Test-Bank-for-Heizer-Operations-Management-9e

106.Provide some examples of recent product changes, i.e. new products that are replacing older ones.

Answers will vary. The list in the text includes: TV to HDTV, radio to satellite radio, coffee shops to Starbucks lifestyle coffee, traveling circuses to Cirque du Soleil, land lines to cell phones, cell phone to Blackberry, Walkman to iPod, and mops to Swiffers. (Generating new products, moderate) {AACSB: Reflective Thinking}

107.What is quality function deployment (QFD)?

QFD refers to determining what will satisfy the customer and translating those customer desires into the target design. (Product development, easy)

108.Identify the steps involved in building the House of Quality.

Identify customers' wants, identify product/service attributes, relate the customers' wants to the product/service how's, conduct an evaluation of competing products, develop performance specifications for product or service how's, and assign how's to the appropriate place in the transformation process. (Product development, moderate)

109.Explain the difference between value analysis and value engineering.

Value engineering is concerned with reducing cost and improving function in a preproduction setting; value analysis, with similar aims, takes place during production, when the product has shown that it will succeed. Techniques are similar. (Product development and Issues for product design, moderate)

110.Aggressive new product development requires that organizations build structures internally that contain what features?

They should have open communication with customers, innovative organizational cultures, aggressive R&D, strong leadership, formal incentives, and training. (Generating new products, difficult) {AACSB: Communication}

111.What two issues should be considered in combination in order to enhance the likelihood of ethical decision in the realm of product design? Why is each important?

The two issues are (1) view product design from a "systems" perspective, and (2) consider the life cycle of the product. The first issue causes managers to go beyond "what is best or cheapest for the firm?" The second causes managers to address environmental concerns over the life of the product, not just at time of manufacture. (Issues for product design, moderate) {AACSB: Ethical Reasoning}

112.Identify the specific guidelines that can help an operations manager achieve environmentally friendly designs.

Specifically, the following ideas are presented in the text: make products recyclable, use recycled material, use less harmful ingredients, use lighter components, use less energy, and use less material. (Issues for product design, moderate) {AACSB: Ethical Reasoning}

113.What are some of the benefits from using environmental teams for product design?

Environmental teams help develop safe and more environmentally sound products, minimize the waste of raw materials and energy, differentiate products from competition, reduce environmental liabilities, increase cost-effectiveness of complying with environmental regulations, and help the organization be recognized as a good corporate citizen. (Issues for product design, moderate) {AACSB: Ethical Reasoning}

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114.Discuss the advisability of using modular assemblies in manufacturing. (What are the advantages and disadvantages?) To what extent can these arguments be utilized in service products?

Modules are easily segmented components; they add flexibility to production and marketing; allows mix-and-match of components (customization at point of customer contact). Use of modules usually means fewer parts, less design and tooling expense. Disadvantages include using a module in a product for which a more specific component would have been better. Modules exist in services, as in fast-food meals built to customer specification. (Issues for product design, difficult)

115.What is time-based competition?

Time-based competition is competition that is based on time. It involves rapid development of products, fast introduction to the marketplace. Often, the first company into production may have its product adopted as the "standard." (Time-based competition, moderate)

116.State the benefits of implementing group technology.

Benefits include improved design; reduced raw materials and purchases; simplified production planning and control; improved routing and machine loading; reduced tooling setup time, work-in-process, and production time; and development of work cells. (Defining the product, moderate)

117.Identify the external product development strategies; describe each in a sentence or two.

The external product development strategies include alliances, joint ventures, and purchase of technology or expertise by acquiring the developer. Alliances are cooperative agreements that allow firms to remain independent, but use complementing strengths to pursue strategies consistent with their individual missions. Joint ventures are combined ownership to pursue new products or markets. Purchasing technology or expertise is usually accomplished by acquiring entrepreneurial firms that have already developed the technology that fits the mission. The issue then becomes fitting the purchased organization, its technology, and its product line into the buying firm, rather than a product development issue. (Time-based competition, moderate)

118.How does configuration management manifest itself when you ask for service on your automobile?

Configuration management is used by every automobile manufacturer to track all of the changes between and during a model year. To be specific about the part that is needed, the VIN (vehicle identification number) is often used. (Documents for production, moderate)

119.Briefly explain how Product Lifecycle Management (PLM) impacts product design.

