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University of Toronto Scarborough
Management (MGT)
Chris Bovaird

Chapter 1: Producing Goods and Services (Up to Pg. 20) [Service Operations] Production activities that yield intangible services [Goods Production] Production activities that yield tangible products [Operations (Production) Management] The systematic direction and control of the processes that transform resources into finished goods and services [Production Managers] Managers responsible for ensuring that operations processes create value and provide benefits [Operations Process] A set of methods and technologies used in the production of a good or a service [Analytic Process] Any production process in which resources are broken down [Synthetic Process] Any production process in which resources are combined [High-contact System] A system in which the service cannot be provided without the customer being physically in the system (e.g., transit systems) [Low-contact System] A system in which the service can be provided without the customer being physically in the system (e.g., lawn care services) Operation Process • Goods-Producing Process o By type of transformation technology (raw materials -> finished goods)  Chemical Process (Raw materials are chemically altered) (E.g. steel, tire, fertilizer, petroleum, paint industries)  Fabrication Process (Mechanically alter the shape or form of a product) (E.g. metal forming, woodworking, textile industries)  Assembly Process (Put together various components) (E.g. automotive industries, making a sandwich)  Transport Process (Moving goods from one location to another acquiring place utility) (E.g. moving goods from factory to stores)  Clerical Process (Add information/advice/packaging knowledge) (E.g. turn financial data into an investment analysis) o By nature of transformation process  Analytic Process (Breaking down materials)  Synthetic Process (Combining materials) • Service-Producing Processes o High-contact Process o Low-contact Process [Forecast] Estimates of future demand for both new and existing products [Capacity] The amount of a good that a firm can produce under normal working conditions [Process Layout] A way of organizing production activities such that equipment and people are grouped together according to their function [Cellular Layout] Used to produce goods when families of products can follow similar flow paths [Product Layout] A way of organizing production activities such that equipment and people are set up to produce only one type of good [Assembly Line] A type of product layout in which a partially finished product moves through a plant on a conveyor belt or other equipment [Service Flow Analysis] An analysis that shows the process flows that are necessary to provide a service to customers; it allows managers to determine which processes are necessary Operations Planning • Demand Planning: Forecast how much you need to make • Capacity Planning: Ensure enough space and workers to meet demand • Location Planning: Find best locations for getting raw materials, good employees and close to customers • Layout Planning: Arrange store/factory for smooth flow of materials • Schedule: To finish on time - start on time Facts and data: • Approximately 80% Canadians work in services as opposed to working in manufacturing • Approximately 70% Canada's GDP is created by "services" as opposed to manufacturing Chapter 2: Increasing Productivity and Quality [Productivity] A measure of efficiency that compares how much is produced with the resources used to produce it Productivity • National Productivity = GDP / population (workers) • Business Productivity = outputs (products or service) / inputs (labour, capital or materials) [Quality] A product’s fitness for use in terms of offering the features that consumers want [Labour Productivity] Partial productivity ratio calculated by dividing gross domestic product by total number of workers [Total Quality Management (TQM)] A concept that emphasizes that no defects are tolerable and that all employees are responsible for maintaining quality standards [Performance Quality] The overall degree of quality; how well the features of a product meet consumer’s needs and how well the product performs [Quality Reliability] The consistency of quality from unit to unit of a product [Quality Ownership] The concept that quality belongs to each employee who creates or destroys it in producing a goods or service; the idea that all workers must take responsibility for producing a quality product [Business Process Re-engineering] Redesigning of business processes to improve performance, quality, and productivity [Supply Chain] Flow of information, materials, and services that starts with raw materials suppliers and continues through other stages in the operations process until the product reaches the end customer Ford Motor’s supply chain: Primary producers -> Secondary producers of components -> Assemblers -> Retailers -> Consumers [Supply Chain Management (SCM)] Principle of looking at the chain as a whole to improve the overall flow through the system According to ‘Retail Insider’, Eaton Centre is the Toronto shopping mall that generates the highest sales per square foot Facts and data: • Norway has the "most productive" workers, i.e. had the highest "GDP per hour worked" Chapter 4: Understanding Accounting Issues [Accounting] A comprehensive system for collecting, analyzing, and communicating financial information [Bookkeeping] Recording accounting transactions [Accounting information system (AIS)] An organized procedure for identifying, measuring, recording, and retaining financial information so that it can be used in accounting statements and management reports [Controller] The individual who manages all the firm’s accounting activities [Financial accounting system] The process whereby interested groups are kept informed about the financial condition of a firm [Managerial (management) accounting] Internal procedures that alert managers to problems and aid them in planning and decision making Two kinds of accounting info: • Financial accounting Tell external users about financial condition of firms Tend to look at business as a whole o Financial accounting info is collected on an annual basis o Keep track if financial records have been done properly o Help business plan and prepare annual tax returns • Managerial accounting Tells internal users about performance and problems for decision making Tend to look at individual products, plants or divisions [Audit] An accountant’s examination of a company’s financial records to determine if it used proper procedures to prepare its financial reports [Forensic accountant] An accountant who tracks down hidden funds in business firms, usually as part of a criminal investigation [Generally accepted accounting principles (GAAP)] Standard rules and methods used by accountants in preparing financial reports [Management consulting services] Specialized accounting services to help managers resolve a variety of problems in finance, production scheduling, and other areas [Private accountant] An accountant hired as a salaried employee to deal with a company’s day-to-day accounting needs [Asset] Anything of economic value owned by a firm or individual [Liability] Any debt owed by a firm or individual to others [Owners’ equity] Any positive difference between a firm’s assets and its liabilities; what would remain for a firm’s owners if the company were liquidated, all its assets were sold, and all its debts were paid Assets = Liability + Equity [Double-entry accounting system] A bookkeeping system, developed in the fifteenth century and still in use, that requires every transaction to be entered in two ways – how it affects liabilities and owners’ equity – so that the accounting equation is always in balance [Financial Statement] Any of several types of broad reports regarding a company’s financial status; most often used in reference to balance sheets, income statements, and/or statements of cash flows Financial statements • Balance Sheet Show resources owned and available to the business • Income Statement Show sales, expenses, profits made using resources [Balance sheet] A type of financial statement that summarizes a firm’s financial position on a particular date in terms of its assets, liabilities, and owner’s equity Balance Sheet Assets Liability Current Assets: Current Liabilities: Cash – bank accounts, petty cash (Accounts payable) Accounts receivable – money owed to Trade credit – money owed to you suppliers Inventory – products ready to be sold Unpaid bills – rent, phone, hydro, etc. Raw materials Term Liabilities: Fixed Assets: Bank loans – lines of credit, overdrafts Real estate – office buildings, factories Term loans – truck and car loans Machinery & equipment – vans, Mortgages – 25 year loan on factory computers Intangible Assets: Total liabilities ------------------------ $$$ Patents Trademarks Equity Copyright Share capital Franchise fees Earnings Total equity --------------------------- $$$ Total liabilities and equity ----------$$$ Total assets --------------------------------- $$$ [Current assets] Cash and other assets that can be converted into cash within a year [Accounts receivable] Amounts due to the firm customers who have purchased goods or services on credit; a form of current assets [Merchandise invent
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