Chapter 6 QUIZ Questions PDF

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Chapter 6 practical multiple choices and short answer questions...

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Managing Quality: Integrating the Supply Chain, 5e (Foster) Chapter 6 The Voice of the Market 1) Toyota developed the world-class production system known as ________. A) business process reengineering B) just-in-time C) total quality management D) benchmarking E) statistical process control Answer: B 2) The sharing of information between companies so that both can improve is called ________. A) reengineering B) baselining C) benchmarking D) interfacing E) data mining Answer: C 3) The goal of ________ benchmarking is to identify and to observe the best practices from one or more benchmark firms. A) product B) strategic C) process D) financial E) functional Answer: C 4) ________ allows initiator firms to assess their competitive position by comparing products and services with those of target firms. A) Functional B) Strategic C) Product D) Performance E) Process Answer: D 5) The process of dismantling competitors' products to understand the strengths and weaknesses of their designs is referred to as ________. A) benchmarking B) reengineering C) baselining D) inverse production E) reverse engineering Answer: E

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6) ________ benchmarking involves observing how others compete. A) Strategic B) Product C) Performance D) Functional E) Process Answer: A 7) A benchmarking effort that is limited to studying the purchasing department of another firm is referred to as ________ benchmarking. A) functional B) performance C) process D) strategic E) product Answer: A 8) What is the formula used to calculate scrap efficiency? A) scrap/cost of goods sold B) (cost of goods sold — scrap)/scrap C) cost of goods sold/scrap D) (scrap — cost of goods sold) /scrap E) cost of goods sold × scrap Answer: C 9) If the cost of goods sold reported by Champion Cooling Co. is equal to $600,000 and the scrap cost amounts to $50,000, what is their scrap efficiency? A) 8.33 B) 30.0 C) 12.0 D) 18.5 E) 22.8 Answer: C 10) Champion Cooling Co. signed an exclusive contract with a scrap metal dealer that is willing to pay 33 cents a pound for scrap copper. If the cost of goods sold reported by Champion amounts to $100,000 and the scrap cost is equal to $20,000 for their 3030 pounds of scrap copper, what is Champion's scrap efficiency? A) 7.60 B) 5.00 C) 6.26 D) 9.33 E) 3.18 Answer: B

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11) Ajax Carpet Cleaning promises to clean 100 square feet of carpet for $15.00. Their work standard for such a job is $5.00 for labor and $2.00 for cleaning supplies. Since they use the customer's electricity, there are no other inputs in to the cleaning process. What is their labor productivity? A) 3.00 B) 7.50 C) 20.00 D) 10.0 E) 50.0 Answer: A 12) Make-Do, a national automotive painting service, paints cars for $199. Their work standard for such a job is $20.00 for labor and $30.00 for paint. They consume $10 worth of supplies and $3 of energy during their service. What is their total factor productivity? A) 3.16 B) 9.95 C) 5.83 D) 13.6 E) 18.24 Answer: A 13) Ajax Carpet Cleaning promises to clean 100 square feet of carpet for $20.00. Their work standard for such a job is $5.00 for labor and $2.50 for cleaning supplies. Since they use the customer's electricity, there are no other inputs in to the cleaning process. What is their labor productivity? A) 20.0 B) 4.00 C) 8.00 D) 2.50 E) 40.0 Answer: B

Use the following information to answer the question(s) below. A company has gathered the following financial information for itself and a competing firm. The company wishes to compare productivity for the two firms:

Labor Plant and Equipment Energy Materials Sales

Firm A $ 25,000 $ 120,000 $ 7,500 $ 240,000 $ 480,000

Firm B $ 20,000 $ 150,000 $ 15,000 $ 200,000 $ 520,000

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14) Calculate the labor productivity of Firm A. A) 19.2 B) 24.0 C) 20.8 D) 26.0 E) 9.6 Answer: A 15) Calculate the plant and equipment productivity of Firm B. A) 26.00 B) 2.60 C) 19.20 D) 3.47 E) 34.67 Answer: D 16) Calculate the energy productivity of Firm A. A) 34.67 B) 64.00 C) 19.20 D) 27.43 E) 69.33 Answer: B 17) Calculate the materials productivity of Firm B. A) 3.47 B) 10.40 C) 19.20 D) 6.80 E) 2.60 Answer: E 18) Calculate the total factor productivity for Firm A. A) 19.20 B) 3.31 C) 1.22 D) 14.77 E) 8.68 Answer: C 19) Calculate the total factor productivity for Firm B. A) 14.86 B) 1.35 C) 2.60 D) 34.67 E) 20.28 Answer: B 6-4

