Mgmt/300 Final Exam

Final Exam Study Guide
MGMT 300 Principles of Management and Operations
I Study Materials and Focus • PPT slides and textbook of the following chapters

Daft Chap 1 Innovative management for turbulent times

Daft Chap 5 Managing ethics and social responsibility

Daft Chap 9 Managerial decision making

Daft Chap 19 Managing quality and performance

OM Chap 7 Process selection, design and analysis

OM Chap 12 Managing Inventories

OM Chap 18 Project management

II Cautions • Final exam includes 50 multiple-choice questions, covering both concepts and calculations.

• 1-2 bonus question will be given in the format of problem solving.

• This study guide pinpoints the major contents of the final exam. It is
NOT a comprehensive list of problems on the exam.

• Please bring a copy of “Standard Normal Distribution Table” (posted online in the same folder)

• Please bring your own scantron Form F-289-PAR-L (Note: the same as that of Exam II)

• Don’t forget to bring your calculator to the exam. The use of electronic devices will be strictly prohibited

III Key concepts and models Daft Chapter 1 Innovative Management for Turbulent Times • The four management functions- planning, organizing, leading, controlling

• Planning- identifying goals for future organizational performance and deciding on the tasks and use of resources to attain them , organizing-assigning responsibility for task accomplishment leading-using influence to motivate employees - and controlling- monitoring activities and making corrections

• Effectiveness-the degree to which the organization achieves a stated goal efficiency- the amount of resources used to produce a desired level of output

• Conceptual skills- cognitive ability to see the organization as a whole and the relationship amongst its parts , human skills- managers ability to work with and through with other people and work effectively as part of a group technical skills – understanding and proficiency in the performance of a specific task

• Management levels in the organizational hierarchy- Top managers- > moddle managers -> first line managers

• Functional managers= responsible for a department that performs a functional task (actg/fin) versus general managers= responsible for several departments that perform different functions such as the manager at macys/ ford factory

• Manager roles: ( ROLE def: set of expectations for ones behavior informational=activities used to maintain and develop an information network, monitoring , dissiminating, spokesperson to communicate information interpersonal= acting as a figurehead, leader, and liason decisional= entrepreneur , disturbance handler, resource allocator, and negotiator

• 10 manager roles = monitor, disseminator and spokesperons ( informational role figurehead, leader, and lisaion ( interpersonal entrepreneur, disturbance handler, resource allocator, and negotiator ( decisional

Daft Chapter 5 Ethics and Social Responsibility • Domain of codified law,= legal standard domain of ethics= social standard, domain of free choice= personal standard

• Utilitarian approach= ethical decision making says that ethical choice is one that produces the greatest good for the greatest number

• Individualism approach= actions are ethical when they promote the individuals’ best long-term interests, because with everyone pursuing self-interest, the greater good is served

• Moral rights approach= ethical decisions are those that best maintain the fundamental rights of people affected by them

• Justice approach: distributive= different treatment of individuals not be based on arbitrary characteristic /procedural= rules should be clearly stated and consistently and impartially reinforces compensatory = individuals should be compensated for the cost of their injuries by the party responsible, and individuals should not be held responsible for matters over which they have no controls

• Virtue ethics approach= moral behavior stems from personal virtues. If manager develops good character traits and learns to overcome negative traits, he or she will make ethical decisions based on personal virtues.

• Practical approach= sidesteps debates about what is right, good, or just, and bases decisions on prevailing standards of the profession and the larger society, taking the interests of all stakeholders into account.

• Stage of moral development: preconvention= individuals are concerned with external rewards and punishments and obey authority to avoid detrimental personal consequences conventional- people learn to conform to the expectations of good behavior as defined by fam/colleagues/society, leadership style is one that encourages interpersonal relationships and cooperation post conventional (principled) = individuals guided by internal set of values based on universal principles of justice and right and will even disobey rules or laws that violate these principles

• Stakeholder= any group within or outside and organization that has a stake in the organizations performance. key stakeholders= shareholders, employees, customers, and suppliers.

