchange ideas and concerns about processes. Interviewing is a tool used by managers to find information from employees through Q & A sessions. Benchmarking is tool for companies to set standards. It attempts to compare itself to the best in the industry in order to meet or exceed the standard set. Usually uses these steps: 1. Identify process for improvement. 2. Identify organization that is the best at that process. 3. Study that organization. 4. Analyze data. 5. Improve process at your organization. 5W2H approach asks the questions what, why, where, when, who, how, and how much (5 W words and 2 H words). Its purpose is to ask the questions that will lead to improving processes.

Responsibility for Quality Top Management- has the ultimate responsibility for quality. While they establish strategies for quality, they also institute programs to improve quality; guide, direct, and motivate managers and workers; and set an example by being involved in quality initiatives. Design- Quality products and services begin with design.

Sales can be lost when the products are not designed well and do not function correctly. Customers get turned off when that happens and may not want to risk buying the same brand again. Liability is an important area because there is the potential for damages or injures that could reflect badly on the company and then damage control will need to be done to repair the company image and reputation. Productivity can be slowed when there are defects and poor quality because time must be spent to redo and fix these issues. Costs can be reduced by up to five times if problems are caught early on in the process, compared to later in the production stages.

Questions to the chapter

1.Which quality certification pertains to set of international standard on quality management and quality assurance? a) ISO 14000 b) ISO 24700 c) ISO 9000 d). ISO 27000 e) None of the above Answer: C (pg.424) 2. Whose key contribution included the cause-and-effect diagram (fishbone diagram)? a) Joseph M. Juran b) Kaoru Ishikawa c) Armand Feigenbaum d) Walter Shewhart e) Genichi Taguchi

46

Answer: B (pg.411) 3. Which cost of quality involves the cost of preventing a defect from occurring? a) Appraisal Costs b) Failure Costs c) Fixing Costs d) Prevention Costs e) Internal Costs Answer: D (pg.420) 4. Which failures are discovered after delivery to customer? a) External b) Internal c) Prevention d) Quality e) None of the above Answer: A (pg.420-421) 5. Which method for generating ideas is a tool used to organize data into logical categories? a)Brainstorming b) Affinity Diagram c) Quality Circles d) Interviewing e) Benchmarking Answer: B (pg.444)
6. Which of the following is a consequence of poor quality?

a) loss of business b) liability c) productivity d) costs e) all of the above are correct Answer: e) all of the above are correct PG. 418 7. Which of the following is true of the benefits of good quality? a) enhanced reputation for quality b) reduced productivity c) lower liability cost d) higher liability cots e) both a & c are correct Answer: e) both a & c are correct pg. 418

47

8. The cost to fix a problem at the design or production stage, compared to at an earlier stage costs how many times more? a) one time b) two times c) three times d) four times e) five times Answer e) five times PG 419 10. Productivity is closely related to which of the following?: a) liability b) costs c) quality d) express written warranties e) defective products Answer c) quality PG 418 11. What are the three costs that are associated with quality? a) Appraisal costs, Prevention costs, Labor costs. b) Appraisal costs, Prevention costs, Failure costs. c) Appraisal costs, Prevention costs, Internal Failures costs. d) Appraisal costs, Prevention costs, Total Costs. e) Appraisal costs, Prevention costs, Overhead cost. Answer is B found on page 420. 12. Which of the following are two major aspects of the TQM approach? a) Continuous improvement and process improvement. b) Six-sigma and continuous improvement. c) Problem solving and process improvement. d) Problem solving and continuous improvement. e) All of the above. Answer is C found on pages 432-434. 13. What is the Japanese term for continuous improvement? a) kaizen b) Ishikawa c) fishbone d) a. and c. are correct answers, e) None of the above. Answer is A found on page 428. 14. What are the four basic steps in the PDSA cycle? a) Problem, Decision, Solution, Award. b) Design, Study, Plan, Do, Act.

