Operations Management, 5th Canadian Edition Solution Manual

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Chapter 11-1CHAPTER 1INTRODUCTION TO OPERATIONS MANAGEMENTTeaching NotesThe initial meeting withthe class (the first chapter) isprimarily to overviewthe course (text), and tointroduce the instructor and his/her interest in OperationsManagement.Thecourse outline (syllabus), theobjectives of the course andtopics, chapters, and pages of text covered in the course, as well asproblems/cases to be done in class, videos to watch, Excel worksheets to use, etc. are announced to theclass.Many studentsmayknow littleaboutOMandthetypes of jobs available.This point can beaddressed inorderto generate enthusiasm for the course.The Learning Objectives at the beginning of the chapterindicatethe highlights of the chapter.Answers to Discussion and Review Questions1.Operations managementisthe management ofactivities and resourcesthat create goods and/orprovide services.2.Production/operationsplanner/scheduler/controller, demand planner (forecaster), qualityspecialist, logistics coordinator, purchasing agent/buyer,supplychainmanager,materials planner,inventory clerk/manager, production/operations manager.3.a.Because a large%of a company’s expenses occur in the operations,e.g.,purchasingmaterials and workforce salaries, more efficient operationscan result in large increases inprofits.b.Alarge number of management jobs are inOM.c.Activities in all other areas ofanyorganization are all interrelated withOM.4.The threemajorfunctionsoforganizationsare operations, finance, and marketing. Operations isconcerned with the creation of goods and servicesidentified by marketing, finance is concernedwith provision of funds necessary for operation and investment of extra funds, and marketing isconcerned with promoting and/or selling goods or services.5.The operations function consists of all activities that are directly related to producing goods orproviding services. It is the core ofmost organizations. Itaddsvalue duringthetransformationprocess (the difference between the cost of inputs and price of outputs).An operations managermanages the transformation function.He/she is responsible for planning and use of resources(labour, machines, and materials). Not all jobs which are primarily OM are called as such.Thekinds of jobs that operations managers oversee vary tremendously from organization toorganization largely because of the different goods or services involved.For example, astore/restaurant manager is in effect an operations manager. See Figure 1-6 for examples oftypical activities performed by operations managers.6.Design decisions are usually strategic and long term (1–5 yearsor soahead), whereasplanningand controldecisionsare shorter term.In particular,planning decisions are tactical and mediumterm (1–12 monthsor soahead), and control decisions(including schedulingand execution)are

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Operations Management,5/C/e1-2short term (1–12 weeksor soahead).Designinvolves decisions that relate togoodsand servicedesign, capacity,acquisition of equipment,arrangement of departments, and location of facilities.Planning/controlactivitiesinvolvemanagement of personnel,qualitycontrol/assurance,inventory planningandcontrol,production planning,andscheduling.7.Important differences betweenproducing goodsandperformingservices are:(1)Customer contact, use of inventories, and demand variability(2)Uniformity of input(3)Labour content of jobs(4)Uniformity of output(5)Measurementof productivity(6)Quality Assurance8.Answers mightvaryfor each student.Teaching;personal services such ashaircut, lawn mowing,maid service,andcar wash.The customer or something belonging to the customer isbeingtransformed.9.From Figure 1-6:•dealing with labour difficulties,solving personnel problems, solving managementproblems, solving technical problems•making OM decisions, including general management decisions (planning, organizing,controlling, and directing)•innovating, personalinitiatives, improvingproductivity•representing operations in uppermanagement10.a.Industrial Revolution began in the 1770s in England, and spread to the rest of Europe andNorth America in the late eighteenth century and the early nineteenth century. A number ofinventions such as the steam engine, the spinningjenny, and the power loom helped to bringabout this change.Latermachinesmade of iron were built.Two concepts assisted in large-scale production: division of labour and interchangeable parts.Despite the major changes thatwere taking place, management theory and practice had not progressed much from early days.What was needed was a systematic approach to management.b.Frederick W. Taylor spearheadedthescientific managementmore than a century ago. Thescience of management was based on observation, measurement, analysis, improvement ofwork methods, and economic incentives.He also published a book titledThe Principles ofScientific Managementin 1911.Other pioneerswho contributed to scientific managementinclude Frank Gilbreth, often referred to as the father of time and motion study, and his wifeLillian Gilbreth, and Henry Gantt.c.An interchangeable part is a part made to such precision thatall units of thepart would fit anyparticularproductit is made for. It meant thatindividual parts would not have to be custom-made (they were standardized).The standardized parts could also be used for replacementparts. The result was a tremendous decrease in assembly time and cost.