• Four criteria of corporate social responsibility= economic responsibility-> legal responsibility -> ethical responsibility-> discretionary responsibility

• Ethical structures( ethics committee= group of executives appointed to oversee company ethics, provides ruling on questionable ethical issues chief ethics officer= company executive that oversees all the aspects of ethics an legal compliance ethics training – help employees deal with ethical questions and translate values stated in code of ethics into everyday behavior

Daft Chapter 9 Managerial Decision Making • Programed = one made in response to a situation that has occurred often enough to enable managers to develop decision rules that can be applied in the future nonprogramed decisions= one made in response to a situation that is unique , poorly defined and largely unstructured , has important consequences for the organization

• Decision making under certainty= a situation in which all the information the decision make needs is fully available risk= decision has clear cut goals and good information is available, but the future outcomes associated with each alternative are subject to chance. uncertainty = managers know which goals they want to achieve but information about alternatives and future events is incomplete ambiguity= condition In which the goals to be achieved or the problem to be solved is unclear, alternatives are difficult to define, and information about outcomes is unavailable

• Classical (normative) model= aka rational approach to decision making, based on assumption that managers should make logical decisions that are economically sensible and in the organization’s best economic interests. Model is normative. defines how a manager SHOULD make logical decisions and provides guidelines for reaching an ideal outcome

• Administrative (descriptive) model= includes concepts of bounded rationality and satificing and describes how managers make decisions in situation that are characterized by uncertainty and ambiguity

• Political model= considers debate, discussion, and coalition building within the organization

• Bounded rationality= people have the time and cognitive ability to process only a limited amount of information on which to base decisions

• Satisfying= choosing the first alternative that satisfies minimal decision criteria, regardless of whether better solutions are presumed to exist

• Decision styles: directive= people who prefer simple, celar cut solutions to problems , quick decisions, rely on existing rules and procedures analytical= people who consider complex solutions based on as much data as they can gather, best possible decision based on the information available conceptual= consider a broad amount of information however they are more socially orientated that those with analytical style (ie: Obama) and behavioral= adopted by managers with deep concern for others as individuals, talk to people one on one and understand feelings on problems.
Concerned with personal development of others and make decisions that help others achieve their goals.

Daft Chapter 19 Managerial Quality and Performance • Organizational control- the systematic process through which managers regulate organizational activities to meet planned goals and standards of performance

• The balanced scorecard= comprehensive management control system that balances traditional financial measures with measured of customer service , internal business processes, and the organizations capacity for learning and
growth.

• Four typical components of the balanced scorecard= financial, internal business processes, learning and growth, customers.

• Feedback control model= involves using feedback to determine whethe performance meets established standards. Includes establishing standards, measures performance, compare performance to standards, and make corrections as necessary.

• Expense budget,= outlines the anticipate and actual expenses for a responsibility center revenue budget= lists forecasted and actual revenues of the organization cash budget,= estimates receipts and expenditures of money on a daily or weekly basis to ensure that an organization has sufficient cash to meet its obligations capital budget= estimates receipts and expenditures of money on a daily or weekly basis to ensure that an organization has sufficient cash to meet its obligations • Balance sheet= shows firms financial position with respect to assets and liabilities at a specific point in time

• Income statement= summarizes the firms financial performance for a given time interval

• Liquidity ratios (current ratio and quick ratio)= measures firms ability to meet its current debt obligations current ratio= current assets/ current liabilities • Quick ratio = cash + acc receivable / current liabilities • Activity ratios (inventory turnover, conversion ratio) – measures organizations internal performance with respect to key activities defined by management inventory turnover= total assets/ average inventory conversion ratio = purchase orders/ customer inquiries • Profitability ratios = describes the firms profits relative to a source of profits such as sales or assets. margin on sales= net income /sales return on total assets = net income/ total assets • Gross profit= revenue – c.o.g.s. operating profit= gross profit – operating expenses net profit = operating profit- non operating income - taxes • Leverage ratios- describes the firms profits relative to a source of profits such as sales or assets • Hierarchical versus decentralized control hierarchial = monitoring and influencing employee behavior through exntesive use of rules, policies, hierarchy of authority, writeen documentation, and other formal mechanisms decentralize control= organization fosters compliance with organizational controls through the use of organizational culture, group norms, and focus on goals rather than rules and precedures • TQM= popular decentralized control philosophy where the entire org. infused quality into every activity in a company through continuous improvement • Quality circles= group of 6-12 employees who meet to discuss and solve problems affecting the quality of their work • Benchmarking= continuous process of measuring products., services, and practice against the toughest competitor • Six sigma= highly ambitious quality standard that specifies a goal of no more than 3.4 defects per million parts, emphasized disciplined relentless pursuit of higher quality and lower costs. • Reduced cycle time= steps take to complete a company process, improvement possible by focusing on improved responsiveness and acceleration of activities in shorter time • Continuous improvement= KAIZEN, the implementation of large number of small incremental improvements in all aread of the organization on an ongoing basis. OM Chapter 7 Process Selection, Design and Analysis • Custom (Make-to-order) product= produced and delivered as a one of a kind and in small quantities , designed to meet customer specifications

