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1 TRUE/FALSE. Write 'T' if the statement is true and 'F' if the statement is false. 1) Processes are found in all organizations. 1) 2) Processes are found in all functions of an organization. 2) 3) A firm's supply chain is sometimes called the value chain. 3) 4) Vertical integration is the degree to which a firm's own production system or service facility handles the entire supply chain. 4) 5) Process choice is the mix of equipment and human skills in a process. 5) 6) Resource flexibility determines whether resources are organized around products or processes. 6) 7) Customer involvement reflects the ways in which customers become part of the process and the extent of their participation. 8) Capital intensity is the ease with which employees and equipment can handle a wide variety of products, output levels, duties, and functions. 7) 8) 9) Volume is one factor that impacts the selection of the process type. 9) 10) The degree of customization is one factor that impacts the selection of process type. 10) 11) A continuous process is characterized by a high degree of job customization. 11) 12) Construction of a new shopping mall would be an example of a project process. 12) 13) Project processes are typically used to create one-of-a-kind products or services. 13) 14) Resources used in a project typically are released for further use after a project is completed. 14) 15) A job shop process has a relatively high level of customization. 15) 16) A project process has the highest level of customization of the five process types. 16) 17) Batch processes typically uses a line flow through the operations. 17) 18) Project processes generally have higher volumes than batch processes. 18) 19) Service providers with a line process follow a standardized-services strategy. 19) 20) In a line process variety is possible by careful control of the addition of standard options to the main product or service. 20) 21) Petroleum refineries typically use continuous processes. 21) 22) Continuous processes have a high level of customization. 22) 23) Project processes involve a higher degree of customization than line processes. 23)

2 24) Job processes support higher production volumes than line processes. 24) 25) The more processes in the supply chain that the organization performs itself, the less vertically integrated it is. 25) 26) More vertical integration means more outsourcing. 26) 27) Backward integration means that the firm acquires more channels of distribution. 27) 28) The decision of a major grocery chain to invest in a poultry processing plant to supply its stores is an example of forward integration. 29) The decision by consumer product manufacturing companies such as Nike and Sony to own and operate retail outlets is an example of forward integration. 28) 29) 30) Generally, doing the work in-house means better quality. 30) 31) The advances in information technology have led to more vertical integration. 31) 32) In a vertical corporation, competitors enter into short-term partnerships to respond to market opportunities. 33) Resource flexibility helps to absorb the feast-or-famine workloads in individual operations that are caused by low-volume, jumbled routings, and fluid scheduling. 34) A business that competes on customization frequently allows customers to develop their own product specifications. 35) When a service is delivered to the customer, client, or patient by appointment, decisions involving the location become part of process design. 32) 33) 34) 35) 36) Capital intensity is the mix of equipment and human skills in the process. 36) 37) Flexible automation produces one type of part or product in a fixed sequence of simple operations. 37) 38) A job with a high degree of specialization generally means great efficiency. 38) 39) Job rotation involves the vertical expansion of job duties. 39) 40) Economies of scope reflect the ability to produce multiple products more cheaply in combination than separately. 41) A cell is a group of two or more dissimilar workstations located close to each other that process a limited number of parts or models that have similar process requirements. 40) 41) 42) Flow diagrams are effective for documenting and evaluating processes. 42) 43) Process charts trace the flow of information, customers, employees, equipment, or materials through a process. 43) 44) Simulation is an act of reproducing the behavior of a process using a model that describes each step of the

3 process. 44) Full file at 45) Reengineering is the fundamental rethinking and radical redesign of processes to improve performance dramatically. 45) 46) The emphasis of reengineering is on the functional departments. 46) 47) Information technology is rarely used with reengineering. 47) 48) Process re-engineering involves incremental improvements to the design of processes. 48) 49) In services, productivity improves as processes involve shorter service encounters and lower levels of customer interaction. 49) 50) For professional services the work tends to be standardized and routine. 50) 51) So called "back office" processes are more likely to be associated with professional service processes with high levels of customer interaction than service factories. 51) 52) Service factories place greater emphasis on cost efficiency than professional services. 52) MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 53) Which one of the following statements concerning process management is TRUE? 53) A) Process management is a short-term decision, and thus it has a tactical rather than a strategic focus. B) The variable underlying all five major process decisions is volume. C) Process changes should be made only when introducing new products or services. D) A company's operations strategy is the primary output of its major process decisions. 54) Five dimensions must be considered in making decisions on process. Which one of the following correctly identifies all five major process decisions? A) capital intensity, resource flexibility, facility location, vertical integration, and process choice B) product or service life cycle, capital intensity, vertical integration, process choice, and customer involvement C) capital intensity, resource flexibility, vertical integration, customer involvement, and process choice D) capital intensity, process choice, inventory placement, resource flexibility, and customer involvement 54) 55) Which of the following is sometimes called mass production? 55) A) batch B) project C) continuous D) line 56) A job process would be preferred when 56) A) products are made to stock type. B) workforce and equipment are specialized. C) customization is low and volume is high. D) customization is high and volume is low. 57) A job process requires 57) A) a line flow strategy.

