Chapter 1 Quiz Study Guide
High labor content
Notes
Operations management is an
area of management control
concerned with overseeing,
controlling the process of
production and redesigning
business operations in the
production of gods and/or services
o Managing the process of
converting inputs into outputs
o Inputs transformation
processes outputs
o Operations managers are the
ones who plan, acquire, and
manage resources to meet the
companys needs
Materials management is a
coordinating function responsible
for planning and control material
flow
o Includes all activities in the flow
of material from the supplier to
the consumer
o Activities include physical
supply, operations planning and
control, and physical distribution
o Objective is to maximize use of
firms resources and provide the
required level of customer
services
o 2 Types of output produced
1. Goods (tangible): physical
object, something can touch,
feel, or see
a. Can be inventoried
b. No interaction between
customer and process
c. High uniformity of input
d. Low labor content
2. Services (intangible):
performance of some useful
function such as banking
a. Cannot be inventoried
b. Direct interaction
between customer and
processes
c. Low uniformity of input
d.
o Wealth is measured by the
amount of goods and services
produced
o Wealth of a country is measured
in Gross National Product (GNP)
Factors affecting operating
environment:
o Government- register company
to establish, follow government
regulation, limit number of
exports, and safety + taxation
o Economy- economy recession
or inflation and population, labor
o Competition- competed with
each other company, internet
business competitor
o Customer- much more
demanding, characteristics &
selection customer expect in the
product and services they buy
are
Fair/reasonable price
High quality
products/services
Delivery lead time
Better resale/after sale
services
Product/volume flexibility
o Quality- provide quality that
not only meets the customers
expectations but exceeds them
Business strategy concerns the
market orientation in order to meet
customer expectations
o Operations must be aligned with
the business strategy in order to
meet the needs of the customer
Order Qualifiers: customer
requirement based on price, quality
and delivery
o In order to qualify to compete,
its costs and the related price
must be within a certain range
to be considered by its
customers
 Order Winners: competitive
characteristics or combination of
characteristics that persuade a
customer to choose a companys
products or services
o Can be considered to be
competitive advantages for the
firm
Manufacturing Strategies
o Engineer to Order (ETO)
Customer specification
require unique engineer time
Long delivery lead time
o Make to Order (MTO)
Manufacturer doesnt start to
make the product until an
order is received
Delivery lead time is reduced
o Assembly to Order (ATO)
Products are made from
standard component that
manufacturer can inventory
and assembly according to
order
Delivery lead time is even
shorter
o Make to Stock (MTS)
Supplier manufacturer the
goods and sell from finished
goods inventory
Delivery lead time is the
shortest
Supply Chain Concept = raw
materials supplier
manufacturing distribution
customer consumer
How do we maximize profits?
o Profits = revenues
expenses
Manufacturing planning and
control (MPC) are responsible for
the planning and control of the flow
of materials through the
manufacturing process
o Production Planning: a
process to determine the most
productive way of meeting the
demand of the market place
involves forecasting, master
planning and capacity planning
o Implementation and Control:
responsible for putting into
action and achieving the plans
made by production planning
accomplished through activity
control
o Inventory Management:
branch of business concerned
with planning and controlling
inventories
Physical supply/distribution
includes all the activities involved
in moving goods, from the supplier
to the beginning of the production
process, and from the end of the
production process to the
consumer
o Transportation
o Distribution inventory
o Warehousing
o Packaging
o Material handling
o Order entry
Delivery lead time is the amount
of time between the placing of an
order and the receipt of the goods
ordered
Cumulative lead time is the
longest time planned to perform a
certain activity
Volume Variety Matrix (VV
Matric) is the basis of many
operating choices
o The higher the volume, the
lower the variety correlation
Questions
1. What is wealth, and how is it
created?
2. What is value added, and how is it
achieved?
3. Name and describe four major
factors affecting operations
management?
4. What are an order qualifier and an
order winner?
5. Describe the four primary
manufacturing strategies. How
does each affect delivery lead
time?
6. What is a supply chain? Describe
five important factors in supply
chains.
7. What must manufacturing
management do to manage a
process or operation? What is the
major way in which management
plans and controls?
8. Name and describe the three main
divisions of supply, production, and
distribution systems.
9. What are the four objectives of a
firm wishing to maximize profits?
10. What is the objective of
marketing? What three ways will
help it achieve this objective?
11. What are the objectives of
finance? How can these objectives
be met?
12. What are the objectives of
production? How can these
objectives be met?
13. Describe how the objectives
of marketing, finance, and
production are in conflict over
customer service, disruption to
production, and inventories.
14. What is the purpose of
materials management?
15. Name and describe three
primary activities of manufacturing
planning and control.
16. Name and describe the
inputs to a manufacturing planning
and control system.
17. What are the six activities
involved in the physical
distribution/supply system?
18. Why can materials
management be considered a
balancing act?
19. What are metrics? What are
their uses?