MANGT 421 COMPREHENSIVE EXAM ANSWERS AND
QUESTIONS SET A+
Production - ✔✔The creation of goods and services
✔✔Operations Management (OM) - ✔✔Activities that relate to the creation of goods and
services through the transformation of inputs to outputs
✔✔To create goods and services, all organizations perform three functions. These three
functions are the necessary ingredients not only for production but also for an
organization's survival. They are: - ✔✔1. Marketing, which generates the demand, or at
least takes the order for a product or service (nothing happens until there is a sale)
2. Production/operations, which creates, produces, and delivers the product
3. Finance/accounting, which tracks how well the organization is doing, pays the bills,
and collects the money
✔✔Supply chain - ✔✔A global network of organizations and activities that supplies a
firm with goods and services
✔✔Why Study OM? - ✔✔1. OM is one of the three major functions of any organization,
and it is integrally related to all the other business functions
2. We study OM because we want to know how goods and services are produced
3. We study OM to understand what operations managers do
4. We study OM because it is such a costly part of an organization
✔✔What Operations Managers Do - ✔✔All good managers perform the basic functions
of the management process. The management process consists of planning,
organizing, staffing, leading, and controlling. Operations managers apply this
management process to the decisions they make in the OM function.
✔✔Operations for Goods and Services - ✔✔Manufacturers produce a tangible product,
while service products are often intangible. But many products are a combination of a
good and a service
, ✔✔Services - ✔✔Economic activities that typically produce an intangible product (such
as education, entertainment, lodging, government, financial, and health services)
✔✔Service sector - ✔✔The segment of the economy that includes trade, financial,
lodging, education, legal, medical, and other professional occupations
✔✔Productivity - ✔✔The ratio of outputs (goods and services) divided by one or more
inputs (such as labor, capital, or management)
✔✔Single-factor productivity - ✔✔Indicates the ratio of goods and services produced
(outputs) to one resource (input)
✔✔Multifactor productivity - ✔✔Indicates the ratio of goods and services produced
(outputs) to many or all resources (inputs)
✔✔Productivity variables - ✔✔The three factors critical to productivity improvement--
labor, capital, and the art and science of management.
✔✔Productivity variable: labor - ✔✔Improvement in the contribution of labor to
productivity is the result of a healthier, better educated, and better-nourished labor
force. Three key variables for improved labor productivity are:
1. Basic education appropriate for an effective labor force
2. Diet of the labor force
3. Social overhead that makes labor available, such as transportation and sanitation
Training, motivation, team building and improved education, as well as others, may be
among the many techniques that will contribute to increased labor productivity.
✔✔Productivity variable: capital - ✔✔Human beings are tool-using animals. Capital
investment provides those tools. Inflation and taxes increase the cost of capital, making
capital investment increasingly expensive. When the capital invested per employee
drops, we can expect a drop in productivity.
✔✔Productivity variable: management - ✔✔Management is a factor of production and
an economic resource. Management is responsible for ensuring that labor and capital
are effectively used to increase productivity. Management accounts for over half of the
annual increase in productivity. This increase includes improvements made through the
use of knowledge and the application of technology.
✔✔Productivity of the service sector has proven difficult to improve because service-
sector work is: - ✔✔1. Typically labor intensive (e.g., counseling, teaching)
2. Frequently focused on unique individual attributes or desires (e.g., investment advice)
3. Often an intellectual task performed by professionals (e.g., medical diagnosis)
4. Often difficult to mechanize and automate (e.g., a haircut)
5. Often difficult to evaluate for quality (e.g, performance of a law firm)
QUESTIONS SET A+
Production - ✔✔The creation of goods and services
✔✔Operations Management (OM) - ✔✔Activities that relate to the creation of goods and
services through the transformation of inputs to outputs
✔✔To create goods and services, all organizations perform three functions. These three
functions are the necessary ingredients not only for production but also for an
organization's survival. They are: - ✔✔1. Marketing, which generates the demand, or at
least takes the order for a product or service (nothing happens until there is a sale)
2. Production/operations, which creates, produces, and delivers the product
3. Finance/accounting, which tracks how well the organization is doing, pays the bills,
and collects the money
✔✔Supply chain - ✔✔A global network of organizations and activities that supplies a
firm with goods and services
✔✔Why Study OM? - ✔✔1. OM is one of the three major functions of any organization,
and it is integrally related to all the other business functions
2. We study OM because we want to know how goods and services are produced
3. We study OM to understand what operations managers do
4. We study OM because it is such a costly part of an organization
✔✔What Operations Managers Do - ✔✔All good managers perform the basic functions
of the management process. The management process consists of planning,
organizing, staffing, leading, and controlling. Operations managers apply this
management process to the decisions they make in the OM function.
✔✔Operations for Goods and Services - ✔✔Manufacturers produce a tangible product,
while service products are often intangible. But many products are a combination of a
good and a service
, ✔✔Services - ✔✔Economic activities that typically produce an intangible product (such
as education, entertainment, lodging, government, financial, and health services)
✔✔Service sector - ✔✔The segment of the economy that includes trade, financial,
lodging, education, legal, medical, and other professional occupations
✔✔Productivity - ✔✔The ratio of outputs (goods and services) divided by one or more
inputs (such as labor, capital, or management)
✔✔Single-factor productivity - ✔✔Indicates the ratio of goods and services produced
(outputs) to one resource (input)
✔✔Multifactor productivity - ✔✔Indicates the ratio of goods and services produced
(outputs) to many or all resources (inputs)
✔✔Productivity variables - ✔✔The three factors critical to productivity improvement--
labor, capital, and the art and science of management.
✔✔Productivity variable: labor - ✔✔Improvement in the contribution of labor to
productivity is the result of a healthier, better educated, and better-nourished labor
force. Three key variables for improved labor productivity are:
1. Basic education appropriate for an effective labor force
2. Diet of the labor force
3. Social overhead that makes labor available, such as transportation and sanitation
Training, motivation, team building and improved education, as well as others, may be
among the many techniques that will contribute to increased labor productivity.
✔✔Productivity variable: capital - ✔✔Human beings are tool-using animals. Capital
investment provides those tools. Inflation and taxes increase the cost of capital, making
capital investment increasingly expensive. When the capital invested per employee
drops, we can expect a drop in productivity.
✔✔Productivity variable: management - ✔✔Management is a factor of production and
an economic resource. Management is responsible for ensuring that labor and capital
are effectively used to increase productivity. Management accounts for over half of the
annual increase in productivity. This increase includes improvements made through the
use of knowledge and the application of technology.
✔✔Productivity of the service sector has proven difficult to improve because service-
sector work is: - ✔✔1. Typically labor intensive (e.g., counseling, teaching)
2. Frequently focused on unique individual attributes or desires (e.g., investment advice)
3. Often an intellectual task performed by professionals (e.g., medical diagnosis)
4. Often difficult to mechanize and automate (e.g., a haircut)
5. Often difficult to evaluate for quality (e.g, performance of a law firm)