4 B) organizing the resources around the process. C) perfectly predictable customer demands. D) same sequence of processing steps for each job. 58) Which one of the following is NOT true about vertical integration? 58) A) As a firm performs more processes itself, from acquiring materials and services to final delivery to customers, the more vertically integrated it is. B) Forward integration represents movement toward the sources of raw materials and parts. C) Extensive vertical integration is more attractive when volumes are high. D) A make decision means more vertical integration. 59) Which one of the following statements concerning vertical integration is TRUE? 59) A) A company owning its own distribution channels is an example of backward integration. B) High vertical integration is likely to be attractive when volumes are low. C) Make-or-buy decisions relate primarily to forward integration. D) Opting for more vertical integration implies less outsourcing. 60) Which one of the following statements about vertical integration is TRUE? 60) A) By owning its own distribution channels, a company exhibits backward integration. B) Outsourcing is more likely to be attractive when product volumes are high. C) Make-or-buy decisions are most closely related to forward integration. D) As a firm performs more processes itself, from acquiring materials and services to final delivery to customers, the more vertically integrated it is. 61) Which one of the following statements about process management is TRUE? 61) A) Customized-services processes tend to have high customer involvement. B) A standardized-services process has high customer involvement. C) A standardized-services process is characterized by low capital intensity. D) Replacement of general-purpose production equipment with highly specialized process equipment tends to reduce a company's capital intensity. 62) Which one of the following processes is more likely to have the greatest capital intensity? 62) A) a process with more of its products or services in the early stage of their life cycles B) a process with high production volumes C) a process using customization as its competitive priority D) a process with a flexible flows 63) Which one of the following statements on the concept of focused factories is best? 63) A) emphasize economies of scale, rather than diseconomies of scale B) prefer larger facilities producing all of the products or services the company offers C) emphasize flexibility rather than cost D) reduce the range of demands placed on a factory so management can concentrate on fewer tasks 64) One method of gaining focus is to 64) A) reorganize existing facilities to the plant-within-plant approach. B) remodel stores to create the effect of many small boutiques under one roof. C) build large enough factories to produce all products and services the company offers. D) hire more specialists and supervisors to control the operations. 65) Which one of the following statements on the concept of gaining focus is best? 65) A) Small sizes of many focused factories make it difficult to compete on the basis of shorter

5 lead times. Full file at B) Focused factories maximize the amount of customization. C) Plants within plants are different operations within a facility that can have individualized competitive priorities and processes. D) Focused factories are large factories producing all the products that the company offers. 66) Which one of the following statements about process management is best? 66) A) Creating a more capital-intensive process tends to reduce the fixed cost and raise the variable unit cost. B) The traditional relationship between capital intensity and resource flexibility is that if one is high, so is the other. C) When customization must be high, equipment should be general purpose and employees need to perform a broader range of duties. D) Economies of scope mean that a process should be devoted to a single product or service to achieve high volumes. 67) Which of the following is an example of BACKWARD integration for an automobile manufacturer? A) opening new company-owned car dealerships B) creation of a marketing plan to offer a factory rebate upon the purchase of a new car C) installation of robotic welding equipment on the factory floor D) acquisition of a sheet metal company that is a major supplier to the automobile industry 67) 68) Which one of the following is an example of BACKWARD integration? 68) A) a local bank opening branch offices in neighboring states B) a personal computer manufacturer opening retail computer sales stores C) an airline company purchasing a retail clothing store D) an automobile company opening a plant to manufacture spark plugs 69) Which one of the following is an example of FORWARD integration? 69) A) an automobile company opening a plant to manufacture spark plugs B) a personal computer manufacturer deciding to produce its own keyboards C) a local bank opening branch offices in neighboring states D) a personal computer manufacturer opening retail computer sales stores 70) Which of the following is an example of FORWARD integration? 70) A) an auto manufacturer deciding to purchase interior door panels from suppliers rather than manufacturer them internally. B) the decision by the owner of a sawmill to buy a large woodlot adjacent to the mill. C) a food processing company's decision to enter into long term supply contracts with farmers. D) a group of farmers decision to form a cooperative to build and operate a roadside market to sell fresh produce. 71) Which one of the following is NOT normally an advantage of outsourcing? 71) A) tighter control over product quality B) advanced capabilities to coordinate suppliers through information technology C) less required investment in capital equipment D) increased supplier options due to globalization 72) As it relates to process management, the concept of a flexible work force is defined as 72) A) workers who are willing to work large amounts of overtime when necessary.

