Servicing and Manufacturing Operations Business Management Business Management and Administration Lesson Plan
Performance Objective Students will understand the necessity for the management control function as it relates to service and manufacturing operations. Specific Objectives  Understand the concept of inventory.  Understand the importance of managing and controlling inventory.  Explain service operations in business.  Analyze manufacturing operations. Terms  Tangible – Physical appearance of facilities, personnel, and equipment.  Intangible – Cannot be touched.  Reliability – Is the service be performed accurately and dependably.  Responsiveness – Prompt customer service.  Assurance – Trustworthy, knowledgeable employees.  Empathy – Individualized attention.  Supply Chain Management – The process of 1) converting raw materials into a finished product and then 2) getting the right product to the right place at the right time in the right location at the right price.  Economic Order Quantity – The amount at which the amount of inventory ordered minimizes inventory costs.  Raw materials – The materials or supplies that are used to create goods.  Appraisal – The process of assessing the value of a property.  Point of Sale – The place where goods are sold. Time When taught as written, this lesson should take approximately four to five days to teach. Preparation
TEKS Correlations This lesson, as published, correlates to the following TEKS. Any changes/alterations to the activities may result in the elimination of any or all of the TEKS listed. 130.121 (c) Knowledge and Skills Copyright © Texas Education Agency, 2014. All rights reserved.
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(6) The student understands the necessity of controlling. The student is expected to: (L) explain service operations; (M) analyze manufacturing operations; and (O) explain the fiscal importance of managing and controlling inventory. Interdisciplinary Correlations English‐English I  110.31(b)(1) Reading/Vocabulary Development. Students understand new vocabulary and use it when reading and writing.  110.3(b)(11) Reading/Comprehension of informational text/procedural texts. Students understand how to glean and use information in procedural texts and documents. Math‐Algebra I  111.32(b)(1)(C) Interpret and make decisions, predictions, and critical judgments from functional relationships. Social Studies‐World Geography 113.34(c)(20)(A) Describe the impact of new technologies, new markets, and revised perceptions of resources. Occupational Correlation (O*Net – www.onetonline.org/) Job Title: Loss Prevention Managers O*Net Number: 11‐9199.08 Reported Job Titles: Market Asset Protection Manager; Regional Loss Prevention Manager; Senior Manager Tasks 
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Administer systems and programs to reduce loss, maintain inventory control, or increase safety. Identify potential for loss and develop strategies to eliminate it. Perform or direct inventory investigations in response to shrink results outside of acceptable ranges. Soft Skills: Time Management, Coordination, Instructing Accommodations for Learning Differences It is important that lessons accommodate the needs of every learner. These lessons may be modified to accommodate your students with learning differences by referring to the files found on the Special Populations page of this website. Preparation  Review and familiarize yourself with the terminology and website links.  Have materials and websites ready prior to the start of the lesson. References  http://web.stcloudstate.edu/brklemz/servqual‐1.doc  Business Principles and Management, South‐western Publishing, 2001.  Business Management, South‐western Publishing, 2013. Copyright © Texas Education Agency, 2014. All rights reserved.
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http://www.osc.nc.gov/sigdocs/sig_docs/documentation/policies_procedures/sigInventory_Control_
Methods.html https://www.msu.edu/course/prr/473/oldstuff/Inventory%20Management.htm#jit http://faculty.mccombs.utexas.edu/James.Fitzsimmons/latest/PowerPointLectures/Goods16.ppt www.bls.gov/web/empsit/ceshighlights.pdf http://www.nist.gov/baldrige/ Instructional Aids  Textbook  Lesson Presentation  Instructor Computer/Projection Unit  Websites Introduction
The main purposes of this lesson are to help students understand the following concepts:  how the quality of a service is measured;  how inventory is tracked in retail stores; and  the different costs associated with holding inventory. Ask students if they have an idea of how stores keep track of how much inventory they have. Ask students if they have ever noticed how a company that sells services knows how good their services are to customers. Copyright © Texas Education Agency, 2014. All rights reserved.