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Chapter 11-3d.Division of labour is breaking up a production process into a series of tasks, each performedby a different worker. It enabledaworker to learnthejob and become proficient atitmorequickly, and avoid the delays ofhaving a single workershifting from one activity to another.11.a.Service involvesa high degree of customer contact and aremuch more sensitive to demandvariability. Services often require a higher labourcontent and the output is variable. Qualityassurance is more challenging in services because performance and consumption occur at thesame time.The service sector accounts for more than 78percent of jobs in Canada and thiscontinues to increase.Some examples include government services, finance and insurance,healthcare, education, professional and technical services.b.Manufacturing is importantbecauseitproduces the goods that we use, and many service jobsare dependent on manufacturing because they supportmanufacturing. Itallows a separationbetween production and consumptionpermitting a fair degree of latitude in selecting workmethods, assigning jobs, scheduling work, and exercising control over operations.Since highmechanization generates products with low variability, manufacturing tends to be smooth andefficient.Manufacturing produces food and beverage, textile and clothing, petroleum,chemicals, machinery, computer and electronic products, electrical equipment, andtransportation equipment.12.A model is an abstraction of reality, a simplified representation of something.Models can bemathematical, schematic, or statistical.Models ignore the unimportant details so that attentioncan be concentrated on the most important aspects, thus increasing the opportunity to understanda problem and its solution.Models allow experiments that could be very costly to do in real life.13.From Table 1-6:e.g.,Frederick W. Taylor, Frank Gilbreth, Henry Gantt, Henry Ford, F.W.Harris, W. Shewhart,W. EdwardsDeming, Joseph Orlicky,andTaiichi Ohno.14.Answers might vary for each student.a.Pros(for owning a car): convenience, flexibilityCons(for owning a car): costs (initial,insurance, maintenance & repairs, gas),parkingb.Pros (for buying now): availabilityCons (for buying now): technology change, reduced cost in futurec.Pros (for new car): reliability, warranteeCons(fornewcar):more expensive,higherinsurance,higher depreciationd.Pros (for speaking up in class): develop favourable image with instructor, feel more confidentCons (forspeaking up in class):risk of being wrong, appearance of showing off15.Craft production:involvesskilled workersproducing high variety of customized goodsatlowquantity,utilizing general-purpose equipment. The main advantage is the flexibility to produce awide variety ofgoods providing many choices for customers. The main disadvantage is itsinability to produce at low cost.Examples:customtailor, machine shop, print shop, andlandscaping.Mass production: involveslow-skilled workersproducing a few standardized goods at highquantity,utilizing specialized equipment. The main advantage is low cost, efficient production.The main disadvantage is that it does not allow easy changes inquantityof output,theproduct,ortheprocess.Examples:paper,sugar or salt or crude oil refining,andsoft drink-bottling.

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Operations Management,5/C/e1-4Lean production(or just-in-time): involveshighlyskilled workersproducingahighvariety ofgoods athighquantity, usingflexibleequipment. It requireshighlevel ofemployee involvementandteamwork. It combines the advantages of both mass production (highquantity, low cost) andcraft production (variety, flexibility).Examples:automobiles, computers, and appliances.16.Compared to workers inmass production, much more is expected of workers in lean productionsystems. They must be able to function in teams,andplay active roles in operating and improvingthe system.Thiscan lead to pressure and anxiety. Moreover, a flatter organizational structuremeans career paths are not as steep in lean production organizations. Unions often opposeconversion to a lean system because they view the added responsibility and multiple tasks as anexpansion of job requirements without comparable increases in pay. In addition, workerssometimes complain that the company is the primary beneficiary of employee-generatedimprovements.17.Answers might vary for each student.Use ofmodern technology likecomputers, cell phones, andmicrowaves hashad positive effects on people’s lives.Instant communication and easy access toinformation are some of the advantages.However, there are somedownsides. As a result oftechnology, many of us are less active,thus have gainedweightand are less healthy. Anotherdownsideis theautomation of jobs that were previously done by manual labour, e.g., robots forwelding car bodies.18.Long-termtrendsin OMincludeincreasing use ofInternet &e-commerce,other technologies,globalization,supply chain management, and sustainability.Personally, it is likely thattheuseof Internet for purchasing has increased, more machines and computers are being used in one’sdaily life, more international purchasesis being made, more use of package delivery services,such as Purolator, FedEx, and UPS, is being made, and there is more recycling at work and athome.19.Many examples are possible. These may include•cheating in an exam•copying someone else’s homework assignment•lying in the resume20.Value added is defined as the difference between the cost of inputs and the value or price ofoutput.In nonprofit organizations, the value of outputsis their value to society; the greater thevalue added, the greater the efficiency of these operations. In for-profit organizations, the value ofoutputs is measured by the prices that customers are willing to pay for those goods or services.Asthe inputs are transformed to outputs, value is added to products in a number of different ways.For example, value can be added by changing the product structurally (physical change) ortransporting it (it may have more value somewhere else).21.A supply chain isthesequence of organizations involved in producing and delivering aproduct..Supply chain management is thecoordination and collaborationof members ofasupply chain.

