Chapter 08 - Managing Service and Manufacturing Operations
8-22
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9. Describe some of the methods a firm may use to control inventory.
A firm may use a variety of methods to control inventory including economic order quantity
(identifies the optimum number of items to order to minimize the costs of managing them), just-in-
time inventory management (eliminates waste by using smaller quantities of materials that arrive
“just-in-time” for use), and material-requirements planning (a planning system that schedules the
precise quantity of materials needed to make the product).
10. When might a firm decide to inspect a sample of its products rather than test every product for
quality?
Whether to inspect 100 percent of the output or only part of it is related to the cost of the inspection
process, destructiveness of the inspection process, and the importance of the item to the safety of
consumers or others. The greater the cost and the more destructive the inspection process, the more
likely the firm is to use sampling techniques. However, the more important an item is to the safety of
consumers or others, the more likely the firm is to examine all items.
GET INVOLVED
1. Compare and contrast OM at McDonald’s with that of Honda of America. Compare and
contrast OM at McDonald’s with that of a bank in your neighborhood.
Sample answer (not exhaustive):
McDonald’s Honda of America Local bank
Inputs Human labor, money,
management, energy,
cooking oil, meat,
condiments, pickles,
ketchup, mustard, bread,
soft drinks, milk, coffee
grounds, juice
concentrate, water,
potatoes, plastic toys,
menus, ice cream cones,
wrappers
Human labor at
factory, salespeople,
money, management,
energy, engines,
braking systems, steel,
glass, door panels,
windows, rubber, tires,
dashboard needles,
transmission gears,
steering wheel, seats,
air conditioner vents,
radios, mirrors, paint
Human labor, money,
management,
information and
customer data, paper,
calculators,
knowledge
Equipment Metal forming
equipment, machining
equipment, car lifts,
robotics, conveyor
systems, lubrication
equipment, wheel spoke
spinning machine,
assembly line, welding
machines, hydraulic
press machines,
stamping parts,
Drive-thru equipment
(loudspeaker, signs),
cash registers, ovens,
cutlery, playground
equipment, fryer, ice
cream machine, coffee
maker, soda
dispensers, ice makers,
shelves, food
preparation tables
(assembly line)
Teller machines,
drive-thru equipment,
computers, filing
systems, ATM
machines, counters,
drawers