Solution Manual For Operations and Supply Chain Management, 16th Edition

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Chapter 01-Operations and Supply Chain Management1-1CHAPTER 1OPERATIONS AND SUPPLY CHAIN MANAGEMENTDiscussion Questions1.Using Exhibit 1.3 as a model, describe the source-make-deliver-return relationships in thefollowing systems:a. An airlineSource: Aircraft manufacturer,in-flight food,repair parts, computer systemsMake:Aircraft and flight crew scheduling, groundservicesprovided at airports, aircraftmaintenance and repairDeliver:Outbound and arriving passenger service, baggage handlingReturn: Resolve anypost-serviceissues such as lost or damaged luggageb.An automobile manufacturerSource: Suppliers of components and rawmaterialsMake:Manufacturing of vehicles and components or subassemblies to be sold as sparepartsDeliver:Delivery to and sales from dealerships, delivery ofspare parts to the wholesalesystemReturn: Warrantyand recallrepairs, trade-insc.A hospitalSource: Medical supplies, cleaning services, disposal services, food services,qualifiedpersonnelMake:Inpatientrooms,outpatient clinics,emergencyroom,operatingroomsDeliver:Scheduling patients, providing treatment, ambulanceservice,family counselingReturn: Billing errors, follow up visitsd.An insurance companySource: Supplies needed for the office,underwriters, legal authority to operateMake:Establish policy guidelines and pricing, field agent/representative and facilitynetwork, develop Internet service capabilities, establish preferred vehicle repair servicenetworkDeliver:Meet with and advise clients, write policies, process and pay claimsReturn: refund of overpayments2.Define the service package of your college or university. What is its strongest element?What isits weakest one?The categories with examples are:Supporting facility-location, buildings, labs, parkingFacilitating goods–class schedules, computers, books, chalkExplicit services–classes with qualified instructors, placement officesImplicit services–status and reputation (e.g., Ivy League schools)

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Chapter 01-Operations and Supply Chain Management1-2At Indiana University and the University of Southern California, among their strongestelements are their business schools and their Operations Management programs (of course).Both also have very dedicated alumni networks. A weak element of Indiana University is itsweak football program; for USC, weak elements are on-campus parking and housing.3.What service industry has impressed you the most with its innovativeness?Our vote goes to cruise lines which have introduced such onboard innovations as wavemachines for belly boarding and rock climbing walls, as well as all sorts of other amenities tokeep cruisers involved. The industry is doing record business as well.Some of the standout companies in less innovative industries are Bank of America (has aformalized research program to try out new customer services/amenities such as video screensin next to teller lines), Intuit (e.g., putting Quicken money management software online), Ikea,JetBlue Airlines, and Progressive Insurance (discussed later in the book).4.Whatis product-service bundlingand what are the benefits tocustomers?Product-service bundling isaddingValue-added servicesto a firm’s productofferings to createmore value for the customer. Thisprovidesbenefits in two areas.First, thisdifferentiatestheorganization from the competition. Secondly, these servicestiecustomers to the organizationin a positive way.Alternatively, bundling can also involve adding products to a service, forexample, adding the sale of convenience items and snacks at a hotel.5.What is the difference between a service and a good?A service is an intangible process(you can’t hold it in your hands), while a good is the physicaloutput of a process.6.Look at thejob postingsat http://www.indeed.comand evaluate the opportunities for anOSM major with several years of experience.There are pages and pages of thesewhen you do a search on operationssupply chainmanagement. Here are some examples:Global Active Ingredient Supply PlannerFMC CorporationUS-PA-PhiladelphiaThis is your opportunity to join the Agricultural Products Group (APG) and work on the teamresponsible for globalactive ingredient planning. You'll serve as a central Supply Plannerworking in tandem ...Purchasing Manager (Buyer)Texas Dow Employees Credit Union (TDECU)US-TX-Lake Jackson-Nearest Metro area-South Houston