• Option (Assemble-to-order) product= configurations of standard parts , subassemblies, services that can be selected by customer from limited set

• Standard (Make-to-stock) product= made according to fixed design and the customer has no options from which to choose

• The characteristics of each of the four types of processes: project= large scale , customized initiatives that consist of many smaller tasks and activities that must be cooridinated and completed to finish on time and within budget job shop= organized around particular types of general purpose equipment that are flexible and capable of customizing work for individual customers flow shop= organized around a fixed sequence of activites and process steps such as an assembly line to produce a limited variety of similar goods and continuous process= create highly standardized goods or services usually around the clock in very high volumes.

• The Product-Process matrix= model that describes the alignment of process choice with the characteristics of the manufactured good

• Pathway= unique route through a service system

• Provider-routed pathways= constrain customers to follow a very small number of possible and predefined pathways through the service system

• Customer-routed pathways= offer customers broad freedom to select the pathways that are best suited for their immediate needs and wants from many possible pathways through the service delivery system

• Service-encounter activity sequence= consists of all the process steps and service enounters necessary to complete a service transaction and fulfill a customers needs and wants

• Functions of a flowchart- describes the sequence of all process activities and tasks necessary to create and deliver a desired output or outcome

• Definition of value stream mapping= mapping the valued added activities involved in the designing , producing, and delivering good and services to customers

• Throughput= average number of entities completed per unit time , output rate.

• Bottleneck= the work activity that effectively limits throughput of the entire process

• Little’s Law= explains relationship amongst flow time (T) , throughput ® m and work in process (WIP) WIP = throughput x flowtime

OM Chapter 12 Inventory Management • ABC inventory =

• Raw materials,= inputs to manufacturing work-in-process= partially finished products waiting for further processing finished-goods inventory= completed products ready for distribution

• Safety stock=additional amount that is kept over and above the average amount required to meet demand

• Ordering costs= incurred as a result of the work involved in placing order with suppliers or configuring tools, equipment, and machines , holding costs =expenses associated with carrying inventory stockout costs= costs associated with inventory not bein available.

• SKU= sinclge item or asset stored at a particular location (stock keeping unit)

• Dependent demand = if demand depends on demand of other SKU /…independent demand=unrelated to other SKU and must be forecasted

• Deterministic demand= can be predicted withcertainty , stochastic demand= random demand, static demand= stable dynamic demand= demand that varies over time

• Lead time= time between placement of order an its receipt stockouts= inability to satisfy the demand for an item backorder= occurs when customer is willing to wait for the item lost sale= occurs when customer doesn’t wait and purchases elsewhere

• Fixed-Period System= inventory position is checked only at fixed intervals of time T Fixed-Quantity System= the order quantity size is fixed. Same amount Q ordered everytime

• EOQ model assumptions= minimizes total cost which is sum of inventory holding costs and the ordering costs.

(only one SKU, entire order arrives at one time, only two costs: order/setup and inventory holding costs., no stockouts allowed., demand is continuous and constant, lead time is constant)

• EOQ model calculations- Q= Sqrt[(2*DC,)/Ch) D= demand, C, = cost of placing order, Ch = cost of holding in inventory

• Cycle inventory= inventory that results from purchasing or producing in larger lots than are needed for immediate consumption or sale

• Average inventory= (max inventory +minmimu inventory /2)

• Inventory positions= on hand quantity plus any orders placed but not yet received

• Service level= the desired probability of not having a stock out during a lead-time period

• Reorder point model calculations = r= d*l d= demand rate l= lead time)

• Single-period model calculations=

OM Chapter 18 Project Management • Project life cycle- DPOCC : Define, Plan, Organize, Control, Close

• ***Critical path-sequence of activities that tkes the longest time and defines the total project completion time.

• Project duration- how long the project will take

• ***Slack and calculation of slack- slack time = LS – ES = LF – EF (LS=latest start, ES= Earliest start)

• Assumptions of critical path method- 1) the project network defines a correct sequence of work in terms of the and workflow, 2) activities are assumed to be independent of one another with clearly defined start and finish dates. 3) the activity time estimates are accurate and stable. 4) once an activity is started it continues uninterrupted until it is completed.

• ***Project crashing procedures- OM ch 18 slides, #38 ********

• ***Expected activity time in PERT= (a+4m+b)/6 (a-optimistic time estimate, m most probably, b= pessimistic time estimate.)

• ***Variance of activity time in PERT= (b-a)^2 /36