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Outline
I. II. III. IV. Service Businesses A. Form – intangible, meaning that they cannot be physically touched B. Quality – created by the provider, which means it can vary from one provider to another C. Storage – because services are not products, they cannot be stored D. Availability – only made available from the provider Manufacturing Businesses A. Form – tangible, can be touched B. Quality – determined by the manufacturing process, should not vary much C. Storage – can be stored, referred to as inventory D. Availability – wherever the buyer needs the product/ online, brick and mortar location, or other locations Service Quality Standards A. SERVQUAL survey B. Franchising C. Meeting customer needs SERVQUAL Surveys – measures five areas of service quality that are important to customers A. Reliability – can the service be performed accurately and Have students visit the following website www.bls.gov/web/empsit/ceshig
hlights.pdf and examine the change in employment in different manufacturing and services sectors. Discuss some of the changes from the site. Service businesses are increasingly more prevalent today than in the past. After examining the differences between service and manufacturing businesses, ask students to think about the amount of money they spend each week. Ask them if more is spent on services (such as movie theaters and restaurants) or manufacturing (such as retail stores). Ask the students who purchased services if they were satisfied with their purchase. Ask them what they particularly liked about the service. A major issue that service businesses face is how to measure the quality of the service. The Malcolm Baldrige National Quality Awards recognize service businesses. Multiple Intelligences Guide
Existentialist
Interpersonal
Intrapersonal
Kinesthetic/
Bodily
Logical/
Mathematical
Musical/Rhythmic
Naturalist
Verbal/Linguistic
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V. VI. VII. dependably B. Responsiveness – prompt customer service C. Assurance – trustworthy, knowledgeable employees D. Empathy – individualized attention E. Tangible – physical appearance of facilities, personnel, and equipment Franchising A. What is franchising? – a fee is paid to be able to sell a company’s products or services B. Benefits of franchising 1. Provided in many locations 2. Training provided ensuring consistency in quality and service levels Meeting Customer Needs A. offering extended hours B. providing more locations C. extending customer follow‐up contact Manufacturing Considerations A. Raw materials – supplies and costs B. Transportation – availability and cost C. Energy/utility costs D. Land and building costs E. Labor – hiring and training employees Have students research winners in the service business category. How is service quality measured on an ongoing basis? Ask students if they have ever completed customer satisfaction survey. Many times this may be the only way a service business can determine its quality. Ask students who above said they purchased services, and if they purchased them at the same place (for example, the same restaurant). Ask them what they each liked or disliked about the service. Did they have the same experience? Consistency can be a problem with service businesses. Ask students if they are familiar with franchise businesses. Have them search for a few on the Internet. Explain to them how franchising can improve consistency in service businesses. Ask students if they have gone to different restaurants that are franchised, such as McDonald’s or Subway, in different locations. They probably noticed many similarities. While service businesses have their own issues, manufacturing businesses have cost issues. Multiple Intelligences Guide
Existentialist
Interpersonal
Intrapersonal
Kinesthetic/
Bodily
Logical/
Mathematical
Musical/Rhythmic
Naturalist
Verbal/Linguistic
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VIII. IX. X. XI. F. Customers – locating, attracting and attaining G. Legal/economic – taxes, zoning, environment Inventory Management A. Inventory – largest expense of a business B. Raw materials C. Work in progress D. Finished goods Problem – High Inventory Levels A. Products not marketed properly B. Incorrect pricing C. Poor quality D. Inadequate supply chain management Problem – Inventory Storage Costs A. Facility (warehouse) B. Insurance C. Taxes D. Depreciation E. Labor F. Loan costs if inventory purchased without cash Solutions A. Forecast sales more accurately B. Build relationships with suppliers
Ask students what they think the biggest expense of a manufacturing business is. It is inventory and costs associated with it. Ask students what costs they think are associated with storing inventory. Then review the different costs with them. Then ask students what could be done to reduce those costs. They may suggest selling the products more quickly so the products can be re‐stocked. Other students may suggest not to order so much inventory. Discuss the different inventory control methods on the left below and ask students to try to match store names with each method. Multiple Intelligences Guide
