Chapter 09 - Management of Quality
CHAPTER 01 .
INTRODUCTION TO OPERATIONS MANAGEMENT. . .
Teaching.Notes
Many.students.come.to.this.course.with.negative.feelings,.perhaps.because.they.have.heard.that.the.course.i
ncludes.a.certain.amount.of.quantitative.material.(which.many.feel.uncomfortable.with),.or.perhaps.becaus
e.the.course.strikes.them.as.“how.to.run.a.factory.”.Others.seem.to.have.very.little.idea.about.what.operations
.management.is..I.view.the.initial.meeting.with.my.classes,.and.this.first.chapter,.as.opportunities.to.dispel.so
me.of.these.notions,.and.to.generate.enthusiasm.for.the.course.
Highlights.of.the.chapter.include.the.following:
1. Operations.as.one.of.the.three.main.functional.concerns.of.most.organizations.
2. The.role.and.job.of.the.operations.manager.as.a.planner.and.decision-maker.
3. Different.ways.of.classifying.(and.understanding).production.systems.
4. System.design.versus.system.operation.
5. Major.characteristics.of.production.systems.
6. Contemporary.issues.in.operations.management.
7. Operations.as.essentially.managerial.(planning,.staffing,.etc.)
8. The.historical.evolution.of.production/operations.management.
9. Manufacturing.operations.versus.service.operations.
10. The.need.to.manage.the.supply.chain.
Reading:.Why.Manufacturing.Matters
1.
Given.that.the.U.S..economy.is.becoming.more.service.based,.the.percentage.of.employment.i
n.manufacturing.is.declining.while.the.percentage.of.employment.in.the.service.industry.is.increasi
ng..In.addition,.the.loss.of.manufacturing.jobs.results.in.the.loss.of.service.jobs.as.well.(a.general.est
imate.is.that.four.service.jobs.are.lost.for.each.manufacturing.job.lost).
2. The.government.could.offer.companies.tax.incentives.for.purchasing.new.equipment.or.for.hiring.
workers..In.addition,.the.government.could.work.with.manufacturing.companies.to.re-
train.workers.in.more.advanced.manufacturing.processes..
3. Manufacturing.innovation.is.important.because.it.requires.high.value-
added.knowledge.work.that.supports.future.innovation..Second,.innovation.generates.high-
paying.jobs..Third,.innovation.is.important.because.it.improves.productivity,.thereby.slowing.the.o
utsourcing.of.jobs.to.lower.wage.countries.
Reading:.Agility.Creates.a.Competitive.Edge
The.first.solution.could.be.for.U.S..retailers.to.continue.sourcing.from.China.that.part.of.demand.that.is.certa
in.and.to.source.uncertain.demand.from.the.same.low-cost.producers.in.Romania.and.Turkey..
9-1
Copyright © 2021 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.
,Chapter 09 - Management of Quality
9-2
Copyright © 2021 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.
,Chapter 09 - Management of Quality
This.approach.provides.the.advantages.of.low-
cost.manufacturing.in.China.and.the.flexibility.provided.by.the.suppliers.in.Romania.and.Turkey..The.disad
vantage.of.this.approach.is.that.transportation.times.for.U.S..retailers.still.will.be.longer.than.the.transportati
on.times.faced.by.Zara’s.and.H.&.M...
A.second.approach.could.be.that.U.S.retailers.find.low-
cost,.flexible.suppliers.just.across.the.border.in.Mexico..The.advantages.of.this.approach.include.low.wages.
and.shorter.transportation.times..The.primary.disadvantages.to.this.approach.involve.the.time.and.expense.
of.locating.new.suppliers..Additionally,.the.U.S..retailers.might.have.to.lend.considerable.support.developi
ng.the.capabilities.of.these.suppliers...
Reading:.Sustainable.Kisses
1.
Hershey’s.and.other.companies.engage.in.sustainable.business.practices.because.consumers.p
refer.to.do.business.with.companies.that.practice.sustainable.sourcing.and.ethical.treatment.of.wor
kers..Many.of.the.leaders.in.these.businesses.hold.the.same.values..By.educating.farmers,.Hershey’
s.can.also.help.to.increase.the.longevity.and.yield.of.cocoa.plants..