PLM is an umbrella of software programs that attempts to bring together many phases of product design and manufacture. PLM products often start with product design (CAD/CAM); move on to design for manufacture and assembly (DFMA); and then into product routing, materials, layout, assembly, maintenance and even environmental issues. (Documents for production, moderate)

120.Identify the four methods of service design that can reduce costs and enhance the product.

Customizing as late in the process as possible; modularizing the product; identifying the service parts that lend themselves to automation or reduced customer interaction; and focusing design on the moment of truth. (Service design, moderate)

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PROBLEMS

121.JDI, Inc. is trying to decide whether to make-or-buy a part (#J-45FPT). Purchasing the part would cost them $1.50 each. If they design and produce it themselves, it will result in a per unit cost of $0.75. However, the design investment would be $50,000. Further, they realize that for this type of part, there is a 30% chance that the part will need to be redesigned at an additional cost of $50,000. Regardless of whether they make-or-buy the part, JDI will need 100,000 of these parts. Using decision trees analysis and EMV, what should JDI do? Show the decision tree.

Since the expected values represent costs, JDI should select the lowest expected value, and make the part. Its expected monetary value (cost) is $140,000 versus $150,000 for the buy decision.

		Success
		.70
Make		Failure,
	EMV =	redesign
	.70($125,000)	.30
	+ .30($175,000)
	= $140,000

EMV = $150,000

Buy

100,000($0.75) + $50,000 = $125,000

100,000($0.75) + $100,000 = $175,000

100,000($1.50) = $150,000

(Application of decision trees to product design, moderate) {AACSB: Analytic Skills}

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122.Tri-products is trying to decide whether to make-or-buy an accessory item for one of their products. It is projected that this item will sell for $10 each. If the item is outsourced, there is virtually no cost other than the $6 per unit that they would pay their supplier. Internally, they have two choices. Process A requires an investment of $120,000 for design and equipment, but results in a $4 per unit cost. Process B requires only a $100,000 investment, but its per unit cost is $5. Regardless of whether the item is subcontracted or produced internally, there is a 50% chance that they will sell 50,000 units, and a 50% chance that they will sell 100,000 units. Draw the decision tree appropriate to the alternatives and outcomes stated. Using decision trees and EMV, what is their best choice?

Process A promises the highest profit with an EMV of $330,000.

Process

A EMV =

.50($480,000) + .50($180,000)

= $330,000

Process

B

EMV =

.50($400,000)

+.50($150,000)

=$275,000

EMV =

.50($400,000) Buy + .50($200,000)

= $300,000

Highdemand

.50

Lowdemand

.50

Highdemand

.50

Lowdemand

.50

Highdemand

.50

Lowdemand

.50

100,000($10-$4) - $120,000 = $480,000

50,000($10-$4) - $120,000 = $180,000

100,000($10-$5) - $100,000 = $400,000

50,000($10-$5) - $100,000 = $150,000

100,000($10-$6) = $400,000

50,000($10-$6) = $200,000

(Application of decision trees to product design, moderate) {AACSB: Analytic Skills}

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123.A company manufactures specialty pollution-sensing devices for the offshore oil industry. One particular device has reached maturity, and the company is considering whether to replace it with a newer model. Technologies have not changed dramatically, so the new device would have similar functionality to the existing one, but would be smaller and lighter in weight. The firm's three choices are: keep the old model; design a replacement device with internal resources; and purchase a new design from a firm that is one of its suppliers. The market for these devices will be either "receptive" or "neutral" of the replacement model. The financial estimates are as follows: Keeping the old design will yield a profit of $6 million dollars. Designing the replacement internally will yield $10 million if the market is "receptive," but a $3 million loss if the market is "neutral." Acquiring the new design from the supplier will profit $4 million under "receptive," $1 million under "neutral." The company feels that the market has a 70 percent chance of being "receptive" and a 30 percent chance of being "neutral." Draw the appropriate decision tree. Calculate expected value for all courses of action. What action yields the highest expected value?