Existentialist
Interpersonal
Intrapersonal
Kinesthetic/
Bodily
Logical/
Mathematical
Musical/Rhythmic
Naturalist
Verbal/Linguistic
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XII. XIII. C. Be realistic about inventory turnover goals D. Calculate actual inventory costs to get a realistic picture of costs E. Use up‐to‐date technology to assist with supplier information and point‐of‐sale data F. Educate employees on inventory control Inventory Control Methods A. EOQ – Economic Order Quantity – the amount at which the amount of inventory ordered minimizes inventory costs B. Perpetual – maintaining a running count of inventory C. Periodic – no continuous records are kept, inventory physically counted periodically D. Visual – making a visual inspection of inventory to determine when inventory should be ordered E. ABC – concentrates on the items that generate the most sales F. Just in Time – maintaining the smallest amount of inventory needed to prevent out‐of‐stocks while being able to obtain stock as soon as it is needed EOQ A. Economic order quantity depends Because an important part of management includes dealing with change, it is essential for businesses to be able to effectively deal with change and growth. This can affect how businesses control and manage their inventory. Discuss with students what can happen when a small business decides to change its method from visual to any type of electronic method. Ask students what the pros and cons would be for that small business owner. Ask students to think about places they shop at a mall or places their parents may shop at, such as a grocery store or a Bass Pro Shop type of store. Then discuss the type of inventory those stores carry. Have students in pairs think of any store and answer these questions: how often do they think they take inventory? And, how do they take inventory? Multiple Intelligences Guide
Existentialist
Interpersonal
Intrapersonal
Kinesthetic/
Bodily
Logical/
Mathematical
Musical/Rhythmic
Naturalist
Verbal/Linguistic
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Visual/Spatial
XIV. XV. upon 1. Unit cost 2. Carrying (or storage) costs 3. Costs to order products and raw materials B. Purpose is to determine an order quantity that minimizes cost Perpetual Inventory Control A. Advantages 1. Immediate inventory amounts 2. UPC bar codes make scanning inventory easier 3. POS systems can also maintain up‐to‐the‐minute inventory counts B. Disadvantages 1. Employees may forget to scan re‐stocks 2. Employees may forget to record sales 3. Computerized systems can be costly Periodic Inventory Control A. Inventory physically counted B. Used in combination with other methods to cross‐check inventory amounts C. Two counting methods 1. Periodic – usually end‐of‐
year inventory counts The EOQ method is the most scientific of the various methods, which would lead to a more exact amount of ordering quantity. Ask students to suggest businesses that may benefit from this type of control method. Explain to students that any of the listed inventory control methods can be combined with other methods for a more accurate way to control inventories. Remind them that the goal of inventory control is to reduce costs. Ask students what a consequence of high inventory costs can be. One suggestion may be that a company could go out of business. They may also suggest that a company may have to raise its prices. Ask students who work for a clothing store as an example if they have ever had to do year‐
end inventory. Multiple Intelligences Guide
Existentialist
Interpersonal
Intrapersonal
Kinesthetic/
Bodily
Logical/
Mathematical
Musical/Rhythmic
Naturalist
Verbal/Linguistic
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Visual/Spatial
2. Cycle – counting a few types of items on a frequent basis instead of just year‐end XVI. Visual Inventory A. Effective for lower‐dollar items and smaller variety of merchandise B. Least effective for accuracy C. Can result in out‐of‐stock items D. Makes inventory forecasting more difficult XVII. ABC inventory control A. A = the relatively small amount of higher‐dollar volumes B. B = the amount of average‐
dollar volumes C. C = the lower‐dollar volume items D. Most control and highest control cost for A items E. Control costs less and items can use periodic counting of inventory with B items F. Least complicated and lowest control cost for C items XVIII. Just in Time Inventory Control A. Reduces inventory costs B. Keeps very little inventory on hand C. Requires close relationships with suppliers to be able to Ask students what local businesses would use a visual inventory control method. Aside from this method being most appropriate for smaller businesses, this method works better when someone is extremely familiar with the merchandise. The purpose of the ABC method is to allocate more control time and costs on higher‐dollar items while less control is spent on lower cost items. Ask students what type of store could benefit from this method. Just in Time inventory control requires balance between cost‐ lowering procedures but more time spent on communicating with suppliers. Ask students what kind of business (they may need to conduct online research) may use this method. Multiple Intelligences Guide
