MGMT 333 Summer test 2

decision node

points in a decision tree when decisions need to be made. Usually squares represent decision points and circles represent chance events.

arrival rate

the average number of customers that come to a facility during a specific period of time

Earned value management, when properly applied, provides

A method for evaluating the success of a project

Statement of Work (SOW)

A narrative description of products, services, or results to be delivered by the project.

Inventory turn

Cost of goods sold/average inventory

z-Transformation

D-T/SQRT(sum of the variances along the critical path)

An activity has the following costs abs durations. Calculate the crash cost per day. Normal cost 1000, Crash cost: 1,200. Normal duration - 5 days. Crash durations - 3 days.

$100 per day. $1,200-$1,000/5-3

Variance formula

((b-a)/6)^2

days of supply

(Average inventory/cost of goods sold) x 365

expected time formula

(a + 4m + b)/6

The time-cost model attempts to

- Control expenditures - Develop a minimum-cost schedule

Which of the following statements about inventory measures is TRUE

1. Inventory turn compares cost of goods sold to average inventory 2. Days-of-supply measures how long (on average) a firms inventory can support sales

Which of the following are features of an earned value management (EVM) implementation?

1. Predefined metrics that quantify the accomplishment of work 2. A project plan that identifies activities to be accomplished. 3. A valuation of each activity

3 important things to think about when changing capacity

1. System balance 2. Frequency of capacity additions or reductions 3. Use of external capacity

Learning curve theory is based on three assumptions

1. The amount of time required to complete a given task or unit of a product will be less each time the task is undertaken. 2. The unit time will decrease at a decreasing rate. 3. The reduction in time will follow a predictable pattern.

learning curve

A line displaying the relationship between unit production, time and cost, and the cumulative number of units produced. - Every time a plants cumulative production doubled, it's production costs decline by a specific percentage depending on the nature of the business.

Plant within a plant (PWP)

An area in a larger facility that is dedicated to a specific production objective (for example, product group). This can be used to operationalize the focused factory concept.

economies of scale

As a plant gets larger and volume increases, the average cost per unit of output drops. - This is partially due to lower operating and capital cost

Which layout moves product from workstation to workstation at a controlled rate?

Assembly line

Matrix Project

Attempts to blend properties of functional and pure project structures.

Crash Cost Formula

CC - NC/ NT - CT

Economies of scope

Exist when multiple products can be produced at a lower cost in combination than they can separately.

When calculating the critical path for a three time estimate project, you use the ____ as the activity duration time.

Expected time

focused factory

Holds that a production facility works best when it focuses on a fairly limited set of production objectives. - The firm should not expect to excel in every aspect of manufacturing performance: cost, quality, delivery speed, and reliability

individual learning

Improvement that results when people repeat a process and gain skill or efficiency from their own experience

Little's Law Formula

Inventory = Throughput rate x flow time

task

Is a further subdivision of a project

When calculating activity variance, what is X in the following calculation? (X/6)^2

Pessimistic time (b) - Optimistic time (a)

functional project

Responsibility for the project lies within one functional area of the firm. Employees from that area work on the project, usually only part time.

Organizational learning

Results from practice as well, but it also comes from changes in administration, equipment, and product design.

Time per unit

Shows the decrease in time required for each successive unit.

Total average value of inventory

Sum of raw material, work-in-process, and finished goods inventory

Two types of costs to consider when adding capacity

The cost of upgrading to frequently and that of upgrading too infrequently

What are the two ways to think about improved performance with learning curves.

Time per unit Units of output per time period

decision tree

a graph of decisions and their possible consequences; it is used to create a plan to reach a goal

Work Package

a group of activities combined to be assignable to a single organizational unit

Pure Project

a self-contained team works full time on the project

service rate

average number of customers that can be processed over the same period of time when the facility is operating at maximum capacity

Capacity utilization rate

capacity used/best operating level

capacity cushion

is an amount of capacity in excess of expected demand Example: if the expected annual demand on a facility is $10 million in products per year and the design capacity is $12 million per year, it has a 20% capacity cushion. A 20 percent capacity cushion equates to an 83 percent utilization rate (100%/120%)

Cumulative average time

shows the cumulative average performance times as the total number of units increases.

diseconomies of scale

the situation in which a firm's long-run average costs rise as the firm increases output