Operations Management
Factors That Affect Location Decisions: Political risk, values, and culture
-National, state, local governments' attitudes toward private and intellectual property, zoning, pollution, employment stability may be in flux -Worker attitudes toward turnover, unions, absenteeism -Globally cultures have different attitudes toward punctuality, legal, and ethical issues
8 Advantages to outsourcing
1. workers can be shifted to better jobs 2. increased demand for other U.S. jobs 3. profits and competitiveness 4. world peace vis economic integration 5. developing other nations 6. lower prices for consumers 7. use talent in other countries 8. helps sale of American goods
8 Disadvantages to outsourcing
1. workers lose jobs 2. loss of capability in U.S. 3. strategic and political risks 4. exploitation of workers overseas 5. ethical corruption overseas 6. intellectual property rights violated 7. poor quality of products or customer service 8. increasing gap between rich and poor
MRP requirements
-computer system -mainly for discrete products -accurate bills of materials -accurate inventory status with 99% accuracy -lead times -assumes infinite capacity
fixed order interval system
-inventory counted at the end of a specified period -order is placed to raise inventory position to predetermined target level
The minimum possible cycle time in a product layout is determined by the:
A. longest task time
Daily capacity of a product layout is determined by:
B. operating time divided by cycle time
Cellular layout is a term associated with:
B. part families
9. Changing an alpha value in single exponential smoothing from .2 to .5 would make: a. forecasts more dependent on most recent actual. b. no difference. c. forecasts slower to respond to most recent actual. d. the equations invalid.
A
40. All of the following are factors increasing the importance of purchasing EXCEPT: a. impact of materials cost on profits b. increasing prominence of automated manufacturing c. increasing government regulation of transportation industry d. increasing global competition
C
44. The greater specialization of employees is seen as an advantage of: a. supply chain management b. blanket purchase orders c. centralization of purchasing d. decentralization of warehousing
C
Layout planning is required because of: (I) Efficient operations (II) Accidents or safety hazards (III) New products or services (IV) Morale problems A. I and II B. II and IV C. I and III D. II, III, and IV E. I, II, III, and IV
D. II, III, and IV A number of factors affect layout planning.
Which closeness rating reflects indifference on the nearness or lack of nearness of two departments?
D. U
Which closeness rating reflects indifference on the nearness or lack of nearness of two departments? A. A B. E C. I D. U E. X
D. U Closeness ratings denoted "U" are neither desirable nor undesirable.
6. Which of the following is not a component of demand in a typical time series model? a. Average demand for period b. Trend c. Seasonal influence d. Cyclical elements e. Peak demand for period
E
Which closeness rating reflects the undesirability of having two departments located near each other?
E. X
Which closeness rating reflects the undesirability of having two departments located near each other? A. A B. E C. I D. U E. X
E. X Undesirable
A group of machines including supervisory computer control, automatic material handling, and possibly robots is called:
E. a flexible manufacturing system
Which of the following is not an information requirement for the design of a process layout?
E. a list of product cycle times for every product manufactured
Tools for quality improvement
Flowchart Check sheet Histogram Pareto Chart Scatter diagram Control Chart Cause-and-effect diagram
Mean square error, or MSE
N= periods of data
Supply chain management
The coordination of all supply chain activities involved in enhancing customer value
Aggregate Demand Production
Two ways: active - creative pricing,
Sustainability
ability or capacity of the system to maintain or sustain itself by improving its performance in terms of how it manages planet, people, and profit.
Backward integration
acquiring capabilities toward suppliers
Key success factors (KSFs)
activities or factors that are key to achieving competitive advantage
Service process design
activity of developing an efficient sequence of activities to satisfy both internal and external customer requirements
net requirements
actual amount needed minus adj gross requirements for on hand and schedule receipts
(labor, purchased costs,...) charged for the tasks completed at this point in time. ACWP was the old acronym which has been changed to ____. The _____ can be plotted up until the current time on the graph.
actual cost (AC)
Output-based incentive systems are based on the assumption that some workers ____________________.
are motivated by money and produce more when pay is linked to performance
Process boundary
beginning or end of process
Economies of scale occur when a company is operating
below its best operating level and increases its output
Delphi method
consists of forecasting by expert opinion by gathering judgments and opinions of key personnel based on their experience and knowledge of the situation.
Kaizen is a Japanese term referring to __________________________.
continuous improvement
failure costs
costs caused by defective parts or faulty services
Statistical forecasting
is based on the assumption that the future will be an extrapolation of the past. can generally be categorized as time-series methods, which extrapolate historical time-series data, and regression methods, - Moving average (MA) - Exponential smoothing (SES) - Linear regression (Y=mx+b)
Forecast error
is the difference between the observed value of the time series and the forecast
Lead time
is the time between placement of an order and its receipt
What is the approach to job design which involves an increase in responsibility for work planning and/or inspection?
job enrichment
The best operating level is the volume of output that results in the_________________________.
lowest average unit cost
cycle time
max amount of time for workstations to complete tasks
UCL =
mean + z * std dev
LCL =
mean - z * std dev
High Variety
one or few units per run (allows customization)
Green sustainable supply chain
one that uses environmentally friendly inputs and transforms these inputs through change agents whose by products can improve or be recycled within the existing environment
scheduled receipts
open orders scheduled to arrive at the beginning of period
quality at the source
philosophy of making each worker responsible for the quality of his or her work
Service layouts must be visually pleasing as well as functional.
TRUE The service layout is often perceived by the customer.
ISO 24700
set of international standards that pertains to the quality and performance of office equipment that contains reused components
directly
setup up and holding costs are ____ related to total cost
precedence diagram
shows elemental tasks and their precedence requirements
quality
the ability of a product or service to consistently meet or exceed customer expectations
Stockouts
the inability to satisfy the demand for an item
Mission
the purpose or rationale for an organization's existence
One reason capacity and location decisions are usually made simultaneously is what?
the size of a new facility may affect its location
Operations decisions
the strategic decisions of OM are goods and service design, quality, process and capacity design, location selection, layout design, human resources and job design, supply-chain management, inventory scheduling and maintenance
Bias
the tendency of forecasts to consistently be larger or smaller than the actual values of the time series
bias
the tendency of forecasts to consistently be larger or smaller than the actual values of the time series. ?????????
Process time
the time to produce a unit or specified batch
Service organizations such as restaurants, movie theaters, and banks focus on locating near ____________.
their customers
intermodal
use of two or more different modes in movement
flow process chart
used to examine the overall sequence of an operation by focusing on movements of he operator or flow of materials
maintenance/repair/operating supply
used to run the business
Economic Forecast
-Address business cycle - inflation rate, money supply, housing starts, etc.
Time-Series Components: Random
•Erratic, unsystematic, 'residual' fluctuations •Due to random variation or unforeseen events •Short duration and non-repeating
Work Cells
- Reorganizes people and machines into groups to focus on single products or product groups •Group technology identifies products that have similar characteristics for particular cells •Volume must justify cells •Cells can be reconfigured as designs change or volume fluctuates
Designing process layouts
- Some departments need to be close to each other while others need to be far away. - Some large organizations with multiple locations will use a standardized design. - Challenging process layout designs concern customization factors.
Repetitive processing
- Standardized goods or services. - Slight flexibility of equipment. - Assembly line.
Factors That Affect Location Decisions: Cost
- Tangible: easily measured costs such as utilities, labor, materials, taxes - Intangible:not as easy to quantify and include education, public transportation, community, quality-of-life
From-To Charts
- Transportation costs are considered proportionate to distance traveled between departments. - The cell is always blank for the distance or work flow between a department and itself. - From-To Charts are used to assign departments to layout locations. - Although measurement may vary depending upon direction, assume value of 'A to B' is the same as 'B to A' to simplify the problems.
What are the various building factors which may influence process layout design?
- Types of flooring (e.g., "reinforced") - Location of entrance, exit, and docks - Availability of windows for either desired light or darkness
Fixed-position layouts
- Used for Project process type, such as construction projects. - Administrative costs of coordinating activities can be significant. - Lack of storage space can present problems.
Batch processing
- Variety - Intermittent
When does process selection need to be done or re-evaluated?
- When technology changes - In response to competition - For new product introduction
Medium-range forecast
-3 months to 3 years -Sales and production planning, budgeting
Long-range forecast
-3+years -New product planning, facility location, research and development
Which type of processing system tends to produce the most product variety?
B. Job-Shop
Which type of processing system tends to produce the most product variety? A. Assembly B. Job-Shop C. Batch D. Continuous E. Project
B. Job-Shop A Job-Shop provides low volume of high-variety goods.
Which phrase most closely describes flexible manufacturing systems?
B. a more fully automated version of cellular manufacturing
Which phrase most closely describes flexible manufacturing systems? A. a variation of CAD B. a more fully automated version of cellular manufacturing C. manufacturing resource planning D. a process layout with a manufacturing overlay E. an approach that allows workers to begin work at a time of their choosing
B. a more fully automated version of cellular manufacturing Flexible automation allows for greater variety within or across product families.
The grouping of equipment by the operations needed to perform similar work for part families is:
B. cellular manufacturing layout
The grouping of equipment by the operations needed to perform similar work for part families is: A. product layout B. cellular manufacturing layout C. functional layout D. fixed-position layout E. process layout
B. cellular manufacturing layout Cellular layouts are organized around part families.
Although they do not guarantee optimal solutions, ______________ are useful in finding reasonable solutions when the number of possible options is overwhelming.
B. heuristics
Although they do not guarantee optimal solutions, ______________ are useful in finding reasonable solutions when the number of possible options is overwhelming. A. cellular layouts B. heuristics C. logistics D. CAM E. CAD
B. heuristics Heuristics often provide workable solutions to complex problems.
Daily capacity of a product layout is determined by: A. cycle time divided by operating time B. operating time divided by cycle time C. operating time divided by total task time D. total task time divided by cycle time E. cycle time divided by total task time
B. operating time divided by cycle time This represents how many units are possible per day.
Cellular layout is a term associated with: A. wireless telecommunication B. part families C. functional (or process) layouts D. assembly lines E. job shops
B. part families Part families are produced on cells.
A service organization (for example, a hospital) is likely to use a ________ layout because of variability in customer processing requirements.
B. process
A service organization (for example, a hospital) is likely to use a ________ layout because of variability in customer processing requirements. A. project B. process C. flow D. assembly E. non-repetitive
B. process A process layout is capable of providing more variety.
11. A company is using single exponential smoothing. Last month they predicted a sale of 1,000 cases of a certain chemical. The value they have been using is .1. Because they sold 800 cases, they are predicting a sale this month of: a. 800 b. 990 c. 980 d. 1,080
C
Fabrication
-Builds components on a series of machines -Machine-paced -Require mechanical or engineering changes to balance
Technological forecast
-Predict rate of technological progress -Impacts development of new products
Demand forecast
-Predict sales of existing products and services
Assembly line
-Puts fabricated parts together at a series of workstations -Paced by work tasks -Balanced by moving tasks
17. Which of the following is a mixed strategy for absorbing demand fluctuations in aggregate production planning? a. altering the production rate by changing the size of the labor force b. using subcontracting to meet peak fluctuations in demand c. using overtime, inventory, and subcontracting d. keeping the work force and production rate constant, and allowing fluctuations in the inventory level
C
2. The M in BOM stands for which of the following? a. Machining b. Manufacturing c. Material d. Manual
C
Short-range forecast
-Up to 1 year, generally less than 3 months -Purchasing, job scheduling, workforce levels, job assignments, production levels
Why study OM? (4 things)
1. One of the three major functions of any organization (Marketing, Finance, Operations) 2. We need to know how goods and services are produced 3. We want to understand what operations managers do 4. OM is such a costly part of an organization
What are the five different activities that can be part of a process?
1. Operation 2. Transportation 3. Inspection 4. Delay 5. Storage
Inventory Costs (4)
1. Ordering or set up costs 2. Inventory holding costs 3. shortage costs 4. Unit cost of the SKUs
Examples of companies with high offshoring (3)
1. P&G 2. Honda 3. Airbus
23. Rough Cut Capacity Planning does which of the following: a. It plans and schedules the production of components. b. It verifies the load for work centers. c. It plans the production of families of products. d. It plans and schedules the finished goods build schedule.
C
What are the 4 costs of quality?
1. Prevention Costs 2. Appraisal Costs 3. Internal Failure Costs 4. External Failure Costs
What are the 3 important "connotations" identified for TQM?
1. Product's quality is determined by the customer's acceptance and use 2. Quality management is an organizationwide activity 3. Quality improvement requires commitment from all employees
Inputs of process selection
1. Product/Service Design 2. Forecasting Data 3. Technology
procedure for making location decisions
1. decide on criteria to use for evaluation (revenues, costs, community) 2. Identify important factors (raw materials, markets) 3. develop alternatives a. country(ies) for location b. general region c. small number of communities d. site alternatives among the communities 4. evaluate and decide
Know options for increasing contribution margin, and greatest opportunity to contribute through OM. (3 things)
1. marketing option: increase sales revenue 2. finance/accounting: reduce finance costs 3. OM option: reduce production costs (**increases contribution income the most of the three)
What type outsourcing is used by Apple in choosing to have their products manufactured in China? (3 answers)
1. off-shoring 2. off-shore outsourcing 3. business process outsourcing
The U.S. benefits from outsourcing by: (4 things)
1. opportunities to lower labor costs 2. opportunities to learn from other cultures 3. opportunities to exchange or trade resources 4. opportunities to do the right thing and trust in God's provision for all people
Principle of Forecasting
1. past data available 2. able to identify pattern 3. believe pattern will continue
Seven Steps in Forecasting
1.Determine the use of the forecast 2.Select the items to be forecasted 3.Determine the time horizon of the forecast 4.Select the forecasting model(s) 5.Gather the data needed to make the forecast 6.Make the forecast 7.Validate and implement the results
Location options include
1.Expanding existing facilities 2.Maintain existing and add sites 3.Closing existing and relocating
Requirements of Work Cells
1.Identification of families of products 2.A high level of training, flexibility and empowerment of employees 3.Being self-contained, with its own equipment and resources 4.Test (poka-yoke) at each station in the cell
Potential Problems With Moving Average
1.Increasing n smooths the forecast but makes it less sensitive to changes 2.Does not forecast trends well 3.Requires extensive historical data
Time-series models
1.Naive approach 2.Moving averages 3.Exponential smoothing 4.Trend projection
Process Strategy: Four basic strategies
1.Process focus 2.Repetitive focus 3.Product focus 4.Mass customization
Inventory
1.Raw materials components and supplies 2.work-in-progress 3.finished goods 4.Repair and replacement parts
Least Squares Requirements
1.We always plot the data to insure a linear relationship 2.We do not predict time periods far beyond the database 3.Deviations around the least squares line are assumed to be random
The A2 factor includes how many standard deviations of ranges?
3
35. Same as in (34), with order cost of $20 and holding costs of $2/unit/year, weekly demand is 100 and 50 weeks in the work year, and the item costs $10 per unit. If 200 are ordered each time, then what will be the total annual holding cost. a. 50 b. 100 c. 200 d. 250
C
For the standard normal distribution, how much confidence is provided within 2 standard deviations above and below the mean?
95.44%
Assuming that data exhibit a normal distribution, control limits set at ± 3 standard deviations from the mean capture how much common variation?
99.74%
international strategy
: a strategy in which global markets are penetrated using exports and licenses
26. The basis for the ABC classification system in determining which item should receive the greatest control is: a. The size of the inventory for each item. b. The rate of turnover for each item. c. The annual dollar usage for each item. d. The cost of the order.