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Chapter 11-522.Sustainability refers to reduced use of resources and reduced harm to the environment so that future humanexistence is not threatened.Sustainability is important because life depends on clean air, water, and soil,and concern about global warming and pollution is having an increasing effect on how businessesoperate. Governments are imposing stricter environmental regulations. Furthermore, businessesare coming under increasing customer pressure to reduce their carbon footprint.Activities that aremost affected are product design, purchasing and supply chain management, production process,and disaster preparation and response.Answers to Taking Stock Questions1.Trade-offsis the comparison of theconsequencesof adecision.It is important to consideralltheconsequences ofa decision in order to make a measureddecision which will have the best net result. Forgetting one advantage or disadvantage may resultin a wrong decision.2.An organization, by definition,isa group of individuals who work together to achieve a goal,make goods, or provide services. If functional areas do not collaborate, the organization is like anout-of-tune engineor unsynchronized orchestra, clearly not as effective and efficient as it couldbe.For example, if marketing and operations don’t communicate well, either there will be lostsales or unwanted goods.3.TechnologyhasaffectedOperationsintermsofcomputerusage(Internet,officeandmanufacturing software, e.g., CAD, ERP), machines (automation, e.g., CNC), and new materials(e.g., recycled plastic).4.Because they willbedeprived of education.It is well-known that level of education is a majordeterminant of life-long income.Answers toCritical Thinking Exercises1.Manufacturers have the luxury of making the productsearlier than the time the customer needsthem. Therefore, quality and timing problems can be fixed. Also, production can be evenlydistributed over the work day (e.g.,8-hour a day shift as opposed to operatingin the evenings ornightsfor services).Service providers have to present their staff and their facility in an attractiveway because the customer will be able to see them.Importance of servers implies more timespent on recruiting, training, evaluating, and motivating.Services should be prepared for a widervariety of inputs (customers) and outputs. For example, an airline should be prepared to deal withproblem passengers.Defining a service and measuring itaregenerallymoredifficult. Hence,improvingproductivity and qualityaregenerallymoredifficult.