20) Return on assets (ROA) and return on investments (ROI) are examples of ________. A) structural measures B) market share data C) productivity ratios D) quality measures E) financial ratios Answer: E 21) ________ are useful in measuring the extent to which a firm effectively uses the scarce resources that are available to the firm. A) Quality measures B) Financial ratios C) Productivity ratios D) Market share data E) Structural measures Answer: C 22) ________ are important for monitoring and tracking the effectiveness of a company's cycle times, waste-reduction measures, and value-added measures. A) Customer-related measures B) Productivity ratios C) Quality measures D) Operating results E) Structural measures Answer: D 23) Reject rates, capability information, and performance information are examples of ________. A) structural measures B) market share data C) productivity ratios D) financial ratios E) quality measures Answer: E

24) ________ include objectives, policies, and procedures followed by a firm. A) Productivity ratios B) Quality measures C) Market share data D) Structural measures E) Operating results Answer: D

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25) ________ dictates that decisions are made based on the sound collection and analysis of data. A) Strategic benchmarking B) Baselining C) Business process reengineering D) Management by fact E) Reverse engineering Answer: D 26) ________ is based on the concept of 5w2h. A) Business process benchmarking B) Statistical process control C) Total quality management D) Business process reengineering E) Reverse engineering Answer: A 27) In the ________ process of business process benchmarking, the inputs are aligned together to form the product or service. A) reconstruction B) control C) reengineering D) transformation E) conversion Answer: E 28) The ________ process of business process benchmarking results in outputs that are eventually sold to customers. A) transformation B) conversion C) control D) reconstruction E) reengineering Answer: B 29) In the conversion process, the feedback loop that involves gathering, analyzing, and using the data to adjust the process is called the ________ process. A) control B) reengineering C) reconstruction D) development E) transformation Answer: A

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30) What is the first step in Xerox's 10-step process to benchmarking? A) determine the current performance gap B) identify whom to benchmark C) decide what to benchmark D) develop action plans E) project future performance levels Answer: C 31) Which of the following steps in Xerox's 10-step process to benchmarking helps companies prioritize which areas are the first candidates for change and improvement? A) determine the current performance gap B) plan and conduct the investigation C) identify whom to benchmark D) decide what to benchmark E) develop action plans Answer: A 32) Which of the following steps in Xerox's 10-step process to benchmarking involves predicting whether the performance gap for the benchmarked processes will narrow or widen in the coming years? A) develop action plans B) determine the current performance gap C) plan and conduct the investigation D) project future performance levels E) implement specific actions and monitor progress Answer: D 33) ________ is defined as the fundamental rethinking and redesign of business processes. A) Reengineering B) Benchmarking C) Baselining D) Reverse engineering E) Restructuring Answer: A 34) Which of the following best defines the breadth factor of reengineering? A) It refers to organizational elements such as responsibilities, measurements, information technology, and skills. B) It refers to the monitoring of key internal firm performance measures over time to identify trends such as improvement in managerial decision making. C) It refers to the impact of the reengineering process to the entire organization. D) It refers to the dismantling of competitors' products to understand the strengths and weaknesses of their designs. E) It refers to the sharing of information between companies so that both can improve. Answer: C 6-7