A
31. Most current inventory decision models are made on the basis of: a. cost minimization. b profit maximization. c. optimum influence on demand. d. minimizing setup times.
A
41. What current trend enhances the importance of purchasing? a. declining labor costs relative to total production costs b. increasing proportion of older people in the United States c. declining educational achievement d. increasing third world debt burdens
A
Which one of the following is not considered an important factor in service layout design? A. cost minimization and product flow B. frequency of orders C. customer attitude and image D. all are important E. none are important
A. cost minimization and product flow Service layout design is generally not all that focused on cost minimization.
The maximum allowable cycle time is computed as:
A. daily operating time divided by the desired output
The maximum allowable cycle time is computed as: A. daily operating time divided by the desired output B. desired output divided by the daily operating time C. daily operating time divided by the product of the desired output and the sum of job times D. the product of desired output and the sum of job times divided by daily operating time E. 1.00 minus station time
A. daily operating time divided by the desired output If this is smaller than the minimum cycle time, extra workstations will be necessary.
What is it about continuous processes that make them appropriate for products in the maturity phase of their life-cycle?
A. efficiency
What is it about repetitive processes that make them appropriate for products in the maturity phase of their life cycle?
A. efficiency
What is it about continuous processes that make them appropriate for products in the maturity phase of their life-cycle? A. efficiency B. general-purpose technology C. possible variety D. low risk E. flexibility
A. efficiency Continuous processes are more appropriate for mature products, when efficiency is of paramount importance.
The minimum possible cycle time in a product layout is determined by the: A. longest task time B. shortest task time C. average task time D. total task time E. none of the above
A. longest task time The longest task time represents the minimum cycle time.
An example of automated services is
A. on-line banking
An example of automated services is A. on-line banking B. build your own pizza C. haircuts D. massage parlors E. all are examples of automated services
A. on-line banking On-line banking has almost no human to human interaction.
Which term is most closely associated with cellular manufacturing?
A. part families
Which term is most closely associated with cellular manufacturing? A. part families B. assembly line C. robotics D. CAD E. CAM
A. part families Part families are central to cellular manufacturing.
The type of layout which features departments or other functional groupings in which similar activities are performed is:
A. process
The type of layout which features departments or other functional groupings in which similar activities are performed is: A. process B. product C. fixed-position D. mass E. unit
A. process Process layouts group similar activities.
adv and dis of counterseasonal product and service mixing
Adv: Dis: may lead to products or services outside the company's areas of expertise
adv and dis of influencing demand
Adv: Dis: may not be sufficient to balance demand and capacity
advantages and disadvantages of railroads
Adv: capable of carrying large loads Dis: little flexibility though containers and piggybacking have helped with this
adv and dis to back ordering for high demand periods
Adv: effective when few substitutes for product Dis: often results in lost sales
advantages and disadvantages of airfreight
Adv: fast and flexible Dis: expensive
advantages and disadvantages of changing inventory levels
Adv: fewer changes in production schedules & little or no HR resource effects Dis: higher holding costs, possibility of shortages, & n/a in services
adv and dis of varying production rate through overtime or idle time
Adv: fewer layoff and hiring costs, allows for constant workforce, & lower inventory Dis: difficulty in meting high demand, OT can be costly, & absorbing idle time may be difficult
adv and dis of subcontracting
Adv: flexibility and smoothing of output Dis: may be costly, loss of quality and scheduling control, & exposes your customers to a possible competitor
advantages and disadvantages of waterways
Adv: good for large, bulky loads and cargo of low value Dis: slow
advantages and disadvantages of piplelines
Adv: good for transporting oil, gas, and other chemical products
adv and dis of varying workforce size by hiring and layoffs
Adv: lower inventory costs Dis: higher hiring and layoff costs & lower morale and producivity
advantages and disadvantages of trucking
Adv: movies vast majority of manufactured goods & chief advantage of flexibility
adv and dis of using PT workers
Adv: useful for filling unskilled or low skilled positions, & lower costs Dis: problems with motivation, quality, finding suitable workers
Location Cost-Volume Analysis
An economic comparison of location alternatives 1. Determine fixed and variable costs for each location 2.Plot the cost for each location 3.Select location with lowest total cost for expected production volume
30. The time between the issuance of a replenishment order and the receipt of stock is: a. stock time. b. lead time. c. work content time. d. in-process time.
B
37. A firm can order an item at two costs. As shown below, the larger order quantity yields a quantity discount. Weekly demand is 200 units. The inventory holding cost rate is 20%. The cost to place an order is $10/order. There are 50 weeks per year. Quantity Cost/unit < 500 $10 > 500 $ 8 What is the economic order quantity to minimize total cost? a.700 b. 500 c. 233 d. 316
B
39. All of the following are major activities of materials management EXCEPT: a. purchasing b. repairing c. warehousing d. expediting
B
43. Which of the following is typically NOT an advantage of centralized purchasing: a. better prices through large quantity purchases b. responsiveness to the needs of operations c. reduction of order duplication d. better overall control of financial transactions
B
The main issue in the design of process layouts for service operations concerns the relative positioning of:
C. departments.
The main issue in the design of process layouts for service operations concerns the relative positioning of: A. workstations. B. processing components. C. departments. D. entrances, loading docks, etc. E. manufacturing cells.
C. departments. In process layouts, departments and their relative locations are of primary concern.
The type of layout in which workers, materials, and equipment are moved to the product as needed is:
C. fixed-position
The type of layout in which workers, materials, and equipment are moved to the product as needed is: A. process B. product C. fixed-position D. batch E. mass
C. fixed-position The fixed position layout brings the processes to the product.
What is it about job shops that make them appropriate for products in the introductory phase of their life-cycle?
C. flexibility
What is it about job shops that make them appropriate for products in the introductory phase of their life-cycle? A. efficiency B. technology C. flexibility D. high volume capacity E. rigidity
C. flexibility Job shop processes are more appropriate for relatively new products.
In a product layout, the task of deciding how to assign work to specific stations is referred to as:
C. line balancing
The process of assigning tasks to workstations in such a way that the workstations have approximately equal time requirements is called:
C. line balancing
In a product layout, the task of deciding how to assign work to specific stations is referred to as: A. process balancing B. task allocation C. line balancing D. work allocation E. station balancing
C. line balancing Line balancing allocates work to work stations.
The process of assigning tasks to workstations in such a way that the workstations have approximately equal time requirements is called: A. fair employment practices B. idle time analysis C. line balancing D. cycle time optimization E. none of the above
C. line balancing The goal is to reasonably balance work across the workstations.
A common goal in designing process layouts is:
C. minimizing transportation costs
A common goal in designing process layouts is: A. minimizing the number of workers B. minimizing idle time C. minimizing transportation costs D. maximizing work-station productive time E. maximizing transportation distances
C. minimizing transportation costs An efficient process layout minimizes transportation costs.
Job shops tend to be __________ while continuous processes tend to be __________.
C. small scale and flexible; large-scale and inflexible
Layout design has many objectives, one of which is ______.
C. use workers and space efficiently
Layout design has many objectives, one of which is ______. A. reduce bottlenecks B. move materials and workers simultaneously C. use workers and space efficiently D. hold material handling costs to 27% or less E. install computer terminals every 500 feet
C. use workers and space efficiently Layout design is focused on the efficient placement of human and other assets.
A production line is to be designed for a job with three tasks. The task times are 0.3 minutes, 1.4 minutes, and 0.7 minutes. What is the minimum cycle time for this line?
C. 1.4 minutes.
A company needs to locate three departments (X, Y, and Z) in the three areas (I, II, and III) of a new facility. They want to minimize interdepartmental transportation costs, which are expected to be $.50 per load per meter moved. An analyst has prepared the following distances and flow matrices: Distances (meters): From/TO I II III I - 10 20 II - 10 III - Flows (loads per week: From/TO I II III X - 60 90 Y 40 - 160 Z 110 140 - What is the distance (in meters) from area III to area I in this new facility?
C. 20
On a control chart, what separates common from assignable causes of variation?
Control limits
What guides make or buy decisions
Core Competencies
intellectual and physical abilities and assets most directly related to why customers want your product or service - they are fundamental to your company's self identity
Core Competency
the ratio of earned value to actual costs, computed as EV/AC. An _____ value of 1.0 means the costs of the completed tasks are exactly on budget. A ____ value > 1.0 means that the budget value of the work completed is greater than the actual costs billed to the project. In other words, you have a cost under-run, which is a happy thought! A ____ of < 1.0 means that the actual costs (AC) billed to the project are greater than the budget intended for the work done thus far (EV). That is not a good thing.
Cost Performance Index (CPI)
Which of the following is not considered an important factor in service layout design?
Cost minimization and product flow. Important factors in service layout design: - Intensity of contact with the customer. - Customer attitude and image. - Frequency of orders. - Customer preferences with regard to variety.
holding cost
Cost of capital (working) Inventory handling and storage Insurance, taxes, breakage, pilferage Not including cost of the item
The budgeted value of the tasks completed at this point in time (EV) minus the actual costs (AC) billed to the project at this point in time.
Cost variance
A Muther Grid may be more useful than From-To Charts for assigning department locations because:
Covers multiple dimensions of adjacency and ranks the importance of closeness.
45. The instrument that authorizes the purchasing department to buy the goods or services is the: a. request for quotation b. purchase order c. material specification d. purchase requisition
D
47. Logistics includes: a. the shipment of products to customers b. the shipment of materials from suppliers to factory c. the shipment of materials within the factory d. All of the alternatives are correct.
D
49. Which of the following is NOT a warehousing function: a. storage of materials b. ordering of materials c. accounting for stored materials d. transportation to the warehouse
D
5. Which method of forecasting is the most used? a. Regression analysis b. Adaptive forecasting c. Weighted moving average d. Exponential smoothing
D
50. Which of the following would NOT be a good measure of the performance of materials managers: a. inventory levels b. number of customer orders delivered late c. cost of purchased materials d. None of the alternatives is correct; they are all good measures.
D
7. If the importance of random data diminishes as the past becomes more distant, the method to use for forecasting should be: a. correlation analysis. b. weighted moving average. c. linear regressions. d. exponential smoothing.
D
A company needs to locate three departments (X, Y, and Z) in the three areas (I, II, and III) of a new facility. They want to minimize interdepartmental transportation costs, which are expected to be $.50 per load per meter moved. An analyst has prepared the following distances and flow matrices: Distances (meters): From/TO I II III I - 10 20 II - 10 III - Flows (loads per week: From/TO I II III X - 60 90 Y 40 - 160 Z 110 140 - If departments X, Y, and Z were to be located in areas I, II, and III, respectively, what would be the total distance (in meters) loads would be moved each week?
D. 8,000
In which type of processing system would gasoline be produced from crude oil?
D. Continuous
In which type of processing system would gasoline be produced from crude oil? A. Job Shop B. Batch C. Assembly D. Continuous E. Project
D. Continuous Oil refining is an example of a continuous process.
Heuristic rules are used primarily in which of these types of layouts? (I) Product (II) Process (III) Fixed-position A. I B. II C. I and III D. I and II E. II and III
D. I and II Heuristics help in formulating reasonably good product and process layouts.
Heuristic rules are usually applied when:
D. a problem has a large number of alternatives
Heuristic rules are usually applied when: A. an optimum is necessary B. a computer program isn't available C. a problem has a small number of alternatives D. a problem has a large number of alternatives E. other approaches have failed
D. a problem has a large number of alternatives As the number of alternatives grows, the use of heuristics becomes more attractive.
Which one of the following is not common to product layouts?
D. ability to adjust to changes in demand
Which one of the following is not common to product layouts? A. a high rate of output B. specialization of labor C. low unit costs D. ability to adjust to changes in demand E. all are common
D. ability to adjust to changes in demand Product layouts are not flexible with respect to volume.
Which of the following is a primary concern for process selection? A. variety in products/services B. flexibility of equipment C. volume of output D. all of the above E. none of the above
D. all of the above All of these enter into the process selection decision.
An operations strategy for process selection should recognize that:
D. flexibility is not always the best choice
An operations strategy for process selection should recognize that: A. process selection seldom requires technical expertise B. engineering "white elephants" are uncommon C. there is little need to manage technology D. flexibility is not always the best choice E. most technical skills can be contracted out to consultants
D. flexibility is not always the best choice Flexibility isn't so valuable if efficiency is at a premium.
The benefits of flexible manufacturing systems (FMS) include:
D. significantly lower unit costs
The benefits of flexible manufacturing systems (FMS) include: A. reduced labor costs B. higher flexibility than automation C. quick changeover from part to part D. significantly lower unit costs E. all of the above
D. significantly lower unit costs Reduced labor costs and consistent quality and quick changeover time provide lower unit costs.
Which of the following is not a characteristic of layout decisions in system design?
D. usually well-received by operative personnel
Which of the following is not a characteristic of layout decisions in system design? A. substantial investment of both money and effort B. long-term commitment C. significant impact on short-term efficiency D. usually well-received by operative personnel E. all of the above
D. usually well-received by operative personnel Layout decisions can lead to conflict from those who are affected by them.
In the use of closeness ratings for process layouts, the code "U" means the closeness between two departments is:
D. (U)nimportant
In the use of closeness ratings for process layouts, the code "U" means the closeness between two departments is: A. (U)nknown B. (U)nusually important C. of (U)sual importance D. (U)nimportant E. (U)ndesirable
D. (U)nimportant Close department pairings denoted "U" should be avoided.
A production line is to be designed for a job with three tasks. The task times are 0.4 minutes, 1.2 minutes, and 0.5 minutes. The maximum cycle time in minutes is:
D. 2.1
Intermittent processing can take the form of batch processing or a job shop.
TRUE A job shop is a batch processer with a standard batch size of one.
Morale problems can be a reason for redesign of a facility layout.
TRUE A layout redesign can lead to improved morale.
An idle percentage of zero means a line is perfectly balanced.
TRUE All workstations would be occupied 100% of the time.
Poor layouts are found in both manufacturing and service organizations.
TRUE Both manufacturers and service firms benefit from improved layouts.
Group technology is closely connected to cellular manufacturing.
TRUE Both require a systematic analysis of parts to identify the part families.
As a general rule, continuous processing systems produce products for inventory rather than for customer order.
TRUE Continuous processing systems tend to be used in make-to-stock scenarios.
Continuous production has been a significant factor underpinning the U.S. standard of living over the last century.
TRUE Continuous production has led to substantial productivity gains.
Cycle time is the maximum time allowed for each workstation to complete its work on each unit.
TRUE Cycle time paces the production line.
Process layouts feature departments or other functional groupings of personnel or equipment.
TRUE Departmental or functional grouping is an example of process layout.
The main issue in the design of process layouts concerns the relative positioning of the departments involved.
TRUE Designing process layouts involves the relative positioning of the departments involved.
Flexibility can be used as a competitive strategy.
TRUE Flexibility is a key competitive dimension.
"Balance delay" is another name for the percentage of idle time in a product layout.
TRUE Greater utilization implies a smaller balance delay.
Numerically controlled (N/C) machine and some robots are applications of programmable automation.
TRUE N/C machines and robots can be used in flexible manufacturing systems (FMS).
None of the approaches to line balancing, manual or computerized, guarantees an optimal solution.
TRUE Optimal solutions cannot be guaranteed through the use of heuristics.
Process layouts allow greater flexibility in processing than product layouts.
TRUE Process layouts are more flexible.