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Operations Management,5/C/e1-62.Jobs that involve creativity areusuallynot well-defined. Consider, for example, teaching.Thereis no unique process for teachinga topic.However,there are somecommon steps that should befollowed.Students should have the right background, the topic should be divided in easy-to-learnsegments,qualified instructors are employed,andstudentsaretestedfrequently. This is a processand can be managed.OM doesn’t usually involve the technical aspects of work.1.Answers to the Experiential Learning ExercisesQuality in a fast restaurant refers toquality of food and quality of service. Quality of food pertains to the quality of raw material andcooking process.Theseare usuallydeterminedby tasting the food.Quality of service refers toboth the servers and the environment of the restaurant. Are the employees wearing cleanuniforms? Are they polite? Is the restaurant clean? Also, a broad definition of quality includeswhatever customers expect, which includes a short wait time.2.Other than food, packaging material, condiments,napkins, and cleaning products should bestocked.3.Employee scheduling is very important in a service, because the customers expect a short waittimeand food is not usually made before customer orders.4.Capacity (size) of a restaurant should match its peak demand (the busiest time and day).If therestaurant is too small, it will lose a lot of customers and revenue, whereas if it is too large, thenits lease costand property taxwill be too high.In either case, its profit will be less than what itcould have been.Answers to the Internet Exercises1.Supply Chain Management Association has recentlybeenformed by merger ofPurchasingManagement Association of Canada(PMAC) and Supply Chain & Logistics Association Canada(SCL). PMAC’s membersareorganizational buyersor purchasing agents/managers.SCL’smembers are transportation coordinators and others interested in logistics.SCMAprovidesacertification program,an annual conference and some regional(“institute”)meetings, researchreports, job listing,news and events announcements, Internet links, etc.Canadian Institute of Traffic and Transportation (CITT)’s members are transport professionals.CITT provides a certification program, an annual conference, career center, news and events, etc.Canadian Supply Chain Sector CouncilisaFederal-government initiative to find solutions tohuman resource challenges in supply chains.They provide job descriptionsand occupationalstandards, job fairsand conferences, accreditationofprograms and courses, andlabour marketinformation to allthe stakeholders.American Production and Inventory Control Society(now called The Association for OperationsManagement)’s members are primarily professionalsinOperations Management.Note thatAPICS has regional branches in Canada. APICSprovidescertification programs, an annualconference,an online bookstore,job listing, news and events announcements, research reports,APICS magazine,and Industry Internet links.AmericanSocietyforQuality(ASQ)’smembersareprimarilyprofessionalsinqualitymanagement and engineering.Note that ASQ has regional branches in Canada. ASQ providescertification programs, an online bookstore, job listing, news and events announcements,andseveralmagazines and journals.

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Chapter 11-7Project Management Institute(PMI)’s members are primarily professionals.PMI provides acertification program, an online bookstore,job listing,news and events announcements,andfewmagazines and a journal.2.a.Inputs are coal, iron ore, and scrap metal.There are twodifferent processes to make steelslabs. One requires converting the coal into coke, melting the iron ore in a blast furnaceusingthe coke, and makingliquid iron intoliquid steel in a basic oxygen furnaceusingsome scrapsteel. The otherprocessis using the electric arc furnaceto meltscrap steel. Both processesthen test the liquid steel intheirladle metallurgy facility, and then use continuous castingtomake steel slabswhich arestored. When needed,slabsare reheated and rolled thinnerin theroughing mill, andthenrolled intorolled sheetsin the finishing mill. These hot rolled sheetsare stored.Later most are further processed in the cold roll mill into galvanized and tin-coated sheets.Also, some tubes are made. A process flow diagram forDofasco isgiven inChapter 6’s Internet Exercises.The outputs are steel slabs, hot-rolled steel, cold-rolled steeland tubes.b.Thequality iscontrolledin the metallurgy facilities.c.The inventories include iron ore, coal, scrapsteel, slabs, hot rolled, and cold rolled steel.Answers to LynnMini-case1.a.Demand for her services(numberand sizeof yards)need to be forecasted.b.Inventories probably include mowerparts, fuel, lubricants, fertilizer, chemicals, tools, etc.;replenishment decisions.c.She must schedule jobs (lawns) andherstaff;Weather, illness, rush orders, emergencies,breakdownscan force rescheduling.d.Qualityassurance(of worked lawn, staff, equipment, etc.) is very important. Repeat businesswould be greatly affected and new business depends on word of mouth and reputation.e.Oil change, blade sharpening, motor tune-up,bladeand filter clean-up, etc.2.a.Pros (for working for herself):being one’s own boss (control).Cons (for working for herself):uncertainty of income,more time consuming,harder,b.Pros (for expanding business): possibility of more profitCons (for expanding business):moreinvestment,moreworkload,moreemployeeproblemsc.Pros (for launching a web site):more customers (it is a form of advertising)Cons (for launching a web site): initial & on-going costs, time for updating the information3.Yes,becauseLynn promised thestudenta bonus of $25 foragood idea and this idea appears tobe good.4.Using eco-friendly pesticides, weed-killers, and fertilizers; finding a use for the cut grass (e.g.,animal feed); buying more efficient, less polluting lawn mowers, etc.

