OM and Supply Chain Management

The number of Kanban cards required in an operating system can be calculated by dividing the:

average daily demand during lead time plus a safety stock by the number of units per container

Which of the following is true of total productive maintenance (TPM)?

It seeks to foster continuous efforts to improve equipment operation through employee involvement activities.

Identify a true statement about International Organization for Standardization (ISO) 9000.

Its standards apply to all types of businesses, including electronics and chemicals.

External Failure Costs

Josephine's T-Shirts faced a lot of complaints from customers when its recent batch of long-sleeved shirts was dispatched. The employees at Josephine's T-Shirts, hence, had to rework on the returned items, and in some cases, the company had to even replace the faulty goods. In this case, the costs incurred by Josephine's T-Shirts are an example of _____.

true

Lean Six Sigma focuses on real dollar savings and has the ability to make significant financial impacts on an organization.

False

Lean operating systems value idle stock and extra storage because it eliminates wait times to replenish stock.

The _____ function of a supply chain is responsible for selecting transportation carriers and managing company-owned fleets of vehicles.

Logistics

False

Long setup times enable a manufacturer to have frequent changeovers and move toward single-piece flow, thus achieving high flexibility and product variety.

Which of the following is a difference between lean production and Six Sigma?

Unlike lean production, Six Sigma is more concerned with less visible problems in processes.

Which of the following is a characteristic of Just-In-Time (JIT) systems?

Very little inventory to hide problems and inefficiencies

Six Sigma

- A business improvement approach that seeks to find and eliminate causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers, resulting in a clear financial return for the organization - Defects- any mistake or error that is passed on to the customer Defects per unit= number of defects discovered/number of units produced - Unit of work- the output of a process or an individual process step

The GAP Model

- A framework for evaluating the quality of both goods and services, and identifying where to focus design and improvement efforts - This is my companies current condition, I desire company to do better. The gap is current to desire condition - Recognizes that there are several ways to mismanage the creation and delivery

W. Edwards Deming

- A product of a service possesses quality if it helps somebody and enjoys a good and sustainable market - Philosophy focuses on bringing about improvements in product and service quality by reducing variability in goods and services design and associated processes - Higher quality leads to higher productivity and lower costs, which leads to improved market share and long-term competitive strength - 14 points.........Include responsibility of top management to create a vision and commit to quality, continual improvement of products and processes, the importance of training and teams, and the creation of an environment that drives out fear and fosters pride in work - Deming Cycle......Plan, do, study, act PDSA

Joseph Juran

- Defined quality as fitness for use......does it work and last as expected - Plan, control, and improve - Argued that employees at different levels of an organization speak their own languages - He stated that in order to get top managers attention, quality issues must be spoken in terms of money through quality cost measurement - At the operational level, Juran focused on increasing conformance to specifications through elimination of defects, supported extensively by statistical tools for analysis.

ISO 9000

- Founded to standardize quality requirements for European countries within the Common Market and those wishing to do business with those countries - It adopted a series of written quality standards in 1987 - Define quality system standards, based on the premise that management practices can be standardized and that a well-designed, well-implemented, and carefully managed quality system provides confidence that the outputs will meet customer expectations and requirements - It prescribes documentation for all processes affecting quality - Provides a set of good basic practices for initiating a basic quality management system. - Principles: customer focus, leadership, engagement of people, process approach, improvement, evidence-based decisions, relationship management

Lean Six Sigma

- Lean production addresses visible problems in processes; for example, inventory, material flow, and safety. Six Sigma is more concerned with less visible problems; for example, variation in performance. - In essence, lean is focused on efficiency by reducing waste and improving process flow, whereas Six Sigma is focused on effectiveness by reducing errors and defects. - Both are driven by customer requirements, focus on real dollar savings, have the ability to make significant financial impacts on the organization, and can easily be used in nonmanufacturing environments. Both use basic root cause, process, and data analysis techniques

Root Cause Analysis

- Used to designate the source of a problem - 5 why's

What is the average time a bouquet stays in a florist shop if they sell 100 bouquets per day and they maintain an average inventory of 200 bouquets?

2 days

In the context of SERVQUAL, ______ is the knowledge and courtesy of service providers and their ability to convey trust and confidence

Assurance

Which of the following is a similarity between lean production and Six Sigma?

Both are driven by customer requirements.

Phillip B. Crosby

4 Absolutes of Quality Management - Quality means conformance to requirements, not elegance -There is no such thing as a quality problem; problems are functional in nature - There is no such thing as the economics of quality; doing the job right the first time is always cheaper - The only performance measurement is the cost of quality, which is the expense of nonconformance. Quality cost data are useful to call problems to managements attention, to select opportunities for corrective action, and to track quality improvement over time - The only performance standard is Zero Defects

TekSupply Inc., an automobile parts supplier, held an average automobile parts inventory of $4 million last year. Its cost of goods sold was $25 million. Therefore, the automobile parts experienced an inventory turnover of _____ turns last year.

