PROD 315 Exam 1

Systematic decision making in capacity planning

5+ Types of Capacity Planning. Capacity planning is the process of developing and implementing a capacity strategy to scale to business volumes. Capacity includes things like labor, land, facilities, infrastructure, machines and resources that are required to deliver products, services and processes

How do you identify a bottleneck?

A bottleneck can be identified in several different ways: If it has the highest total time per unit processed If it has the highest average utilization and total workload If a reduction of processing time would reduce the average throughput time for the entire process

Which of the following is FALSE about bottlenecks in service processes?

A bottleneck usually has the lowest total time per unit processed.

__________ measures the amount by which the average utilization falls below 100 percent.

A capacity cushion

Which of the following is FALSE about a business's capacity gap?

A capacity gap can only be negative.

All of the following EXCEPT __________ is a major process strategy decision for a firm.

A flexible workforce

What are the capacity lead and lag strategies?

A lead strategy is aggressive and involves increasing capacity in mere anticipation of an increase in demand. It may result in costly excess capacity. A lag strategy is conservative and involves increasing capacity only when there is an actual increase in demand.

Which of the following is FALSE about long-term capacity planning?

A long-term capacity plan should cover at least five years.

Which of the following is TRUE about customer involvement in an organization?

A more customer-focused process could increase the net value to customers.

What are the advantages and disadvantages of customer involvement?

Advantages: Might increase the net value to the customer Can mean better quality, faster delivery, greater flexibility, and even lower cost Can also help coordinate across the supply chain Disadvantages: Might just be disruptive, making the process less efficient Managing the timing and volume of customer demands becomes more challenging if the customer is physically present and expects prompt delivery

Definition of process

Any activity or group of activities that takes one or more inputs, transforms them, and provides one or more outputs for its customers

__________ is the amount by which efficiency falls short of 100 percent.

Balance delay

Which of the following is NOT a tool that deals with demand uncertainty and variability?

Base case

__________ is an alternative plan, which is to do nothing and simply lose orders.

Base case

Which of the following is considered the most controversial aspect of line-flow layout?

Behavioral response

__________ is the process of verbalizing whatever comes to mind as proposals of ideas or thoughts about a process.

Brainstorming

Which of the following is NOT a key principle of the theory of constraints?

Building inventories at all points in a system is essential.

What are the steps in line balancing?

Can be described as the assignment of work to stations in a line process so as to achieve the desired output rate with the smallest number of workstations Four steps: Drawing Precedence Diagram: Precedence diagram needs to be drawn to demonstrate a relationship between workstations. Certain process begins when previous process was done. Determining Cycle Time: Cycle time is longest time allowed at each station. Assigning tasks to workstation: The tasks distributions should be taken after completing a time cycle. It's good to allocate tasks to workstation in the order of longest task times. Calculating an Efficiency Line: This is done to find effectiveness of the line.

Which of the following is a typical characteristic of a flexible workforce?

Can do many tasks

How do you make product mix decisions based on BN?

Can view the Drum-Buffer-Rope system Material release schedule-->Process A (nonconstraint)-->Time buffer inventory (Constraint buffer)-->CCR(Bottleneck) Process B-->Process C (nonconstraint)-->Finished goods inventory (Shipping Buffer)-->Shipping Schedule-->Market Demand

The __________ is the amount of reserve capacity a process uses to handle temporary losses of production capacity or sudden increases in demand.

Capacity cushion

What is the systematic method to evaluate capacity decisions?

Capacity decisions should be closely linked to processes and supply chains throughout the organization. If a change is made in any one decision area, the capacity cushion may also need to be changed to compensate. For example, capacity cushions for a process can be lowered if less emphasis is placed on fast deliveries (competitive priorities), yield losses (quality) drop, or if investment in capital intensive equipment increases or worker flexibility increases (process design)

Top quality and customization are the __________.

Competitive priorities of a front office

__________ is the amount each product creates toward profits and overhead for a company.

Contribution margin

Core and support processes, what are they?

Core process - a process with a set of related and interdependent activities that transform an input to a system to an output with added value to a customer. It is the transformation of people, money, materials or information that is the value-added work of the organization. Support process - all processes whose sole purpose is to ensure the functioning of key processes and overall operations of the company.

__________ coordinates a firm's overall goals with its core processes.

Corporate strategy

Which of the following is NOT one of the reasons why economies of scale drive costs down when output increases?

Costs of input materials rise.