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Chapter 01-Operations and Supply Chain Management1-3Education Accredited university degree in Business or Marketing with certification inPurchasing, Inventory Management, or Logistics. Accredited Purchasing Practitioner (APP) orCertified Purchasing ...Product Line ManagerCintas CorporationUS-OH-MasonHigh School diploma or GED required, 4 year degree preferred Knowledge of and experienceusing Internet and Microsoft Office (Word, Excel, PowerPoint, and Email) 3 years managementexperience preferred ...Director PurchasingLegendary BakingUS-CO-DenverCERTIFICATIONS & LICENSES • Valid Driver’s License and car insurance. • Certified PurchasingManager certification (C.P.M.) preferred. • Certified Food Purchasing Manager ...Process Improvement ManagerARAMARK CorporationUS-TX-HoustonBachelor's Degree required. Technical Engineering discipline within Industrial, Mechanical,Chemical, or Food Operations strongly preferred. • Minimum 5 years Lean manufacturingexperience coupled ...7.Recent outsourcing of parts and services that had previously been produced internally isaddressed by which current issue facing operations and supply management today?The coordination of relationships between mutually supportive but separate organizations.8.What factors account for the resurgence of interest in OSCM today?With companies facing competition on a global scale, and ever-advancing manufacturing andinformation technologies, firms realize the competitive advantage their OSCM functions canprovide if properly managed. Many have found that the same old way of doing businessleaves them unable to compete successfully.9.As the field of OSCM has advanced, new concepts have been applied to helpcompaniescompete in a number of ways, includingthe advertisement of the firm’s products or services.One recent concept to gain the attention of companies ispromotingsustainability. Discusshow you have seen the idea of sustainability used by companies to advertise their goods orservices.There of course will be a number of examples that students will bring up, though they mayneed some prodding to jog their memories. Some examples to start with might be IBM’s “I’man IBMer” campaign where they advertise how they are “building a smarter planet.” Bottled

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Chapter 01-Operations and Supply Chain Management1-4water manufacturers have reduced the amount of plastic used in many of their products, thussaving production and distribution costs, but also allowing them to advertise how the newbottles are better for the environment because they result in less waste.10.Some people tend to use the terms effectiveness and efficiency interchangeably, thoughwe’ve seen they are different concepts. But is there any relationship at all between them?Can a firm be effective but inefficient? Very efficient but essentially ineffective? Both?Neither?Firms can be anywhere on these two dimensions. It is possible for a firm to be the best at whatthey do in serving their market, but be very wasteful in doing so. Alternatively, a firm couldsqueeze every last dollar out of their processes but fail to deliver what the market expects anddesires. Of course, the best firms will provide the goods and services that the market desires,exactly as the market desires, and do so at a minimum cost. Firms that are both inefficient andineffective do not survive for long in any market.

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Chapter 01-Operations and Supply Chain Management1-5ObjectiveQuestions1.What are the three elements that require integration to be successful in operations andsupply chain management?(Appendix E)Strategy, Processes, andAnalytics2.Operations and supply chain management is concerned with the design and management ofthe entire system thathas what function?Produces a product or delivers a service3.Match the following OSCM job titles with the appropriate duties and responsibilities.CPlant managerA:Plans and coordinates staff activities such as new productdevelopment and new facility locationDSupply chain managerB:Oversees the movement of goods throughout the supplychainAProject managerC:Oversees theworkforce and resources required to producethe firm’s productsEBusiness processimprovement analystD:Negotiates contracts with vendors and coordinates the flowof material inputs to the production processBLogistics managerE:Applies thetools of lean production to reduce cycle timeand eliminate waste in a process4.What high-level positionmanageris responsible for working with the CEO and companypresident to determine the company’s competitive strategy?Chief Operating Officer5.Order the following major concepts that have helped define the OSCM field on a timeline.Use 1 for the earliest to be introduced, and 5 for the most recent.3Supplychainmanagement1Manufacturing strategy developed5Businessanalytics2Totalqualitymanagement4Electronic commerce

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Chapter 01-Operations and Supply Chain Management1-66.Which major OSCM concept can be described as an integrated set of activities designed toachieve high-volume production using minimal inventories of parts that arrive at workstationsexactly whenthey are needed?Just-in-time (JIT) production7.Operations and supply chain ___________________________ leveragesthe vast amount ofdata in enterprise resource planning systems to make decisions related tomanagingresources.analytics8.A process is ________________ if it operates at the lowest possible cost.Efficient9.A customer picks a product over a similar product due to the ________________ value of theproduct.Value

