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RSM 100 Final Exam Study Notes

Rotman Commerce
Course Code
Michael Szlachta
Study Guide

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RSM 100 Final Exam Study Notes
11. Producing Goods & Services
Service operations production activities that yield tangible & intangible service products
Goods production production activities that yield tangible products
Utility power of a product to satisfy a human want; something of value
Time utility quality of a product satisfying a human want bec of time @ which made available
Place utility quality of a product satisfying human want bec of where its made available
Ownership (possession) utility during its consumption / use
Form utility because of its form; requires raw materials to be transformed into a finished product
Operations (production) management systematic direction & control of processes that transform
resources into finished goods
Production managers responsible for ensuring operations processes create value & provide
Operations process set of methods & tech used in production of a good / 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 system in which service cant be provided w/o customer being physically
Low-contact system system in which service can be provided w/o customer physically in system
Operations capability (production capability) activity / process that production must do
especially well, with high proficiency
Process layout way of organizing production activities such that equipment & ppl are grouped
together according to function
Cellular layout layout used to produce goods when families of products can follow similar flow
Product layout way of organizing production activities so equip. & ppl set up produce 1 type of
Assembly line type of product layout in which partially finished product moves through plant on
conveyor belt (or other equip.)
Lean manufacturing involves getting rid of traditional assembly lines altogether. Suppliers pre-
assemble many specific parts into modules, then production workers combine to finish product
U-shaped production lines production layout in which machines placed in narrow U shape
rather than straight line
Flexible manufacturing system (FMS) production system that allows single factory to produce
small batches of different goods on same production line
Soft manufacturing reducing huge FMS operations to smaller, more manageable groups of

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Service flow analysis an analysis that shows process flows necessary to provide service to
customers; allows managers to determine which are necessary
Master production schedule showing which products will be produced, when production will
take place, & what resources
Gantt chart scheduling tool that diagrams steps to be performed & specifies time required to
complete each
PERT chart production schedule specifying sequence & critical path for performing steps in a
Operations control managers monitor production performance by comparing results w/ plans &
Inventory control receiving, storing, handling & counting of all raw materials, partly finished &
finished goods
Purchasing acquisition of all raw materials & services that company needs to produce products
Holding costs costs of keeping extra supplies / inventory on hand
Lead times in purchasing control, gap between customers placement of order & sellers shipment
Just-in-time (JIT) production method of inventory control in which materials are acquired & put
into production as needed
Material requirements planning (MRP) method of inventory control in which computerized bill
of materials is used to estimate production needs so that resources are acquired & put into
production only as needed
Bill of materials basically a recipe for the finished product
Manufacturing resource planning (MRP II) an advanced version of MRP that ties together all
parts of the organization into the companys production activities
12. Increasing Productivity & Quality
Productivity measure of economic performance that measures how much is produced relative to
resources used to produce it
Labour productivity partial productivity ratio calculated by dividing GDP by total # of workers
Total quality management (TQM) all activities necessary for getting high-quality g&s into
Performance quality features of a product & how well it performs
Quality reliability consistency of repeatability of performance
Quality ownership idea that quality belongs to each person who creates / destroys it while
performing job
Competitive product analysis process by which a company analyzes competitors products to
identify desirable improvements

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Value-added analysis evaluation of all work activities, material flows & paperwork to determine
value added
Statistical process control (SPC) statistical analysis techniques that allow managers to analyze
variations in production data & to detect when adjustments are needed to create high-quality
reliability products
Process variation any change in employees, materials, work methods, or equip that affects output
Control chart statistical process control method in which results of test sampling of a product are
plotted on diagram that reveals when process is beginning to depart from normal operating
Quality/cost studies method of improving product quality by assessing firms current quality-
related costs & identifying areas with greatest cost-saving potential
Internal failures expenses incurred during production & before bad product leaves plant
External failures expenses incurred when defective products are allowed to leave factory & to
Quality improvement (QI) teams TQM tool in which groups of employees work tougher to
improve quality
Benchmarking comparing quality of firms output with quality of industry leaders
ISO 9000 certification program attesting to fact that factory, lab or office has met rigorous
quality mgmt requirements set by International Organization for Standardization
ISO 14000 has improved environmental performance
Business process re-engineering redesigning of business processes to improve performance,
quality & productivity
Supply chain flow of info, materials & services that start with raw-materials suppliers &
continues thru other stages in operations process until product reaches end customer
The Re-Engineering Process
1. Identify the business activity that will be changed.
2.Evaluate info & HR to see if can meet reqs for change.
3.Diagnose current process to identify strengths & weaknesses.
4.Create new process design.
5. Implement new design.
Supply chain management (SCM) principle of looking @ chain as a whole to improve overall flow
thru system
Continuous improvement ongoing commitment to improving products & processes, step by step,
in pursuit of ever-increasing customer satisfaction
14. Understanding Accounting Issues
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