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Operations Management,5/C/e1-8Answers toSobeysMini-case1.Inputs: groceries, staff, building, fixtures (shelves, stands, displays, etc.), tillsTransformation process: making the groceries available to customers (purchasing, transportation,receiving, and stocking shelves, etc.)Output: satisfied, loyal customersFeedback/control:inventory control,quality control, customer service2.a.Forecasting:to plan thestoresize,workforce level,andpurchase quantities& inventorylevelsb.Productdesign &selection:to determine the merchandise mix to carry forthe particularmarketc.Capacity planning:todeterminethe store’sright size (floor size)andstore hoursd.Layout design:to determinea good floor plan(directing customers through the store)e.Location: to determine the right location in the city (most important for a service)f.Quality: a system to assureand controlquality in groceries (e.g., keeping meat, dairy, etc.fresh andat the right temperature), and in customer serviceg.Inventory: toavoid stock-outs andexcess inventory levelsf.Staffscheduling:to achieveminimal customer waitingandminimal employee idle time

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Chapter 22-1CHAPTER 2COMPETITIVENESS, STRATEGIC PLANNING,ANDPRODUCTIVITYTeaching NotesThe topics covered in this chapter can be used to get your course off to an interesting start. Most ofthestudentsalready know some of the concepts in this chapter (from other courses or general businessknowledge): (a) the competitive attributesofgoodsand servicessuch as price, quality, and timeliness, (b)plans and strategies, and (c) productivity.The three apparently disjointedtopics can be related through the followingargument: companies must beproductive in order to be competitive and that to be competitive they must have a mission and some well-thought-out approach or plan or strategy on how to achieve this position.Concepts new to students will be (a) value or best buy, order qualifies and winners (b) operations strategyand (c) measuring productivity.New chapter opener (Porter Airlines),the mini-cases at the end ofchapter, and videos such as McDonalds’“Made for You” (available from McGraw Hill Ryerson),can beused to illustrate strategyand competitiveness.Answers to Discussion and Review Questions1.The four key purchasing criteria are price, quality, variety, and timeliness. Every purchase isdifferent. For example, one may buy a very inexpensive Durabrand electricbreadknife, but moreexpensive and better quality (according to consumer ratings) Hamilton Beach mixer. Someconsumers look for special colours and models, and are willing to pay more for them. Everyoneprefers to have the items they need availablewithout delay, but some willwait a little in order toget a better price. For example, books are cheaper if purchased directly from Amazon.ca, but onehas to wait1-2 weeks.The example might vary for each student.2.Organizations competewithcost, quality,flexibility, anddelivery.WestJet competesbasedoncost.Cadillac competes based on quality. Dell competes based on flexibility(customization).Dominos Pizza competes based on delivery (within30 minutes or free).3.Characteristics such as price, quality,andtimelinesscan be order qualifiers or order winners.Order qualifiers are the minimum level of characteristics(standards)required to be considered asa qualified supplier.Order winners are those purchasing criteria that cause the sellingorganization to be perceived as better than thecompetition.For example, for automanufacturersoperating just-in-time, on-time delivery and quality of parts of a supplier are order qualifies andcost is order winner.4.Competitive advantagecanbe developed over time by focusing on a limited range of goods orservices,and/oron a technology. Using teamwork and rewards, an organization can develop itscapabilities(also called core competencies). Companies should use past experience and expertisein design, operations/manufacturing, or marketing, and leverage them to introduce newgoods andservices5.Strategic planning is the managerial process that determines a strategy for the organizationandimplementsit through allocation of resources and actionplans.Without a mission and a strategy,the organization is aimless and cannot compete.

