Exam One BA A377

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

Steps in Project Crashing

1. Compute the crash cost per time period. If crash costs are linear over time: Crash cost per period = (Crash cost - normal cost)/(Normal time - crash cost) 2. Using current activity times, find the critical path and identify the critical activities 3. If there is only one critical path, then select the activity on this critical path that (a) can still be crashed, and (b) has the smallest crash cost per period. If there is more than one critical path, then select one activity from each critical path such that (a) each selected activity can still be crashed, and (b) the total crash cost of all selected activities is the smallest. Note that the same activity may be common to more than one critical path.

Types of Layout

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

OM Decisions

10 Strategic ________: Design of goods and services Managing quality Process strategy Location strategies Layout strategies Human resources Supply-chain management Inventory management Scheduling Maintenance

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

Bottleneck

A ____ is a limiting factor or constraint. Has the lowest effective capacity in a system.

The Economic System

INPUTS Labor, capital, management --------------> TRANSFORMATION The U.S. economic system transforms inputs to outputs at about an annual 2.5% increase in productivity per year. The productivity increase is the result of a mix of capital (38% of 2.5%), labor (10% of 2.5%), and management (52% of 2.5% --------------> OUTPUTS Goods and services

Multi-Factor Productivity

Output / Labor + Material + Energy + Capital + Miscellaneous Also known as total factor Outputs and inputs are expressed in dollars

Six Steps PERT and CPM

The Framework of _____ and ____ 1. Define the project and prepare the work breakdown structure. 2. Develop the relationships among the activities. Decide which activities must precede and which must follow others. 3. Draw the network connecting all the activities. 4. Assign time and/or cost estimates to each activity. 5. Compute the longest time path through the network. This is called the critical path. 6. Use the network to help plan, schedule, monitor, and control the project.

Throughput Time

The ___ ___ is the time it takes a unit to go through production from start to end.

Bottleneck Time

The ____ ____ is the time of the slowest workstation in the production system.

Three Functions of an Organization

To create goods and services, all organizations perform these activities: Marketing Productions/operations Finance/accounting

3%

Trade agreements can lower tariffs (40% in 1940, __ today) Foreign locations with lower wage rates can lower direct and indirect costs Maquiladoras World Trade Organization (WTO) North American Free Trade Agreement (NAFTA) APEC, SEATO*, MERCOSUR, CAFTA European Union (EU) * Japan, Australia, New Zealand, Hong Kong, South Korea, Chile, New Guinea

Productivity Formula

Units Produced/Input Used Measure of process improvement Represents output relative to input Only through _____ increases can out standard of living improve

Labor Productivity Formula

Units produced/labor hours used One resource input -> single-factor productivity

Short Range Forecast

Up to 1 year, generally less than 3 months Purchasing, job scheduling, workforce levels, job assignments, production levels

Just In Time

___ ___ ___: 'Pull' system of production scheduling including supply management - Production only when signaled Allows reduced inventory levels -Inventory costs money and hides process and material problems Encourages improved process and product quality

Value-Stream Mapping

___ ___ ___: 1. Begin with symbols for customer, supplier, and production to ensure the big picture 2. Enter customer order requirements 3. Calculate the daily production requirements 4.Enter the outbound shipping requirements and delivery frequency 5. Determine inbound shipping method and delivery frequency 6. Add the process steps (i.e., machine, assemble) in sequence, left to right 7. Add communication methods, add their frequency, and show the direction with arrows 8. Add inventory quantities between every step of the entire flow 9. Determine total working time (value-added time) and delay (non-value-added time)

Probability of Project Completion

___ ___ ___: project variance is computed by summing the variances of critical O2P = Project Variance = Sum (variances of activities on critical path)

Check Sheet

___ ___ is an organized method of recording data.

Mass Customization

___ ___ is rhe 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

Effective Capacity

___ ___ is the capacity a frim expects to achieve given current operating constraints. - Often lower than design capacity.

Associative Forecasting

___ ___ is used when changes in one or more independent variables can be used to predict the changes in the dependent variable Most common technique is linear regression analysis Applied the same as time-series example Based on predictor variable using the least squares technique

Quality Circles

___ ___: Group of employees who meet regularly to solve problems Trained in planning, problem solving, and statistical methods Often led by a facilitator Very effective when done properly

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

Process Stategies

___ ___: Four basic strategies 1. Process focus 2. Repetitive focus 3. Product focus 4. Mass customization Within these basic strategies there are many ways they may be implemented.

