Chapter 10 Business

continuous improvement

A commitment to constantly seek better ways of doing things in order to achieve greater efficiency and improve quality.

manufacturing resource planning II (MRPII)

A complex computerized system that integrates data from many departments to allow managers to more accurately forecast and assess the impact of production plans on profitability.

enterprise resource planning (ERP)

A computerized resource-planning system that incorporates information about the firm's suppliers and customers with its internally generated data.

materials requirement planning (MRP)

A computerized system of controlling the flow of resources and inventory. A master schedule is used to ensure that the materials, labor, and equipment needed for production are at the right places in the right amounts at the right times.

perpetual inventory

A continuously updated list of inventory levels, orders, sales, and receipts.

fixed-position layout

A facility arrangement in which the product stays in one place and workers and machinery move to it as needed.

process layout

A facility arrangement in which work flows according to the production process. All workers performing similar tasks are grouped together, and products pass from one workstation to another.

product (or assembly-line) layout

A facility arrangement in which workstations or departments are arranged in a line with products moving along the line.

bill of material

A list of the items and the number of each required to make a given product.

job shop

A manufacturing firm that produces goods in response to customer orders.

mass customization

A manufacturing process in which goods are mass-produced up to a point and then custom-tailored to the needs or desires of individual customers.

process manufacturing

A production process in which the basic input is broken down into one or more outputs (products).

assembly process

A production process in which the basic inputs are either combined to create the output or transformed into the output.

continuous process

A production process that uses long production runs lasting days, weeks, or months without equipment shutdowns; generally used for high-volume, low-variety products with standardized parts.

intermittent process

A production process that uses short production runs to make batches of different products; generally used for low-volume, high-variety products.

Six Sigma

A quality-control process that relies on defining what needs to be done to ensure quality, measuring and analyzing production results statistically, and finding ways to improve and control quality.

critical path method (CPM)

A scheduling tool that enables a manager to determine the critical path of activities for a project—the activities that will cause the entire project to fall behind schedule if they are not completed on time.

program evaluation and review technique (PERT)

A scheduling tool that is similar to the CPM method but assigns three time estimates for each activity (optimistic, most probable, and pessimistic); allows managers to anticipate delays and potential problems and schedule accordingly.

ISO 9000

A set of five technical standards of quality management created by the International Organization for Standardization to provide a uniform way of determining whether manufacturing plants and service organizations conform to sound quality procedures.

ISO 14000

A set of technical standards designed by the International Organization for Standardization to promote clean production processes to protect the environment.

just-in-time (JIT)

A system in which materials arrive exactly when they are needed for production, rather than being stored on-site.

flexible manufacturing system (FMS)

A system that combines automated workstations with computer-controlled transportation devices—automatic guided vehicles (AGV)—that move materials between workstations and into and out of the system.

business process management (BPM)

A unified system that has the power to integrate and optimize a company's sprawling functions by automating much of what it does.

Malcolm Baldrige National Quality Award

An award given to recognize U.S. companies that offer goods and services of world-class quality; established by Congress in 1987 and named for a former secretary of commerce.

Gantt charts

Bar graphs plotted on a time line that show the relationship between scheduled and actual production.

quality

Goods and services that meet customer expectations by providing reliable performance.

critical path

In a critical path method network, the longest path through the linked activities.

CAD/CAM systems

Linked computer systems that combine the advantages of computer-aided design and computer-aided manufacturing. The system helps design the product, control the flow of resources needed to produce the product, and operate the production process.

operations management

Management of the production process.

cellular manufacturing

Production technique that uses small, self-contained production units, each performing all or most of the tasks necessary to complete a manufacturing order.

blockchain technology

Refers to a decentralized "public ledger" of all transactions that have ever been executed. It is constantly expanding, as "completed" blocks are added to the ledger with each new transaction.

value-stream mapping

Routing technique that uses simple icons to visually represent the flow of materials and information from suppliers through the factory to customers.

lean manufacturing

Streamlining production by eliminating steps in the production process that do not add benefits that customers want.

production planning

The aspect of operations management in which the firm considers the competitive environment and its own strategic goals in an effort to find the best production methods.

routing

The aspect of production control that involves setting out the work flow—the sequence of machines and operations through which the product or service progresses from start to finish.

scheduling

The aspect of production control that involves specifying and controlling the time required for each step in the production process.

computer-integrated manufacturing (CIM)

The combination of computerized manufacturing processes (such as robots and flexible manufacturing systems) with other computerized systems that control design, inventory, production, and purchasing.

production

The creation of products and services by turning inputs, such as natural resources, raw materials, human resources, and capital, into outputs, which are products and services.

make-or-buy decision

The determination by a firm of whether to make its own production materials or to buy them from outside sources.

inventory management

The determination of how much of each type of inventory a firm will keep on hand and the ordering, receiving, storing, and tracking of inventory.

electronic data interchange (EDI)

The electronic exchange of information between two trading partners.

supply chain

The entire sequence of securing inputs, producing goods, and delivering goods to customers.

mass production

The manufacture of many identical goods at once.

purchasing

The process of buying production inputs from various sources; also called procurement.

quality control

The process of creating quality standards, producing goods that meet them, and measuring finished goods and services against them.

e-procurement

The process of purchasing supplies and materials online using the internet.

supply-chain management

The process of smoothing transitions along the supply chain so that the firm can satisfy its customers with quality products and services; focuses on developing tight bonds with suppliers.

customization

The production of goods or services one at a time according to the specific needs or wants of individual customers.

outsourcing

The purchase of items from an outside source rather than making them internally.

inventory

The supply of goods that a firm holds for use in production or for sale to customers.

robotics

The technology involved in designing, constructing, and operating computer-controlled machines that can perform tasks independently.

computer-aided design (CAD)

The use of computers to design and test new products and modify existing ones.

computer-aided manufacturing (CAM)

The use of computers to develop and control the production process.

Total Quality Management (TQM)

The use of quality principles in all aspects of a company's production and operations.

production process

The way a good or service is created.