6.25

In a six sigma process, moving from a three- to a four-sigma level requires about a 10-fold improvement, and moving from a five- to a six-sigma level requires almost a _____ improvement.

70-fold

histogram

A _____ is a basic statistical tool that graphically shows the frequency or number of observations of a particular value or within a specified group.

transfer batch

A _____ is a portion of the original lot size that is completed at one workstation and moved to the next downstream workstation.

Pareto Diagram

A _____ is a quality control (QC) tool that helps separate the vital few causes from the trivial many and provides direction for selecting projects for improvement.

push system

A __________ produces finished-goods inventory in advance of customer demand using a forecast of sales.

Which of the following is NOT part of a queueing system?

A map of processes and functions

Which of the following best defines the Theory of Constraints?

A set of principles that focuses on increasing total process throughput by maximizing the utilization of all bottleneck work activities

Which of the following is NOT true about simulation models?

A simulation model is used to get estimates; an analytical model provides detailed analysis.

Which of the following is a core philosophy of Six Sigma?

Achieving cycle time reduction

Best practices

Approaches that produce exceptional results, are usually innovative I terms of the use of technology or human resources, and are recognized by customers or industry experts

Internal Failure Costs

Bueller Tractors, a few machines in the assembly section were faulty and had to be shut down till they were repaired. This reduced the output of tractors for the quarter. In this case, the costs incurred by Bueller Tractors for repairing the machines are an example of _____.

Simulation Model

Can be used to analyze processes that cannot be evaluated well analytically. They can use actual probability distributions for both demand and service rates (called empirical distributions). Simulation models are also better equipped to capture the dynamic behavior of queues over time. Often, analytical and simulation models are used in combination; an analytical model is used to get the first operating system performance estimates, and then simulation provides detailed analysis over many more time periods.

Internal failure costs

Costs incurred as a result of unsatisfactory quality that is found before the delivery of a good or service to the customer. Examples include scrap and rework costs—including material, labor, and overhead; costs of corrective action—arising from time spent determining the causes of failure and correcting problems; downgrading costs—such as revenue lost by selling a good or service at a lower price because it does not meet specifications; and process failures—such as unplanned equipment downtime or service upsets or unplanned equipment repair.

In General Electric's Six Sigma problem-solving approach, the control phase involves:

Determine how to maintain the improvements. Put tools in place to ensure that the key variables remain within the maximum acceptable ranges under the modified process. Involves determining ways to maintain the improvements in the modified process.

In General Electric's Six Sigma problem-solving approach, the measure phase involves:

Determine how to measure the process and how it is performing. Identify the key internal processes that influence CTQs and measure the defects currently generated relative to those processes.

In General Electric's Six Sigma problem-solving approach, the analyze phase involves:

Determine the most likely causes of defects. Understand why defects are generated by identifying the key variables that are most likely to create process variation.

Identify a true statement about the GAP model.

Failure to understand and minimize gaps presents the risk of losing customer loyalty.

Air shipments have the lowest transportation cost and can carry unlimited weight.

False

Electronic data interchange and Internet links decrease the velocity of supply chains.

False

A warehouse is capable of processing 600 returns per day, and the average number of returns in the 200. Based on the data in the question, what is being calculated by dividing 600 by 200?

Flow time

Kazien

Focuses on small, gradual, and frequent improvements over the long term, with minimum financial investment and with participation by everyone in the organization Any activity directed toward improvement falls under the kaizen umbrella. Kaizen Event- intense and rapid improvement practice where all resources are thrown in at one time.

Root cause

Huran Co., a food manufacturer, encountered a blown fuse during manufacturing. Although they were able to fix it and resume operations, they used the 5-Why Technique to determine the _____ of the problem.

In General Electric's Six Sigma problem-solving approach, the improve phase involves:

Identify means to remove the causes of the defects. Confirm the key variables and quantify their effects on the CTQs. Identify the maximum acceptable ranges of the key variables and a system for measuring deviations of the variables. Modify the process to stay within the acceptable range. Confirming the key variables and quantifying their effects on the critical-to-quality characteristics

Which of the following describes the general process for identifying a bottleneck?

Identify the work activity that has the smallest throughput.

In General Electric's Six Sigma problem-solving approach, the define phase involves:

Identifying customers and their priorities. Identify a project suitable for Six Sigma efforts based on business objectives as well as customer needs and feedback. Identify CTQs (critical-to-quality characteristics) that the customer considers to have the most impact on quality.