A possible disadvantage of a product layout is an inflexible system.
TRUE Product layouts are inherently inflexible.
A robot consists of three parts: a power supply, a controller, and a mechanical arm.
TRUE Robots consist of a few broad components.
The minimum number of workstations for a production line is determined in part by the desired output rate.
TRUE The desired output rate is used to find the required cycle time.
For a production line, daily capacity can be determined by dividing the daily operating time by the line's cycle time.
TRUE The line's cycle time represents the time between units. Thus, dividing the time available by the cycle time gives the daily capacity.
An advantage of a U-shaped production line is that it facilitates teamwork and flexibility in work assignments.
TRUE These are key factors in favor of U-shaped layouts.
Among the benefits claimed for cellular manufacturing are less material handling and reduced setup time.
TRUE These are lower in cellular manufacturing.
Mismatches between operational capabilities and market demand can have a negative impact on an organization
TRUE These can lead to changes in processes.
Product layouts involve high utilization of labor and equipment.
TRUE They're used in high volume, standardized operations.
The goal of line balancing is to assign tasks to workstations in such a way that the workstations have approximately equal time requirements.
TRUE This is why it is called line balancing.
"Inside information" is most likely garnered through which of the following forecasting methods?
Delphi
Which forecasting method is particular good for predicting technological changes and scientific advances?
Delphi method
If a line is balanced with 90 percent efficiency, the "balance delay" will be:
E. 10 percent
A company needs to locate three departments (X, Y, and Z) in the three areas (I, II, and III) of a new facility. They want to minimize interdepartmental transportation costs, which are expected to be $.50 per load per meter moved. An analyst has prepared the following distances and flow matrices: Distances (meters): From/TO I II III I - 10 20 II - 10 III - Flows (loads per week: From/TO I II III X - 60 90 Y 40 - 160 Z 110 140 - What is the total flow (loads per week) between department Y and department Z?
E. 300
Which of the following is not an approach that companies use to achieve a smooth flow of production? A. line balancing heuristics B. parallel workstations C. dynamic line balancing (Cross train workers) D. mixed model line E. Companies use all of these.
E. Companies use all of these. Any of these is a means to achieve smooth flow.
Product profiling links key product or service requirements to:
E. Process capabilities
Product profiling links key product or service requirements to: A. Market conditions B. Order sizes C. Pricing strategies D. Schedule changes E. Process capabilities
E. Process capabilities Product profiling allows firms to match what they should (or must) do with respect to product or service requirements.
A group of machines including supervisory computer control, automatic material handling, and possibly robots is called: A. computer aided design B. a manufacturing cell C. computer-aided manufacturing D. computer-integrated manufacturing E. a flexible manufacturing system
E. a flexible manufacturing system FMS involve all these things.
Which of the following is not an information requirement for the design of a process layout? A. a list of departments or work centers B. a projection of work flows between the work centers C. the distance between locations D. the cost per unit of distance to move loads E. a list of product cycle times for every product manufactured
E. a list of product cycle times for every product manufactured Cycle times do not enter into the design of process layouts.
An advantage of a U-shaped production line is that it:
E. all of the above
An advantage of a U-shaped production line is that it: A. is more compact. B. permits better communication among employees. C. facilitates teamwork among workers. D. increases flexibility of work assignments. E. all of the above
E. all of the above All of these are advantages of U-shaped lines.
In which type of operations are you likely to see, at most, only minor variations in the product or service being produced using the same process and the same equipment?
E. continuous production
In which type of operations are you likely to see, at most, only minor variations in the product or service being produced using the same process and the same equipment? A. a project B. a job shop C. repetitive production D. batch processing E. continuous production
E. continuous production In continuous production there is no variation in the product or service being produced.
Which of the following process types would be more likely to be used in the introductory phase of a product's life-cycle?
E. job shop
Which of the following process types would be more likely to be used in the introductory phase of a product's life-cycle? A. continuous B. intermittent C. project D. batch E. job shop
E. job shop Job shop processes are more appropriate for relatively new products.
Which of the following is not true about process layouts when they are compared to product layouts?
E. lower unit costs
Which of the following is not true about process layouts when they are compared to product layouts? A. higher in-process inventories B. lower span of supervision C. lower rates of output D. more involved cost accounting E. lower unit costs
E. lower unit costs Process layouts are not inherently more efficient that product layouts.
Computer-aided manufacturing (CAM) refers to the use of computers in: A. product design B. decision making C. data analysis D. quality control E. process control
E. process control CAM automates process control.
Which of the following is not a process commonly considered in making products or delivering services? A. continuous B. batch C. repetitive D. job shop E. subcontracting
E. subcontracting Subcontracting isn't a process type.
A risk management tool which consists of a table listing of possible categories of failure, specific type (mode) of failure, the probability of failure, the degree of impact of the failure, what the result of the failure is (the effect), and mitigation actions that can be taken to reduce the likelihood or impact if the failure occurs.
FMEA
A risk management tool which consists of a table listing of possible categories of failure, specific type (mode) of failure, the probability of failure, the degree of impact of the failure, what the result of the failure is (the effect), and mitigation actions that can be taken to reduce the likelihood or impact if the failure occurs.
Failure Modes and Effects Analysis (FMEA)
A process layout is more susceptible to shutdowns caused by equipment breakdowns than a product layout. True False
False ( A product layout is more susceptible to these. )
A disadvantage of a product layout can be high in-process inventory costs. True False
False ( In-process inventory is low with a product layout. )
A cafeteria line would be an example of a process-focused layout. True False
False ( This would be an example of a product-focused layout. )
The Repetitive process type, sometimes referred to as "Assembly," is selected when relatively ____________ volume of more standardized goods or services is desired and thus a relatively ____________ flexibility is tolerated.
High/low
Fixed costs are ____________ in Repetitive/Continuous process types compared to Job Shop/Batch, and variable costs are ____________.
Higher/lower
What term refers to processes or activities that are completed in-house?
Insource
According to several studies, what are the three most important criteria for selecting suppliers?
Price, quality, on-time delivery
Supermarkets generally use what layout type?
Process (Functional) layout
Just-in-Time (JIT)
Inventory def: supplies and components are pulled through system to arrive where they are needed when they are needed Mgmt def: philosophy of continuous and forced problem solving
Poka-Yoke
Is a Japanese term that means "mistake-proofing" or "inadvertent error prevention". The key word in the second translation, often omitted, is "inadvertent".
Trend
Is the underlying pattern of growth or decline in a time series
muda
Japanese term for anything that is wasteful and doesn't add value
Types of Layout
Layout decisions include the best placement of machines, offices and desks, or service centers 1.Office layout 2.Retail layout 3.Warehouse layout 4.Fixed-position layout 5.Process-oriented layout 6.Work-cell layout 7.Product-oriented layout
For which of the following would a control chart for attributes not be appropriate?
Length of metal rods
Match the type of layout with the processing characteristic.
Product - Repetitive Processing Process - Intermittent Processing Fixed-Position - Projects
A cafeteria line uses which type of service layout?
Product layout
check sheet
a tool for organizing and collecting data; a tally of problems or other events by category
check sheet
a tool for recording and organizing data to identify a problem
Value-chain analysis
a way to identify those elements in the product/service chain that uniquely add value
What technique determines whether a batch of goods should be accepted or rejected?
acceptance sampling
Cost leadership
achieving maximum value as perceived by the customer, does not imply low value or low quality
Forward integration
acquiring capabilities towards distribution or even customers
job design
act of specifying the contents and methods of a job
Servicescape
all physical evidence a customer might use to form an impression, provides behavioral setting where service encounters take place
What is the approach that moves the work to the worker rather than the worker to the workplace?
alternative workplace
Safety stock inventory
an additional amount that is kept over and above the average amount required to meet demand
return on quality
an approach that evaluates the financial return of investments in quality
Value chain integration
as the process of managing information, physical goods, and services to ensure their availability at the right place, at the right time, at the right cost, at the right quantity, and with the highest attention to quality.
In work sampling, when should observations be taken?
at randomly determined times.
European Quality Award
award for organizational excellence
Therbligs
basic elemental motions that make up a job
Fabrication and Assembly lines both must
be balanced so that the time to perform the work at each station is the same
An employee who will not help a customer because "it is not my job" violates the JIT belief of
broad view of operations
Offshoring
building, acquiring, or moving of process capabilities from a domestic location to another country location while maintaining ownership and control
forward integration
business activities are expanded to include control of the direct distribution or supply of a company's products
Approaches to ensuring business focus of quality and its management
business consultants university & academic researchers Processional Organizations(ASQ) Total quality management philosophy continuous improvement philosophy 6 sigma approaches quality awards ISO Standards
Six Sigma
business process for improving quality, reducing costs and increasing cust. satisfaction
six sigma
business process for improving quality, reducing costs, and increasing customer satisfaction
Third-Party logistics (3PL) providers
businesses that provide integrated services that might include packaging, warehousing, inventory management, and inbound or outbound transportation
the budgeted value of the tasks completed at this point in time (EV) minus the actual costs (AC) billed to the project at this point in time. ____ = EV - AC. A ____ value of 0.0 indicates that the actual costs billed exactly match the baseline budgeted value of the work done, so you are right on budget. A _____ value of > 0.0 means the budget value of work done is greater than its actual cost, therefore you have a budget under-run, which is great
cost variance (CV)
failure costs
costs caused by defective parts or products or by faulty services
appraisal costs
costs of activities designed to ensure quality or uncover defects
prevention costs
costs of preventing defects from occuring
prevention costs
costs of preventing defects from occurring
Continuous flow processes
create highly standardized goods and services, usually around the clock in very high volumes
Launch
culmination of an intense product design and development effort.
An important TQM concept is that quality is defined by the
customer
What is Wal-Mart's primary consideration for its store layout decision regarding the number and size of aisles in its stores?
customer exposure to merchandise
Decline
customer needs change or new technology is developed
the control process
define(what is being controlled) measure compare evaluate correct monitor results
Safety Capacity (capacity cushion)
defined as an amount of capacity reserved for unanticipated events such as demand surges, materials shortages, and equipment breakdowns
Which of the following is not a positive attribute of Multiple Suppliers?
deliveries can be scheduled more easily
Maturity
demand stabilizes; costs become more critical because of competitors
Materials Requirements Planning (MRP)
dependent demand technique that uses a bill-of-material, inventory, expected receipts, and a master production schedule to determine material requirements
Process map (flowchart)
describes sequence of all process activities and tasks necessary to create and deliver a desired output or outcome
keiretsu
describes suppliers who become part of a company coalition where they are assured long-term relationships and are expected to collaborate as partners, providing technical expertise, and stable quality production to the manufacturer
Efficient Supply chains
designed for efficiency and low cost, by minimizing inventories and maximizing efficiencies in process flow
purpose of material requirements planning
determine material requirements
purpose of aggregate planning
determine the quantity and timing of production for the immediate future
Capacity Analysis
determines the throughput capacity of workstations in a system
Center of Gravity method
determines the x and y coordinates (location) for a single facility
vertical integration
developing the ability to produce goods or services previously purchased or actually buying a supplier or distributor
stopwatch time study
development of a time standard based on observations of one worker taken over a number of cycles
cause and effect diagram (fishbone diagram)
diagram used to search for the causes of a problem
process plant strategy
different plants coordinate on different aspects of a process. automobile plants for example (engine, transmissions, body stamping, radiators) best suited for products with lots of components. need highly informed, centralized administration. highly specialized, high economies of scale
Differentitaition
distinguishing the offerings of an organization in a way that the customer perceives as adding value
central limit theorem
distribution of sample averages tends to be normal regardless of the shape of the process distribution
ABC inventory categorization technique
divides inventory items into 3 classes according to $ usage (A being the highest value and C being the lowest)
control limits
dividing lines b/w random and nonrandom deviations from the mean of the distribution
Setting up control charts to monitor whether a process is in control
does not guarantee process capability
Demand Forecasting
estimates sales based on history, trends and current market information
Location options
expand existing facility add new locations while retaining existing ones shut down at one and move to another location do nothing
planned orders receipts
expected amount to be received at beginning of period
enterprise resource planning (ERP)
extension of the MRP system to tie in customers and suppliers; allows automation and integration of many business processes, shares common data bases and business practices and produces information in real time
safety stock
extra inventory held to protect against variability in demand, supply, and other factors
external failures
failures discovered after delivery to the customer
internal failures
failures discovered during production
internal failures
failures discovered in production
In a JIT environment, workers need to
feel secure in their jobs
backward integration
firm purchases its suppliers
joint ventrues
firms engage in collaboration to enhance new product prowess or tech skills and/or to secure supply or reduce costs
In an environment in which demand is both substantial and stable, __________ technology tends to be the best choice. flexible automation fixed automation project production programmable automation batch production
fixed automation ( Fixed automation is the least flexible, but low cost and high volume are its primary advantages. )
total cost =
fixed costs + variable cost per unit * quantity of output
Responsive supply chains
focus on flexibility and responsive service and are able to react quickly to changing market demand and requirements
Service encounter design
focuses on interaction directly or indirectly, between the service providers and the customer
Supply Chain Management
focuses on performance measures, key activities including sustainability and logistics
Kaizen
focuses on small, gradual, and frequent improvements over the long term, with minimum financial investment and with participation by everyone in the organization
Long-term capacity requirements are identified on the basis of__
forecasts of future demand
Utilization
fraction of time a workstation or individual is busy over the long run
Plan to study act cycle PDSA
framework for problem solving and improvement activities
factor rating
general approach to evaluating locations that includes quantitative and qualitative inputs
Custom/make to order goods and services
generally produced and delivered as one of a kind or in small quantities and are designed to meet customer's specific needs
attributes
generate data that are counted
variables
generate data that are measured
Empowerment
giving people authority to make decisions based on what they feel is right, to have control over their work, take risks and learn from mistakes and to promote change
employee empowerment
giving workers the responsibility for improvements and the authority to make changes to accomplish provides motivation. decision making is given to the people who are closest to the job
raw material
goods purchased but not processed
A process chart is a
graph that show whether a sample falls within the common or normal range
flexible manufacturing system FMS
group of machines designed to handle intermittent processing requirements and produce a variety of similar products
self directed teams
groups empowered to make certain changes in their work processes
quality circles
groups of workers who meet to discuss ways of improving products or processes
Studies mentioned in the text have shown that workers that are in close proximity to each other are more likely to ________________________________________.
have greater understanding, tolerance, and trust for one another
Dependent demand
if their demand is directly related to the demand of other skus and can be calculated without needing to be forecasted
few suppliers
implies that rather than looking for short-term attributes, such as low cost, a buyer is better off forming a long-term relationship with a few dedicated suppliers
assignable variation
in process output, a variation whose cause can be identified. a nonrandom variation
assignable variation
in process output, a variation whose cause can be identified. not random
Service delivery system design
includes facility location and layout, the servicescape, service process and job design, and technology and information support system
fail-safing
incorporating design elements that prevent incorrect procedures
ergonomics
incorporation of human factors in the workplace
bullwhip effect
increasing fluctuation in orders or cancellations that often occurs as orders move through the supply chain
job enrichment
increasing responsibility for planning and coordination tasks, by vertical loading
Risk management
involves identifying risks that can occur, assessing the likelihood that they will occur, determining the impact on the firm and its customers, and identifying steps to mitigate the risks. Examples of short- and long-term risks that supply chains may face, and ways by which they can be mitigated, are summarized in Exhibits 12.3 and 12.4.