2. Hershey’s.actions.may.influence.retailers.and.customers.in.its.supply.chain.to.become.better-
educated.about.sourcing,.which.may.influence.competitors.to.adopt.similarly.sustainable.business.
practices..
Operations.Tour:.Wegmans.Food.Markets
1. Customers.judge.the.quality.of.a.supermarket.based.on:
a. Quality.of.individual.products.
b. Exterior.and.interior.physical.look.of.the.store.
c. Effectiveness.and.efficiency.of.service.personnel.
2. a.
Customer.satisfaction.is.the.major.key.to.the.success.of.any.operation;.without.it,.the.comp
any.cannot.survive.
b.
Forecasting.allows.the.company.to.plan.the.workforce.levels,.purchase.quantities,.invento
ry.levels,.and.capacity.
c. Capacity.planning.allows.the.company.to.balance.the.trade-
off.between.shortages.and.excess.inventories.and.between.waiting.lines.and.idle.time.
d. A.good.location.can.have.a.significant.impact.in.attracting.customers,.thus.improving.sales.
e.
Planning.and.controlling.levels.of.inventory.will.assist.with.avoiding.stockouts.and.avoidi
ng.excess.inventory.levels.
f.
Good.layout.of.the.store.can.assist.in.maximizing.customer.service.and.sales.by.strategical
ly.directing.customers.through.the.store..An.effective.layout.can.also.improve.the.efficiency.of.
the.operations.
9-3
Copyright © 2021 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.
, Chapter 09 - Management of Quality
g. Effective.scheduling.of.company.workers.and.work.hours.can.improve.both.customer.service.
and.efficiency..An.effective.schedule.provides.convenient.store.hours,.minimal.customer.wait
ing.lines,.and.minimal.employee.idle.time.
3.
Wegmans.uses.technology.to.track.inventory.and.manage.its.supply.chain,.which.lessen.th
e.risk.of.occurrences.of.out-of-
stock.events,.and.to.maintain.freshness.in.its.meat.and.produce.departments.
Answers.to.Discussion.and.Review.Questions
1.
The.term.operations.management.relates.to.the.management.of.systems.or.processes.that.creat
e.goods.and/or.provide.services..These.processes.involve.the.planning,.coordination,.and.executio
n.of.all.activities.within.an.organization.that.create.goods.and.services..A.supply.chain.is.the.sequen
ce.of.organizations,.including.their.facilities,.functions,.and.activities,.that.are.involved.in.produci
ng.and.delivering.a.product.or.service..This.sequence.begins.with.basic.suppliers.of.raw.materials.a
nd.ends.with.the.final.customer..A.supply.chain.includes.activities.and.facilities.external.to.the.inter
nal.operations.function,.e.g.,.sourcing.and.transportation.of.inbound.materials.
2.
The.three.primary.functions.are.operations,.finance,.and.marketing..Operations.is.concerned.w
ith.the.creation.of.goods.and.services,.finance.is.concerned.with.provision.of.funds.necessary.for.op
eration,.and.marketing.is.concerned.with.promoting.and/or.selling.goods.or.services.
3.
The.operations.function.consists.of.all.activities.that.are.related.directly.to.producing.goods.or.
providing.services..It.is.the.core.of.most.business.organizations.because.it.is.responsible.for.the.crea
tion.of.an.organization’s.goods.or.services..Its.essence.is.to.add.value.during.the.transformation.pro
cess.(the.difference.between.the.cost.of.inputs.and.value.and.price.of.outputs).
4. Among.the.important.differences.between.manufacturing.and.service.operations.are:
a. The.nature.and.consumption.of.output.
b. Uniformity.of.input.
c. Labor.content.of.jobs.
d. Uniformity.of.output.
e. Measurement.of.productivity.
Among.the.important.similarities.between.manufacturing.and.service.operations.are:
a. Forecasting.and.capacity.planning.to.match.supply.and.demand.
b. Process.Management
c. Managing.variations
d. Monitoring.and.controlling.costs.and.productivity
e. Managing.the.supply.chain
f. Location.planning,.inventory.management,.quality.control.and.scheduling
9-4
Copyright © 2021 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.