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Chapter 01-Operations and Supply Chain Management1-7Analytics Exercise: Comparing Companies Using Wall StreetEfficiency MeasuresEach student is asked to pick an industry and compare three companies within that industrybased onEfficiency RatiosThe following is typical of what you might obtain:BPShellExxonMobilManagement EfficiencyDayssales outstanding29.4742.7034.40Days inventory28.8526.5131.51Payables period61.3153.2368.69Cash conversion cycle-2.9915.98-2.87Receivables turnover12.398.5510.64Inventory turnover12.6513.7711.58Asset turnover1.040.930.78Students are then asked to identify which company appears to have the most productive employees.Withthis data we see that ExxonMobil does very wellin that its cash conversion cycle is-2.87 days.This is amazing!The Inventory Turnover is highest forShellindicating that the company is the mostefficient from an operations and supply chain processes view.BP has the highest Asset Turnover,which relates to the use of its facility and equipment assets.Overall,these are all three verystrong companies relative to there operations and supply chainprocesses.Of course, the data generated by each student will be different and an interesting interchange can bedeveloped with students each presenting what they found from their research. It is very interesting todo comparisons across industries; retailers versus oil companies, and computer makes versus softwarecompanies, for example.

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Chapter 02-Strategy and Sustainability2-1CHAPTER 2STRATEGY AND SUSTAINABILITYDiscussion Questions1.What are the major priorities associated with operations and supply chain strategy? How hastheir relationship to each other changed over the years?The four major imperatives are cost, quality, delivery, and flexibility. In the sixties, these fourimperatives were viewed from atradeoff’sperspective. For example, this meant that improvingquality would result in higher cost, and in many cases that was true. However, advances inmanufacturing and information technologies since then have reduced the size of those tradeoffs,allowing firms to improve on several orallthese imperatives simultaneously, gaining greatercompetitive advantage than was possible 50 years ago.The problem now becomes one ofprioritizing and managing towards orderly improvement.2.Why does the properoperations and supply chain strategy keep changing for companies that areworld-class competitors?The top three priorities have generally remained the same over time: make it good, make it fast,and deliver it on time. Others have changed. Part of this may be explained by realizing that worldclass organizations have achieved excellence in these three areas and are, therefore, focusingattention on some of the more minor areas to gain competitive advantage. The changes in theminor priorities may result from recognizing opportunities or from changes in customer desires orexpectations.3.Whatdothe expressionsorder winnersandorder qualifiersmean? What was the order winner(s)for your last purchase of a product or service?Order winners are dimensions that differentiate the product or service or services of one firm fromanother. Order qualifiers are dimensions that areused to screen a product or service as acandidate for purchase. Order qualifiers get a company’s “foot in the door.” Order winners arewhat make the sale. Obviously, answers will vary for the order winners from your last purchase.4.Pick a companythat you are familiar with and describe its operations strategy and how it relatesto winning customers. Describe specific activities used by the company that support the strategy.Student answers will vary widely based on their experiences and views. It might be helpful for aclassroom exercise to assign certain companies toseveralstudents/teams and compare theiranswers in class.5.At times in the past,the dollar showed relative weakness with respect to foreign currencies, suchas the yen, mark, and pound. This stimulated exports. Why would long-term reliance on a lowervalued dollar be at best a short-term solution to the competitiveness problem?

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Chapter 02-Strategy and Sustainability2-2This approach is dependent on economic policies of other nations. This is a fragile dependency. Along-term approach is to increase manufacturing and service industry productivity in order toregain competitive advantage. At a national level, solutions appear to lie in reversing attitudes.At a firm level, competitive weapons are consistent quality, high performance, dependabledelivery, competitive pricing, and design flexibility.6.Identify an operations and supply chain-related disruptionthat recently impacted a company.What could the company have done to have minimized the impact of this type of disruption priorto it occurring?The March 2011 tsunami that struck Japan was geographically concentrated but had globalimpact on multiple firms, many of which had no physical presence at all in the affected area.Examples include firms that had sole source agreements with suppliers in the affected area. Thetsunami left these companies scrambling to find new suppliers to feed into their supply chains.These firms could have reduced the impact of the tsunami by having a few high-quality,dependable suppliers located in different geographical regions. There are many other examplesthat could be taken from this one event. A simple Internet search will provide plenty of materialfor discussion.7.What do we meanwhen we say productivity is a relativemeasure?For productivity to be meaningful, it must be compared with something else. The comparisonscan be either intra-company as in the case of year-to-year comparisons of the same measure, orintercompany as in the case of benchmarking. Intercompany comparisons of single factorproductivity measures can be somewhat tenuous due to differences in accounting practices(especially when comparing with foreign competitors) and the balance of labor to capitalresources. Total factor productivity measures are somewhat more robust for comparisonpurposes.8.What is meant by triple-bottom-line strategy? Give an example of a company that has adoptedthis type of strategy.A triple-bottom-line strategy places emphasis on a company’s environmental and socialresponsibilities as well as the traditional bottom line of economic prosperity. It recognizes thatthe long-term health of the firm is interdependent with the health of the environment and thebetterment of society. There are many examples–an interesting one is Ben & Jerry’s, famous fortheirall-naturalice cream. Do a search “Ben & Jerry’s Corporate Social Responsibility” to findtheir current statements related to this.9.Find examples where companies have used features related to environmental sustainability towinnew customers.Car companies use environmental concerns in marketing ads. The development of hybrid andflex-fuel cars is one way they have operationalized those concerns. Consumer goods companiesdisplay the “made with recycled material” logo on the packaging. Bottled water manufacturersareusing,and advertising bottles made with less plastic.