Inventory management
involves planning coordinating and controlling the acquisition, storage, handling, movement, distribution, and possible sale of raw materials, component parts and subassemblies, supplies and tools, replacement parts, and other assets that are needed to meet customer wants and needs
Single exponential smoothing (SES)
is a forecasting technique that uses a weighted average of past time-series values to forecast the value of the time series in the next period. a is the constant Exhibit 9.9 F2=aA+(1-a)f
Ergonomics
is concerned with improving productivity and safety by designing workplaces, equipment, instruments, computers, workstations, and so on that take into account the physical capabilities of people
Managing Inventories
is critical to meeting demand, preventing stock outs and being cost effective.
Inventory position (IP)
is defined as the on-hand quantity (OH) plus any orders placed but which have not arrived (called scheduled receipts, SR), minus any backorders (BO) IP=
Independent Demand
is demand for an SKU that is unrelated to the demand for other skus and needs to be forecasted
Pipeline inventory
is inventory that has been ordered but is in transit.
Green sustainable supply chain
is one that uses environmentally friendly inputs and transforms these inputs through change agents—whose byproducts can improve or be recycled within the existing environment.
Green purchasing (environmentally preferable purchasing EPP)
is the affirmative selection and acquisition of products and services that most effectively minimize negative environmental impacts over their life cycle of manufacturing, transporting, use, and recycling or disposal
Takt Time
is the average time between the start of production of one unit and the start of production of the next unit,
Capacity
is the capability of a manufacturing or service resource such as a facility, process, workstation, or piece of equipment to accomplish its purpose over a specified time period 1as the maximum rate of output per unit of time or 2as units of resource availability
Effective Capacity
is the capacity a firm expects to achieve given current operating constraints -Often lower than design capacity -Design capacity minus lost output because of planned resource unavailability (e.g., preventive maintenance, machine setups/changeovers, changes in product mix, scheduled breaks)
Service level
is the desired probability of not having a stockout during a lead-time period. (For example, a 95 percent service level means that the probability of a stockout during the lead time is 0.05.)
Design for Environment
is the explicit consideration of environmental concerns during the design of goods, services, and processes, and includes such practices as designing for recycling and disassembly
Purchasing (procurement)
is the function responsible for acquiring raw materials, component parts, tools, services, and other items required from external suppliers.
Job enlargement
is the horizontal expansion of the job to give the worker more variety- although not necessarily more responsibility
Stockout
is the inability to satisfy the demand for an item.
Planning horizon
is the length of time on which a forecast is based (Ex.1-10yrs)
Logistics
is the management of transportation activities and the flow of materials within a supply chain to ensure adequate customer service at reasonable cost.
Design Capacity
is the maximum theoretical output of a system -Normally expressed as a rate -Ideal conditions exist during the time that the system is available
Utilization
is the percent of design capacity actually achieved Utilization = Actual output / Design capacity
Efficiency
is the percent of effective capacity actually achieved Efficiency = Actual output / Effective capacity
Unit cost
is the price paid for purchased goods or the internal cost of producing them.
Supply chain integration
is the process of coordinating the physical flow of materials to ensure that the right parts are available at various stages of the supply chain, such as manufacturing and assembly plants.
Forecasting
is the process of projecting the values of one or more variable into the future
Throughput time
is the time it takes a unit to go through production from start to end, with no waiting
Random variations (or noise)
is the unexplained deviation of a time series from a predictable pattern such as a trend, seasonal, or cyclical pattern. caused by short term unanticipated and non recurring factors and is unpredictable
Random Variation
is the unexplained deviation of a time series from a predictiable pattern such as a trend, seasonal, or cyclical
Reorder point
is the value of the inventory position that triggers a new order.
Reorder point
is the value of the inventory position that triggers a new order. When the inventory position falls at or below a certain value, r, called the reorder point, a new order is placed.
Objective of Process Strategy
is to create a process to produce offerings that meet customer requirements within cost and other managerial constraints How to produce a product or provide a service that -Meets or exceeds customer requirements -Meets cost and managerial goals Has long term effects on -Efficiency and production flexibility -Costs and quality
The objective of layout strategy
is to develop an effective and efficient layout that will meet the firm's competitive requirements
Objective of exponential smoothing
is to obtain the most accurate forecast no matter the technique
Time bucket
is unit of measure for time period used in a forecast. it can be a year, quarter, month, week, day, hour and minute
Vendor-managed inventory (VMI)
is where the vendor (supplier) monitors and manages inventory for the customer. essentially outsources the inventory management function in supply chains to suppliers. For example, a supplier such as a consumer goods manufacturer might manage the inventory for a grocery store. allows the vendor to view inventory needs from the customer's perspective and use this information to optimize its own production operations, better control inventory and capacity, and reduce total supply chain costs. Does not account for substitable products
component
item that is transformed into or used in making one or more parents
Kaizen
japanese term for continuous improvement
Having waiters cook and having the cooks wait on tables is an example of_____________________.
job rotation
level strategy
keep workforce or output constant
Leveraging core competence is about sharing:
knowledge
Unit cost
price paid for purchased goods or the internal cost of producing them
Deming Prize
prize established by the japanese and awarded annually to firms that distinguish themselves with quality management programs
Which forecasting method is particularly good for determining customer preferences?
market research
Benefits of global location
markets - expanding, more customers cost savings legal and regulatory financial other-globalization
chase strategy
match demand by varying output rates and/or work-force
chase demand strategy
matching capacity to a demand; the planned output for a period is set at the expected demand for that period
Virtual Teams
members communicate by computer, take turns as leaders, and join and leave the team as necessary
center of gravity method
method for locating a distribution center that minimizes distribution cost
Design for Manufacture
methods and tools that focus on design activities on improving product producibility.
Reliability
probability that a manufactured good, piece of equipment, or system performs its intended function for a stated period of time under specified circumstances
service level
probability that demand will not be greater than supply during lead time; the probability of a stockout
What are small groups of employees who meet to identify, analyze, and solve operational problems called?
problem-solving teams
where inspection should take place
raw materials and purchased parts finished products before a costly operation before an irreversible process before a covering process
If the project statement of work changes or if the status gets hopelessly beyond recovery to the original baseline plan, then the project may be _________, and then subsequently statused to the new baseline
re-baseline
Competitive Advantage
reason why our customers like our product/services over that of our competitors
What may a U shaped line do
reduce employee movement and space requirements while enhancing communication, reducing the number of workers, and facilitating inspection
Value steam
refers to all value-added activities involved in designing, producing, and delivering goods and services to customers
Lean thinking
refers to approaches that focus on the elimination of waste in all forms, and smooth, efficient flow of materials and information throughout the value chain to obtain faster customer response, higher quality and lower costs
Reverse logistics
refers to managing the flow of finished goods, materials, or components that may be unusable or discarded though the supply chain from customers toward either suppliers, distributors, or manufacturers for the purpose of reuse, resale, or disposal
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.Reverse logistics includes the following activities: Logistics: authorizing returns, receiving, sorting, testing, refurbishing, cannibalizing, repairing, remanufacturing, recycling, restocking, reshipping, and disposing of materials. Marketing/sales: remarketing and selling the recovered good for reuse or resale to wholesalers and retailers. Accounting/finance: approving warranty repairs, tracking reverse logistic revenue and costs, billing, and paying appropriate suppliers and third-party vendors. Call center service: managing service center calls all along the supply chain to coordinate work activities such as collecting items from many diverse sources for recovery operations. Legal/regulatory compliance: constantly monitoring compliance with local, state, federal, and country laws, import and export regulations including environmental, and service contract commitments.
Vertical integration
refers to the process of acquiring and consolidating elements of a value chain to achieve more control
Facility Layout
refers to the specific arrangement of physical facilities
Companies need to design compensation systems that
reinforce the behaviors needed to meet the company's objectives
Judgmental forecasting
relies upon opinions and expertise of people in developing forecasts
objectives of the aggregate planning process
minimize cost over the planning period by adjusting: -production rates -labor levels -inventory levels -overtime work -subcontracting rates -other controllable variables
OSHA
occupational safety and health administration
Backorder
occurs when a customer is willing to wait for the item
Flow-blocking Delay
occurs when a work enter completes a unit but cannot release it because the in-process storage at the next stage is full
Lack-of-work Delay
occurs whenever one stage completes work and no units from the previous stage are awaiting processing
Manufacturing Resource Planning (MRP II)
once MRP is in place, inventroy data can be augmented by other useful info on labor hours, vertical costs, capital costs, and virtually any resource
total quality management
philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction
continuous improvement
philosophy that seeks to make never ending improvements to the process of converting inputs into outputs
continuous improvement
philosophy that seeks to make never ending improvements to the process of converting inputs to outputs
planned order releases
planned amount to order each period; equal to planned order receipts offset by lead time
In which type of operation are you likely to see, at most, only minor variations in the product or service being produced using the same process and the same equipment? a job shop intermittent production a project batch processing repetitive production
repetitive production ( In continuous production there is no variation in the product or service being produced. )
supply chain risks
supplier failure to deliver, theft, vandalism, and terrorism, natural catastrophes, information loss or distortion
many suppliers
supplier responds to the demands and specifications of a "request for quotation," with the order usually going to the lowest bidder
A constant concern within purchasing departments is the issue of ethics in managing
suppliers
lean production
supplies customers with exactly what they want, when they want, without waste, through continuous improvement
computer integrated manufacturing CIM
system for linking a broad range of manufacturing activities through an integrating computer system
motion study
systematic study of the human motions used to perform an operation
the budgeted value of the tasks planned (scheduled) to have been completed by this time. The planned value represents the baseline plan at any point in time. BCWS was the old acronym which has been changed to ____. Note that the _____ is a cumulative curve through time and can be plotted all the way to the end of the project, since it represents the baseline plan.
planned value (PV)
general purpose plant strategy
plants are flexible and capable of handling a range of products. quick response, less productive.
market area plant strategy
plants serve particular geographic segments of the market. individual plants produce most if not all of a company's product and supply a limited geographical area. operating costs are high, shipping costs are low. centralized coordination of decisions.
time fences
points in time that separate phases of a master schedule planning horizon
Disadvantages of globalization include__________________________________________________.
political risks for countries with unstable governments
risks of global locations
political(stability) terrorism economic(instability) Legal ethical cultural quality
Resources view
a method managers use to evaluate the resources at their disposal and manage or alter them to achieve competitive advantage
Five forces model
a method of analyzing the 5 forces in the competitive environment
SWOT analysis
a method of determining internal strengths and weaknesses and external opportunities and threats
project
a nonrepetitive set of activities directed towards a unique goal within a limited time frame
Total Quality Mangement (TQM)
a philosophy that involve everyone in an organization in a continual effort to improve quality and achieve customer satisfaction
quality control
a process that evaluates output relative to a standard and takes corrective action when output doesnt meet standards
Reservation
a promise to provide a good or service at some future time and place
ISO 9000
a set of international standards on quality management and quality assurance
Core Competencies
a set of skills, talents and activities in which a firm is particularly strong
Job
a set of tasks an individual performs
Response
a set of values related to rapid, flexible and reliable performance
Control Chart
a statistical chart of time-ordered values of a sample statistic (eg. sample mean)
Global strategy
a strategy in which operating decisions are centralized and headquarters coordinates the standardization and learning between
Multidomestic strategy
a strategy in which operating decisions are decentralized to each country to enhance local responsiveness
Transnational strategy
a strategy that combines the benefits of global-scale efficiencies with the benefits of local responsiveness
Process
a system of structured activities that use resources to transform inputs into valuable outputs
Process Mapping
a technique to graphically document the activities in a process with the goal of identifying opportunities for improvement.
Assembly-Line balancing
a technique to group tasks among workstations so that each workstation has-in the ideal case- the same amount of work
Capacity
the limit on the amount of output that a process can produce given an amount of inputs and resources made available to the process
Fixed-quantity system (FQS)
the order quantity or lot size is fixed; that is, the same amount, Q, is ordered every time.
quality at the source
the philosophy of making each worker responsible for the quality of the work
Statistical process control tools are used most frequently because
they are helpful in measuring and evaluating the quality of products
Customer-routed services
those that offer customers broad freedom to select pathways that are best suited for their immediate needs and wants from many pathways through service delivery system
Lead time
time between placement of an order and its receipt
standard time
time it should take fully trained and qualified worker to complete a specified task at an efficient and sustainable pace using specific methods, materials and equipment
control chart
time ordered plot of sample statistics used to distinguish between rendom and nonrandom variability
standard elemental times
time standards derived from a firms historical time data
run chart
tool for tracking results over a period of time
responsibility for quality
top management design procurement production/operations quality assurance packaging and shipping marketing and sales customer service
gross requirements
total demand for an item without regard to amount on hand
downfalls of global locations
transportation costs security costs unskilled labor import restrictions criticisms productivity
Investments in building or purchasing long-term production facilities are inherently risky due to
uncertainty in forecasting future demands
available to promise inventory ATP
uncommitted inventory
What is a technique for estimating the proportion of time an employee or machine spends on different work activities?
work sampling
specialization
work that concentrates on some aspect of a product or service
What are the two types of control charts for variables?
x-bar and R
What is a control chart that monitors changes in the mean value of a process?
x-bar chart
What are the four most common control charts?
x-bar, R, p, c
Common causes of variation are also known as
random
motion study principles
guidelines for designing motion efficient work procedures
fail safing
incorporating design elements that prevent incorrect procedures
Control Chart
A graphical presentation of process data over time
Activity
a group of tasks needed to create and deliver an intermediate or final output
Examples of low offshoring (2)
1. service call centers 2. sales offices
time frame of aggregate planning
3-8 months
Which of these items would be most likely to be made with a fixed position layout?
A. a Boeing 777 jet aircraft
Causes of variation that can be identified and eliminated are called what?
Assignable
multiple linear regression model
A linear regression model with more than one independent variable is called a
For landscaping a home, which layout type would be used?
Fixed-position layout
GATT
General Agreement on Tariffs and trade
Mean absolute deviation (MAD)
How much the forecast missed the target
The budgeted value of the tasks planned (scheduled) to have been completed by this time.
Planned value
What is a distribution called when the same numbers of observations are below the mean as are above the mean?
Symmetric
TF: A seasonal factor is the amount of correction needed in a time series to adjust for the season of the year.
T
P-charts are used to measure:
proportion of items in a sample that is defective
Suppose that you are using the naïve forecasting method with trend to forecast sales. If sales have been declining by 20% per week, and this week's sales amounted to $200,what would your forecast be for next week?
$160
Changes in Attributes
(such as grade, quality, size, thickness, etc.) long runs only
What are some external factors which might influence process layout design?
- Ability to design a safe environment for employees and customers. - Size and location of restrooms. - Noise levels at the various locations.
Effectiveness of process layouts
- An advantage of process layouts is their ability to satisfy a variety of processing requirements. - When considering department re-arrangement a cost-benefit analysis should be performed.
Muther Grids for designing process layouts
- Can include a subordinate rating of 1-6 for notations regarding the basis for primary rating. - Includes a rating for Undesirable Adjacency. - Ranks the importance of the closeness of one department to another. - Reads like a mileage chart between cities.
Lean Process Design
- Can result in reduced inventory and floor space. - Can result in quicker response times and shorter lead times. - Primarily focused on waste reduction.
What do businesses consider when implementing Sustainable Production?