Stockout

In the context of inventory costs, _____ costs can reflect backorders or service interruptions for external customers.

Stock-keeping unit

In the context of inventory management, a(n) _____ is a single item or asset stored at a particular location.

the lead time

In the context of managing inventories in supply chains, _____ is the time between placement of an order and its receipt.

the 5-Why Technique

In the context of root cause analysis, the approach that forces one to redefine a problem statement as a chain of causes and effects to identify the source of the symptoms is specifically called _

sustain

In the context of the 5S principles, _____ means to keep a process going through training, communication, and organizational structures.

sort

In the context of the 5S principles, _____ refers to ensuring that each item in a workplace is in its proper place or identified as unnecessary and removed.

Set in order

In the context of the 5S principles, __________ means to arrange materials and equipment so that they are easy to find and use.

Production effects

In the context of the seven major categories of waste classified by the Toyota Motor Company, not performing work correctly the first time leads to:

External failure costs

Incurred after poor-quality goods or services reach the customer. (Consider the cost that GM occurred because of its faulty ignition switches, as described at the beginning of this chapter.) They include costs due to customer complaints and returns—including rework on returned items, cancelled orders, discount coupons, and freight premiums; goods and services recall costs and warranty and service guarantee claims—including the cost of repair or replacement as well as associated administrative costs; and product-liability costs—resulting from legal actions and settlements.

Which of the following is true of purchasing?

It can have a significant impact on total supply chain costs

Internal Failure Costs

It guides teams to develop an improvement plan, try it out, examine the results, and institute changes, then repeat the cycle.

Which of the following statements is true of the Deming cycle?

It guides teams to develop an improvement plan, try it out, examine the results, and institute changes, then repeat the cycle.

Which of the following is true of lean thinking?

It helps to drive a culture of waste elimination

Which of the following best defines inventory turnover?

It is a measure of how quickly goods are moving through the supply chain.

Which of the following is true of Six Sigma?

It is focused on effectiveness by reducing errors and defects.

Which of the following statements is true of the independent demand for a stock-keeping unit (SKU)?

It needs to be forecasted

Which of the following is a disadvantage of vendor-managed inventory (VMI)?

It often results in higher customer inventories than necessary.

Which of the following statements is true of a fixed-period system (FPS)?

It orders sufficient stock at the time of review to bring the inventory position up to the replenishment level (M).

Which of the following is true of order amplification?

Order amplification in the supply chain leads to the bullwhip effect

__________is inventory that has been ordered but is in transit.

Pipeline inventory

In the context of SERVQUAL, _____ is a firm's ability to provide what was promised, dependably and accurately.

Reliability

Analytical Model

Rely on mathematical assumptions that limit their use. It makes strict assumptions about arrival rates and service times.

In the context of SERVQUAL, _____ is the willingness to help customers and provide prompt service

Responsiveness

__________specialize in handling all aspects of customers giving back a manufactured good or delivered service and requesting their money back, repairing the manufactured good and giving it to the customer, and/or invoking the service guarantee.

Return facilitators

Benchmarking

Search for industry best practices that lead to superior performance

Static

Stable demand is usually called_____ demand.

In the context of SERVQUAL, ______ is what the customer sees, such as physical facilities, equipment, and the appearance of service employees

Tangibles

Static

The demand for bread in Ahoma City ranges from 100 to 120 tons per day, every day of the year. The demand is easily satisfied on a daily basis. This demand for bread can be categorized as _____.

The cost of quality refers specifically to the costs associated with avoiding poor quality or those incurred as a result of poor quality.

True

Kazien

The management of Breedlove Communications, a wireless headphone manufacturing company, wants all employees in the organization to contribute to the quality of the firm by setting a long-term goal to make small, gradual, and frequent improvements without a large financial investment.

Throughput

The number of units or tasks that are completed per unit time from a process is the _____.

ISO

The principles of customer focus, leadership, engagement, process approach, improvement, evidence-based decision making, and relationship management support the __________.

Which of the following is true of long setup times?

They waste manufacturing resources

Appraisal costs

Those expended on ascertaining quality levels through measurement and analysis of data to detect and correct problems. They include test and inspection costs—those associated with incoming materials, work-in-process, and finished goods, including equipment costs and salaries; instrument maintenance costs—those associated with the calibration and repair of measuring instruments; and process-measurement and process-control costs—which involve the time spent by workers to gather and analyze quality measurements.

