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Exam 9: Production and Operations Management

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Question 101

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Rysler Motors currently uses an ERP system to manage all of its production operations and coordinate them with the other operations of the company. The company also wants to implement a just-in-time (JIT) inventory system. Unfortunately for Rysler, ERP is incompatible with JIT, so if it adopts the new inventory system it will have to abandon ERP.

A) True
B) False

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Question 102

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The basic reason the term production management has been replaced by the term operations management is that:

A) the U.S. economy has moved toward a more socialist approach with government controlling a greater share of the production process.
B) a much larger share of total output is being produced by nonprofit organizations.
C) the United States is now a service economy.
D) the United States now exports more than it imports.

E) None of the above
F) A) and B)

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Question 103

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In today's quality control programs, emphasis is placed on:

Statistical process control (SPC) is the process of taking statistical samples of product components at each stage of the production process and plotting those results on a graph. Any variances from quality standards are recognized and can be corrected if beyond the set standards.

The Internet is a very popular place to locate your business today.

The decreased use of enterprise resource planning (ERP) reflects the fact that firms are not interested in combining the computerized functions of all divisions and subsidiaries of a firm.

According to the Making Ethical Decisions box, titled, "Stay or Leave", by law a firm must give employees 60 days notice of a facility or plant closing.

Sophisticated software that enables computer-aided design machines to communicate with computer-aided manufacturing machines is called:

Retailing is one area where technology is unlikely to make a big difference in how services are provided.

Becca works as a new product development engineer for a company that makes solar panels for residential and commercial purposes. Her company uses PERT network software for all development projects. As she nears the final month of her timeline for completing a new panel, Becca will focus on those activities that are:

The service sector of the U.S. economy offers many jobs, but very few of them are considered high wage occupations.

In making a location decision, businesses seldom consider "quality of life" in various locations, because factors that influence quality of life have little or no impact on profits.

Technological improvements are largely responsible for the increase in productivity and efficiency of U.S. plants.

A major purpose of the program evaluation and review technique (PERT) is to identify the minimum time needed to complete a project.

Mini-Case "These are exciting times for our company. We've made a lot of changes over the past two years that have really improved our operations and lowered our costs. Now we are ready to expand into new markets. Minimotors is on its way to becoming a global player." The speaker was Sparky Weyer, president and CEO of Minimotors, Inc., a growing manufacturer of small (some of them downright tiny) electric motors used in a variety of power tools and appliances. Sparky was meeting with potential financial backers in an effort to obtain funding for some expensive new machinery he wanted to purchase. "You may have heard about some of the ways we've cut costs," Sparky continued. "We've developed a new arrangement with several of our biggest suppliers. They've agreed to make more frequent deliveries tied directly to our production schedules. This will help us reduce our inventory costs dramatically. We've also greatly reduced the number of defective motors we produce by carefully keeping tabs on all of our manufacturing processes. In fact, we have set a goal of reducing our defects to 3.4 parts per million. The main purpose of my meeting with you today is because we want to install some sophisticated new machinery and software that will allow us to quickly design and produce motors to the exact specifications of our customers. The machinery is computer-controlled and can produce custom-designed products at very little increase in cost compared to our mass produced motors. We feel this flexibility and quick response time will give us a tremendous competitive advantage and help us attract new customers. Installing the new equipment and training our workers to use it properly will be a complex project, but I'm confident that once we get everything up and running we'll be able to strengthen our position as the leading maker of high-quality electric motors." -While Minimotors has focused on improving production efficiencies, global customers are inquiring about its environmental policies. In light of its strategy to serve European customers, Sparky has requested two of its lead engineers to investigate what it would take to meet the environmental standards of its socially responsible customers. The engineers should investigate as best practices for managing a firm's impact on its environment.

The Deming Cycle is designed to catch errors before they happen.

Andre is an outdoorsman whose love of hunting and fishing led him to start a mail order company specializing in hunting and fishing gear. He decided to locate his business near the Ozarks in southwestern Missouri, partly because of low labor costs, but mainly because the area offered excellent fishing and hunting opportunities, a low crime rate, and a pleasant climate. Ken's location decision was strongly influenced by quality of life considerations.

Northern States Electric is in the process of trying to achieve ISO 14000 certification. Although the criteria for certification involve several milestones, we can be assured they will be evaluated on the regularity and thoroughness of their environmental audits, and how well top management reviews the firm's adherence to policies that are environmentally friendly.

Overall, American firms that have tried to use just-in-time inventory systems generally report disappointment with the results.

Companies that employ lean manufacturing and flexible manufacturing produce better quality products, but have costlier production lines.