6 B) workers who are capable of performing many different tasks. C) a labor force that often changes in size because of hirings and firings. D) a labor force with a high turnover rate. 73) Which of the following statements regarding resource flexibility is best? 73) A) Worker flexibility is not a priority if the process is subject to hourly or seasonal peaks in demand. B) Training is a small part of worker flexibility. C) The use of registered nurses is preferred in some hospitals because they can perform all nursing tasks. D) Specialization of employees is consistent with worker flexibility. 74) Which of the following statements concerning resource flexibility is best? 74) A) Investment in general-purpose equipment is warranted if the firm expects to sell more than the break-even amount. B) Resource flexibility is crucial for line-flow processing. C) Manufacturing efficiency increases with general-purpose equipment. D) Flexible equipment is useful to companies with low production volumes and high customization. 75) Suppose that competitive priorities call for offering a wide variety of customized services. Which of the following process decisions would be more likely? A) more resource flexibility B) less outsourcing C) more capital intensity D) less customer involvement 76) Under which one of the following environments would you opt for a higher degree of resource flexibility? A) a firm producing only one product B) a firm using a flexible flow strategy C) a firm facing a stable demand D) a firm using a line flow strategy 75) 76) 77) Which of the following statements about customer involvement is best? 77) A) A firm that produces standardized products often seeks customer specifications. B) When customer involvement is high a process is more likely to use a standardized-services process rather than a customized-services process. C) For services that directly involve the customer, the customer often dictates time and location of the service. D) In service industries, customer contact is of minor importance. 78) Which one of the following statements about fixed automation is NOT usually true? 78) A) It is designed around a particular product or service and can yield rock-bottom variable cost per unit. B) The equipment performs simple operations in a fixed sequence. C) It is an automatic process that can be reprogrammed to handle various products. D) Chemical processing plants and oil refineries use fixed automation. 79) Which one of the following statements about fixed automation is TRUE? 79) A) Operations managers consider fixed automation when demand volumes are high, product designs are unstable, and product life cycles are short. B) The primary drawbacks of fixed automation are its large initial investment cost and its relative inflexibility. C) The equipment performs complicated operations in a flexible sequence. D) It is an automatic process that can be reprogrammed to handle various products.

7 80) MORE fixed automation typically means 80) A) lower sales. B) longer cycle time. C) decreased labor productivity. D) higher demand volumes. 81) Which of the following statements regarding capital intensity is NOT true? 81) A) Leasing is a method to acquire equipment while defraying financial risk. B) Capital intensity can be a prohibitive investment for low-volume operations. C) Automation refers to a system or piece of equipment that is self-regulating and self-acting. D) Decreased amounts of automation increase capital intensity. 82) Which one of the following statements about flexible automation is best? 82) A) Chemical processing plants and oil refineries mainly utilize programmable automation. B) Investment cost is lower when a transfer machine handles many operations. C) It is an automatic process that can be reprogrammed to handle various products. D) It achieves top efficiency; accommodating new products is difficult and costly. 83) With flexible automation, the ability to reprogram instructions can be useful in 83) A) line flow, but not flexible flow, operations. B) either line flow or flexible flow operations. C) situations where top efficiency is mandatory, but only if volumes are high and life cycles long. D) flexible flow, but not line flow, operations. 84) Which one of the following statements about relationships between the five major process decisions is best? A) Resource flexibility usually is higher when capital intensity is higher. B) Customer involvement usually is higher when capital intensity is higher. C) Increasing volume opens the door for less capital intensity and more outsourcing. D) A manufacturing plant that is capital intensive tends to have more opportunity for vertical integration. 84) 85) Which statement about economies of scope is NOT true? 85) A) Economies of scope reflect the ability to produce multiple products more cheaply in combination than separately. B) Economies of scope reflect low capital intensity and high resource flexibility. C) Economies of scope bring together two competitive priorities--customization and low price. D) Economies of scope are often attained through programmable automation. 86) The manner and extent to which customer involvement becomes part of the process is determined by A) the extent to which preferences for customized features must be determined B) the potential for cost savings based on self-service C) whether or not the customer has to be present fora service to be provided D) all the factors listed above 87) Which of the following statements is LEAST likely to be associated with a high volume production? A) less resource flexibility B) high capital-intensity and automation C) a continuous or line process D) high levels of customer involvement 86) 87) 88) Which of the following statements is MOST likely to be associated with a low volume pro duction

