Answers to Questions

Solutions Manual for Operations and Supply Chain Management, 10e Russell, Taylor (All Chapters) 1 / 4

• - Introduction to Operations

and Supply Chain Management

Answers to Questions 1-1. The operations function involves organizing work, selecting processes, arranging layouts, locating facilities, designing jobs, measuring performance, controlling quality, scheduling work, managing inventory, and planning production. Operations interacts with marketing in product development, forecasting, production planning, and customer service. Operations and finance interact in capital budgeting, cost analysis, production and inventory planning, and expansion and technology plans.Operations and human resources work together recruiting, training and evaluating workers, designing jobs and working with unions. IT and operations work together daily on e-commerce, enterprise resource planning and supply chain management systems.

1-2. a. Operations at a bank involves transferring funds, processing funds, providing checks, cashing checks, preparing monthly statements, reconciling statements, approving loans, loaning money, keeping track of loan payments, approving credit cards, and more.

• Operations at a retail store involves purchasing goods, stocking goods, selling goods, keeping track of

inventory, scheduling workers, laying out the store, locating the store, forecasting demand, and more.

• Operations at a hospital involves preparing the rooms, scheduling doctors, nurses and other workers,

processing paperwork, ordering supplies, caring for patients, maintaining the facility, laying out the facility, ensuring quality and more.

• Operations at a cable TV company involves taking orders, installing equipment, maintaining equipment,

keeping the shows on the air, scheduling work, processing statements and payments, and more.

1-3. Inventions during the industrial revolution brought workers together under one roof in a factory setting where division of labor and interchangeable parts encouraged the formation of separate worker and management jobs.Ideas from the scientific management era made work more efficient. Human relations theorists emphasized the importance of the human element in operations management. The management science era saw many advances in quantitative techniques and their application. The quality revolution focused management on meeting customer expectations and emphasized quality over quantity. The Internet brought numerous opportunities to do work faster and better. It also opened doors to new markets worldwide. Today’s successful companies compete worldwide for both market access and production resources.

1-4. Productivity is the efficiency with which inputs are transformed into outputs. It is calculated by dividing units of output by units of input. Output can be represented by units or dollars of sales made, products produced, customers served or calls answered. The most common input is labor hours, although a variety of inputs can be used, such as labor cost, labor cost + machine cost + energy cost, and so forth.

1-5. Student answers will vary.

1-6. Student answers will vary. 2 / 4

1-7. Students can begin this assignment by accessing Fortune’s homepage and referring to the Fortune 500 or Global 500 by industry. The leaders in each industry are listed and there is usually some discussion of industry concerns. Individual data on companies can be found at Hoover’s website (www.hoovers.com).

1-8. Student answers will vary.

1-9. Student answers will vary.

1-10. Student answers will vary. Access www.worldbank.com.

1-11. The WTO is an international organization that works to establish and enforce rules of trade between nations.WTO agreements are ratified by the governing bodies of the nations involved. WTO’s dispute settlement process interprets agreements and rules on violations, thereby avoiding political or military conflict. The group promotes free trade and more recently, has helped developing nations enter the trade arena on more equitable grounds. Currently, there are 147 member nations. Membership is achieved by meeting certain environmental, human rights, and trade criteria, agreeing to abide by the rules of the organization, and being approved by two-thirds of the existing membership. See www.wto.org

1-12. Student answers will vary. Access www.executiveplanet.com

1-13. Student answers will vary. Access www.transparency.org

1-14. Student answers will vary. Access http://www.usdoj.gov/criminal/fraud/fcpa.html for basic information.

1-15. Students will find a variety of answers for this question. In general, it is easy to find mission or vision statements, but more difficult to find evidence of the mission or vision being applied.

1-16. Strategy formulation consists of four basic steps: (1) Defining a primary task—what is the purpose of the firm? What is the firm in the business of doing? (2) Assessing core competencies—what does a firm do better than anyone else? (3) Determining order winners and order qualifiers—what wins orders in the marketplace? What qualifies a product or service to be considered for purchase? (4) Positioning the firm— what one or two important things should the firm choose to concentrate on? How should the firm compete in the marketplace?