__________ are a key element of reengineering.

Critical processes

__________ is the extent to which a customer is present and receives personal attention during the service process.

Customer contact

Which of the following is NOT a key element of reengineering?

Customer involvement

Which of the following is FALSE in relation to customer involvement in a business?

Customer involvement is always a good idea for a business.

What is NOT one of the four core processes that deliver value to external customers?

Customer nested process

All of the following EXCEPT __________ are primary considerations when a business is developing a corporate strategy.

Customer relationship processes

Which of the following is NOT part of the product-process matrix?

Customization

Front offices in a business most often should emphasize which of the following?

Customization and top quality

__________ allow anticipation of events, which requires a sequence of choices regarding capacities.

Decision trees

Describe capacity decisions and tools used for it

Decisional capacity can be defined as the ability of health care subjects to make their own health care decisions. Questions of 'capacity' sometimes extend to other contexts, such as capacity to stand trial in a court of law, and the ability to make decisions that relate to personal care and finances

What are the production and inventory strategies?

Design to order Make to order Assemble to order Make to stock

__________ strategy involves designing new products and manufacturing them to meet unique customer specifications.

Design-to-order

Which of the following is NOT a dimension of capacity strategy that needs to be examined prior to making capacity decisions?

Determining the economies of scale rate

Which is the third step of capacity decision making associated with base case?

Develop alternatives

Which of the following is NOT one of the primary considerations when developing a corporate strategy?

Developing a market analysis

What are economies and diseconomies of scale?

Economies of scale - States that the average unit cost of a service or good can be reduced by increasing its output rate. Four principale reasons explain why economies of scale can drive costs down when output increases: Fixed costs are spread over more units; construction costs are reduced; costs of purchased materials are cut; process advantages are found Diseconomies of scales - When "bigger is not always better" in a sense. The average cost per unit increases as the facility's size increases. The reason is that excessive size can bring complexity, loss of focus, and inefficiencies that raise the average unit cost of a service or product

How do you increase throughput?

Eliminate Throughput Bottlenecks. Reduce the Parts Rejection Rate. Improve Employee Training. Use Factory Automation. Minimize Physical Prototyping Where Possible. Increase Manufacturing Safety.

Which of the following is the first step in helping managers make sound capacity decisions?

Estimate future capacity requirements.

Which of the following is NOT a qualitative concern for a business?

Estimating the change in cash flows for a product

Which of the following is the final step in helping managers make sound capacity decisions?

Evaluate each alternative, and make a final choice.

Which step of capacity decision making is associated with qualitative concerns?

Evaluating alternatives

__________ are end users or intermediaries who buy a firm's finished services or products.

External customers

What are some examples of a typical core competency of an organization?

Facilities The workforce Market and financial know-how

What are the types of automation?

Fixed automation - produces one type of part or product in a fixed sequence of simple operations Flexible (or programmable) automation - can be changed easily to handle various products. IE and industrial robot which can be programmed to perform various tasks

Which of the following is also known as relationship maps, blueprints, or process maps?

Flowcharts

Which of the following is true about demand forecasts?

Forecast accuracy declines as the forecasting horizon lengthens.

What are the types of service processes?

Front office Hybrid office Back office

What are the customization and contact (X-axis) and divergence and flow (y-axis) for each type of service processes?

Front office - high customer contact where the service provider interacts directly with the internal or external customer. Work flows are flexible and they vary from one customer to the next. Hybrid office - High on some contact measures and low on others. Moderate levels of customer contact and standard services. Work flow progresses from one workstation to the next, with some dominant paths apparent Back office - Low customer contact and little service customization. Work is standardized and routine, with line flows from one service provider to the next until the service is completed. Low customer contact, low divergence, and a line flow.

_____ describes more of a service process than a manufacturing process

High customer contact

What are the considerations when you automate services?

High volume is practically required to make it worth it, as automation is expensive over a period of time A big disadvantage of capital intensity can be the prohibitive investment cost for low-volume operations. You must have high utilization to be justifiable. Automation does not always align with a company's competitive priorities.

Which of the following is the LEAST typical way to relieve a manufacturing bottleneck?

Hiring additional management

What are the principles of the Theory Of Constraints (TOC)?

IT is a systematic management approach that focuses on actively managing those constraints that impede a firm's progress toward its goal of maximizing profits and effectively using its resources. The operational measures for TOC are as follows: Inventory Throughput Operating Expense Utilization

Which of the following is the first step in the practical applications of the TOC?