Service Blueprinting

___ ___: - Focuses on the customer and provider interaction - Defines three levels of interaction - Each level has different management issues - Identifies potential failure points

Process Capability

___ ___: is a measure of the relationship between the natural variation of the process and the design specifications The natural variation of a process should be small enough to produce products that meet the standards required A process in statistical control does not necessarily meet the design specifications

Capacity Analysis

___ ____ determines the throughput capacity of workstations in a system.

Taguchi Concepts

___ ____: Engineering and experimental design methods to improve product and process design -Identify key component and process variables affecting product variation _____ _____: Quality robustness Quality loss function Target-oriented quality

Statistical Process Control SPC

____ ___ ____: Variability is inherent in every process - Natural or common causes - Special or assignable causes Provides a statistical signal when assignable causes are present Detect and eliminate assignable causes of variation

Time-Series Forecasting

____ ___: Set of evenly spaced numerical data -obtained by observing response variable at regular time periods. Forecasted based only on past values, no other variables are important -assumes that factors influencing past and present will continue influence in the future.

Weighted Moving Average Formula

____ ____ ____ Formula = Sum((weight for period n)(demand in period n)) / Sum(weights)

Cause and Effect Diagram

____ ____ ____ is a tool that identifies process elements (causes) that might effect an outcome. AKA fishbone chart.

Seasonal Variations in Data

____ ____ ____: 1. Find average historical demand for each season 2. Compute the average demand over all seasons 3. Compute a seasonal index for each season 4. Estimate next year's total demand 5. Divide this estimate of total demand by the number of seasons, then multiply it by the seasonal index for that season

Overview of Quantitative Approaches

____ ____ ____: 1. Naive approach 2. Moving averages 3. Exponential smoothing 4. Trend projection 5. Seasonality 6. Seasonality with trend 7. Linear regression

Statistical Process Control

____ ____ ____: Uses statistics and control charts to tell when to take corrective action. Drives process improvement Four key steps: - Measure the process - When a change is indicated, find the assignable cause - Eliminate or incorporate the cause - Restart the revised process The objective of a process control system is to provide a statistical signal when assignable causes of variation are present

Moving Average Method

____ ____ ____: ____ ____ is a series of arithmetic means Used if little or no trend Used often for smoothing -Provides overall impression of data over time ___ ___ = Sum of demand in previous n periods/n

Project Management Activities

____ ____ ____: 1. Planning Objectives, Resources, Work break-down structure, Organization 2. Scheduling Project Activites, Start & end times, Network 3. Controlling Monitor, Compare, Revise, Action

Forecasting Time Horizons

____ ____ ____: 1. Short-range forecast Up to 1 year, generally less than 3 months Purchasing, job scheduling, workforce levels, job assignments, production levels 2. Medium-range forecast 3 months to 3 years Sales and production planning, budgeting 3. Long-range forecast 3+ years New product planning, facility location, research and development

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

Total Quality Management

____ ____ ____: Encompasses entire organization from supplier to customer Stresses a commitment by management to have a continuing companywide drive toward excellence in all aspects of products and services that are important to the customer

Seven Tools of TQM

____ ____ ____: Tools for Generating Ideas 1. Check sheets 2. Scatter diagrams Tools to Organize the Data 3. Pareto charts 4. Flow Charts Tools for Identifying Problems 5. Cause-and-effect diagrams 6. Histogram 7. Statistical process control chart

Weighted Moving Average

____ ____ ____: Used when some trend might be present -Older data usually less important Weights based on experience and intuition ____ ____ ____= Sum((weight for period n)(demand in period n)) / Sum(weights)

Product Life Cycle

____ ____ ____: the stages through which goods and services move from the time they are introduced on the market until they are taken off the market. Introduction, growth, maturity, decline

Process Capability Ratio

____ ____ ____: the tolerance width divided by six standard deviations Cp = (Upper specification - Lower specification)/6O - A capable process must have a Cp of at least 1.0 - Does not look at how well the process is centered in the specification range - Often a target value of Cp = 1.33 is used to allow for off-center processes -Six Sigma quality requires a Cp = 2.0

Central Limit Theorem

____ ____ _____ This theorem states that regardless of the distribution of the population, the distribution of Xs (each of which is a mean of a sample drawn from the population) will tend to follow a normal curve as the number of samples increases. The theorem also states that: (1) the mean of the distribution of the Xs (X double bar), will equal the mean of the overall population (U); and and (2) the standard deviation of the sampling distribution, OX, will be the population (process) standard deviation, divided by the square root of the sample size, n. In other words: 1. The mean of the sampling distribution will be the same as the population mean U. AKA X double bar equals U. 2. The standard deviation of the sampling distribution (Ox) will equal the population standard deviation (O) divided by the square root of the sample size, n. Like used in first problem of HW 7 for the oat boxes.