Existentialist
Interpersonal
Intrapersonal
Kinesthetic/
Bodily
Logical/
Mathematical
Musical/Rhythmic
Naturalist
Verbal/Linguistic
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Visual/Spatial
get products as soon as needed D. Usually requires updated technology to keep inventory activities in real time to coordinate with the suppliers Ask students how their parents keep track of their grocery item inventory. Many adults may keep a visual inventory, but there are now apps that can read bar codes of grocery products. Multiple Intelligences Guide
Existentialist
Interpersonal
Intrapersonal
Kinesthetic/
Bodily
Logical/
Mathematical
Musical/Rhythmic
Naturalist
Verbal/Linguistic
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Visual/Spatial
Application
Guided Practice Have students in groups track inventory in your classroom. One group can track textbooks. One can track furniture items. Another can track supplies. Another can track technology items. By having students obtain an inventory of your classroom they can see the detail that is involved. They may not realize the amount of items that there actually are in a classroom. Independent Practice Have students prepare an inventory of their personal belongings, such as their school supplies, t‐shirts, jeans, socks, CDs, or any other items. Explain that keeping inventory records is also helpful for insurance purposes in case any of the items have to be replaced. Summary
Review Ask students the following questions on exit tickets. Question #1: What is one way to measure the quality of a service? Answer #1: A customer satisfaction survey or a SERVQUAL survey. Question #2: What is considered inventory? Answer #2: Raw materials, work in progress, and finished goods are inventory items. Question #3: What are two major problems with inventory? Answer #3: Two problems are high inventory levels and the cost of the carrying inventory. Question #4: What is a solution to these two inventory problems? Answer #4: Effectively managing inventory can create solutions. Question #5: List several inventory control methods. Answer #5: Several inventory control methods include EOQ, perpetual, periodic, visual, ABC, and Just in Time. Evaluation
Informal Assessment Any and all of the following can be used as informal assessments.  Exit tickets with vocabulary  Pair‐share activities  Class discussion and participation Copyright © Texas Education Agency, 2014. All rights reserved.
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Formal Assessment The following can be considered a formal evaluation:  Tour Guide Assignment #1 – Present the students with the following scenario: they live in the Florida Keys and are looking to start a tour guide business. They plan on offering tours around the particular island on which they live. Students are to imagine their own details for these tours. The assignment is to create a survey to assess the quality of their service, that is, the tours they offer. They should use the guide at the http://web.stcloudstate.edu/brklemz/servqual‐1.doc website. Students should create this survey manually or in a word‐processing program.  Inventory Control Document Assignment #2 – Have students select five stores that they know carry inventory. The will create a document such as a table, diagram, or other type of document that will identify the name of the store; the type of inventory control method they think would be most appropriate (and an explanation of why they think that way); and finally a statement from an owner, manager, or other employee of the companies they have selected regarding what type of inventory control method they actually do use. They should also include a statement somewhere on their document regarding how their suggestion compares to the actual method used.  Inventory Control Shrinkage Report Assignment #3 – Shrinkage is an issue concerning inventory that businesses must deal with. Shrinkage is the difference between the amount of inventory that is recorded and the actual amount of inventory on hand. Students will create a one‐page on the causes and consequences of inventory shrinkage. They should detail at least three types or causes of shrinkage and explain the consequences of shrinkage. Proper writing conventions should be followed. Enrichment
Extension Have students interview a manager of a store or someone who may be in charge of inventory control. Ask them which day of the week generates the most sales and if this affects how they manage inventory. Summarize the manager’s responses and present to the class. Copyright © Texas Education Agency, 2014. All rights reserved.