- Carbon footprint and toxic emissions - Worker health and safety - Energy use, efficiency, and waste reduction
Factors That Affect Location Decisions
- Country Decision - Region/ Community Decision - Site Decision - Labor productivity - Wage rates are not the only cost - Lower productivity may increase total cost - Exchange rates and currency risks - Cost - Political risk, values, and culture - Proximity to markets -Proximity to suppliers - Proximity to competitors
Disadvantages of Product layouts
- Division of labor creates dull, repetitive jobs. - Inflexible systems respond poorly to changes in volume or product design.
Examples of Information Technology used in Operations
- E-commerce, e-mail, and the Internet - Bar codes and radio frequency tags on goods for identification and tracking
Process (Functional) layouts
- Equipment is arranged by type rather than by processing sequence. - Process layouts are common in Service environments. - Process layouts often use higher skilled labor than Product layouts do.
Methods of Evaluating Location Alternatives
- Factor-Rating Method - Location Cost-Volume Analysis - Center-of-Gravity Method
Terms associated with Process layouts
- General-purpose equipment - Departments/work centers - Intermittent processing - Functional layout
Cellular Layouts
- Grouped in a cell by similar work. - Help streamline inefficient Functional layouts. - Organized by Part Families.
Advantages of Product layouts
- High utilization of labor and equipment. - Low cost per unit. - Routine accounting, purchasing, and inventory control.
Layout design considerations
- Higher utilization of space, equipment, and people - Improved flow of information, materials, or people - Improved employee morale and safer working conditions - Improved customer/client interaction-Flexibility
Cellular layouts
- Improves flow in Batch process type. - Physical layout can be U-shaped. - Groups work as teams with limited supervision.
The Strategic Importance of Location
- Increasingly global in nature - Significant impact on fixed and variable costs - Decisions made relatively infrequently
Advantages of Process (Functional) Layouts
- Individual incentive programs are possible. - Handle a variety of goods or services. - Systems are not vulnerable to equipment breakdowns.
Process-Oriented Layout
- Like machines and equipment are grouped together •Flexible and capable of handling a wide variety of products or services •Scheduling can be difficult and setup, material handling, and labor costs can be high •Arrange work centers so as to minimize the costs of material handling •Basic cost elements are -Number of loads (or people) moving between centers -Distance loads (or people) move bet
Requirements for process layout design
- List of departments/work centers and their sizes. - Projection of the work flow through the system. - Location of key utilities in the facility. - Key considerations such as adjacency needs between the departments.
Disadvantages of Process Layouts
- Material handling is slow and inefficient. - Equipment utilization rates are low. - Routing and scheduling pose continual challenges.
Process selction
- Mismatches between operations capabilities and market demand can negatively impact competitiveness. - Process selection can involve a substantial investment in equipment.
Continuous processing
- No variety - Non-discrete output
Economic considerations of process technology.
- Pay back/cash flow - Ongoing maintenance - Initial investment
The following correlation coefficient values come from five different linear regression models. Which model "fits" the data the best?
-1
Product focus
-Facilities are organized by product •High volume but low variety of products •Long, continuous production runs enable efficient processes •Typically high fixed cost but low variable cost •Generally less skilled labor (high-volume, low-variety, continuous process)
Principal elements of service-encounter
-customer contact behavior and skills -service-provider selection, development and empowerment -recognition and reward -service recovery and guarantees
assumptions and limitations of simple EOQ model
-demand is known, constant and dependent -lead time is known and constant -receipt of inventory is instantaneous and complete -quantity discounts are not available -only variable costs are holding costs and costs for placing or setting up an order -stockouts can be completely avoided if orders are placed at the right time -there are no limits on size of oder
reasons against holding inventory
-holding (carrying) costs -finance related factors (interest, opp costs, and diluted ROI/ROA -slower customer responsiveness -cost of coordination production -large-lot quality costs -cost of production problems
non-instantaneous replenishment model
-inventory received over time -takes into account daily production and demand rates
things that affect the level of safety stock
-longer lead time= higher ss -more demand inconsistency= higher ss
Blanket Order
A long term purchase commitment to a supplier for items that are to be delivered against short term releases to ship.
Inventory management
-need to "optimize" inventory cost implications What is needed? How much to order? When is the right time to order it? How much to keep on hand? Implications of too much or too little inventory, at the wrong time, poor quality ...
reasons for holding inventory
-ordering costs -stockout costs -acquisition costs -production factors
types of waste
-product defects -overproduction -inventory -waiting -transportation b/w processes -inefficient processing -unnecessary motion
What value of the correlation coefficient implies that there is a perfect positive linear relationship between the two variables of a linear regression model?
1
Designing goods and services
1&2: Strategic Mission, Analysis, and competitive priorities 3: Customer benefit package and design configuration 4: Detailed Goods, services, and process design 5: Market introduction/deployment 6: Marketplace evaluation
two fundamental questions all inventory models must answer
1) How much do we order? 2) When do we order it?
aggregate planning strategies
1) Use inventories to absorb changes in demand 2) Accommodate changes by varying workforce size 3) User part-timers, overtime, or idle time to absorb changes 4) Use subcontractors and maintain a sable workforce 5) Change price or other factors to influence demand
capacity aggregate planning options
1) change inventory levels 2) vary workforce size by hiring or layoffs 3) vary production rate by overtime or idle time 4) use PT workers 5) subcontracting
demand aggregate planning options
1) use advertising and promotion to increase demand 2) back ordering during high demand periods 3) counterseasonal product and service mix
Examples of companies with moderate offshoring (3)
1. Coca-cola 2. Dell 3. Boeing
Five different process types
1. Continuous 2. Repetitive 3. Project 4. Batch 5. Job Shop
What do you manage? (4 things to keep track of while managing projects)
1. Cost (of the project, relative to the planned budgeted expenditure) 2. Schedule (for the work completion, relative to the planned schedule) 3. Scope (of work, relative to what tasks were planned to be completed) 4. Quality of Work (relative to customer expectations and applicable law and regulations)
In designing service layouts, what are the two key factors?
1. Degree of customer contact. 2. Degree of customization
Lean operating systems principles
1. Elimination of waste 2. Increased speed and response 3. improved quality 4. Reduced cost
What are the three basic reasons layout decisions are important for operating system design?
1. Facilities are substantial investment. 2. Mistakes have long-term effects. 3. Layouts have major impact on efficiency.
Rank the different types of Automation Technology in terms of the ease of making changes to it once implemented, with 1 being the easiest to change.
1. Flexible 2. Programmable 3. Fixed
Examples of companies with no offshoring (3)
1. Harley 2. Maytag 3. Priceline.com
What are the four phases of the product life cycle?
1. Launch 2. Growth 3. Maturity 4. Decline
What measures the difference between the largest and smallest observations in a set of data?
range
What are children in China being trained to do? (2 things)
1. Speak English 2. Compete Globally
6 major components of project management (as found on Smartsheet)
1. Tasks 2. Duration 3. Budget 4. CAD drawings 5. Alerts and actions 6. Discussions
What happened to the displaced workers in Rolla, MO? (2 things)
1. They lost their jobs 2. They now have the opportunity to pursue other careers
Why did Briggs and Stratten say that they moved part of their operations to China? (3 things)
1. To capture the market there 2. To take advantage of a reduced labor rate 3. To secure jobs for their employees in the U.S.
Team diversity is important for which of the following? (2 things)
1. To utilize the experience and skills of different people 2. To capture a diverse set of customer requirements
Juran's Law
15% of operational problems are the result of human errors; the other 85% are due to systemic process errors
Accounting, purchasing, and inventory control are fairly routine with process layouts.
FALSE They are more routine in product layouts.
A production line is to be designed for a job with three tasks. The task times are .4 minutes, 1.2 minutes, and .5 minutes. The maximum cycle time in minutes is: 1.4. 2.1. .7. .8. .3.
2.1. ( This assumes only one workstation. )
If a line is balanced with 80 percent efficiency, the "balance delay" will be: 20 percent. 80 percent. depends on the next operation. unknown, since balance delay is not related to efficiency. 100 percent.
20 percent ( Efficiency equals 100 percent minus balance delay. )
80/20 rule
20% of the items cause 80% of the issues
Which of the following forecasting methods would be best (most accurate) if demand were rapidly decreasing?
3-month moving average
Pareto principal
80% dollar value based on 20% of items
8. The three pieces of data needed to forecast when using the exponential smoothing method are: a. the most recent forecast, the actual demand which occurred for that period, and a smoothing constant. b. the usual average demand, the autocorrelation, and a smoothing constant. c. the actual demand for the most recent past period, the seasonal influence factor, and a smoothing constant. d. the most recent forecast, the actual demand that occurred for that period, and the autocorrelation.
A
Which one of the following is not considered an important factor in service layout design?
A. cost minimization and product flow
The percentage of idle time in an assembly line is called cycle time.
FALSE This is called balance delay.
specifications
range of acceptable values established by engineering design or customer requirements
A cafeteria line would be an example of a process focused layout.
FALSE This would be an example of a product focused layout.
Cycle Counting
A continuing reconciliation of inventory with inventory records
Supply chain
A global network of organizations and activites that supplies a firm with goods and services
Supply Chain
A global network of organizations and activities that supplies a firm with goods and services
Tracking signal
A measurement of how well a forecast is predicting values.
Load Report
A report showing the resource requirements in a work center for all work currently assigned there as well as all planned and expected orders
Core competencies
A set of skills, talents, and capabilities in which a firm is particular strong
Closed-loop
A supply chain designed to optimize both forward and reverse flows
Master production schedule
A timetable that specifies what is to be made (usually finished goods) and when
Checklist
A type of poka-yoke that lists the steps needed to ensure consistency and completeness in a task.
Which closeness rating reflects the highest importance for two departments being close to each other?
A. A (absolutely necessary)
Which closeness rating reflects the highest importance for two departments being close to each other? A. A B. E C. I D. U E. X Closeness ratings denoted "A" should be encouraged.
A. A (absolutely necessary) Closeness ratings denoted "A" should be encouraged.
Which one of these is a tool used to tell a machine the details of the operations to be performed? A. CNC B. CIM C. CAD D. CAM E. automation
A. CNC CNC stores and transmits instructions on operations that are to be performed.
Which of these items would be most likely to be made with a fixed position layout? A. a Boeing 777 jet aircraft B. applesauce C. a computer chip D. toothpaste E. all of these
A. a Boeing 777 jet aircraft A fixed position layout brings the process to the product.
The substitution of machinery that has sensing and control devices for human labor is best described by the term:
A. automation
The substitution of machinery that has sensing and control devices for human labor is best described by the term: A. automation B. feedback control C. computer-aided manufacturing D. computer-integrated manufacturing E. flexible manufacturing system
A. automation Automation involves the substitution of machinery that has sensing and control devices for human labor.
A product focused, single piece flow, pull production system would be called a:
A. cellular layout
A product focused, single piece flow, pull production system would be called a: A. cellular layout B. job shop C. assembly line D. non-repetitive process E. continuous flow
A. cellular layout These are characteristics of cellular layouts.
The type of processing system which is used for highly standardized products is:
A. continuous
Which of the following process types would be more likely to be used in the maturity phase of a product's life-cycle?
A. continuous
Which of the following process types would be more likely to be used in the maturity phase of a product's life-cycle? A. continuous B. intermittent C. project D. batch E. job shop
A. continuous Continuous processes are more appropriate for highly standardized products in their maturity phase.
The type of processing system which is used for highly standardized products is: A. continuous B. intermittent C. project D. batch E. unit
A. continuous Continuous processing is for highly standardized products.
An OC curve is an example of what?
Acceptance sampling
What technique determines whether a batch of goods should be accepted or rejected?
Acceptance sampling
Triple Bottom Line
An approach to corporate performance measurement that focuses on a company's total impact measured in terms of profit, people. and planet.
Pull data
Accurate sales data that initiate transactions to "pull" product through the supply chain.
Operations management
Activities that relate to the creation of goods and services through the transformation of
Approximately how much of the U.S. workforce works in an office environment?
Almost half of the workforce in the United States
who does aggregate planning and what is it planned for
Anheuser Busch, Toro, tax firms; product lines
Who receives the most profit from iPods produced in China?
Apple Inc
Which of the following is not considered to be a characteristic of partnership relations?
Are arms-length in nature
Seasonal patterns
Are characterized by repeatable periods of ups and downs over short periods of time.
control limits
within the UCL and LCL you are fine, outside the UCL or LCL you have problems
Bottleneck
work activity that effectively limits the throughput of the entire process
Advantages of Automation Technology in production
Automation leads to low variability and generally higher quality with standardized processing.
Throughput
Average number of entities completed per unit time (the output rate) from a process amount of money generated per time period through actual sales
10. Exponentially smoothed forecasting models are an example of which of the following forecasting techniques? a. Qualitative b. Time series analysis c. Causal d. Simulation models.
B
25. What question must be considered in any inventory system? a. What is to be ordered? b. How much should be ordered? c. When should the order be placed? d. All of the above.
B
27. What is the purpose of classifying items into group, when using the ABC type inventory planning system? a. To determine unit cost of items. b. To establish the appropriate degree of control over each item. c. To determine if group deviations are normally distributed. d. To determine if an item has a high dollar value.
B
13. A firm uses exponential smoothing to forecast demand. In period 10 the forecast was 90 and the actual was 100. If à is equal to .10, then what is the forecast for period 11? a. 89 b. 91 c. 90 d. 99
B
21. The Aggregate Production Plan does which of the following? a. It plans and schedules the production of components. b. It calculates the load for most work centers. c. It plans the production of families of products. d. It calculates loads for critical, bottleneck work centers.
B
24. In an ABC inventory classification, which items consist of roughly the top 15 percent of the items? a. A b. B c. C d. D
B
46. JustinTime (JIT) purchasing usually includes this practice: a. transporting materials in larger lots b. developing longterm supplier relationships c. buying materials from least cost suppliers d. buying from a greater number of suppliers
B
48. The logistics function includes all of the following activities EXCEPT: a. movement of materials from a factory warehouse to the factory assembly area b. inspection of incoming materials c. loading finished goods into outgoing vehicles d. storing finished products in a finishedgoods warehouse
B
TF: A traditional measure for evaluating performance of materials managers is the level and value of inhouse inventories.
T
TF: Aggregate Production planning considers the following variables: work force size, inventory levels, production rate.
T
sending data to another company who performs some process
BPO (business process outsourcing)
What refers to owning or controlling sources of raw materials and components?
Backward integration
Which type of technology provides "point-of-sale information?"
Barcode scanners
TF: At the optimal point of EOQ, total holding cost and order cost are equal.
T
The project task durations, budgets, dependencies, and resource requirements as originally planned. Any deviations or delays from plan are tracked against the _______
Baseline
The project tasks in the scope of work, durations, resources needed, budget, etc. as originally planned, to which you will be measured against during execution.
Baseline
Poor Strategy
Both fixed and variable costs are high
A methodology developed about the same time as PERT. Task times are considered to be constant, rather than the optimistic/expected/pessimistic used in PERT.
CPM (Critical Path Method)
1. An operation routing sheet does which of the following? a. shows an exploded view of the product and components b. shows how parts go together and the order of assembly c. specifies the sequence of machines used to assemble the product d. shows the manufacturing process cycle
C
TF: Compared to the basic EOQ model Q* = (2DS/H)1/2, the inclusion of a shortage cost into the model has the effect of making Q* larger.
T
14. A forecasting model yields the following forecasts as compared to the actual. Forecast: 10 10 20 30 40 50 60 Actual: 7 11 23 35 42 56 66 Which one of the following is the MAD for this forecasting model? a. - 2.86 b. 3.01 c. 3.71 d. 26.00
C
15. In aggregate production planning, the most used method is: a. try-and-error techniques. b. mathematical programming models. c. heuristic approaches. d. linear programming.