Seven Concepts of TQM

____ ____ _____: 1. Continuous improvement 2. Six Sigma 3. Employee empowerment 4. Benchmarking 5. Just-in-time (JIT) 6. Taguchi concepts 7. Knowledge of TQM tools

Qualitative Methods

____ ____ are forecasting approaches. Used when the situation is vague and little data exist. - New products - New technology Involves intuition, experience

Scatter Diagram

____ ____ is a graph of the value of one variable vs. another variable.

Cost Leadership

____ ____ is achieving maximum value,a s perceived by the customer. Does not imply low value or low quality. Part of the 3 strategic concepts Examples: Southwest Airlines - secondary airports, no frills service, efficient utilization of equipment Walmart - small overhead, shrinkage*, and distribution costs Franz Colruyt - no bags, no bright lights, no music, and doors on freezers

Design Capacity

____ ____ is the maximum theoretical output of a system. - Normally expressed as a rate

Natural Variations

____ ____ of SPC: Also caused common causes Affect virtually all production processes Expected amount of variation Output measures follow a probability distribution For any distribution there is a measure of central tendency and dispersion If the distribution of outputs falls within acceptable limits, the process is said to be "in control"

Demand Forecasts

____ ____ predicts sales of existing products and services.

Six Sigma

____ ____: 1. Defines the project's purpose, scope, and outputs, identifies the required process information keeping in mind the customer's definition of quality 2. Measures the process and collects data 3. Analyzes the data ensuring repeatability and reproducibility 4. Improves by modifying or redesigning existing processes and procedures 5. Controls the new process to make sure performance levels are maintained

Costs of Quality

____ ____: Prevention costs - reducing the potential for defects -Training, Prevention Program, DFSS Appraisal costs - evaluating products, parts, and services -Labs, Testing, Inspectors Internal failure costs - producing defective parts or service before delivery -Rework, Scrap, Downtime External failure costs - defects discovered after delivery -Rework, Returned Goods, Warranty, Liabilities, Lost Goodwill

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

Types of Forecasts

____ ____: 1. Economic 2. Technological 3. Demand

Quality Robustness

____ ____: Ability to produce products uniformly in adverse manufacturing and environmental conditions -Remove the effects of adverse conditions -Small variations in materials and process do not destroy product quality

Focus Forecasting

____ ____: Developed at American Hardware Supply, based on two principles. 1. Sophisticated forecasting models are not always better than simple ones. 2. There is no single technique that should be used for all products or services. Uses historical data to test multiple forecasting models for individual items. Forecasting model with the lowest error used to forecast the next demand.

Theory of Constaints

____ ____: Five-step process for recognizing and managing limitations. Step 1: Identify the constraints Step 2: Develop a plan for overcoming the constraints Step 3. Focus resources on accomplishing step 2. Step 4. Reduce the effects of constraints by offloading work or expending capability. Step 5. Once overcome, go back to step 1 anf find new constraints.

Exponential Smoothing

____ ____: Form of weighted moving average -Weights decline exponentially - Most recent data weighted the most Requires smoothing constant (alpha) -Ranges from 0 to 1 -Subjectively chosen

Trend Projections

____ ____: fitting a trend line to historical data points to project into the medium to long-range. Linear trends can be found using the least squares technique.

Adaptive Smoothing

____ ____: it's possible to use the computer to continually monitor forecast error and adjust the values of the a and b coefficients used in exponential smoothing to continually minimize forecast error.

Exponential Smoothing Formula

____ _____ Formula: New forecast = last period's forecast + a (last period's actual demand - Last period's forecast) Ft =F-1 + a(At-1 - FT -1) Ft = new forecast Ft - 1 = previous period's forecast a = smoothing (or weighting) constant (0 <= a <= 1) At - 1 = previous period's actual demand lowercase letter are sub. Ex. F sub t - 1

Operations Management

____ _____ is the set of activities that create value in the form of goods and services by transforming inputs into outputs.