Identifying the system bottlenecks

How does flexible automation increase the economies of scope?

In certain types of manufacturing operations, such as machining and assembly, programmable automation breaks the inverse relationship between resource flexibility and capital intensity. It makes possible both high capital intensity and high resource flexibility, creating the economies of scope. Economies of scope reflect the ability to produce multiple products more cheaply in combination than separately

Which of the following is NOT one of the reasons why costs are driven down when output increases in relation to economies of scale?

Increased retail price

As __________ have become economically stronger, the traditionally low-cost labor advantage that these two countries offer is diminishing.

India and China

Which of the following is NOT a standard of PWPs?

Individualized management

__________ is/are generally used for low-volume, flexible processes.

Input measures

What are the inputs/outputs of a process?

Inputs: Workers Managers Equipment Facilities Materials Services Land Energy Outputs: Goods Services

Which of the following describes more of a service process than a manufacturing process?

Intangible, perishable output

__________ is/are the LEAST typical way to relieve a manufacturing bottleneck.

Investments in inventory

Which of the following is a benefit of having a flexible workforce?

It is one of the best ways to achieve reliable customer service.

Which of the following best describes the customer-contact matrix?

It is the starting point for evaluating and improving the quality of a process.

Which of the following does NOT describe a decision tree?

It is valuable for more complex waiting-line problems.

What does the product-process tell us?

It's used to demonstrate the combination of a product's volume and various characteristics, together with the nature of the processes that make it It is a tool to analyze the relationship between the life cycle of the product and the life cycle of the technology used It is a convenient way of characterizing the relationship between product volumes and processing system employed by a firm at a particular location

What are the types of manufacturing processes?

Job process Batch process Line process Continuous-flow process

What are the customization and volume (X-axis) and divergence and flow (y-axis) for each type of manufacturing processes?

Job process - All equipment and workers capable of certain types of work are positioned together. Because customization is high and most jobs have a different sequence of steps, this process choice creates flexible flows through the operations rather than a line flow Batch process - Volumes are higher because the same or similar products or parts going into them are produced repeatedly. The process flow is flexible, but more dominant paths emerge than at a separate process for each product Line process - Volumes are high and products are standardized. Divergence is minimal in the process or line flows, and little inventory is held between the processing steps Continuous-flow process - Extreme end of high-volume standardized production, with rigid line flows. Materials flow through the process without stepping until the whole batch is finished.

Which of the following is NOT a reason why strategies for manufacturing processes differ from those in services?

Lack of inventories for finished products

Which of the following is NOT one for the four common process decisions?

Layout

Which of the following is the physical arrangement of operations that puts decisions into tangible form?

Layout

__________ is the assignment of work to stations so as to achieve desired output with the smallest number of workstations.

Line balancing

_____ is the selecting of the mode of transportation, scheduling both inbound and outbound shipments, and providing intermediate inventory storage.

Logicstics

__________ spurred the need for sound global strategies including reduced import quotas and other international trade barriers, improved transportation and communication, and increased demand for imported services and goods.

Loosened regulations on financial institutions

Which of the following is a reason that diseconomies of scale might set in for a business?

Loss of focus for an organization

Which of the following competitive priorities would measure cost per billing statement or weekly postage, and may consider eliminating microfilming and storage of billing statements?

Low-cost operations

What are the competitive priorities?

Low-cost operations Top quality Consistent quality Delivery speed On-time delivery Development speed Customization Variety Volume flexibility

What are the process considerations of each priority when talking about competitive priorities

Low-cost operations - Processes must be designed and operated to make them efficient (reduce waste) Top quality - May require a high level of customer contact and may require superior product features Consistent quality - Processes designed and monitored to reduce errors and prevent defects Delivery speed - Design processes to reduce lead time On-time delivery - Planning processes to increase percent of customer orders shipped when promised Development speed - Cross-functional integration and involvement of critical external suppliers Customization - Low volume, close customer contact, and easily reconfigured Variety - Capable of larger volumes than processes supporting customization Volume flexibility - Processes must be designed for excess capacity

Input measures are generally used for which of the following?

Low-volume, flexible processes

Which of the following is FALSE about the TOC view?

Machines and work-in process materials should not be calculated in a company's inventory.

How do all of the production and inventory strategies relate to process structure? What are each of their types of process structure?

Make to order - Job, some batch Assemble to order - Batch, line Make to stock - Line

Which of the following is NOT one of the three mainline functions of a typical business?