35) Which of the following best defines the depth factor of reengineering? A) It refers to organizational elements such as responsibilities, measurements, information technology, and skills. B) It refers to the monitoring of key internal firm performance measures over time to identify trends such as improvement in managerial decision making. C) It refers to the impact of the reengineering process to the entire organization. D) It refers to the dismantling of competitors' products to understand the strengths and weaknesses of their designs. E) It refers to the sharing of information between companies so that both can improve. Answer: A 36) ________ requires the monitoring of key internal firm performance measures over time to identify trends such as improvement to inform managerial decision making. A) Baselining B) Benchmarking C) Reengineering D) Reverse engineering E) Restructuring Answer: A 37) The ________ process involves identifying measures, establishing time frames for future data collection, gathering data, and analyzing data on an ongoing basis to identify performance trends and changes. A) restructuring B) baselining C) reengineering D) reverse engineering E) benchmarking Answer: B 38) The concept of ________ implies that you must have something to offer the target firm in return for sharing information. A) reciprocity B) baselining C) reengineering D) interfacing E) restructuring Answer: A 74) Explain the process of benchmarking. Answer: Benchmarking is the sharing of information between companies so that both can improve. The first step a benchmarking firm must take is to document current performance. This activity will allow the company to pinpoint its goals and find a company (inside or outside the industry) that already excels at what it is trying to accomplish, study what it does, and gather ideas for improvement. Benchmarking is useful for externally validating an organization's approach to its business. If the managers in a firm are unsure that they are pursuing a useful plan of action, benchmarking can help them understand how what they are doing stacks up against the 6-8

masters. 75) Differentiate between an initiator firm and a target firm. Are these static roles? Answer: There are two parties to each benchmarking relationship: an initiator firm and a target firm. The initiator firm initiates contact and studies another firm. The target firm is the firm that is being studied (also called a benchmarking partner). These are not static roles. Often the target firm enters into a reciprocal agreement to observe the initiator firm. 76) Describe the concept of performance benchmarking. Answer: Performance benchmarking allows initiator firms to assess their competitive position by comparing products and services with those of target firms. Performance issues may include cost structures, various types of productivity performance, speed of concept to market, quality measures, and other performance evaluations. 77) Describe the concept of functional benchmarking. Answer: In functional benchmarking, a company focuses its benchmarking efforts on a single function to improve the operation of that function. An example of functional benchmarking occurs in purchasing. Often purchasing managers use their networks to share information about the purchasing function in many different organizations. 78) How is a scrap efficiency ratio calculated? Answer: Consider the computation of scrap in which a company computes the ratio of cost of goods sold to scrap. The formula for this computation is: Scrap Efficiency = Cost of Goods Sold/ Scrap This formula normalizes the cost of scrap based on the volume of business that a firm does. The resulting ratio is the proportion of the material inputs to production that is wasted as scrap. The higher the ratio, the more efficient is the use of these materials. 79) Differentiate between financial ratios and productivity ratios of benchmarking data. Answer: Financial ratios such as return on assets (ROA) or return on investments (ROI) are probably the easiest to obtain and compare. For many financial ratios, all that is needed is an income statement of a firm and a balance sheet. Many of these statistics are available in annual reports and on the Internet. Productivity ratios are useful in measuring the extent to which a firm effectively uses the scarce resources that are available to the firm. These include single-factor, multifactor, and total-factor productivity measures. 80) Explain the importance of using customer-related results as benchmarking data. Answer: Customer-related results include customer satisfaction, customer dissatisfaction, and comparisons of customer satisfaction relative to competitors. These measures may be in the form of retention, gains, losses, customer-perceived value, competitive awards, competitive customer ratings, and independent organization evaluations. Customer satisfaction measures are important for gauging the effectiveness of quality improvement because they are good indicators of financial performance. 6-9