				Profit $10 million
Market is receptive
	p =.0.70
	Market is neutral
	p = 0.30			Lose $3 million

Develop replacement internally

Profit $4 milliion

Market is receptive

p = 0.70

Purchase new design

Market is neutral

p = 0.30

Profit $1 million

Stay with current design

profit $6 million

The three expected monetary values are:

Develop replacement internally: $10,000,000 x .7 -$3,000,000 x .3 = $6.1 million Purchase new design: $4,000,000 x .7 + $1,000,000 x .3 = $3.1 million

Stay with current design: $6 million

The company should choose the highest value, and develop a replacement product design with internal resources. (Application of decision trees to product design, moderate) {AACSB: Analytic Skills}

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CHAPTER 6: MANAGING QUALITY

TRUE/FALSE

1.Managers at Arnold Palmer Hospital take quality so seriously that the hospital typically is a national leader in several quality areas—so that continuous improvement is no longer necessary.

False (Global company profile, moderate)

2.An improvement in quality must necessarily increase costs.

False (Quality and strategy, easy)

3.For most, if not all organizations, quality is a tactical rather than a strategic issue.

False (Quality and strategy, moderate)

4.The definition of quality adopted by The American Society for Quality is a customer-oriented definition.

True (Defining quality, easy)

5.Conforming to standards is the focus of the product-based definition of quality.

False (Defining quality, moderate)

6.Internal failure costs are associated with scrap, rework, and downtime.

True (Defining quality, easy)

7.Philip Crosby is credited with both of these quality catch-phrases: "quality is free" and "zero defects."

True (Defining quality, easy)

8.Deming's writings on quality tend to focus on the customer and on fitness for use, unlike Juran's work that is oriented toward meeting specifications.

False (defining quality, moderate)

9.Improved quality can increase profitability via flexible pricing.

True (Defining quality, moderate)

10.ISO 9000 has evolved from a set of quality assurance standards toward a quality management system.

True (International quality standards, moderate)

11.Quality is mostly the business of the quality control staff, not ordinary employees.

False (Total quality management, moderate)

12.TQM is important because quality influences all of the ten decisions made by operations managers.

True (Total quality management, moderate)

13.The phrase Six Sigma has two meanings. One is statistical, referring to an extremely high process capability; the other is a comprehensive system for achieving and sustaining business success.

True (Quality and strategy, moderate)

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14.Continuous improvement is based on the philosophy that any aspect of an organization can be improved.

True (Total quality management, moderate)

15.Kaizen is similar to TQM in that both are focused on continuous improvement.

True (Total quality management, moderate)

16.The Japanese use the term "poka-yoke" to refer to continuous improvement.

False (Total quality management, moderate) {AACSB: Multiculture and Diversity}

17.Quality circles empower employees to improve productivity by finding solutions to work-related problems in their work area.

True (Total quality management, moderate) {AACSB: Communication}

18.Benchmarking requires the comparison of your firm to other organizations; it is not appropriate to benchmark by comparing one of your divisions to another of your divisions.

False (Total quality management, moderate)

19.Line employees need the knowledge of TQM tools.

True (Total quality management, easy)

20.One of the ways that Just-In-Time (or JIT) influences quality is that by reducing inventory, bad quality is exposed.

True (Total quality management, moderate)

21.The quality loss function indicates that costs related to poor quality are low as long as the product is within acceptable specification limits.

False (Total quality management, moderate)

22.Pareto charts are a graphical way of identifying the few critical items from the many less important ones.

True (Tools of TQM, moderate)

23.A cause-and-effect diagram helps identify the source of a problem.

True (Tools of TQM, moderate)

24.Source inspection is inferior to inspection before costly operations.

False (The role of inspection, moderate)

25.Of the several determinants of service quality, access is the one that relates to keeping customers informed in language they can understand.

False (TQM in services, moderate)

26.High-quality products and services are the most profitable.