C
4. Among the components of operations leadtime, which of the following shop managers have the major responsibility to reduce: a. moving times between machines b. job setup times c. job processing times d. waiting times in queue
D
A disadvantage of a product layout can be high in-process inventory costs.
FALSE In-process inventory is low with a product layout.
Information technology refers to competitive data.
FALSE Information technology refers to both data and systems.
TF: Distribution management is the management of the shipment of products through the distribution system to customers.
T
TF: For control purposes, a critical item may be classified A or B, regardless of its dollar value.
T
TF: Hierarchical production planning (HPP) tailors the product and planning structure to the organization.
T
The advantages of automation include: (I) Reduced output variability. (II) Reduced variable costs. (III) Machines don't strike or file grievances. (IV) Machines are always less expensive than human labor. A. I and IV B. II and III C. I, II, and III D. I and III E. II and IV
C. I, II, and III Machines can be more expensive than human labor.
Laser technology used in surgical procedures is an example of technological advances in:
C. Process
Laser technology used in surgical procedures is an example of technological advances in: A. Product B. Service C. Process D. Information E. Reverse Engineering
C. Process Laser technology represents a change in the fundamental surgical process.
What parallel operations management activity is performed concurrently with process selection, the decisions for which are strategic, long-lasting, and difficult to change after implementation?
Capacity Planning
What is China moving to in order to take care of its people's needs?
Capitalism
A Job-Shop processing system generally requires less skilled workers than a continuous processing system.
FALSE Job shops require greater skill on the part of their workers.
80/20 Rule
Class A: 80/20 Class B: 15/30 Class C: 5/50
____________________ is a collaborative process between two trading partners that establishes formal guidelines for joint forecasting and planning.
Collaborative Planning Forecasting and Replenishment (CPFR)
TF: Holding costs include costs for handling, insurance, theft, and breakage.
T
Virtual companies
Companies that rely on a variety of supplier relationships to provide services on demand. Also known as hollow corporations or network companies.
42. Which of the following is NOT an activity of purchasing: a. maintain a data base of available suppliers b. act as the interface between the company and suppliers c. authorize the purchase of materials d. select suppliers to supply each material
D
Just in time
Continuous and forced problem solving via focus on throughput and reduced inventory
The design of service layouts, e.g., warehouse and supermarket layouts, focuses on cost minimization and product flow.
FALSE Often these are low-priority considerations.
Product layouts can more easily adapt to variations in product requirements than process layouts can.
FALSE Process layouts are more adaptable.
Repetitive processing systems usually produce goods specifically for customer orders rather than for inventory.
FALSE Repetitive processing systems usually produce goods for inventory.
16. The major variables associated with aggregate production planning include changes in all of the following except: a. production rate b. inventory level c. work force size d. price of the product
D
What is the statistic that measures the direction and strength of the linear relationship between two variables?
Correlation coefficient
Right-sized equipment tends to be larger than equipment used in traditional process layout.
FALSE Right-sizing can lead to smaller equipment.
36. Demand for the product is nonseasonal with a mean of 200 units per week. The standard deviation of the demand during the lead times is 40 units. The lead time for the item is a constant of 3 weeks. With a confidence level of 95% (=5% with z=1.96), what will be the reorder point (R) of the system? a. 600 b. 200 c. 78.4 d. 678.4
D
That group or sequence of tasks which, because of their durations and before/after dependencies, determine the total project duration or the overall project completion time that must be considered to ensure a project completes according to schedule.
Critical Path
sequence of tasks which determine the overall project completion date. No task on the ________ can be delayed without delaying the entire project completion. Special management attention to should be given to tasks on the _________
Critical path
Which is typically the most difficult data pattern to predict?
Cycle
12. A firm uses exponential smoothing to forecast demand. In period 10 the forecast was 100 and the actual was 90. If à is equal to .10, then what is the forecast for period 11? a. 89 b. 91 c. 90 d. 99
D
18. Demand can be made to more closely equal production capacity by all of the following except: a. adding contracyclical products b. varying the level of customer service through order backlogs c. varying marketing through price cuts, increased promotion, and advertising d. varying the level of inventory
D
22. Inventory Holding Cost is $10/unit/month. Beginning inventory of Month 1 is 100 units. Hiring (Firing) Cost is $100 ($200) per worker. Each worker produces 10 units per month. There are 20 workers at the end of month 0. Month 1 2 3 4 5 6 Demand 300 300 400 300 300 400 A firm must plan production for the next six months. From the information given above, which of the following is the minimum level of average production rate which will meet demand for the next six months? a. 300 b. 317 c. 333 d. 400
D
28. Fixed-order quantity models are: a. time triggered. b. fixed for a specified time period. c. made up of a variable order size. d. event triggered.
D
29. Inventory is used to: a. maintain independence of operations. b. meet variation in product demand. c. allow flexibility in production scheduling. d. all of the above.
D
3. The Manufacturing leadtime consists of which of the following? a. Order preparing time b. Shop flow time c. Pre-delivery time d. All of above
D
32. Annual demand for the radio is 10,400 units, holding cost is $3 per unit/year, and ordering cost is $50. What is the order quantity using simple EOQ model? a. 35 b. 82 c. 416 d. 589
D
33. Which of the following are related to the ABC inventory control principle? I. Allocate control resources to the high dollar volume items. II. Order slow moving items less frequently. III. Typically 80% of the annual dollar volume of inventory exists in 20% of the items. IV. Order the high dollar volume items more frequently. a. I and II only. b. II and III only. c. III and IV only d. I, II, III, and IV
D
34. A firm desires to control inventory levels so as to minimize the sum of holding and order costs. It costs the firm $20 to place an order. The firm estimates its inventory carrying costs at $2/unit/year. Weekly demand is 100 units and there are 50 weeks in the work year. The item costs $10 per unit. What quantity of the item should be ordered each time? a. 32 b. 145 c. 224 d. 316
D
38. The scope of materials management can best be described as encompassing: a. purchase and internal control of materials b. purchase and inbound shipping of materials c. warehousing and distribution of finished goods d. all of the management functions related to the complete cycle of materials flow
D
TF: In forecasting, a tracking signal measures how well the forecast is keeping pace with trends (both the error size and direction) in demand.
T
In linear regression, what are we trying to forecast?
Dependent variable
What are the two most useful types of From-To Charts for designing process layouts?
Distance between locations and interdepartmental work flow.
TF: In general, more clout with suppliers when materials are scarce is an advantage of the centralization of purchasing.
T
What does ESI stand for?
Early supplier involvement
The budgeted value of the tasks actually completed at this point in time.
Earned value
What does EDI stand for?
Electronic data interchange
Lean operations
Eliminates waste through continuous improvement and focus on exactly what the customer wants
Demand planning
Enables companies to integrate planning information across the value chain including accounting, warehousing, finance, marketing and operations into a single demand plan
Under which forecasting method does a group of managers meet to generate a forecast?
Executive opinion
The concept of diseconomies of scale_____________________________________________________.
Exist whenever long-run average costs increase as output increases
According to the textbook, the two kinds of partnerships are basic and what?
Expanded
TF: Inventory may be classified as raw materials, finished products, component parts, supplies, and work-in-process.
T
What are the most frequently used forecasting techniques?
Exponential smoothing
In general, Job-Shop systems have a lower unit cost than continuous systems do because continuous systems use costly specialized equipment.
FALSE Specialized equipment can lead to lower unit cost.
The goal in line balancing is to obtain a reasonable allocation of work to each station.
FALSE The goal in line balancing is to arrive at a reasonable balance of work across the stations.
There are three basic process types - Input, Processing and Output.
FALSE There are five basic process types: job shop, batch, repetitive, continuous and project.
TF: A major drawback to exponential smoothing is that a large amount of historical data must be stored.
F
TF: A moving average will give a quick response if a large number of observations are averaged.
F
TF: All inventory decisions should be based on cost minimization.
F
TF: An analysis of multi-item inventory situations will generally show that the annual dollar volume of sales is evenly distributed over all the items.
F
TF: In a fixed-order quantity system, the danger of stockout can occur at any time except during lead time.
F
TF: In classifying items as A, B, and C items, a good ratio is 40%, 40%, 20%. 19.For control purposes, a critical item may be classified A or B, regardless of its dollar value.
F
TF: One of the differences between a product and a service is that the service may be carried in inventory while the product may not.
F
TF: Purchasing managers negotiate supplier contracts, but do not directly select suppliers.
F
TF: Warehousing is the management of materials while they are in storage and in transit.
F
A manufacturing cell allows the production of a wide-range of very different products.
FALSE A cell is for a modest variety of output within a product family.
A process layout is more susceptible to shutdowns caused by equipment breakdowns than a product layout.
FALSE A product layout is more susceptible to these.
Avoiding bottlenecks is the primary goal of product design.
FALSE Avoiding bottlenecks is a primary consideration in facilities layout.
"Balance delay" is another name for the percentage of idle time in a process layout.
FALSE Balance delay is applicable in product layouts.
The term computer aided manufacturing (CAM) refers primarily to the use of robotics in process control.
FALSE CAM involves using computer technology to control various facets of the manufacturing process.
Continuous processing is the best way to produce customized output.
FALSE Continuous processing is best for standardized output.
Flexible manufacturing systems (FMS) bring the benefits of automation to continuous processes.
FALSE FMS can bring the benefits of flexibility to continuous processes.
Heuristic approaches to line balancing are the only approach that will guarantee an optimal solution.
FALSE Heuristic approaches cannot guarantee an optimal solution.
In cellular manufacturing, machines and equipment are grouped by type (e.g., all grinders are grouped into a cell).
FALSE In cellular layouts, machines and equipment are grouped by the needs of the product family.
Process layouts tend to have low in-process inventories.
FALSE In-process inventories are relatively high in process layouts.
Trend Projections
Fitting a trend line to historical data points to project into the medium to long-range
To perform the financial calculations of the make-or-buy decision, which costs are needed?
Fixed and variable
Flexible production systems
Flexible systems are often more costly and less efficient than non-flexible systems.
TF: JIT manufacturing has made purchasing departments key players in the success of manufacturing companies.
T
Slack time
Free time for an activity. Also referred to as free float or free slack
One style of schedule drawing showing project schedules in which tasks are shown as horizontal bars of lengths which reflect the task durations and start/stop dates on the time scale.
Gantt chart
TF: One forecasting approach is employing statistical techniques founded on the assumption that past history is indicative of future expectations.
T
TF: One of the first requirements for a production plan is to have a demand forecast upon which to base the plan.
T
Strategy
How an organization expects to achieve its missions and goals
TF: Periodically an actual physical count of stock must be made to assure that the records and actual stock agree.
T
What term refers to attaining levels of productivity and competitiveness that are not possible through normal supplier relationships?
Impact
What does the textbook define as the three most critical factors in successful partnering?
Impact, intimacy, vision
TF: Production departments must ordinarily go through the purchasing department to communicate with suppliers.
T
independent vs dependent demand
Independent: demand is independent of demand for any other item (FG; EOQ & ROP) Dependent: consists of items whose demand depends on the demand for other items held in inventory (WIP & RM; MRP)
The quantity that equates the cost of making a product to the cost of buying the product is generally called what?
Indifference point
The discussion in the textbook implies that on-line retailing has shifted power in the supply chain the most to which group?
Individual consumers
What term refers to the working relationship between partners?
Intimacy
Associative model
Linear regression
TF: Service level refers to the percentage of satisfied customers as well as the ratio of units supplied to units demanded.
T
A Job Shop process type is chosen when a ____________ volume of high-variety goods are produced with a relatively high degree of flexibility in operation.
Low
The advantages of the Repetitive/Assembly process type are the ____________ unit cost and its efficiency for high volume operations.
Low
TF: The basic logic in ABC type analysis is that generally, very few items are very important and the bulk of items are relatively unimportant.
T
High volume output is associated with Product Layouts because:
Machinery is usually very expensive.
Which decision gives you more control over your product: making or buying? Why?
Making 1. Reduce risk of late delivery of parts 2. Reduce risk of poor quality 3. Reduce arguments over responsibility for lack of quality 4. Keep capability for future competitive advantage 5. Avoid training a future competitor. Protect proprietary know-how and technology. 6. Capture profits made by suppliers. 7. Cost advantage over suppliers. 8. Keep direct labor base to absorb overhead 9. Simpler logistics. 10. If high engineering change traffic expected
A portion of a project budget (typically 5 - 10%) that is not allocated to specific WBS tasks, but rather held by project management until unexpected costs occur.
Management contingency reserve
Which activity appears to be most frequently outsourced by large companies?
Manufacturing
TF: The item purchase cost can be disregarded in determining the EOQ if quantity discounts are not available.
T
In general, what comprises the bulk of the cost of goods sold?
Materials
Raw material
Materials that are usually purchased but have yet to enter the manufacturing process
The center line of a control chart represents what?
Mean
What measures the central tendency of a set of data?
Mean
TF: The master production schedule is usually fixed over the next six months.
T
TF: The objective of production planning on an aggregate basis is to determine size of inventories, the total work force, and total production.
T
Maquiladoras
Mexican factories located along the United States- Mexico border that receive preferential tariff treatment
What does the linear regression line do?
Minimizes sum of squared errors
To reduce the severity or negative impact of a potential bad event that might occur while managing a project.
Mitigation
Which of the following is the simplest forecasting method?
Naïve
sending work to another country (closely in location)
Nearshoring
TF: The primary objective of inventory control models is to determine an "optimal" inventory level through answering: what/when/and how much to order for each stock item.
T
Early supplier involvement refers to the involvement of critical suppliers for what?
New product design
_________ tasks have slack (float) time and can be delayed by that amount of time without delaying the entire project.
Non-critial path
A Project process type is unlike the other four types in that is for work that is ____________ with a unique set of objectives to be accomplished in a ____________ time frame.
Nonroutine Limited
What is the governmental agency that has inspectors who check for safety conditions?
OSHA
sending work to another company in another country
Offshore outsourcing
sending work to another country (possibly with the same company)
Offshoring
sending work to another company who performs the work at your location
Onsite outsourcing
TF: When using moving averages and a trend exits, the forecast will lag-behind the actual.
T
Process Strategy
Organization's approach to transforming resources into goods and services
Repetitive and Product-Oriented Layout
Organized around products or families of similar high-volume, low-variety products 1.Volume is adequate for high equipment utilization 2.Product demand is stable enough to justify high investment in specialized equipment 3.Product is standardized or approaching a phase of life cycle that justifies investment 4.Supplies of raw materials and components are adequate and of uniform quality
What is the term for the number of units we wish to produce over a specific period of time?
Output Rate
What term refers to processes or activities that are completed by suppliers?
Outsource
True or false: Moving from one stage of a product/service life cycle to another can cause a process type to change.
True
taking some process, whether manufacturing or some office process, and giving that to a supplier to perform instead of your own employees
Outsourcing
a method developed by the US Navy in the 1950's to manage large development projects by treating them as a network of interrelated activities, typically show tasks and task dependencies shown as a network of circles (or boxes) connected by dependency arrows
PERT (program evaluation and review technique)
The primary project management organization's official book of major principles
PMBOK
The project management professional certification
PMP
What is the common term for a process of developing a long-term relationship with a supplier based on mutual trust, shared vision, shared information, and shared risks?
Partnering
Cycles
Patterns in the data that occur every several years.