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Chapter 02-Strategy and Sustainability2-3Objective Questions1.How often should a company develop and refine the operations and supply chain strategy.At least yearly2.What is the term used todescribe product attributes that attract certain customers and can beused to form the competitive position of a firm?Competitive dimensions3.What are the two main competitive dimensions related to product delivery?Delivery speed and delivery reliability4.What are the two characteristics of a product or service that define quality?Design quality and process quality5.What is thediagram that shows how a company’s strategy is delivered by a set of supportingactivities?activity-system map6.In implementing supply chain strategy,a firm must minimize its total cost without compromisingthe needs of what group of people?Customers7.What is defined as the likelihood of disruption that would impact the ability of a company tocontinuously supplyproducts or services?Supply chain risk8.What are risks caused by natural or manmade disasters, and therefore impossible to reliablypredict, called?Disruption risks9.Match the following common risks with the appropriate mitigation strategy.

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Chapter 02-Strategy and Sustainability2-4ECountry risksA:Detailed tracking, alternate suppliersDRegulatory riskB:Carefulselectionand monitoringsuppliersALogistics failureC:Contingency planning, insuranceCNatural disasterD:Good legal advice, complianceBMajor qualityfailureE:Currency hedging, local sourcing10.What is the term used to describe the assessmentof the probability of a negative event againstthe aggregate severity of the related loss?Risk mapping11.As Operations Manager, you are concerned about being able to meet sales requirements in thecoming months. You have just been given the following production report.JANFEBMARAPRUnits Produced2300180028003000Hours per Machine325200400320Number of Machines3544Find the average monthly productivity (units permachinehour).To answer this we need torealize that the measure of hours given is per machine, so we have tomultiply that by the number of machines in each period to get the total machine hours in eachperiod. Those figures are used in the calculations below.Average productivity: (2300/975+ 1800/1000+ 2800/1600+ 3000/1280)/4Average productivity (2.36+1.80+1.75+2.34)/4= 2.06units per machine hour12.Sailmastermakes high-performance sails for competitive windsurfers. Below is informationabout the inputs and outputs for one model, the Windy 2000.Units sold1,217

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Chapter 02-Strategy and Sustainability2-5Sale price each$1,700Total labor hours46,672Wage rate$12/hourTotal materials$60,000Total energy$4,000Calculate the productivity insales revenue/labor expense.We have to do some interim calculations here. Sales revenue is calculated by multiplyingunits sold by the unit sales price. Labor expense is calculated bymultiplying labor hours bythe wage rate.(1217*1700)/(46672*12)=3.6913.Live TrapCorporationreceived the data below for its rodent cage production unit. Find thetotalproductivity?OutputInput50,000 cagesProduction time620laborhoursSales price: $3.50 per unitWages$7.50 per hourRaw materials (total cost)$30,000Component parts (total cost)$15,350Total productivity could be expressed two ways here based on how you express output: inunits sold, ordollars of sales.Units sold:50,000 / ((620 * $7.50) + 30,000 + 15,350) = 1.00 units sold per dollar inputDollars of sales:(50000*3.5)/((620*$7.50)+30,000+15,350) = 3.5dollars in sales per dollar input14.Two types of cars (Deluxe andLimited) were produced by a car manufacturer last year.Quantities sold, price per unit, and labor hours follow. What is the labor productivity for eachcar? Explain the problem(s) associated with the labor productivity.QUANTITY$/UNITDeluxe car4,000 units sold$8,000/carLimited car6,000 units sold$9,500/carLabor, Deluxe20,000 hours$12/hourLabor, Limited30,000 hours$14/hourLabor Productivity–units/hour