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Operations Management, 5/C/e2-26.Briefly, strategic planning starts with top management soliciting the performance of currentstrategy from department managers, and commissioning a market research study of the industryand where it is headed in the next one to five years. Then, the management team may form/adjustthe organization’s mission and vision, based on the organization’s values, determine a set ofgoals, and brainstorm and evaluate alternative ways (strategies) to achieve them. Finally, thechosen strategy is implemented by determining a set of action plans at the operating departmentlevel.7.An operations strategy comprises a set of well-coordinated policies,objectives, and action plans,directly affecting the operations function, which is aimed at securing a long-term sustainableadvantage over the competition.8.Thenine strategic decision categoriesare: Facility, capacity, vertical integration/outsourcing,supplierrelationship/partnership, product mixand new products, process types & technology,human resources,quality, and operations infrastructureand systems.9.The formulation ofanoperations strategy involves the following steps: (a)determine theoperations requirements of the business strategy, (b) categorize customersand their competitivepriorities, (c) group product lines into types,(d) assess the strengths & weaknesses of the currentoperations strategy and products,(e) assess the degree of focus in each plant, and (f) Determinethe objectives, policies, and action programs in thenine strategicdecisioncategoriesfor productlines and assign them to plants.10.Answers might vary for each student.Example of a policyfor waiting staff:Respond to everycustomer request with “my pleasure”.Example of an Action plan:hire a design artist, buy a camera and platemaking machine (in orderto reduce graphics production lead time from 10 days to 1 day)11.Time-based strategies are approaches that focus on reducing the time needed to conduct thevarious activities in product design,production, anddistribution. The rationale is that by reducingtime, costs arereduced, productivity isincreased, product innovations appear on the marketearlier, and customer service is improvedalong with gaining a competitive edge.At the sametime, quality also tends to be higher.Examples include just-in-time (“made for you”) productionby McDonald’s and cellularlayoutby Standard Aero.12.Answers might vary for each student.Boeing isforecasting that demand for medium-to-longrange flightsbetween medium-size citieswill increase, whereas Airbus is forecasting thatdemand forverylong-range flights betweenmajor cities inAsia and North America, willincrease.For more info., see e.g., http://www.smarttravelasia.com/AirbusVsBoeing.htm.13.Productivity isa measure of productive use of resources, usually expressed as the ratio of outputto input.Productivityis important because itis related to profitabilityand standard of living.14.Factors affecting productivity—methodand management,equipment andtechnology,and labour.An example of a method and management improving productivity is JIT (lean) production. Anexample of an equipment and technology improving productivity are computers and Internet. Anexample of labour improving productivity are trainedand knowledgeableworkers.15.The Japaneseautomakers,such as Toyota, Honda, and Nissan,are using more productive workmethods,such as lean production,thanthe Big 3North Americanautomakers (GM, Ford,

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Chapter 22-3Chrysler).Also,they have better relations with their suppliers and workers. Finally, they usetheir plantsat higher capacity (close to 100%vs. less than 90%).16.Answers might vary for each student.“If productivity increases, fewer workers will be needed” isnot necessarily true. For example, output can increase or other types ofproductscan beintroduced. Even when costs, e.g., labour, is reduced, the displaced workers can move to otherindustries such as services.17.Efficiency is a narrower concept that pertains to getting the most out of afixedset of resources;productivity is a broader concept that pertains to better use of overall resources. For example, anefficiency perspective on mowing a lawn if given a hand mower would focus on the best way touse the hand mower; a productivity perspective would include the possibility of using a powermower.18.The main reasonthatproductivity measurement in health careis difficultis that measuring output isdifficultbecause it is partly intangible, involves intellectual activities, orthe output has a highdegree of variability. One measure of output is quality-adjusted life years or life expectancy after apatient has been diagnosed for a disease andthenis treated or operated on.For example, considerdiabetes. Life expectancydepends on how early the patient goes to his/her doctor and onperforming some of the treatment personally (e.g., injecting insulin). If diagnosis is not doneearly enoughor is not managed well, diabetes can become seriousand lead to other serious healthproblems. In this case,the extent of deterioration in health due to diabetes may be hard tomeasure. The involvement of patient anddeterioration in health due to diabetesmakes measuringthe productivity indiabeteshealthcare difficult.AnswerstoTaking StockQuestions1.Top and senior management should be involved in formulating organizationalstrategy. However,the opinions of middle and lower management peoplein operations functionshouldalsobesought.2.Answers might vary for each student.Competitive trade-offs that may arise in a fast-foodrestaurant include:•product variety vs. customer service (speed): too many products will reduce theproduction speed•cost(staff wages)vs. customer service(speed): too few staff will increase wait times3.a.Technology improvescompetitivenessby•reducingproductcost/price (due tomore efficient/automatedprocessing)•increasing quality (e.g.,automated quality control)•enabling faster delivery (e.g.,faster order processing,better communication,easiercoordination of supply chain,automatic billing; due to EDI and an ERP software)•improving customer service (e.g.,aWeb site)•enabling better decisions (e.g., usingMIS, analytics,GIS)b.Technology improves productivitydue to most of the reasons in part a, especiallyby makingproductionof goods andservicesmore efficient (reducing costs, increasing speed). Thisinvolves using machines and computersin productionof goods andservices.4.Make ethics part of values and culture of the organization. Be an ethical organization. Obey thelaw and spirit of the law. Articulate ethical values in the strategy. Emphasize principles, ratherthan rules. Emphasize individual ethical behavior. Encourage employees to challenge ethical