Prevention costs

Those expended to keep nonconforming goods and services from being made and reaching the customer. They include - quality planning costs—such as salaries of individuals associated with quality planning and problem-solving teams, the development of new procedures, new equipment design, and reliability studies; - process-control costs—which include costs spent on analyzing processes and implementing process control plans; - information-systems costs—which are expended to develop data requirements and measurements; and - training and general management costs—which include internal and external training programs, clerical staff expenses, and miscellaneous supplies.

Cash-to-cash conversion cycle is the average time to convert a dollar spent to acquire raw materials into a dollar collected for a finished good.

True

Technology upgrades and backup systems and sites can help mitigate security risks.

True

Which of the following is an example of a bottleneck management principle? NOT SURE

Work-in-process buffer inventory should be place behind bottlenecks to maximize resource utilization.

Cycle

____ inventory is inventory that results from purchasing or producing in larger lots than are needed for immediate consumption or sale.

Work-in-process

_____ = Throughput × Flow time

Checksheets

_____ are special types of data collection forms in which the results may be interpreted on the form directly without additional processing.

Work-in-process

_____ inventory consists of partially completed products in various stages of completion that are awaiting further processing.

Batching

_____ is defined as the process of producing large quantities of items as a group before they are transferred to the next operation.

Utilization

_____ is the fraction of time a workstation or individual is busy over the long run.

Single-minute exchange of die (SMED)

_____ refers to the quick setup or changeover of tooling and fixtures in processes so that multiple products in smaller batches can be run on the same equipment.

breakthrough

__________ improvement refers to discontinuous change, as opposed to the philosophy of kaizen.

Gap 4

__________ in the GAP model is the discrepancy between actual manufacturing and service-delivery system performance and external communications to the customers.

Six sigma

__________ is a business improvement approach that seeks to find and eliminate causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers, resulting in a clear financial return for the organization.

Total productive maintenance

__________ is focused on ensuring that operating systems will perform their intended function reliably.

reverse logistics

__________refers to managing the flow of finished goods, materials, or components that may be unusable or discarded through the supply chain from customers toward either suppliers, distributors, or manufacturers for the purpose of reuse, resale, or disposal.

The Pharmaceutical Manufacturers Association defines a _____ as one that, after extensive investigation, is found to provide material of such quality that routine testing on each lot received is unnecessary.

certified supplier

Efficient manufacturing plants use the 5S principles to:

create a clean and well organized work environment

5Ss

derived from Japanese terms: Principles for an efficient work environment - Sort- refers to ensuring that each item in a workplace is in its proper place or identified as unnecessary and removed - Set in order- means to arrange materials and equipment so that they are easy to find and use - Shine- refers to a clean work area. Not only is this important for safety, but as a work area is cleaned, maintenance problems such as oil leaks can be identified before they cause problems - Standardize- means to formalize procedures and practices to create consistency and ensure that all steps are performed correctly - Sustain- means to keep the process going through training, communication, and organizational structures

Gap 5

difference between the customer's expectations and perceptions

The number of Kanban cards in an operating system is:

directly proportional to the amount of work-in-process inventory.

Breakthrough improvement

discontinuous change, as opposed to the gradual, continuous improvement philosophy of Kaizen

Gap 1

discrepancy between customer expectations and management perceptions

Gap 2

discrepancy between management perceptions of what features constitute a target level of quality and the task of translating these perceptions into executable specification difference between the customer's expectations and perceptions

Gap 3

discrepancy between quality specifications documented in operating and training manuals and plans and their implementation

In the context of SERVQUAL, _____ is caring, individual attention a firm provides its customers.

empathy

In the context of a fixed-order-quantity system, stockouts occur whenever the lead-time demand _____.

exceeds the reorder point

Based on the constant demand assumption in the economic order quantity (EOQ) model, the average cycle inventory is:

half of the order quantity

In the context of fixed-quantity systems, _____ is defined as the on-hand quantity (OH) plus any orders placed but which have not arrived minus any backorders (BO).

inventory position

__________is the discipline of managing the flow of materials and transportation activities to ensure adequate customer service at reasonable cost.

logistics

An ultimate stretch goal of all organizations that adopt a Six Sigma philosophy is to have all critical processes at a level of:

near zero defects

Which of the following is an example of waste in organizations?

planned product obsolesce

Managers and employees strive to reduce the number of cards in a Kanban operating system through:

reduced lead time

CraftWare Inc., a furniture manufacturer, uses ABC analysis to define its inventory value. The inventory contains wood, cast iron, adhesive, and carbon fiber. If wood accounts for 50 percent of the items and 5 percent of the total dollar value; carbon fiber accounts for 10 percent of the items and 60 percent of the total dollar value; cast iron accounts for 25 percent of the items and 18 percent of the total dollar value; and adhesive accounts for 15 percent of the items and 17 percent of the total dollar value, _____ can be classified as a class C item.

wood