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Service and Manufacturing Operations Tour Guide Survey Assignment #1 Student Name: _____________________________ CATEGORY 20 14 7 1 Grammar There are no grammatical mistakes on the survey. There is one grammatical mistake on the survey. There are two grammatical mistakes on the survey. There are more than two grammatical mistakes on the survey. Content At least 10 questions are included on the survey. At least seven to eight questions are included on the survey. At least five to six Less than five questions are questions are included on the included on the survey. survey. Required Elements The survey includes all required elements as well as additional information. All required elements are included on the survey. All but one of the Several required required elements were elements are missing. included on the survey. Use of Class Time Used time well during each class period. Focused on getting the survey done. Used time well during each class period. Usually focused on getting the survey done. Used some of the Did not use class time well during time to focus on each class the survey. period. There was some focus on getting the survey done. Knowledge Gained Student can Student can Student can Student appears accurately accurately accurately to have answer questions answer most answer about insufficient related to facts in questions related 75% of questions knowledge about the survey. to facts in the related to facts in the facts or survey. the survey. processes used in the survey. Maximum Points Possible: 100 Student Points: ___________ Copyright © Texas Education Agency, 2014. All rights reserved.
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Service and Manufacturing Operations Inventory Control Document Assignment #2 Student Name: _____________________________ CATEGORY 20 14 7 1 Knowledge Gained Student can Student can Student can Student appears accurately accurately accurately to have answer all answer most answer about insufficient questions related questions 75% of questions knowledge about to facts in the related to facts related to facts the facts or poster and in the poster and in the poster and processes used processes used processes used processes used in the document. to create the to create the to create the document. document. document. Required Elements The document includes all required elements as well as additional information. All required elements are included on the document. All but one of the Several required required elements were elements are missing. included on the document. Attractiveness The document is exceptionally attractive in terms of design, layout, and neatness. The document is attractive in terms of design, layout, and neatness. The document is The document is acceptably distractingly attractive though messy or very it may be a bit poorly designed. messy. It is not attractive. Grammar There are no grammatical mistakes on the document. There is one grammatical mistake on the document. There are two grammatical mistakes on the document. Used time well during each class period. Usually focused on getting the project done. Used some of Did not use class the time well time to focus on during each class the project. period. There was some focus on getting the project done. Use of Class Time Used time well during each class period. Focused on getting the project done. There are more than two grammatical mistakes on the document. Maximum Points Possible: 100 Copyright © Texas Education Agency, 2014. All rights reserved.
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Student Points: ___________ Service and Manufacturing Operations Inventory Control Shrinkage Report Assignment #3 Student Name: _____________________________ CATEGORY 20 14 7 1 Internet Use Successfully uses Usually able to Occasionally able Needs assistance suggested use suggested to use suggested or supervision to Internet links to Internet links to Internet links to use suggested find information find information find information Internet links and/or to and navigates and navigates and navigates within these sites within these sites within these sites navigate within easily. easily. easily. these sites. Paragraph Construction All paragraphs include introductory sentence, explanations or details, and concluding sentence. Most paragraphs include introductory sentence, explanations or details, and concluding sentence. Paragraphs included related information but were typically not constructed well. Paragraphing structure was not clear and sentences were not typically related within the paragraphs. Organization Information is very organized with well‐
constructed paragraphs and subheadings. Information is organized with well‐constructed paragraphs. Information is organized, but paragraphs are not well‐
constructed. The information appears to be disorganized. Quality of Information Information clearly relates to the main topic. It includes several supporting details and/or examples. Information clearly relates to the main topic. It provides one to two supporting details and/or examples. Information Information has clearly relates to little or nothing the main topic. to do with the No details and/or main topic. examples are given. Mechanics No grammatical, spelling, or punctuation errors. Almost no grammatical, spelling, or punctuation errors A few grammatical, spelling, or punctuation errors. Many grammatical, spelling, or punctuation errors. Maximum Points Possible: 100 Copyright © Texas Education Agency, 2014. All rights reserved.
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Student Points: ___________ Copyright © Texas Education Agency, 2014. All rights reserved.
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