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Operations Management, 5/C/e2-4issues. Have a process to resolve ethical issues. Make ethics training part of employee training.Be transparent to stakeholders. For more detail, seehttp://www.scu.edu/ethics/practicing/focusareas/business/strategic-plan.html.Answer toCritical Thinking ExerciseThe automated processing would give a much higher labor productivity ratio than the manual processingbecause it requires less workers. Use multi-factor productivity for a more meaningful measure.Answersto Experiential Learning Exercises1.Answers vary. You can use Loblawcaseat the end of chapter.Purchasing criteriaused byconsumersinclude price,quality, variety,andtimeliness, and competitive priorities used bystores include cost, quality, flexibility, and delivery. For example, Loblaw emphasizescostSobeys emphasizes qualityand customer service, Canadian Tire has a deep assortment ofautomotive parts and supplies, and Walmart has almost perfect availability (0% stock-out) as wellaslow cost andhigh variety..2.A goal should be something major and would take a year ormoreto accomplish it. Answersvary. For example, “my goal is to graduate with a good GPA”. The strategy in this case could be“don’t get a full-time job, but get family support;don’t party too much, but study hard”.3.Answers vary. It may be easier to answer this question if a company featured in the chapter (e.g.,WestJet, McDonald’s,Porter Airlines) is used. For example, a goal of McDonald’sis “Made forYou” or assemble-to-order while still achieving the 90 seconds service delivery standard. Thestrategy used was just-in-time system (see the JIT in McDonald’s video). Information on privatecompanies is hard to obtain.Answersto Internet Exercises1.Answers vary.ForCanadian Pacific(CP), fromhttp://www.cpr.ca/en/invest-in-cp/financial-reports/FinancialReports/Attachments/200/cp-ar-2011.pdf, Page 3under “Strategy”,Ourvisionisto become the safest and most fluid railway in North America.Ourobjectiveis to create long-term value for our customers,shareholders and employees bydisciplined execution of ourIntegrated Operating Plan(“IOP”); by executing on our Multi-Year Plan which enhancesand supports our IOP; and by aligning all parts of the organizationaround our fivecore beliefs:▫Service:Reliable and consistent service is our product. We are committed to executing our IOPin order to meet and exceed the needs of ourcustomers in a cost-effective manner.▫Safety:There is no job at CP that is so important that we can’t take the time to do it safely. Ourcomprehensive safety framework safeguards ouremployees, the communities weoperate through, the environment and our customers’ freight enabling us to provide aneffective transportationsolution.▫Productivity and Efficiency:Based on a culture of continuous improvement andaccountability, we are always looking for better, less costly,more reliable ways tooperate our business.▫People:We pride ourselves in our well trained and knowledgeable team of railroaders. We arecommitted to executing the IOP andcollaboratively working with our customers.▫Growth:We invest in our franchise to enhance productivity and service, which allows us tocapitalize on growth opportunities with new andexisting customers at low incrementalcost.

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Chapter 22-5CP doesn’t have a Mission statement.CP’s vision on p. 3 of 2011 Annual Reportis to become the safest and quickestrailway in NorthAmerica.Markets are described separately on p. 4: (a) bulk material to Asia, e.g., for Teck, Canpotex,grains), energy (Bakken, OilSands, etc.), and others (intermodal, automobiles, forest products).CP’s objective (long-term goal) is creation of long-term value by execution of its IntegratedOperating Plan (strategy). Components of the strategy (called core beliefs), expanded from p. 4,are(a)reliable cost-effective service (scheduled, rightly-located assets, network optimization, fastswitching)(b)safety (workers, communities)(c)productivity (C.I., long trains, fuel efficiency, consolidating locomotive repair facilities)(d)people ( trained, involved,andmeasured workers)(e)capital investment (lines, terminals, locomotives, IT)2.Flexibility(custommade-to-order and JIT)bags.3.a.McDonald’s competitive priority isquick service.b.GoalStrategy& ActionsOrder-to-delivery = 90 secJIT (made for you)Universal holding cabinets,Fast (11 sec) toasterKitchen video systemSoftware for forecasting4.a.Jiffy Lube and other fast oil-change services werecreatedin the 1980s to fill the gapleftby closureof full-service gas stations (with service bays).b.Jiffy Lube’s competitive priority is fast (timely) service, without appointment.5.a.Canada Post is in financial trouble because the number of letter mail has been decreasingdue to e-mail communication and texting. This has reduced its revenues. Also, itsoperating cost is high due to public policy obligation to service rural and northerncommunities.b.Yes, cost. It is cheaper than a courier.c.•No more door-to-door deliveries. Instead, people pick up their mail/package from acommunity mailbox.•Instead of standalone new post offices, postal service will be offered by franchises(i.e., stores such as Shoppers Drug Mart)•Faster sorting machines and consolidation of sorting facilities•Workforce will be reduced through attribution and burden of pension plan will bereduced.