48

c) Plan, Design, Check, Act. d) Plan, Do, Study, Act. e) None of the above. Answer is D found on page 433. 15. Which basic quality tool is focused on resolving the most important problem? a) Scatter diagram b) Control chart c) Pareto analysis d) Cause-and-effect diagram e) Fishbone diagram Answer is C found on page 438. 16. Which of the following is a Determinant of Product Quality? a) Design b) Product/Service conformity to design c) Ease of Use d) Service after delivery e) All of the Above Answer: E page 416 17. Which of the following doesnt refer to the term Ease of Use? a) Increases the chances that product will be used for intended design b) Product conforms to the intended designs c) Instructions are included in the product d) Product continues to function safely and properly e) All of the above refers to Ease of Use Answer: B page 417 18. Which is NOT a Consequence of Poor Quality a) Productivity b) Loss of Business c) Costs d) Legal Liability e) None of the Above Answer: E page 406 19. The consequences of poor quality products or services may result in: a) Less Liability b) Baldrige c) Injuries and defective output d) Lower costs e) Faster Productivity

49

Answer: C page 419 20. One of the things Designers should consider when making a product is a) Customer preference b) Company Costs c) Production capabilities d) A and C e) All of the Above Answer E page 419 21. Although closely associated with quality, this name is not on the list of quality gurus: a) W. Edwards Deming b) Philip Crosby c) Malcolm Baldrige d) J. M. Juran e) Kaoru Ishikawa Answer: Malcolm Baldrige (pg 409) 22. Which name is associated with management responsibility? a) Deming b) Crosby c) Juran d) Feigenbaum e) Ishikawa Answer: D. Feigenbaum (pg 411) 23. Which quality pioneer compiled a list of 14 points that he believed were imperative to achieve quality in an organization? a) Deming b) Crosby c) Baldrige d) Juran e) Ishiikawa Answer: A. Deming (pg 409) 24. Which one of these is a tool for gathering data? a) Control chart b) Fishbone diagram c) Scatter diagram d) Flowchart e) Checksheet Answer: E. Checksheet (pg 435)

50

25. Which one of these is a tool for problem solving? a) Benchmarking b) Cause-and-effect diagram c) Histograms d) Scatter diagrams e) Control charts Answer: Cause & Effect Diagram (pg 439) 26. Which of these people are not considered one of the gurus who mapped out some of the foundations of modern quality management? a) Walter Shewhart b) W. Edwards Deming c) Joseph M Juran d) Philip B. Crosby e) Charles P. Bonini Answer is E (pg 409)

27. What is Six Sigma best defined as: a) A Japanese term for continuous improvement b) A business process for improving quality, reducing costs and increasing customer satisfaction c) Framework for problem solving and improvement activities d) A diagram of the steps in a process e) None of the Above Answer is: B, pg.429

28. Which of the following is not a dimension of product quality? a) Performance b) Special features c) Consistency d) Conformance e) Reliability Answer: C, pg. 414- Consistency deals with the dimensions of service quality

29. Philip B. Crosby identified key points in his concept of zero defects, which of the below is one of his key points? a) Management must be persistent in efforts to achieve good quality b) Institute modern methods of training on the job c) Quality products and services begin with design d) Cost to remedy a problem is a major concern in quality management e) All the above.

51

Answer: A, pg.411

30. Reducing one or more steps in a supply chain by cutting out one or more intermediaries is known as: a) Delayed differentiation b) Cross-docking c) Avoidance d) Disintermediation e) Reverse logistics Answer: D, pg. 541 31. What are the key elements of Deming's 14 points? a) Constancy of purpose b) Continual improvement c) Profound knowledge d) Decreasing labor costs e) Only a, b, and c Answer: E (pg 409) 32. By how many times is it more costly to fix a problem at the customer end compared to the design stage? a) 1x b) 5x c) 3x d) 2x e) 4x Answer: B (pg.407) 33.Costs of activities designed to ensure quality or uncover defects are costs associated with? a) external failures b) failure costs c) appraisal costs d) prevention costs e) internal failures Answer: C (pg. 409) 35. What is known as performance, aesthetics, special features, conformance, reliability, durability, perceived quality, and serviceability? a) quality of design b) quality of conformance c) return on quality d) dimensions of quality