81) Give examples of quality measures and structural measures of benchmarking data. Answer: Quality measures include conformance-based quality information such as reject rates, capability information, performance information, or other measures. These quality measures also can include scrap and rework measures, percentage of defectives, field repairs, costs of quality, and many other metrics. The quality measures also may include data concerning the performance of processes and time-related statistics. Structural measures include objectives, policies, and procedures followed by a firm. They may include safety, production, accounting, financial, engineering, and other types of structural measures that are used in determining competitiveness. 82) Explain the use of performance measures or indicators in performance improvement. Answer: A major consideration in performance improvement involves the creation and use of performance measures or indicators. Performance measures or indicators are measurable characteristics of products, services, processes, and operations the company uses to track and improve performance. The measures or indicators should be selected to best represent the factors that lead to improved customer, operational, and financial performance. A comprehensive set of measures or indicators tied to customer and/or company performance requirements represents a clear basis for aligning all activities with the company's goals. Through the analysis of data from the tracking processes, the measures or indicators themselves may be evaluated and changed to better support such goals. 83) Describe the concept of 5w2h. Answer: Business process benchmarking is based on the concept of 5w2h developed by Alan Robinson. The 5w2h concept is labeled as such because a business process benchmarking project should result in the answers to seven questions. Five of these questions begin with the letter "w" (who, what, when, where, and why) and the remaining two questions begin with the letter "h" (how and how much). The 5w2h concept is a good starting point because it focuses the participants in the benchmarking process on the "nuts and bolts" of what is being done. 84) Describe the conversion process and the control process in business process benchmarking. Answer: The 5w2h questions should be viewed in the context of a process. In a broad sense, inputs include the equipment, people, machines, materials, and design that combine to form a product or service. The inputs are combined in what is known as the conversion process. In the conversion process, we align the inputs together to form the product or service. The conversion process results in outputs that are eventually sold to customers. The first feedback loop results from gathering data from the process. This is known as the control process. The control process involves gathering, analyzing, and using the data to adjust the process. This is often the result of using process control charts.

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85) State Xerox's formal 10-step process to benchmarking. Answer: Xerox was an early adopter of benchmarking and has used benchmarking effectively to improve processes. This approach includes a formal 10-step process to benchmarking: • Decide what to benchmark. • Identify whom to benchmark. • Plan and conduct the investigation. • Determine the current performance gap. • Project future performance levels. • Communicate benchmarking findings and gain acceptance. • Revise performance goals. • Develop action plans. • Implement specific actions and monitor progress. • Recalibrate the benchmarks. 86) Explain the process of managing the benchmarking effort. Answer: Like other quality management efforts, benchmarking is a managed process. Therefore, management must understand the benchmarking process, the participants involved, and the objectives of the exercise. Managing the benchmarking process involves establishing, supporting, and sustaining the benchmarking program. To begin the management process, a strategy statement outlining the goals and strategies to be used is developed. With the strategy statement in place, management sets expectations for performance relating to the benchmarking project. At a minimum, the expectations for benchmarking are that this is an ongoing process that serves as a basis for improvement (not a one time event) and that specific deliverables are to be identified by management that must be fulfilled. 87) Explain the importance of training in benchmarking. Answer: Training is a key to success in all quality management approaches. This is especially true for benchmarking. Participants must have project management skills and be familiar with benchmarking approaches and protocols. Benchmarking carries with it legal liabilities that should be addressed during the training. Training should include managerial training, cross-functional benchmarking skills training, team training, and documentation training (flowcharting). Many of these training courses are available from many different consulting organizations. It is best to obtain training from organizations that are experienced with benchmarking. Many companies have established external training arms that can be hired by competing firms. 88) Define reengineering. State the two factors that are critical to achieving success through reengineering. Answer: Reengineering is defined as a fundamental rethinking and redesign of business processes. Such change is often accompanied by the automation of business processes. Two factors are critical to achieving success through reengineering: Breadth refers to the impact of the reengineering process to the entire organization. Depth refers to organizational elements such as responsibilities, measurements, information technology, and skills. Discuss the total cost of quality and compare the common methods of managing quality 6-11

89) Explain the concept of baselining. Answer: A methodology that can be applied in assessing business process reengineering impacts is baselining. Baselining requires the monitoring of key internal firm performance measures over time to identify trends such as improvement (or decline) to inform managerial decision making. The baselining process involves identifying measures, establishing time frames for future data collection, gathering data, and analyzing data on an ongoing basis to identify performance trends and changes. 90) State the four key problems with benchmarking. Answer: Benchmarking is not a simple activity, and it can be difficult to implement any of these tools and concepts. There are four key problems with benchmarking: • There may be substantial difficulty obtaining cooperation from other firms in your own industry. Mo...