8 ? 88) A) less customer involvement B) high capital-intensity and automation C) high resource flexibility D) line or continuous process 89) Which one of the following statements concerning process reengineering is NOT true? 89) A) Reengineering efforts should focus on functional departments. B) Reengineering requires a "clean slate" philosophy. C) Information technology is a major enabler of reengineering. D) Reengineering is the fundamental rethinking and radical design of business processes. 90) Which one of the following statements about reengineering is TRUE? 90) A) It does not require much time or resources to implement. B) It can be done easily for any process. C) It is not appropriate for all organizations and all processes. D) It only requires improving cross-functional processes. 91) Which statement on reengineering and process improvement is best? 91) A) Only process improvement programs make use of cross-functional teams. B) Only reengineering focuses on business processes. C) Process improvement focuses only on critical or core processes, such as order fulfillment. D) Reengineering starts with a "clean slate" whereas process improvement looks for ways to incrementally improve. 92) "The systematic study of activities and flows of each process" is a definition of 92) A) job design. B) product analysis. C) capital budgeting. D) process improvement. 93) Analysis of a process is most likely to be economically beneficial if the process is 93) A) the first operation on an assembly line. B) a bottleneck operation. C) an operation rarely performed. D) a very fast operation. 94) Which one of the following statements concerning flow diagrams is NOT true? 94) A) Flow diagrams trace the flow of information, customers, equipment, employees, or materials through a process. B) Flow diagrams can take many forms. C) It is helpful on flow diagrams to label each step with process measurements such as cost, capacity, or total elapsed time. D) The dotted line of visibility separates activities subcontracted from those done in-house. 95) Which one of the following groups of activities is likely to be shown on a process chart? 95) A) transportation, material flow, physical layout B) storage, delay, personnel involved C) operation, inspection, delay D) operation, capital intensity, flow strategy 96) The five categories of activities. (operation, transportation, inspection, delay, and storage) are used in which of the following methods of process analysis? A) process chart B) capital budgeting C) multiple activity chart D) flow diagram 96) SHORT ANSWER. Write the word or phrase that best completes each statement or answers the question.

9 97) is the selection of the inputs, operations, work flows, and methods that transform inputs into outputs. 97) 98) determines whether resources are organized around products or processes. 98) 99) is the degree to which a firm's own production system or service facility handles the entire supply chain. 100) is the ease with which employees and equipment can handle a wide variety of products, output levels, duties, and functions. 101) reflects the ways in which customers become part of the process and the extent of their participation. 99) 100) 101) 102) is the mix of equipment and human skills in a process. 102) 103) represents movement upstream toward the source of raw materials and parts. 104) means that the firm acquires more channels of distribution, such as distribution centers and retail stores. 105) automation produces one type of product or part in a sequence of simple operations. 103) 104) 105) 106) automation can handle various products through programmability. 106) 107) trace the flow through a process graphically. 107) 108) A(n) is a table that lists and categorizes the steps in the process. 108) 109) are different operations within a facility with individualized competitive priorities, processes, and workforces under the same roof. 110) A is a group of two or more dissimilar workstations located close to each other that process a limited number of parts or models with similar process requirements. 111) Economies of reflect the ability to produce multiple products more cheaply in combination than separately. 112) refers to the fundamental rethinking and radical redesign of processes to achieve dramatic performance improvements. 113) What is the meaning of process reengineering and how can it be applied to a major process with which you are familiar? Be as complete as time permits. 114) How can flow diagrams and process charts be used to study and improve operations? Include descriptions of these two tools, the types of questions that can be addressed with them, and the extent to which teams can be used. Be as complete as time permits. 109) 110) 111) 112) 113) 114) 115) List and briefly define five major process decisions. 115)