CHAPTER 01 .
INTRODUCTION TO OPERATIONS MANAGEMENT. . .
Teaching.Notes
Many.students.come.to.this.course.with.negative.feelings,.perhaps.because.they.have.heard.that.the.course.i
ncludes.a.certain.amount.of.quantitative.material.(which.many.feel.uncomfortable.with),.or.perhaps.becaus
e.the.course.strikes.them.as.“how.to.run.a.factory.”.Others.seem.to.have.very.little.idea.about.what.operations
.management.is..I.view.the.initial.meeting.with.my.classes,.and.this.first.chapter,.as.opportunities.to.dispel.so
me.of.these.notions,.and.to.generate.enthusiasm.for.the.course.
Highlights.of.the.chapter.include.the.following:
1. Operations.as.one.of.the.three.main.functional.concerns.of.most.organizations.
2. The.role.and.job.of.the.operations.manager.as.a.planner.and.decision-maker.
3. Different.ways.of.classifying.(and.understanding).production.systems.
4. System.design.versus.system.operation.
5. Major.characteristics.of.production.systems.
6. Contemporary.issues.in.operations.management.
7. Operations.as.essentially.managerial.(planning,.staffing,.etc.)
8. The.historical.evolution.of.production/operations.management.
9. Manufacturing.operations.versus.service.operations.
10. The.need.to.manage.the.supply.chain.
Reading:.Why.Manufacturing.Matters
1.
Given.that.the.U.S..economy.is.becoming.more.service.based,.the.percentage.of.employment.i
n.manufacturing.is.declining.while.the.percentage.of.employment.in.the.service.industry.is.increasi
ng..In.addition,.the.loss.of.manufacturing.jobs.results.in.the.loss.of.service.jobs.as.well.(a.general.est
imate.is.that.four.service.jobs.are.lost.for.each.manufacturing.job.lost).
2. The.government.could.offer.companies.tax.incentives.for.purchasing.new.equipment.or.for.hiring.
workers..In.addition,.the.government.could.work.with.manufacturing.companies.to.re-
train.workers.in.more.advanced.manufacturing.processes..
3. Manufacturing.innovation.is.important.because.it.requires.high.value-
added.knowledge.work.that.supports.future.innovation..Second,.innovation.generates.high-
paying.jobs..Third,.innovation.is.important.because.it.improves.productivity,.thereby.slowing.the.o
utsourcing.of.jobs.to.lower.wage.countries.
Reading:.Agility.Creates.a.Competitive.Edge
The.first.solution.could.be.for.U.S..retailers.to.continue.sourcing.from.China.that.part.of.demand.that.is.certa
in.and.to.source.uncertain.demand.from.the.same.low-cost.producers.in.Romania.and.Turkey..
9-1
Copyright © 2021 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.
,Chapter 09 - Management of Quality
9-2
Copyright © 2021 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.
,Chapter 09 - Management of Quality
This.approach.provides.the.advantages.of.low-
cost.manufacturing.in.China.and.the.flexibility.provided.by.the.suppliers.in.Romania.and.Turkey..The.disad
vantage.of.this.approach.is.that.transportation.times.for.U.S..retailers.still.will.be.longer.than.the.transportati
on.times.faced.by.Zara’s.and.H.&.M...
A.second.approach.could.be.that.U.S.retailers.find.low-
cost,.flexible.suppliers.just.across.the.border.in.Mexico..The.advantages.of.this.approach.include.low.wages.
and.shorter.transportation.times..The.primary.disadvantages.to.this.approach.involve.the.time.and.expense.
of.locating.new.suppliers..Additionally,.the.U.S..retailers.might.have.to.lend.considerable.support.developi
ng.the.capabilities.of.these.suppliers...
Reading:.Sustainable.Kisses
1.
Hershey’s.and.other.companies.engage.in.sustainable.business.practices.because.consumers.p
refer.to.do.business.with.companies.that.practice.sustainable.sourcing.and.ethical.treatment.of.wor
kers..Many.of.the.leaders.in.these.businesses.hold.the.same.values..By.educating.farmers,.Hershey’
s.can.also.help.to.increase.the.longevity.and.yield.of.cocoa.plants..