Operations Management, 5th Canadian Edition Solution Manual - Page 15 preview image

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Operations Management, 5/C/e2-6Solutionsto Problems1.300 SBC=42.857SBC/Worker last week7Workers240 SBC= 48SBC/Worker this week5WorkersProductivitywas higherthis week.2.WeekCrew SizeSquareMetresInstalledLabourProductivitym2/person149602402370223434968242425002505369623262500250Even-sized crews aremore productivethan odd sizecrews,and a crew of 2has the highestproductivity.3.(1)(2)(3)(4)(5)(6)(7)(8)(9)(10)Units=(2)*$140kg=(4)*$6=(6)*480=(7)*1.5TotalMFPWeekOutputSalesMaterialMaterialWorkersLabourOverheadCost(3)(9)1300$42,00045$2706$2,880$4,320$7,4705.622338$47,32046$2767$3,360$5,040$8,6765.453322$45,08046$2767$3,360$5,040$8,6765.204354$49,56048$2888$3,840$5,760$9,8885.01Multifactor productivity is dropping steadily from a high of 5.62 toa low of5.01($ output per $ input).4.a.Before: 80 ÷ 4 = 20carts per worker per hour.After: 84 ÷ 3 = 28cartsper worker per hour.b.Before: Costs $10×4 = $40 + $40 = $80; hence MFP = 80 ÷ $80 =1cart/$1 CostAfter: $10×3 = $30 + $50 = $80; hence 84 ÷ $80 =1.05carts/$1 Costc.Labour productivity increased by[(28-20)/20]=0.4 or40%Multifactor productivity increased by[(1.05-1)/1]=0.05 or5%

Operations Management, 5th Canadian Edition Solution Manual - Page 16 preview image

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Chapter 22-7Multifactorproductivityis more appropriate because of change in machinesandtheircost.5.Without scrap,the output can be 91.1units per hour1.9110.182=−The increase in productivity would be 91.1-82 = 9.1units per hour.This would amount to an increase of (9.1/82) =0.111or11.1%.6.Current week’slabourproductivity =.hr/units4.hrs40units160=Previous week’slabourproductivity =./83.3.63381hrunitshrsunits=43 830433 83Current Week's ProductivityPrevious Week's ProductivityProductivity GrowthPrevious Week's Productivityunitshr.unitshr.Productivity Growthunitshr.(/)( ./)../−=−== +Thus, there was an increase of 4.3% inlabourproductivity.7.Let N = no. of workers per shiftBeforeLabour productivity = 300 backplanes / 3(7)N= 14.2857/Nbackplanes perworker per shiftAfterLabour productivity =500 backplanes / 2(5)N=50/Nbackplanes per worker per shiftGrowth in labour productivity =(50/N–14.2857/N) / 14.2857N = 2.5 or 250%8.a.Labour productivityBefore:7/3= 2.3333titles per worker per day.After:12/3=4titles per worker per day.Growth =(4–2.3333) / 2.3333= .714 or 71.4%.b.Multifactor productivityBefore:=7 / ($480 + $300) = .008974titles per $ cost.After:=12 / ($480 + $600)= .011111titles per $ cost.Growth =(.011111-.008974) / .008974 =.238or23.8%.c.Multifactorproductivityis more appropriate becausegrowth is higher sincethe overheadcosts haveincreased.9.a.Before:Labourproductivity = 1 / (20/60) = 3 coils per worker per hour.

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