Product Quality
Performance Aesthetics Special Features Conformance Reliability Durability Perceived quality Serviceability Consistency
Locational Break Even Analysis
Point where both locations fixed costs(per year) + variable costs(per unit) are equal. used to show which location is better for the desired amount of units and time.
Factor-Rating Method
Popular because a wide variety of factors can be included in the analysis 1.Develop a list of relevant factors called key success factors 2.Assign a weight to each factor 3.Develop a scale for each factor 4.Score each location for each factor 5.Multiply score by weights for each factor and total the score for each location 6.Make a recommendation based on the highest point score
the certification given by PMI, based on a combination of education level, project job experience, and completing their short courses and tests.
Project Management Professional (PMP)
Forecasting
Process of estimating future sales and demand for products and services
What is Forecasting?
Process of predicting a future event •Underlying basis of all business decisions -Production -Inventory -Personnel -Facilities
Product tolerances are often called
Product specifications
What are preset ranges of acceptable quality characteristics?
Product specifications.
A guide book to the basic terms and processes of project management. The book content is developed and published by PMI.
Project Management Body of Knowledge (PMBOK)
The organization that establishes standards and requirements for the project management domain:
Project Management Institute
the most important professional organization of people involved in project management. As of September, 2007, ________ had 240,000 members in 160 countries around the world.
Project Management Institute (PMI)
True or false: The main driver of process selection is customer demand - to indicate the variety and volume to be produced.
True
Which of the following is not associated with descriptive statistics?
Proportion
E-procurrment
Purchasing facilitated through the Internet
What is a control chart that monitors changes in the dispersion or variability of a process?
R-chart
All processes will have what type of variation?
Random
Common causes of variation are also known as __________________________.
Random Variation
What measures the difference between the largest and smallest observations in a set of data?
Range
If the project statement of work changes or if the status gets hopelessly beyond recovery to the original baseline plan, the original terms of the project may be reset, which, according to the PMBOK, is referred to as:
Re-baselined
What do studies suggest are the three sources of impact?
Reduce waste, leverage core competence, and create new opportunities
Which of the following process types would be most likely to be used in the maturity phase of a product's life cycle?
Repetitive
Ordering costs
Requisition, ordering, receiving, payment steps
What is the only service company to have won the Malcolm Baldridge National Quality Award twice?
Ritz-Carlton
Vendor-managed inventory (VMI)
S system in which a supplier maintains material for the buyer, often delivering directly to the buyer's using department
A detailed textual description of tasks to be performed (scope of the project) for purposes of establishing a price and schedule quote to a customer
SOW (Statement of Work)
The budgeted value of the tasks completed at this point in time (EV) minus the budgeted value of the tasks planned (scheduled) to have been done at this point in time (PV).
Schedule variance
Term used in Project Management that represents many small change requests in a project which may have unfavorable effects on project performance.
Scope Creep
What is the first step that should be taken if an observation falls below the lower control limit on a control chart?
Search for assignable causes
Which of the following would imply that data observations are closely clustered around the mean?
Small range and small standard deviation
a person or group of people who care about the outcome of a project
Stakeholder
A detailed textual description of tasks to be performed (scope of the project) for purposes of establishing a price and schedule quote to a customer It is important that the ________ clearly delineate what tasks are expected and what the deliverables are in order to avoid conflicts later in the project over what was expected versus what was actually delivered. Any customer-directed changes in the ________ after the project begins should be formally recorded and any impact to price or schedule agreed to
Statement of Work (SOW)
A c-chart is an example of what?
Statistical process control
A p-chart is an example of what?
Statistical process control
An x-bar chart is an example of what?
Statistical process control
What technique answers the question of whether the process is functioning properly or not?
Statistical process control
Mean squared error (MSE)
The square of how much the forecast missed the target
Cause-and-Effect Diagram
a diagram used to organize a search for the causes of a problem; also known as a fishbone diagram
TF: A basic assumption of the EOQ model is that shipments will arrive at exactly one time point.
T
TF: A makeorbuy decision in a purchasing department focuses on who can make the items for the lowest cost, highest quality, and with the fastest delivery.
T
International business
a firm engages in cross border transactions
For a p-chart or c-chart, what is the implication of a negative value for the LCL?
The LCL can effectively be rounded up to 0.
Quality
The ability of a product or service to meet customer needs
Forecasting
The art and science of predicting future events
Mean absolute percent error (MAPE)
The average percent error
Holding cost
The cost to keep or carry inventory in stock
Setup cost
The cost to prepare a machine or process for production.
1. Ordering cost
The cost of the ordering process.
Determinants of Quality
The degree to which a product or service successfully satisfies its intended purpose has four primary determinants 1. design 2. how well the product or service conforms to the design 3. ease of use 4. service after delivery
Multinational corporation (MNC)
a firm that has extensive involvement in international business, owning or controlling facilities in more than one country
Most likely time
The most probable time to complete an activity in PERT network
According to the financial calculations of the make-or-buy decision, if we need fewer units than the indifference point, then which option should we definitely choose?
The option with the higher variable costs
Capacity
The throughput, or the number of units a facility can hold, receive, store, or produce in a period of time •Determines fixed costs •Determines if demand will be satisfied -the amount of material or items passing through a system or process
Setup time
The time required to prepare a machine or process for production
The range is an example of what?
Traditional statistical tools
Why are the adjacency ratings between the various department/work centers important in process layout design?
They determine department locations, which directly impact transportation cost of material, information, and/or customer through the process.
The standard deviation is an example of what?
Traditional statistical tools
Basic objective of Layout Planning
To facilitate a smooth flow of work, material, and information through the system.
What is a tracking signal used for?
To identify forecast bias
The objective of location strategy is
To maximize the benefit of location to the firm
Which company is widely considered to be the leader of just-in-time production?
Toyota
Outsourcing
Transferring a firm's activities that have traditionally been internal to external suppliers.
True or False: If a task on the critical path gets delayed, the whole project will be delayed
True
True or false: Different layout types can be combined in production in a single facility such as Fixed-position and Process.
True
What is the term for the probability that a value falling outside the control limits is still due to normal variation?
Type I error
North American Free Trade Agreement (NAFTA)
a free trade agreement between Canada, Mexico, and United States
ten practical principles of forecasting
Use simplest quantitative rather than qualitative methods. Limit subjective adjustments of quantitative forecasts. Adjust for events expected in the future. Ask experts to justify their forecasts in writing. Use structured procedures to integrate judgmental and quantitative methods. Combine forecasts from approaches that differ. If combining forecasts, begin with equal weights. Compare past performance of various forecasting methods. Seek feedback about forecasts. Use multiple measures of forecast accuracy
Scatter Diagram
a graph that shows the degree and direction of relationship between two variables
The different characteristics that can be measured by control charts can be divided into what two groups?
Variables and attributes
When actual time and resources allocated for a project differ either positively or negatively when compared to the project baseline:
Variance
What term refers to the mission or objectives of a partnership?
Vision
A tree drawing or outline grouping of tasks for purposes of planning tasks within the scope of the project, identifying budgets and cost tracking accounts, and assigning groups of tasks to teams.
WBS
Activity Map
a graphical link of competitive advantage, KSFs and supporting activities
When should 100% inspection be used?
When the expected cost of a defective item exceeds the cost of inspecting a unit
flowchart
a diagram of the steps in a process
A tree drawing or outline grouping of tasks for purposes of planning tasks within the scope of the project, identifying budgets and cost tracking accounts, and assigning groups of tasks to teams
Work Breakdown Structure (WBS)
Pareto Chart
a diagram that arranges categories from highest to lowest frequency of occurrence
European Union (EU)
a European trade group that has 28 members states as of 2015
Histogram
a chart that shows and empirical frequency distribution
Going beyond a basic partnership, an expanded partnership between a firm and its supplier implies:
a commitment to helping each other succeed
World Trade Organizations (WTO)
an international organization that promotes world trade by lowering barriers to the free flow of goods across borders helps to make uniform the protection of both governments and industries from foreign firms that engage in unethical conduct
Baldridge Award
annual award given by the US government to recognize quality achievements of US companies
Inventory
any asset held for future use or sale
Service upset
any problem a customer has- real or perceived- with a service delivery system and includes terms such as service failure, error, defect, mistake, or crisis
waste
anything other than the minimum amount of equipment, materials, parts, space, and worker's time, which are absolutely essential to add value to the product
return on quality
approach that evaluates the financial return of investments in quality
logistics management
approach that seeks efficiency of operations through the integration of all material acquisition, movement, and storage activities
Quality function deployment
approach to guide the design, creation, and marketing of goods and services by integrating the voice of the customer into all decisions
rough cut capacity planning RCCP
approximate balancing of capacity and demand to test the feasibility of a master schedule
Economies of scale
are achieved when the average unit cost of a good or service decreases as the capacity and/or volume of throughput increases
Shortage/ stockout costs
are costs associated with inventory being unavailable when needed to meet demand.
Ordering costs or setup costs
are incurred as a result of the work involved in placing orders with suppliers or configuring tools, equipment, and machines within a factory to produce an item. Concentrates on the number of orders placed.
Ordering costs or setup costs
are incurred as a result of the work involved in placing orders with suppliers or configuring tools, equipment, and machines within a factory to produce an item. Concentrates on the number of orders placed. ask him if he said anything special about this one
Raw materials, parts and supplies
are inputs to manufacturing and service-delivery processes.
Cyclical patterns
are regular patterns in a data series that takes place over long periods of time. Ex. movement of stock market values during "bull" and "bear" market cycles. (bull swipes up prices go up bear swipes down prices go down)
Cyclical patterns
are regular patterns ina data series that take place over long periods of time
Product Layout
arrangement based on the sequence of operations that is performed during the manufacturing of a good or delivery of a service
Certified supplier
as one that, after extensive investigation, is found to supply material of such quality that routine testing on each lot received is unnecessary.
the total number of orders placed per year will decrease and the annual setup or ordering cost will decrease
as quantity ordered increases,
demand management
can we do something to make demand more uniform? smooth demand is easier to meet
Why do the Chinese workers not purchase the CD players manufactured in their plants?
can't afford them
A product-focused, single-piece flow, pull production system would be called a: continuous flow. assembly line. cellular layout. job shop. nonrepetitive process.
cellular layout ( These are characteristics of cellular layouts. )
Product life cycle
characterization of product growth, maturity, and decline over time
performing all the tasks related to finishing a project, including customer inspections and acceptance, reassignment of people and equipment resources, compilation of all documents into a history file, final reports to management, etc.
closeout (also called closing)
In the 1980s retail sales were dominated by large department stores. However, in the 1990s gains in sales were made by specialty stores because______________________________________________________.
consumer preferences change very rapidly, and the specialty stores can focus on a specific set of customers and respond to their unique needs
virtual companies
companies that rely on a variety of supplier relationships to provide services on demand
output based system
compensation based on output during payperiod
time based system
compensation based on time during payperiod
Geographic information system
computer based tool for collecting, storing, retrieving, displaying, demographic data on maps
simulation models
computerized models that can be tested under different scenarios to identify acceptable solutions to problems
type II error
concluding a process is in control when it is not
type 2 error
concluding a process is in control when its not
Type I error
concluding a process is not in control when it actually is
type 1 error
concluding process is not in control when it is
Option/assemble to order goods and services
configurations of standard parts, subassemblies, or services that can be selected by customers from a limited set
Process Layout
consists of a functional grouping of equipment or activities that do similar work
Service-encounter activity sequence
consists of all the process steps and associated service encounters necessary to complete a service transaction and fulfill; a customers wants and needs
Revenue Management System (RMS)
consists of dynamic methods to forecast demand, allocate perishable assets across market segments, decide when to overlook and by how much, and determine what price to change different customer(price) classes
Work-in-process (WIP) inventory
consists of partially finished products in various stages of completion that are awaiting further processing. Ex. pizza restaurant might prepare a batch of pizzas with only cheese and sauce and add other toppings when orders are placed
Fixed- Position Layout
consolidates the resources necessary to manufacture a good or deliver a service, such as people, materials, and equipment in one physical location
Provider-routed services
constrain customers to follow a very small number of possible and predefined pathways through service system
p-chart
control chart for attributes used to monitor the proportion of defective items in a process
c-chart
control chart for attributes, used to monitor number of defects per unit
p-chart
control chart for attributes, used to monitor the proportion of defective items in a process
range control chart
control chart used to monitor process dispersion
mean control chart
control chart used to monitor the central tendency of a process
service quality
convenience reliability responsiveness time assurance courtesy tangibles consistency expectations
objectives of supply chain management
coordinate activities within the supply chain to maximize supply chain's competitive advantage and benefits to the ultimate consumer
the budgeted value of the tasks actually completed at this point in time. The ______ values can be plotted on the graph up until the current time. BCWP was the old acronym which has been changed to _______
earned value (EV)
production order quantity model
economic order quantity technique applied to production orders; reduces holding cost; useful for when inventory continuously builds up over time and when traditional economic order quantity assumptions are valid
The central belief of the JIT philosophy is
elimination of waste
Self-Managed Teams (SMT)
empowered work teams that also assume many traditional management responsibilities
Experience differentiation
engaging a customer with a product through imaginative use of the 5 senses so the customer " experiences" the product
product plant strategy
entire products or product lines are produced in separate plants. decentralized approach. specialization often results in economies of scale
competitive benchmarking
identifying other organizations that are the best at something and studying how they do it to learn how to improve your operation
Value Stream Mapping
helps managers understand how to add value in the flow of material and information through the entire production process
If a company offshores some of its support processes, primary processes, and management processes it has a _______ degree of offshoring
high
aggregate plan
high level plan of production rates, workforce levels, and inventory based on customer requirements and capacity limiations
fewer orders, more units per order, longer setup time
higher set up costs=
Maximum Capacity
highest output that can be achieved under ideal conditions in the short term
Strategy
how an org expects to achieve its missions and goals
ERP system
integrate all aspects of a business-accounting, customer relationship management, supply chain management, manufacturing, sales, human resources- into a unified information system, and they provide more timely analysis and reporting of sales, customer, inventory, manufacturing, human resource and accounting data
Total Quality Management
integrated business management strategy aimed at embedding awareness of quality in all organizational processes.
supply chain management
integration of the activities taht procure materials and services, transform them into intermediate goods and the final product, and deliver them to customers
quality of design
intention of designers to include or exclude features in a product or service
Information-free Zone
interruptions are stopped in this such as devices blocked
According to JIT, _________________ is carried to cover up a wide variety of problems, such as poor quality, demand uncertainty, and slow delivery.
inventory
Which of the following is not one of the four basic layout types?
inverted
Job design
involves determining the specific job tasks and responsibilities, the work environment, and the methods by which the tasks will be carried out to meet the goals of operations
Risk management
involves identifying risks that can occur, assessing the likelihood that they will occur, determining the impact on the firm and its customers, and identifying steps to mitigate the risks
The supply chain operations reference (SCOR) model
is a framework for understanding the scope of supply chain management (SCM) that is based on five basic functions involved in managing a supply chain: plan, source, make, deliver, and return Plan—Developing a strategy that balances resources with requirements and establishes and communicates plans for the entire supply chain. This includes management policies and aligning the supply chain plan with financial plans. Source—Procuring goods and services to meet planned or actual demand. This includes identifying and selecting suppliers, scheduling deliveries, authorizing payments, and managing inventory. Make—Transforming goods and services to a finished state to meet demand. This includes production scheduling, managing work-in-process, manufacturing, testing, packaging, and product release. Deliver—Managing orders, transportation, and distribution to provide the goods and services. This entails all order management activities from processing customer orders to routing shipments, managing goods at distribution centers, and invoicing the customer. Return—Processing customer returns; providing maintenance, repair, and overhaul; and dealing with excess goods. This includes return authorization, receiving, verification, disposition, and replacement or credit.