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Chapter 02-Strategy and Sustainability2-6ModelOutputin UnitsInputin Labor HoursProductivity(Output/Input)Deluxe Car4,00020,0000.20units/hourLimited Car6,00030,0000.20units/hourLabor Productivity–dollarsModelOutputin DollarsInputin DollarsProductivity(Output/Input)Deluxe Car4,000($8,000)=$32,000,00020,000($12.00)=$240,000133.33Limited Car6,000($9,500)=$57,000,00030,000($14.00)=$420,000135.71The labor productivity measure is a conventional measure of productivity. However, as a partialmeasure, it may notprovide all of the necessary information that is needed. For example, increases inproductivity could result from decreases in quality, and/or increases in material cost.15.A U.S. manufacturing company operating a subsidiary in an LDC (less-developed country) showsthe following results:U.S.LDCSales (units)100,00020,000Labor (hours)20,00015,000Raw materials (currency)$20,000FC 20,000Capital equipment (hours)60,0005,000a.Calculate partial labor and capital productivityfigures for the parent and subsidiary. Dothe results seem misleading?Labor ProductivityCountryOutputin UnitsInputin HoursProductivity(Output/Input)U.S.100,00020,0005.00units/hourLDC20,00015,0001.33units/hourCapital EquipmentProductivityCountryOutputin UnitsInputin HoursProductivity(Output/Input)U.S.100,00060,0001.67units/hourLDC20,0005,0004.00units/hour

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Chapter 02-Strategy and Sustainability2-7Yes. You might expect the capital equipment productivity measure to be higher in the U.S.than in a LDC. Also, the measures seem contradictory. Each plant appears to be far moreproductive than the other on one measure,butmuch worse on the other.b.Compute the multifactor productivityfigures for labor and capital together.Do theresults make more sense?Multifactor–Labor and Capital EquipmentCountryOutputin UnitsInputin HoursProductivity(Output/Input)U.S.100,00020,000 +60,000=80,0001.25units/hourLDC20,00015,000 + 5,000=20,0001.00units/hourYes, labor and equipment can be substituted for each other. Therefore, this multifactormeasure is a better indicator of productivity in this instance.c.Calculate raw material productivityfigures (units/$ where $1=FC 10). Explain why thesefigures might be greater in the subsidiary.Raw Material ProductivityCountryOutputin UnitsInputin DollarsProductivity(Output/Input)U.S.100,000$20,0005.00units/$LDC20,000FC 20,000/$10=$2,00010.00units/$The raw material productivity measures might be greater in the LDC due to a reduced costpaid for raw materials, which is typical of LDC’s,especiallyif there are local sources for theraw materials.16.Variousfinancial data forthe past two yearsfollow. Calculate the total productivity measure andthe partial measures for labor, capital, and raw materials for this company for both years. Whatdo these measures tell you about this company?Last YearThis YearOutput:Sales$200,000$220,000Input:Labor30,00040,000Raw materials35,00045,000Energy5,0006,000

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Chapter 02-Strategy and Sustainability2-8Capital50,00050,000Other2,0003,000Total ProductivityYearOutputin DollarsInputin DollarsProductivity(Output/Input)Last Year$200,000$30,000 +35,000 +5,000 + 50,000 + 2,000= $122,0001.64This Year$220,000$40,000 + 45,000 +6,000 + 50,000 +3,000= $144,0001.53Partial Measure–LaborYearOutputin DollarsInputin DollarsProductivity(Output/Input)Last Year$200,000$30,0006.67This Year$220,000$40,0005.50Partial Measure–Raw MaterialsYearOutputin DollarsInputin DollarsProductivity(Output/Input)Last Year$200,000$35,0005.71This Year$220,000$45,0004.89Partial Measure–CapitalYearOutputin DollarsInputin DollarsProductivity(Output/Input)Last Year$200,000$50,0004.00This Year$220,000$50,0004.40The overall productivity measure is declining, which indicates a possible problem. The partialmeasures can be used to indicate cause of the declining productivity. In this case, it is acombination of declines in both labor and raw material productivity,which weresomewhatoffset byan increase in the capital productivity. Further investigation should be undertakento explain the drops in both labor and raw material productivity. An increase in the cost of

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