Management

Management may emphasize more than one of the nine broad competitive priorities; which of the following is NOT one of the nine?

Management quality

What are the main differences between manufacturing and services?

Manufacturing organization: Tangible Can be inventoried Low customer contact Capital Intensive Quality easily measured Service Production: Intangible Can't be inventoried High customer contact Labor Intensive Quality hard to measure

Which of the following is NOT a typical operational measure of a firm?

Marketing expense

What is diseconomies of scope

Multi-product production by a single firm that is less efficient than having separate firms each specializing in the production of a single product.

Which of the following is true about capacity measurements for a business?

No single capacity measure is best for all situations.

Which of the following is FALSE in regard to the traditional method for a business?

No variable costs are considered when making the product mix decision.

Which of the following practical applications of the TOC is the step that follows elevating the bottlenecks?

Not letting inertia set in

Which of the following is NOT a capacity measure for a typical business?

Number of suppliers for a retail store

What are the three views of operations management

Operation - A group of resources performing all or part of one or more processes Process - Any activity or group of activities that takes one or more inputs, transforms them, and provides one or more outputs for its customers Nested processes - The concept of a process within a process

What is workforce flexibility?

Operation managers must decide rather to have a flexible workforce. This means that it's a workforce whose members are capable of doing many tasks, either at their own workstations or as they move from one workstation to another

For organizational purposes, processes are often clustered together into __________.

Operations

What all are essential and unique functions of any business, and have their own knowledge and skill areas and primary responsibilities?

Operations Marketing Finance NOT Purchasing

_____ is the systematic design, direction, and control of processes that transform inputs into services and products for internal, as well as external, customers

Operations management

_____ is/are derived from the considerations customers use when deciding upon products and services to purchase

Order winners

__________ are different operations within a facility with individualized competitive priorities, processes, and workforces.

PWPs

Which of the following describes the layout of an organization?

Physical arrangement of operations created by the various processes

Which of the following is NOT a major process strategy decision in organizations?

Process analysis

What are some aspects of the customer-contact matrix?

Process characteristics Customization The degree of customer contact

Which of the following is NOT a common process decision for a business?

Process divergence

Each process of an organization can be analyzed on which of the following two dimensions?

Process divergence and flow

Which of the following are the two process characteristics of the customer-contact matrix?

Process divergence and flow

__________ specifies the form of decisions made in managing processes so that the processes will achieve their competitive priorities.

Process strategy

What are all of the variables involved with the supply chain view of operations management?

Processes can be linked together to form a supply chain - interrelated processes within a firms and across different firms that produce a service or product to the satisfaction of the customers These interrelated processes represent various business activities That add value to the customer Core processes vs. support processes External suppliers-->Supplier relationship process-->New service/product development-->Order fulfillment process-->Customer relationship process-->External customers

_____ is the value of outputs produced divided by the value of inputs of an organization VOP / VIO

Productivity

__________ is a basic measure of the performance of economies, industries, organizations, and processes.

Productivity

Which of the following is NOT a typical operational measure of a company?

Purchasing expenses

Which of the following is NOT one of the dimensions of capacity strategy that operations managers must examine prior to making capacity decisions?

Reducing construction costs

What are the some ways to get customers involved in the process?

Reflects the ways in which customers become part of the process and the extent of their participation Low/High involvement Customer contact is important, in which it is the extent to which the customer is present, is actively involved, and received personal attention during the service process

What is true about the difference between products and services?

Services tend to have a higher degree of customer contact. Manufacturing is usually more capital intensive. Generally, manufacturing processes have longer response times.

What describes process strategy?

Specifies the form of decisions made in managing processes so that the processes will achieve their competitive priorities

What is NOT one of the nine broad competitive priorities of a business?

Standardization

Which of the following is TRUE about manufacturing strategies?

Strategies for manufacturing processes differ from those in services.

Outsourcing, warehousing, and logistics are examples of...

Supply chain processes

What is essential to the management of a business while providing vital resources and inputs to the core processes in a business?

Support processes

Which of the following is NOT a typical aspect of brainstorming in an organization?

Systematic procedure

What is a contribution margin?

The amount each product contributes to profits and overhead for a company

What factors affect the amount of capacity cushion?

The amount of reserve capacity a process uses to handle sudden increases in demand or temporary losses a production capacity; it measures the amount by which the average utilization (in terms of total capacity) falls below 100 percent If the demand keeps increasing over time, then long-term capacity must be increased as well to provide some buffer against uncertainties. When average utilization rates approach 100 percent, it is usually a signal to increase capacity or decrease order acceptance to avoid deciding productivity.