10 116) List and briefly define five basic process types. 116) 117) What is the difference between fixed automation and flexible or programmable) automation? 117) 118) Define economies of scope, and identify how it relates to flexible automation. 118) 119) List and briefly define four elements of process reengineering. 119) 120) What is the difference between a flow diagram and process chart? 120) ESSAY. Write your answer in the space provided or on a separate sheet of paper. 121) Develop a process chart for a manual car wash. 122) Identify at least five situations that require organizations to make decisions regarding current operational processes. Provide examples of businesses that are likely to be impacted by the situations you identify. 123) Explain the three major principles that must be considered in making decisions concerning processes. 124) Explain the distinction between processes structured as project processes and batch processes. Provide examples of both types of processes to support your explanation. 125) Explain the distinction between processes structured as line processes and continuous flow processes. Provide examples of both types of processes to support your explanation. 126) Discuss what is meant by customer involvement in processes and the five factors that determine the level of customer interaction a specific process will have. 127) Describe the different types of service processes based on variability in the extent of customer interaction and the length of the service encounter. 128) Compare the typical arrangement of high volume processes to low volume processes in terms of the process decisions of process structure, customer involvement, resource flexibility, and capital intensity.

11 1) TRUE 2) TRUE 3) TRUE 4) TRUE 5) FALSE 6) FALSE 7) TRUE 8) FALSE 9) TRUE 10) TRUE 11) FALSE 12) TRUE 13) TRUE 14) TRUE 15) TRUE 16) TRUE 17) FALSE 18) TRUE 19) TRUE 20) TRUE 21) TRUE 22) FALSE 23) TRUE 24) FALSE 25) FALSE 26) FALSE 27) FALSE 28) FALSE 29) TRUE 30) TRUE 31) FALSE 32) TRUE 33) TRUE 34) TRUE 35) TRUE 36) TRUE 37) FALSE 38) TRUE 39) FALSE 40) TRUE 41) TRUE 42) TRUE 43) FALSE 44) TRUE 45) TRUE 46) FALSE 47) FALSE 48) FALSE 49) TRUE 50) FALSE 51) FALSE Full file at

12 52) TRUE 53) B 54) C 55) D 56) D 57) B 58) B 59) D 60) D 61) A 62) B 63) D 64) A 65) C 66) C 67) D 68) D 69) D 70) D 71) A 72) B 73) C 74) D 75) A 76) B 77) C 78) C 79) B 80) D 81) D 82) C 83) B 84) D 85) B 86) D 87) D 88) C 89) A 90) C 91) D 92) D 93) B 94) D 95) C 96) A 97) Process management 98) Process choice 99) Vertical integration 100) Resource flexibility 101) Customer involvement 102) Capital intensity 103) Backward integration Full file at

13 104) Forward integration 105) Fixed 106) Flexible 107) Flow diagrams 108) process chart 109) Plants within plants (PWPs) 110) cell 111) scope 112) Reengineering 113) Process reengineering is the fundamental rethinking and radical redesign of processes to improve performance dramatically in terms of cost, quality, service, and speed. Applications will vary. 114) Flow diagrams trace the flow of information, customers, employees, equipment, or material through a process. Process charts record all the activities performed by a person, a machine, at a workstation, with a customer, or on materials. Answers will vary. 115) The five major process decisions are process choice, vertical integration, resource flexibility, customer involvement, and capital intensity. Process choice determines whether resources are organized around products or processes. Vertical integration is the degree to which a firm's own production system or service facility handles the entire supply chain. Resource flexibility is the ease with which employees and equipment can handle a wide variety of products, output levels, duties, and functions. Customer involvement reflects the ways in which customers become part of the process and the extent of their participation. Capital intensity is the mix of equipment and human skills in a process. 116) The five basic process types are project process, job process, batch process, line process, continuous process. A high degree of job customization, the large scope of each project, and the release of substantial resources once a project is completed characterize a project process. A job process creates the flexibility needed to produce a variety of products or services in significant quantities. Customization is relatively high, and volume for any one product or service is low. A batch process differs from the job process with respect to volume, variety, and quantity. The primary difference is that volumes are higher because the same or similar products or services are provided repeatedly. A line process lies between the batch and continuous process on the continuum, volumes are high, and products or services are standardized. The continuous process is the extreme end of high-volume, standardized production with rigid line flows. 117) Fixed automation produces one type of product or part in a sequence of simple operations. Flexible automation can handle various products through programmability. 118) Economies of scope are the ability to produce multiple products more cheaply in combination than separately. Flexible automation would provide economies of scope. 119) The six elements of process reengineering are critical processes, strong leadership, cross-functional teams, information technology, clean slate philosophy, and process analysis. 120) Flow diagram traces the flow through a process graphically. A process chart is a table that lists and categorizes the steps in the process. 121) Answers will vary. A typical answer might look like the following:

14 122) Organizations have to make process decisions when: A new or substantially modified product or service is being offered. Quality must be improved. Competitive priorities have changed. Demand for a product or service is changing. Current performance is inadequate. The cost or availability of inputs has changed. Competitors are gaining by using a new process. New technologies are available. In considering these situations, process decisions must take into account the status of current operations in terms of quality, capacity, layout and inventory. Examples used to illustrate these situations will vary. 123) Strategically it is important to make process decisions that are consistent with the organizations current competitive situation and that fit together cohesively. Process decisions should not work at cross-purposes, i.e. decisions should not optimize one process at the expense of other processes. Process decisions must also recognize that individual processes are building blocks that collectively create the firm's entire value chain. As a result, making process decisions must consider the cumulative effect they have for customer value and the competitive advantage sought by the organization based on the structure of its value chain. Process decisions must pay particular attention to the interfaces between processes that connect the firm to its

15 supp liers and Full file at customers. Paying attention to these interfaces is important for all value chain processes, whether the specific process under consideration is performed internally or outsourced to external suppliers. These interfaces also underscore the importance of cross-functional coordination. 124) A project process is characterized by a high degree of job customization and the large scope of each project. Project processes lie at the high-customization, low-volume end of the process choice continuum. Projects typically make use of certain skills and resources at particular stages and then have minimal requirement for them at other stages of the project. As a result, the resources needed for a project are assembled, utilized, and then released for alternative uses once a project is completed. The particular sequence of operations and processes involved are unique to a project, creating one-of-a-kind products or services for specific customer orders. Project processes are valued on the basis of their capability to do particular type of work rather than their ability to produce specific products or services. Projects tend to be complex, involving many interrelated tasks that require close coordination to complete effectively. Batch processes are based on creating the flexibility needed to produce a variety of products or services in relatively small quantities. In manufacturing, batch processes are sometimes referred to as job shops. The level of customization is relatively high while volume for any one product or service remains relatively low. However, volumes for batch processes are not as low as project processes, which by definition do not produce in quantity. Batches tend to be produced in relatively low volume on an as needed basis (make-to-order). Batch processes tend to have productive resources grouped or organized by tasks rather than having these resources arranged according to specific products or services. As a result, equipment and workers capable of specific tasks are relatively flexible in terms of being assigned to different orders. As needed, customization is achieved by having parts, orders, and customers follow different routings between individual process tasks. As batches become larger, the service and product range (level of customization) produced by batch processes tends to decrease. Greater volume typically involves dominant routings between process steps, and the ability to process some components or products in advance or held in stock to improve process speed. As volume increases, the need for variety tends to be achieved based on an assemble-to-order strategy rather than a make-to-order strategy. Examples used to support the explanation of the distinction between project and batch processes will vary. 125) A line process involves linear movement of materials, information, or customers from one operation to the next according to a fixed sequence. Volumes are relatively high and products or services are standardized, allowing productive resources to be organized around a product or service. Services based on line processes typically follow a standardized-services strategy. In manufacturing, line processes are often referred to as mass production or assembly lines, common labels associated with high volume, repetitive manufacturing operations. Typically production lots for line processes are not linked to specific customer orders, rather line processes follow a make-to-stock strategy so that inventory is available to respond to customer orders. Advances in processing and information technologies are making it more feasible for line processes to incorporate greater product variety, based on a assemble-to-order strategy that controls the addition of standard options to the main product or service. This combination of line processes with high volume and customization of product or services is referred to as mass customization. Continuous flow processes involve the extreme end of high-volume, standardized production using rigid line flow process facilities. Process industries such as petroleum refineries, steel plants, and high volume food processing facilities are typical of continuous flow processes. Continuous flow processes involve capital-intensive production technology, typically operated with large production runs to maximize capacity utilization and to avoid expensive shutdowns and startups. Raw materials are continually input to the process during production, with the output flowing from one processing stage to the next in a continuous manner. Examples used to support the explanation of the distinction between line and continuous flow processes will vary. 126) Customer involvement refers to the ways in which customers become part of the process and the extent of their participation. The level of customer interaction in a service process is determined by five factors, each of which forms a continuum: physical presence, what is being processed, intensity, personal attention, and mode of delivery. The extent to which the customer is physically present during the process can be measured as the percentage of the