Technological Forecasts

____ _____ predict the rate of technological progress and impacts development of new products.

Productivity Variables

____ _____: 1. Labor - contributes about 10% of the annual increase 2. Capital - contributes about 38% of the annual increase 3. Management contributes about 52% of the annual increase. Part of the economic system.

Assignable Variations

____ _____: variation in a production process that can be traced to specific causes. Also called special causes variation Variations that can be traced to a specific reason -Examples: Machine/tool wear, Gradual increase in temperature, Misadjusted equipment, fatigued or untrained workers, new batches of raw materials, Different method/process used buy the second shift The objective is to discover when assignable causes are present -Eliminate the bad causes -Incorporate the good causes If assignable causes are found in a sample pool, the process output is not stable over time and is not predictable.

Quantitative Methods

____ ____are part of forecasting approaches. Used when situation is 'stable' and historical data exist. -Existing products -Current technology Involves mathematical techniques

R-Chart

____ is a control chart that tracks the "range" within a sample; it indicates that a gain or loss in uniformity has occurred in dispersion of a production process.

Histogram

____ is a distribution showing the frequency of occurrences of a variable.

X-Chart

____ is a quality control chart for variables that indicates when changes occur in the central tendency of a production process.

Response

____ is a set of values related to rapid, flexible, and reliable performance. May be thought of as the ability to match changes in a marketplace where design innovations and volumes fluctuate substantially. Part of the 3 strategic concepts

Production

____ is the creation of goods and services

Utilization

____ is the percent of a deign capacity actually achieved. ____ = actual output/design capacity

Efficiency

____ is the percent of effective capacity actually achieved. ____ = acutal output.effective capacity

Capacity

____ is 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 -Three time horizons

Outsourcing

____ is transferring a firm's activities that have traditionally been internal to external suppliers. Adds complexity and risk to the supply chain. Accelerating due to three global trends: 1. Increased technology expertise 2. More reliable and cheaper transportation 3. The rapid development and deployment of advancements in communications & computers. Implies and agreement (contact) with an external organization. Roughly half of all ____ fail because of inadequate planning & analysis.

Benchmarking

____: selecting best practices to use as a standard for performance. 1. Determine what to benchmark: -GM Design-Engineer, User/Vendor 2. Form a benchmark team 3. Identify benchmarking partners -Xerox and Mercedes looked at L.L. Bean Order Pick-up (3 times faster) and Warehouse Management 4. Collect and analyze benchmarking information 5. Take action to match or exceed the benchmark

Quality Function Deployment

_____ ____ ____: 1.Identify customer wants 2. Identify how the good/service will satisfy customer wants 3. Relate customer wants to product hows 4. Identify relationships between the firm's hows 5. Develop customer importance ratings 6. Evaluate competing products 7. Compare performance to desirable technical attributes

Overview of Qualitative Methods

_____ ____ _____: 1. Jury of executive opinion - pool opinions of high-level experts, sometimes augment by statistical models 2. Delphi method - panel of experts, queried iterativley. 3. Sales force composite - estimates from individual salespersons are reviewed for reasonableness, then aggregated. 4. Market survey - ask the customer

Moving Average

_____ _____ = Sum of demand in previous n periods / n

Project Management Techniques

_____ _____ _____: Gantt chart Critical Path Method (CPM) Program Evaluation and Review Technique (PERT)

Variability in Activity Times

_____ _____ _____: Three time estimates are required; 1. Optimistic time (a) - if everything goes according to plan 2. Pessimistic time (b) - assuming very unfavorable conditions 3. Most likely time (m) - most realistic estimate

Key Success Factors

_____ _____ _____: activities or factors that are key to achieving competitive advantage. Includes: Marketing Fiance/Accounting Production/Operations And the 10 OM Decision

Economic Forecast

_____ _____ addresses the business cycle - inflation rate, money supply, housing starts, etc.

Production Technology

_____ _____: 1. Machine technology 2. Automatic identification systems (AISs) and RFID 3. Process control 4. Vision systems 5. Robots 6. Automated storage and retrieval systems (ASRSs) 7. Automated guided vehicles (AGVs) 8. Flexible manufacturing systems (FMSs) 9. Computer-integrated manufacturing (CIM)