Bottleneck
is a limiting factor or constraint -A bottleneck has the lowest effective capacity in a system -is the time of the slowest workstation (the one that takes the longest) in a production system
Regression analysis
is a method for building a statistical model that defines a relationship between a single dependent variable and one or more independent variables, all of which are numerical. Exhibit 9.11 ?????????
Regression Analysis
is a method for building a statistical model that defines a relationsjhip between a single dependent variable and one or more independent variables all of which are numerical
Irregular Variation
is a one time variation that is explainable
Irregular variation
is a one-time variation that is explainable. Ex. a hurricane can cause a surge in demand for building materials, food, and water.
Order amplification
is a phenomenon that occurs when each member of a supply chain "orders up" to buffer its own inventory.
Assembly line
is a product layout dedicated to combining the components of a good or service that has been created previously
Time series
is a set of observations measured at successive points in time over successive periods of time. Provides the data for understanding how the variable that we wish to forecast has changed historically.
Theory of Constraints (TOC)
is a set of principles that focus on increasing total process throughput by maximizing the utilization of all bottleneck work activities and workstations
Stock-keeping unit (SKU)
is a single item or asset stored at a particular location For example, each color and size of a man's dress shirt at a department store and each type of milk (whole, 2 percent, skim) at a grocery store would be a different SKU.
Stock-keeping unit (SKU)
is a single item or asset stored at a particular location For example, each color and size of a man's dress shirt at a department store and each type of milk (whole, 2 percent, skim) at a grocery store would be a different SKU.f
Stock-keeping unit (SKU)
is a single item or asset stored at a particular location.
Safety stock
is additional, planned on-hand inventory that acts as a buffer to reduce the risk of a stockout.
Safety stock inventory
is an additional amount that is kept over and above the average amount required to meet demand.
moving average (MA) forecast
is an average of the most recent "k" observations in a time series. Exhibit 9.7
Kaizen event
is an intense and rapid improvement process in which a team or a department throws all its resources into an improvement project over a short time period, as opposed to traditional kaizen applications, which are performed on a part time basis
Intermediary
is any entity—real or virtual—that coordinates and shares information between buyers and sellers.
Grassroots forecasting
is asking those who are close to the end consumer, such as salespeople, about the customers' purchasing plans.
Statistical forecasting
is based on the asumption that the future will be an extrapolation of the past
A facility location factor that is important for both service and manufacturing organizations is locating close to _________________________________.
labor supply
importance of supply chain management
large portion of sales dollars spent on purchases; supplier relationships increasingly integrated and long term; efforts that improve innovation, speed design, and cost reduction dramatically improves competitiveness; integrated focus puts added emphasis on managing supplier relationships
Projects
large-scale, customized initiatives that consist of any smaller tasks and activities that must be coordinated and completed to finish on time and within budget
cellular production
layout in which workstations are grouped into a cell that can process items that have similar processing requirements
product layout
layout that uses standardized processing operations to achieve smooth, rapid high volume flow
fixed position layout
layout where product/ project remains stationary while workers material and equipment are moved
The fact that human activities typically improve when they are done on a repetitive basis is described by a(an) _________________ curve.
learning
A higher level of vertical integration implies:
less outsourcing and more insourcing.
Effective Capacity
level of capacity that can be expected under normal conditions
product or service profiling
linking key product or service requirements to process capabilities
bill of material
list of components, ingredients, and materials needed to make product
consequences for poor quality
loss of business liability productivity costs
If a company offshores some of its support processes, it has a _______ degree of offshoring
low
What is China's main contribution to the global economy?
low cost labor
automation
machinery that has sensing and control devices that enable it to operate automatically
Standard/make to stock goods and services
made according to a fixed design, customer has no options to choose
level capacity strategy
maintaining a steady rate of regular time output while meeting variations in demand by a combination of options
a portion of a project budget (typically 5 - 10%) that is not allocated to specific WBS tasks, but rather held by project management until unexpected costs occur. The reserve budget helps to prevent a project cost overrun
management contingency reserve
Natural work teams
perform entire jobs, rather than specialized, assembly-line work
Design for Logistics
minimizing packaging, handling, and shipping costs for products.
Design for Environment
minimizing the detrimental environmental impacts of product and process design across all stages of a product's life.
Product-process matrix
model that describes the alignment of processes choice with the characteristics of the manufactured good
If a company offshores some of its support processes and primary processes, it has a _______ degree of offshoring
moderate
Changes in Modules
modest runs, standardized modules
process variablility
natural or inherent variability in a process
random variation
natural variation in the output of a process, created by countless factors
random variation
natural variation in the output of a process, created by countless minor factors
If a company does not offshore processes, it has _______ degree of offshoring
no
numerically controlled (n/c) machines
perform operations by following mathematical processing instructions
Multinational Enterprise
organization that sources, markets, and produces its goods and services in several countries to minimize costs, and to maximize profit, customer satisfaction and social welfare
Flow shop processes
organized around a fixed sequence of activities and process steps, such as an assembly line, to produce a limited variety of similar goods and services
Job shop process
organized particular types of general-purpose equipment that are flexible and capable of customizing work for individual customers
third-party logistics (3PL)
outsourcing logistics to reduce costs and improve delivery reliability and speed
What are the two types of control charts for attributes?
p and c
What is a control chart that monitors the proportion of defects in a sample?
p-chart
OSHA
passed in 1970 requiring employers to furnish a place of employment free of recognized hazards that cause or are likely to cause death or serious physical harm,
knowledge based pay
pay system that rewards workers who undergo training that increases their skills
Why do people in China shop at Walmart?
perceived high quality products
balance delay
percentage of idle time of a line
Utilization
percentage of process capacity that is actually used actual output rate/capacity
A hospital is an example of which layout type?
process
Quality in just-in-time is centered on building quality into the
process
line balancing
process of assigning tasks to workstations in such way that they all have approx. equal time requirements
Service recovery
process of correcting a service upset and satisfying the customer
Postponement
process of delaying product customization until the product is closer to the customer at the end of the supply chain
Design for manufacturability (DFM)
process of designing a product for efficient production at the highest level of quality
Supply chain optimization
process of ensuring that a supply chain operates at the highest levels of efficiency and effectiveness
Outsourcing
process of having suppliers provide goods and services that were previously provided internally
Multisite management
process of managing geographically dispersed service-providing facilities
benchmarking
process of measuring performance against the best in the same or another industry
Reshoring
process of moving operations back to a company's domestic location
Product simplification
process of trying to simplify designs to reduce complexity and costs and thus improve productivity, quality, flexibility, and customer satisfaction
WIP
processed in some way, but still not a finished product
Push system
produces goods in advance of customer demand using a forecast of sales and moves them straight through the supply chain to points of sale, where they are stored as finished goods inventory
Pull system
produces only what is needed at upstream stages in the supply chain in response to custmer demand signals from downstream stages
quality of conformance
product or service conforms to specifications
The challenge for service operations is that they have to synchronize their __________ with demand.
production
Service guarantee
promise to reward and compensate a customer if a service upset occurs during the service experience
predetermined time standards
published data based on extensive research to determine standard elemental times
difference b/w push and pull inventory systems
push: forecasting inventory needs to meet customer demand pull: customers order, then inventory is produced
Variation in the production process leads to
quality defects
total profit =
quantity(revenue per unit - variable cost per unit) - Fixed cost
Which of the following is not typically done jointly by CPFR trading partners?
raise capital
Voice of the Customer (VOC)
research that gathers detailed data describing customers' wishes, needs, likes, and dislikes regarding a product/service.
a matrix format for showing what persons (or departments) are responsible for various tasks in the project WBS
responsibility matrix
Components of Standardization
reusing part designs across multiple products in order to reduce development and production costs.
some event or condition that might occurs, and if it does, would have a negative impact on cost, schedule, scope of work, or quality of project
risk
Growth
sales grow; customers give responses about the product; refinements are made to the product.
the ratio of earned value to planned value, computed as EV/PV. An ____ value of 1.0 means the completed tasks are exactly on schedule. An ____ value > 1.0 means that more work has been accomplished than planned in the baseline schedule
schedule performance index (SPI)
master production schedule MPS
schedule that indicates the quantity and timing of planned completed production
- the budgeted value of the tasks completed at this point in time (EV) minus the budgeted value of the tasks planned (scheduled) to have been done at this point in time (PV). So, ____ = EV - PV. An ____ of 0.0 indicates that you are exactly on the baseline plan with respect to schedule. An ____ > 0.0 means you have accomplished more tasks than planned, so you are ahead of schedule! Life is good, have a party
schedule variance (SV)
the tasks to be accomplished in the project
scope
Gradual change in the statement of work caused by changes in user requirements. This will cause loss of performance to either schedule or budget if the changes are not documented and the baseline plan changed to reflect the changes
scope creep
run
sequence of observations with a certain characteristic
ISO 14000
set of international standards for assessing a companys environmental performance
Time-Function Mapping
shows flows and time frame
Flow Chart
shows the movement of materials
clustering
similar types of businesses locate near each other (car dealerships)
Stock-keeping unit (SKU)
single item or asset stored at a particular location
What measures symmetry of a distribution?
skewness
an informal term that is used to describe a project that is managed as a stand-alone project that is physically and organizationally separate from the rest of the organization. Lockheed used the name for the portion of the company that performed the design and production of highly secret aircraft programs.
skunk works
Time (also known as float) - Tasks on the critical path have zero slack time. Non-critical path tasks have _________ and can be delayed by that amount of time without delaying the entire project.
slack time
microfactory
small factory with a narrow product focus, located near major markets
Return facilitators
specialize in handling all aspects of customers returning a manufactured good or delivered service and requesting their money back, repairing the manufactured good and returning it to the customer, and/or invoking the service guarantee. example UPS Supply Chain Solutions (SCS), a subsidiary of the giant delivery company United Parcel Service (UPS), is a third-party logistics provider that can act as a return facilitator.
Task
specific unit of work required to create an output
Work Order
specification of work to be performed for a customer or client
What is the formula for the process capability index Cp?
specification width / process width
control chart
statistical chart of time ordered values of a sample statistic
statistical process control
statistical evaluation of the output of a process
What technique answers the question of whether the process is functioning properly or not?
statistical process control
inventory
stock of materials used to satisfy customer demand or support the production of goods and services
random number table
table consisting of unordered sequences of numbers, used to determine random observation schedules
JIT production workers are expected to
take responsibility in getting to the root cause of quality problems
pareto analysis
technique for classifying problem areas according to degree of importance, and focusing on the most important
pareto analysis
technique for classifying problem areas according to degree of importance, focusing on most important
work sampling
technique for estimating the proportion of time that a worker or machine spends on various activities and the idle time
locational cost profit volume analysis
technique for evaluating location choices in economic terms
House of Quality
template that guides identification and translation of customer requirements into product features.
run test
test for patterns in a sequence
yield managment
the application of pricing strategies to allocate capacity among various categories of demand
Competitive Advantage
the creation of a unique advantage over competitors
Who is the only one that can determine value?
the customer
quality of conformance
the degree to which goods or services conform to the intent of the designers
Cellular Layout
the design is not according to the functional characteristics of equipment, but rather is based on self-contained groups of equipment (called cells) needed for producing a particular set of good and services
central limit theorem
the distribution of sample averages tends to be normal regardless of the shape of the process distribution
Combined forecasting involves a rule that
the forecasting methods should be different
Purchasing (procurement)
the function responsible for acquiring raw materials, component parts, tools, services, and other items required from external suppliers
process capability
the inherent capability of process output relative to the variation allowed by the design specification
Cycle-time
the interval between successive outputs coming off the assembly line
Pathway
unique route through a service system
micromotion study
use of motion pictures and slow motion to study motions that otherwise would be too rapid to analyze
worker machine chart
used to determine portions of a work cycle during which an operator and equipment are busy or idle
Quality Function Deployment (QFD)
useful tool for translating ordinary language to describe customer needs into engineering language.
Process Chart
uses symbols to analyze the movement of people or materials
Modular Product Design
using combinations of components with standardized product interfaces to create different product variations.
the difference, measured in dollars or labor hours, between planned and actual at a point in time
variance
Job enrichment
vertical expansion of job duties to give the worker more responsibility
control chart
visual tool for monitoring forecast error
Vendor managed inventory (VMI)
where the vendor (supplier) monitors and manages inventory for the customer
Naive Approach
•Assumes demand in next period is the same as demand in most recent period -e.g., If January sales were 68, then February sales will be 68 •Sometimes cost effective and efficient •Can be good starting point
Impact of different a in exponential smoothing
•Choose high values of (a) when underlying average is likely to change •Choose low values of (a) when underlying average is stable
Applying EMV to Capacity Decision
•Determine states of nature -Future demand -Market favorability •Assign probability values to states of nature to determine expected value
Process Focus
•Facilities are organized around specific activities or processes •General purpose equipment and skilled personnel •High degree of product flexibility •Typically high costs and low equipment utilization •Product flows may vary considerably making planning and scheduling a challenge (low-volume, high-variety, intermittent processes)
Repetitive focus
•Facilities often organized as assembly lines •Characterized by modules with parts and assemblies made previously •Modules may be combined for many output options •Less flexibility than process-focused facilities but more efficient (modular)
Center-of-Gravity Method
•Finds location of distribution center that minimizes distribution costs •Considers -Location of markets -Volume of goods shipped to those markets -Shipping cost (or distance) •Place existing locations on a coordinate grid -Grid origin and scale are arbitrary -Maintain relative distances •Calculate x and y coordinates for 'center of gravity' -Assumes cost is directly proportional to distance and volume shipped
Exponential Smoothing
•Form of weighted moving average -Weights decline exponentially -Most recent data weighted most •Requires smoothing constant () -Ranges from 0 to 1 -Subjectively chosen •Involves little record keeping of past data
Moving Averages
•MA is a series of arithmetic means •Used if little or no trend •Used often for smoothing -Provides overall impression of data over time
Time-Series Components: Trend
•Persistent, overall upward or downward pattern •Changes due to population, technology, age, culture, etc. •Typically several years duration
Time-Series Components: Seasonality
•Regular pattern of up and down fluctuations •Due to weather, customs, etc. •Occurs within a single year
Time-Series Components: Cycles
•Repeating up and down movements •Affected by business cycle, political, and economic factors •Multiple years duration •Often causal or associative relationships
Time-Series Forecasting
•Set of evenly spaced numerical data -Obtained by observing response variable at regular time periods •Forecast based only on past values, no other variables important -Assumes that factors influencing past and present will continue influence in future
Strategic Importance of Forecasting
•Supply-Chain Management - Good supplier relations, advantages in product innovation, cost and speed to market •Human Resources - Hiring, training, laying off workers •Capacity - Capacity shortages can result in undependable delivery, loss of customers, loss of market share
Mass customization
•The rapid, low-cost production of goods and service to satisfy increasingly unique customer desires •Combines the flexibility of a process focus with the efficiency of a product focus (high-volume, high-variety)Dell Computer
Forecasting Approaches: Quantitative Methods
•Used when situation is 'stable' and historical data exist -Existing products -Current technology •Involves mathematical techniques -e.g., forecasting sales of color televisions
Weighted Moving Averages
•Used when some trend might be present -Older data usually less important •Weights based on experience and intuition