16 total time the custo mer is in conta ct with the proc ess, relati Full file at ve to the total time it takes to complete the service. What is being processed can include the customer, the customer's possessions, or information. Naturally, people-processing services that involve a tangible action being performed to the people (e.g. transportation or medical services) require higher levels of customer interaction than service processes involving possessions or information. The intensity of contact goes beyond the physical presence of the customer to examine the degree interaction between the service provider and the customer. Active contact means the customer is very much a part of the creation of the service, affecting the service process itself. Passive contact means the customer is not interacting with the service process, but instead is simply waiting in line. The extent of personal attention refers to the richness of the information exchanged, and the level of trust and intimacy associated with customer interaction. In sum, personal attention reflects the extent to which customers are engaged in experiencing the service as opposed to merely being a recipient of the service act. Finally, mode of delivery varies from high-interaction modes such as face-to-face or telephone contact, to low-interaction modes such as mail or internet based contact with customers. High interaction modes assure more clarity in identifying and satisfying customer needs. 127) Service factories are service processes that involve low levels of customer interaction and short service encounters. The work tends to be standardized and routine, with line flows from one operation to another. Processes do not vary, are repetitive, and require little if any attention or input from customers. The routine processing and distribution of customer monthly or quarterly reports for customers by financial service companies is an example of a service factory. Since these types of processes occur behind the scenes and are not visible t the customer, they are sometimes referred to as "back office" processes. The emphasis for these processes is cost efficiency, with a high dependence on automation. The typical process structure is a line or continuous flow process. Service shops tend to have higher levels of customer interaction that service factories, because the service must be at least partially customized to meet unique customer needs of individuals or small groups. Workstations and equipment tend to be organized by task with variability in terms of the routing between them. The overall service process may be relatively complex, but the overall time for the service encounter remains relatively short. Relative to service factories, service shops sacrifice some efficiency to improve the overall effectiveness of meeting individual needs. In order to improve efficient and costs, mass services tend to very low levels of interaction with customers, and in many cases process customers in large batches (e.g. public transit and education). Like service factories the service involves little customization, but the service encounter tends to be longer. Customers tend to follow the same basic steps in the service process, although the particular standardized service consumed by individuals can vary (e.g. different routings within a public transit system). Professional services involve high levels of customer interaction and long service encounters, typically involving the service provider working directly with the customer. The service is can be highly customized to meet individual customer needs. The process itself tends to be complex with the specific steps and sequence followed in a flexible way to suit individual requirements. Professional services emphasize effectiveness rather than costs, including quality, timely responsiveness, and flexibility. Legal services are an example of professional services. 128) High volume operations typically involve line or continuous flow process structures, with customers or products moving through a consistent series of process steps. In high volume services, low levels of customer involvement are required because the process has little variation. Generally customized orders are difficult to accommodate, and to the extent customers are involved in the process it is to perform self-service activities to select standard product options. High process volumes and repetition create less need for resource flexibility. Instead, with high volume operations specialization and simplification of resources is possible, reducing capital and labour costs. High volumes also justify large fixed costs, which can improve the efficiency of operations. Capital-intensity is high, with higher automation and less labour content needed to produce standardized products. In contrast, low volume processes typically involve project or small batch process structures. Typically, low volume corresponds with greater variation in customer needs that must be understood and accounted for in the process. In turn, this requires more customer involvement, with front-line employees having to interact more frequently with customers to understand and diagnose their needs. Greater resource flexibility is required, in both employees and equipment, in order to handle greater variety in demand. Generally, less capital-intensity and

17 auto e flexible automation possible, and some low volume processes are capital-intensive because of particular mati equipment that is required regardless of the volume of output. on is possi ble with low volu me proc esses beca use of the need to have the flexi bility to resp ond to high varia bility in the speci ficati ons of prod uct or servi ce dem and. How ever tech nolo gy adva nces incre asing ly mak