2. Hershey’s.actions.may.influence.retailers.and.customers.in.its.supply.chain.to.become.better-
educated.about.sourcing,.which.may.influence.competitors.to.adopt.similarly.sustainable.business.
practices..
Operations.Tour:.Wegmans.Food.Markets
1. Customers.judge.the.quality.of.a.supermarket.based.on:
a. Quality.of.individual.products.
b. Exterior.and.interior.physical.look.of.the.store.
c. Effectiveness.and.efficiency.of.service.personnel.
2. a.
Customer.satisfaction.is.the.major.key.to.the.success.of.any.operation;.without.it,.the.comp
any.cannot.survive.
b.
Forecasting.allows.the.company.to.plan.the.workforce.levels,.purchase.quantities,.invento
ry.levels,.and.capacity.
c. Capacity.planning.allows.the.company.to.balance.the.trade-
off.between.shortages.and.excess.inventories.and.between.waiting.lines.and.idle.time.
d. A.good.location.can.have.a.significant.impact.in.attracting.customers,.thus.improving.sales.
e.
Planning.and.controlling.levels.of.inventory.will.assist.with.avoiding.stockouts.and.avoidi
ng.excess.inventory.levels.
f.
Good.layout.of.the.store.can.assist.in.maximizing.customer.service.and.sales.by.strategical
ly.directing.customers.through.the.store..An.effective.layout.can.also.improve.the.efficiency.of.
the.operations.
9-3
Copyright © 2021 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.
, Chapter 09 - Management of Quality
g. Effective.scheduling.of.company.workers.and.work.hours.can.improve.both.customer.service.
and.efficiency..An.effective.schedule.provides.convenient.store.hours,.minimal.customer.wait
ing.lines,.and.minimal.employee.idle.time.
3.
Wegmans.uses.technology.to.track.inventory.and.manage.its.supply.chain,.which.lessen.th
e.risk.of.occurrences.of.out-of-
stock.events,.and.to.maintain.freshness.in.its.meat.and.produce.departments.
Answers.to.Discussion.and.Review.Questions
1.
The.term.operations.management.relates.to.the.management.of.systems.or.processes.that.creat
e.goods.and/or.provide.services..These.processes.involve.the.planning,.coordination,.and.executio
n.of.all.activities.within.an.organization.that.create.goods.and.services..A.supply.chain.is.the.sequen
ce.of.organizations,.including.their.facilities,.functions,.and.activities,.that.are.involved.in.produci
ng.and.delivering.a.product.or.service..This.sequence.begins.with.basic.suppliers.of.raw.materials.a
nd.ends.with.the.final.customer..A.supply.chain.includes.activities.and.facilities.external.to.the.inter
nal.operations.function,.e.g.,.sourcing.and.transportation.of.inbound.materials.
2.
The.three.primary.functions.are.operations,.finance,.and.marketing..Operations.is.concerned.w
ith.the.creation.of.goods.and.services,.finance.is.concerned.with.provision.of.funds.necessary.for.op
eration,.and.marketing.is.concerned.with.promoting.and/or.selling.goods.or.services.
3.
The.operations.function.consists.of.all.activities.that.are.related.directly.to.producing.goods.or.
providing.services..It.is.the.core.of.most.business.organizations.because.it.is.responsible.for.the.crea
tion.of.an.organization’s.goods.or.services..Its.essence.is.to.add.value.during.the.transformation.pro
cess.(the.difference.between.the.cost.of.inputs.and.value.and.price.of.outputs).
4. Among.the.important.differences.between.manufacturing.and.service.operations.are:
a. The.nature.and.consumption.of.output.
b. Uniformity.of.input.
c. Labor.content.of.jobs.
d. Uniformity.of.output.
e. Measurement.of.productivity.
Among.the.important.similarities.between.manufacturing.and.service.operations.are:
a. Forecasting.and.capacity.planning.to.match.supply.and.demand.
b. Process.Management
c. Managing.variations
d. Monitoring.and.controlling.costs.and.productivity
e. Managing.the.supply.chain
f. Location.planning,.inventory.management,.quality.control.and.scheduling
9-4
Copyright © 2021 McGraw-Hill. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill.