Student answers will vary. Most start-ups try too much too soon. It’s often difficult to stick with what you do best.

1-17. Core competencies are the essential capabilities that create a firm’s sustainable competitive advantage. They have usually been built up over time and cannot be easily imitated. For example, First National Bank, one of our local banks, is known as a risk taker. Its core competence is its ability to size up the potential of investment opportunities. Through its familiarity with local businesses and its experience in loan making, the bank has developed the ability to predict which loans are worth taking extra risks.Bonomo’s, a successful retail store, is known for having just the right item in stock for special occasions.The store stocks a variety of stylish women’s clothing, but not too much of each style. They specialize in knowing individual customers and even keep track of evening wear purchases so that no one else at a particular party will be wearing the same dress.Toyota emphasizes superior quality at a price below its competitors with its Lexus line of automobiles. To establish a special reputation for quality over the lifetime of the car, the company set up separate sales and service facilities. When it is time for servicing, Lexus owners can have their vehicle picked up and delivered to their home or place of business. The car returns the same day, washed and vacuumed, often with a gift certificate inside for a night on the town complements of the dealer.

1-18. While the answers to this question vary considerably, most students feel competent in the technical areas of their major, but uncomfortable with their communication skills (both oral and written) and their ability to 3 / 4

make decisions. This opens the way for more project-oriented assignments from the instructor. The question also helps students prepare for the inevitable interview question—what are your strengths and weaknesses?

1-19. Order qualifiers are characteristics of a product or service that qualify it to be considered for purchase by a customer. An order winner is the characteristic of a product or service that wins orders in the marketplace— the final factor in the purchasing decision.

1-20. a. Most companies approach quality in a defensive or reactive mode; quality is confined to minimizing defect rates or conforming to design specifications. To compete on quality, companies must view quality as an opportunity to please the customer, not just as a way to avoid problems or to reduce rework costs.The manufacturer of Rolex watches competes on quality.

• Companies that compete on cost relentlessly pursue the elimination of all waste. The entire cost structure

is examined for reduction potential, not just direct labor costs. High volume production and automation may or may not provide the most cost-effective alternative. Wal-Mart competes on cost.

• Flexibility includes the ability to produce a wide variety of products, to introduce new products and to

modify existing products quickly, and, in general, to respond to customer needs. National Bicycle Industrial Company competes on flexibility.

• Competing on speed requires a new type of organization characterized by fast moves, fast adaptations,

and tight linkages. Citicorp competes on speed.

• Competing on dependability requires a stable environment, adequate resources, high standards for

performance, and tight control. Maytag competes on dependability.

• Competing on service requires closeness to the customer, availability of resources, attention to detail,

and flexible operations. Ritz-Carlton competes on service.

1-21. Operations can play two important roles in corporate strategy: (1) it can provide support for the strategy of a firm (help with order qualifiers), and (2) it can serve as a firm’s distinctive competence (win orders).

1-22. Strategic decisions in operations and supply chain management involve products and services, processes and technology, capacity and facilities, human resources, quality, sourcing, and operating systems.

1-23. Policy deployment tries to focus everyone in an organization on common goals and priorities by translating corporate strategy into measurable objectives down through the various functions and levels of the organization. As a result, everyone in the organization should understand the strategic plan, be able to derive several goals from the plan, and determine how each goal ties into their own daily activities.

1-24. The balanced scorecard examines a firm’s performance in four critical areas – its finances, customers, processes and capacity for learning and growing. Although operational excellence is important in all four areas, the tools in operations are most closely associated with process.

1-25. Student answers will vary.

1-26. Student answers will vary. The balanced scorecard worksheet in Table 2.1 is helpful. Finances might refer to future income, customers to potential employers who are interested in both grades and experience, processes to how students will raise their grades and gain experience, and learning and growing to developing skills in several areas.

• / 4