52

e) Deming prize Answer: D (pg. 403) 36.Which technique uses groups of people to share thoughts and ideas without any criticism? a) Process Improvement b) Benchmarking c) Brainstorming d) Interviewing e) 5WH2 Answer: C (pg. 444) 37. Benchmarking uses which of the following to improve standards? a) Larger companies b) Smaller companies c) Competitors d) Suppliers e) Industry Leaders Answer: E (pg. 445) 38.Which methods asks 7 questions to improve processes? a) 5W2H b) Affinity Diagram c) Quality circles d) Benchmarking e) Brainstorming Answer: A (pg. 446) 39. Control charts have which of the following features? a) Tabulated categories b) Diagrams c) Lower control limits d) Upper control limits e) Both C and D Answer: E (pg. 436) 40. A Scatter diagram is useful when there is a) One variable b) Correlation between variables c) Multiple variables d) NO Correlation between variables e) Variation Answer: B (pg. 438)

53

41.What is NOT the primary determinants of qualiy, which a product or a service successfully satisfies its intended purpose? a) Ease of use b) Cost c) Design d) Service after delivery e) Design Conformity Answer: b) Cost (Pg 416) 42.What is the correct definition of an appraisal cost? a) cost of preventing defects from occurring b) cost caused by defective parts or products or by faulty services c) An approach that evaluates the financial return of investments in quality d) cost of activities designed to ensure quality or uncover defects e) all of the above Answer: d) cost of activities designed to ensure quality or uncover defects. (Pg 420) 43.Which quality tool can be useful in getting a sense of the distribution of observed values? a) histogram b) check sheet c) scatter diagram d) control chart e) flow chart Answer: a) Histogram (Pg 435)

44. What step comes after "develop performance measures and collect data" and before "generate potential solutions" in the TQM problem-solving process? a) define the problem and establish an improvement goal b) analyze the problem c) choose a solution d) implement the solution e) monitor the solution to see if it accomplishes the goal Answer: b) analyze the problem. (Pg433) 46. Who is known as the "father of statistical quality control?" a) W. Edwards Deming b) Walter Shewhart c) Philip B. Crosby d) Joseph M. Juran e) Genichi Taguchi

54

Answer is B. (Pg 409) 47. Which of the following is a) Performance b) Durability c) Aesthetics d) Investment e) Conformance Answer is D. (Pages:412-413)

NOT a dimension of quality?

49. A statistical chart of time-ordered values of a sample statistic is a: a) Flowchart b) Check sheet c) Scatter Diagram d) Cause-and-effect diagram e) Control chart Answer is E (Page:439) 50. What question is a) Which b) What c) Why d) Where e) When Answer is A (Page:446) 51. Which are included in the product quality? a) Reliability b) Durability c) Convenience d) a and b e) All of the above Answer is D, pg.415 52. What are the determinants of quality? a) Design b) Ease of use c)Service after delivery d) The wellness of product to design e) All of the above Answer is E, pg.416

not included in the 5W2H approach?

55

53.Which of the following is not a consequence of poor quality? a) productivity b) liability c) costs d) speed e) All of the above Answer is D, pg.419 54. The appraisal costs means: a) costs of preventing defects from occurring b) costs caused by defective parts or products or by faulty services c) costs of activities designed to ensure quality or uncover defects d) costs related to defective products e) neither one is correct. Answer is C, pg.420 55. A set of international standards for assessing a company's environmental performance is a) ISO 14000 b) ISO 24700 c) IEC 24700 d) ISO 9000 e) None of the above Answer is A, pg.424 56. Which tool uses a diagram of the steps as a visual representation of a process? a) PDSA Cycle b) Flow Chart c) Check Sheet d) Histogram e) Scatter diagram Answer is B, pg.435

57. A run chart shows performance over a) speed b) quantity c) productivity d) time e) quality

59. All of the following are affected by poor quality EXCEPT -- One more choice needed.

56

http://xa.yimg.com/kq/groups/32225094/1704620067/name/POMallChapters.pdf

57