How is capacity measured?

The capacity of the manufacturing unit can be expressed in number of units of output per period. In some situations measuring capacity is more complicated when they manufacture multiple products. In such situations, the capacity is expressed as man-hours or machine hours.

Which of the following is TRUE about expansionist strategy?

The expansionist strategy stays ahead of demand.

Which of the following is NOT a key principle of the theory of constraints?

The focus should be on balancing capacity, not on balancing flow.

What is a bottleneck?

The most capacity constrained operation Determines the capacity of the process Bottlenecks move when the mix of jobs changes

What is NOT true of manufacturing processes?

The outputs of manufacturing processes cannot typically be stored or transported

Operations management

The systematic design, direction, and control of processes that transform inputs into services and products for internals, as well as external, customers

__________ is a systematic management approach that centers on actively managing constraints that impede the company's progress.

The theory of constraints

When a service organization is considering implementing a quality process strategy, it needs to first consider __________.

The type and amount of customer contact

__________ is the total time from start to finish of a customer being processed at one or more work centers.

Throughput time

What is the goal of line balancing?

To match the output rate to the staffing or production plan

Which of the following is one of the elements of the product-process matrix?

Volume

Which of the following competitive priorities may want to measure utilization and acquire temporary employees as an action strategy?

Volume flexibility

Which of the following tends to be helpful in selecting an appropriate capacity cushion for a service with high customer contact?

Waiting-line model

__________ use probability distributions that provide estimates of average customer utilization of a specific work center.

Waiting-line models

When do businesses find large-capacity cushions most appropriate?

When demand varies for the business

When are large-capacity cushions most necessary?

When future demand is uncertain

When do diseconomies of scale occur?

When the average cost per unit increases as a facility's size increases

What is an operation?

a group of resources performing all or part of one or more processes

A capacity gap is __________.

a positive or negative difference between projected capacity requirements and current capacity

In an AON network, nodes represent __________ and arcs represent the __________.

activities; precedence relationships between them

What is a transformation process?

any activity or group of activities that takes one or more inputs, transforms and adds value to them, and provides outputs for customers or clients

In DBR, the drum is the __________.

bottleneck schedule

Bottlenecks __________.

can be internal to a firm

A __________ process is the extreme end of high-volume standardized production within an industry.

continuous-flow

Chemical processes and paper manufacturing would most typically use a __________ process.

continuous-flow

A job process __________.

creates the flexibility needed to produce various products in significant quantities

In DBR, the bottleneck schedule is the __________.

drum

A __________ traces the movement of information, customers, equipment, or materials through the steps of a process.

flowchart

Identifying manufacturing bottlenecks becomes __________ when setup times are lengthy.

harder

The expansionist strategy __________.

involves large, infrequent jumps in capacity

A __________ creates flexibility to produce a wide variety of products in large quantities with considerable divergence in the steps that are undertaken.

job process

Identifying manufacturing bottlenecks becomes considerably harder when setup times are __________.

lengthy

Behavioral response is the most controversial aspect of __________.

line-flow layout

All of the following EXCEPT __________ is used to measure utilization.

management

In an activity-on-node network, __________ represent activities and __________ represent the precedence relationships between them.

nodes; arcs

Capacity requirements can best be expressed for a business as a(n) __________.

output rate

The simplest way to express capacity requirements is as a(n) __________.

output rate

DBR is a(n) __________.

planning and control system

A __________ is a set of consecutive time periods considered for planning purposes.

planning horizon

Capacity requirements need to be forecasted for several time periods in a __________.

planning horizon

According to the TOC view, all machines and work-in process materials __________.

represent inventory because they could be sold to make money

In DBR, the rope __________.

represents the tying of material release to the drumbeat

Extend and Witness are __________.

simulation packages

More complex waiting-line problems must be analyzed with __________.

simulations

What is capital intensity?

the mix of equipment and human skills in a process; the greater the cost of equipment relative to the cost of labor, the greater is the capital intensity

The utilization rate tells you __________.

the need for adding extra capacity or eliminating unneeded capacity

The systematic management approach that focuses on actively managing aspects that impede a firm's progress toward its goal is the __________.

theory of constraints

The __________ does not consider fixed costs when making the product mix decision.

traditional method

Long-term capacity planning typically deals with planning that covers at least __________.

two years