True (Defining quality, easy)

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MULTIPLE CHOICE

27.Which of the following statements regarding Arnold Palmer Hospital is false?

a.The hospital uses a wide range of quality management techniques.

b.The culture of quality at the hospital includes employees at all levels.

c.The hospital scores very highly in national studies of patient satisfaction.

d.The hospital's high quality is measured by low readmission rates, not patient satisfaction.

e.The design of patient rooms, even wall colors, reflects the hospital's culture of quality.

d(Global company profile, moderate)

28.Arnold Palmer Hospital uses which of the following quality management techniques?

a.Pareto charts

b.flow charts

c.benchmarking

d.Just-in-Time

e.The hospital uses all of the above techniques.

e (Global company profile, easy)

29.Which of the following statements best describes the relationship between quality management and product strategy?

a.Product strategy is set by top management; quality management is an independent activity.

b.Quality management is important to the low-cost product strategy, but not to the response or differentiation strategies.

c.High quality is important to all three strategies, but it is not a critical success factor.

d.Managing quality helps build successful product strategies.

e.Companies with the highest measures of quality were no more productive than other firms.

d (Defining quality, moderate)

30."Quality is defined by the customer" is

a.an unrealistic definition of quality

b.a user-based definition of quality

c.a manufacturing-based definition of quality

d.a product-based definition of quality

e.the definition proposed by the American Society for Quality

b(Defining quality, moderate)

31."Making it right the first time" is

a.an unrealistic definition of quality

b.a user-based definition of quality

c.a manufacturing-based definition of quality

d.a product-based definition of quality

e.the definition proposed by the American Society for Quality

c(Defining quality, moderate)

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32.Three broad categories of definitions of quality are

a.product quality, service quality, and organizational quality

b.user-based, manufacturing-based, and product-based

c.internal, external, and prevention

d.low-cost, response, and differentiation

e.Pareto, Shewhart, and Deming

b(Defining quality, easy)

33.According to the manufacturing-based definition of quality,

a.quality is the degree of excellence at an acceptable price and the control of variability at an acceptable cost

b.quality depends on how well the product fits patterns of consumer preferences

c.even though quality cannot be defined, you know what it is

d.quality is the degree to which a specific product conforms to standards

e.quality lies in the eyes of the beholder

d (Defining quality, moderate)

34.The role of quality in limiting a firm's product liability is illustrated by

a.ensuring that contaminated products such as impure foods do not reach customers

b.ensuring that products meet standards such as those of the Consumer Product Safety Act

c.designing safe products to limit possible harm to consumers

d.using processes that make products as safe or as durable as their design specifications call for

e.All of the above are valid.

e (Defining quality, easy) {AACSB: Ethical Reasoning}

35.Which of the following is not one of the major categories of costs associated with quality?

a.prevention costs

b.appraisal costs

c.internal failures

d.external failures

e.none of the above; they are all major categories of costs associated with quality

e (Defining quality, moderate)

36.All of the following costs are likely to decrease as a result of better quality except

a.customer dissatisfaction costs

b.inspection costs

c.scrap costs

d.warranty and service costs

e.maintenance costs

e (Defining quality, moderate)

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37.Which of the following statements is not true?

a.Self-promotion is not a substitute for quality products.

b.Inferior products harm a firm’s profitability and a nation’s balance of payments.

c.Product liability transfers from the manufacturer to the retailer once the retailer accepts delivery of the product.

d.Quality—be it good or bad—will show up in perceptions about a firm’s new products, employment practices, and supplier relations.

e.Legislation such as the Consumer Product Safety Act sets and enforces product standards by banning products that do not reach those standards.

c (Defining quality, moderate)

38."Employees cannot produce goods that on average exceed the quality of what the process is capable of producing" expresses a basic element in the writings of

a.Vilfredo Pareto

b.Armand Feigenbaum

c.Joseph M. Juran

d.W. Edwards Deming

e.Philip B. Crosby

d (Defining quality, moderate)

39."Quality Is Free," meaning that the costs of poor quality have been understated, is the work of

a.W. Edwards Deming

b.Joseph M. Juran

c.Philip B. Crosby

d.Crosby, Stills, and Nash

e.Armand Feigenbaum

c (Defining quality, moderate)

40.The philosophy of zero defects is

a.the result of Deming's research

b.unrealistic

c.prohibitively costly

d.an ultimate goal; in practice, 1 to 2% defects is acceptable

e.consistent with the commitment to continuous improvement

e(Total quality management, moderate)

41.Based on his 14 Points, Deming is a strong proponent of

a.inspection at the end of the production process

b.an increase in numerical quotas to boost productivity

c.looking for the cheapest supplier

d.training and knowledge

e.all of the above

d (Total quality management, moderate)

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