CPM

_____ assumes we know a fixed time estimate for each activity and there is no variability in activity times.

Transnational Strategy

_____ is a strategy that combines the benefits of global-scale efficiencies with the benefits of local responsiveness. High-cost reduction, high local responsiveness Move material, people, ideas across national boundaries Economies of sale Cross-cultural learning Ex. Coca-Cola, Nestle

Differentiation

_____ is distinguishing the offerings of an organization in a way that the customer perceives as adding value. Uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customer's perception of value Part of the 3 strategic concepts

Advantages

_____ of Outsourcing: Cost Savings Gaining outside expertise Improving operations and service Maintaining a focus on core competencies Accessing outside technology

PERT

_____ uses a probability distribution for activity times to allow for variability. ____ makes two more assumptions: total project completion times follow a normal probability distribution Activity times are statistically independent

Mission Statement

______ ____ tell an organization where it's going Organization's purpose for being Answers 'What do we contribute to society?' Provides boundaries and focus

Reasons to Globalize

______ _____: 1. Improve the supply chain 2. Reduce costs (labor, taxes, tariffs, etc.) 3. Improve operations 4. Understand markets 5. Improve products 6. Attract and retain global talent

Strategy Development Process

______ ______ ______: 1. Analyze the Environment - identify the strengths, weaknesses, opportunities, and threats. Understand the environment, customers, industry, and competitors. 2. Determine the Corporate Mission- state the reason for the firm's existence and identify the value it wishes to create. 3. Form a Strategy - build a competitive advantage, such as low price, design, or volume flexibility, quality, quick delivery, dependability, after-sale service, broad product lines.

Measurement Problems

______ _______: 1. Quality - may change while the quantity of inputs and outputs remains constant. 2. External Elements - may cause an increase or decrease in productivity 3. Precise Units - of measure may be lacking

Five Forces Model

______ is a method of analyzing the five forces in the competitive environment.

International Strategy

______ is a strategy in which global markets are penetrated using exports and licenses. Little advantage to this strategy - little local responsiveness, and little cost advantage. often the easiest strategy Ex. Harley Davidson U.S. Steel

Global Strategy

______ is a strategy in which operating decisions are centralized and HQ coordinates the standardization and learning between facilities. High-cost reduction, low local responsiveness Appropriate when the strategic focus is cost reduction but not for local responsiveness. Standardize products Economies of scale Cross-cultural learning Ex. Caterpillar, Texas Instruments, Otis Elevator

Value Chain Analysis

______ is a way to identify those elements in a product or service chain that uniquely add value.

Disadvantages

______ of Outsourcing: Increase logistic and inventory costs Loss of control (quality, delivery, etc.) Negative impact on employees Risks may not manifest themselves for years

Strategy

______ tells the organization how its going to achieve its mission. Action plan to achieve mission Functional areas have ______ ______ exploit opportunities and strengths, neutralize threats, and avoid weaknesses

Competitive Advantage Strategies

_______ _______ _______: create customer value in an efficient and sustainable way using the following: 1. Differentiation - better, or at least different 2. Cost leadership - (cheaper Vs VALUE) 3. Response - more responsive

Gnatt Chart

_______ are planing charts used to schedule resources and allocate time. Low-cost and widely used Makes sure 1. Activities are planned 2. Order of performance is documented 3. Activity time estimates are recorded 4. Overall project time is developed

Multidomestic Strategy

_______ has decentralized authority with substantial autonomy at each business. Operating decisions are decentralized to each country to enhance local responsiveness. Low-cost reduction, high local responsiveness Maximizes competitive response for local market but little to no cost advantage. Uses existing domestic model globally Franchises, joint ventures, and subsidies Ex. Heinz, McDonald's, The Body Shop, Hard Rock Cafe

SWOT Analysis

_______ is a method of determining internal strengths and weaknesses and external opportunities and threats. All internal strengths, weaknesses, mission, external opportunities, external threats lead to the analysis and finally become the strategy.

Critical Path Method

_________ a project management technique that uses only one time factor per activity.

Program Evaluation and Review Technique (PERT)

_________ is a project management technique that employs three time estimates for each activity.

Control Charts

graphic presentations of process data over time, with predetermined control limits Constructed from historical data, the purpose of ___ ____ is to help distinguish between natural variations and variations due to assignable causes.

Expected Time

t = (a+4m+b)/6

Variance of Times

v = [(b-a)/6]^2 b-a=6 sigmas (standard deviations)= 99.965%