Exam One MGMT 476

Work overtime

What is the easiest, fastest way to increase capacity?

Total Production= total forecast + opening backlog- ending backlog

What is the formula to find the total production for a make to order level production plan?

Input --> Transformation/Transportation/Storage--> Output

What is the sequence for manufacturing and services?

It makes the product or service expensive

What is the trade-off of having something be custom-made?

The marketing and production plan

What two plans does sales and operations planning cover?

goals

Your ____________ should be in line with your mission statement.

Facilitating Good

buying a service and getting a physical product out of it

Commodity

it's the same kind of product or service for all of it's competitors- no difference except maybe price

Product-Process Matrix

job shop, batch process, assembly line, continuous process

Materials Management

the old term for 'supply chain management'

Process Quality

things like reliability and durability

Design Quality

things that give a product or service status. -Like features, leather seats in a car- leather seats doesn't make you drive better but you would rather have leather seats in your car because it looks nice and gives your car status. -Rolex watches, cross pens

Perceived Quality

what is high-quality to someone else may not be high quality for me -different tastes of lifestyles- someone may consider the Rolex high quality simply because it's expensive

MRP

The term MRP II is used to distinguish the manufacturing resource plan (MRP II) from the materials requirements plan (______).

Gross National Product

The wealth of a country is measured by its __________ _________ _________________- the output of goods and services produced by the nation in a given time.

a level plan and a chase plan

What are the 2 pure production/aggregate plan strategies?

-flow of materials -flow of information -flow of funds

What are the 3 critical things in the supply chain?

Inventories can be kept to a minimum; thus, the costs associated with carrying inventories are avoided. You always meet demand.

What are the advantages of a chase strategy?

It results in a smooth level of operation that avoids the costs of changing production levels. Firms do not need to have excess capacity to meet peak demand. They can build a stable workforce. -You don't need to hire or layoff anyone

What are the advantages to a level strategy?

Questions asked in the production plan

"What should your production level be in order to meet goal? Inventory level? Employee level?"

Materials Requirements Plan

(MRP) a plan for the production and purchase of the components used in making the items in the master production schedule. It shows the quantities needed and when manufacturing intends to make or use them. -The level of detail is high. It establishes when the components and parts are needed to make each end item. -The planning horizon is at least as long as the combined purchase and manufacturing lead times. As with the master production schedule, it usually extends from 3 to 18 months.

all

(This is called capacity management) -Determining the capacity required, comparing it to the available capacity, and making adjustments (or changing plans) must occur at ______ levels of the manufacturing planning and control system.

Continuous Process

-Commodity -Very high volume -very low variety -very capital intensive -very unskilled workers- all they do is moderate the machine

Inventory will build up in low-demand periods, which will cost money to carry. In addition, an understated forecast could result in not enough inventory being produced for the peak season.

What are the disadvantages to a level strategy?

marketing, finance, operations

What are the three functions of any business?

price, quality, service, flexibility, and innovation

What can I do to make someone else buy my product or service compared to someone else? -These things make a product either become an order winner or an order qualifier. -There are certain standards of things a product has to meet in order for a consumer to consider buying it. -Since it is virtually impossible to be the best in every category, firms in general should strive to hit the minimal amounts in each category for the current market's wants and needs.

goods and services, information, and money

What flows in a supply chain?

1) Chase strategy 2) Production leveling 3) Subcontracting 4) Hybrid strategy

Four Basic Strategies that can be used in developing a production plan:

-goods are produced to customer specifications -the customer is willing to wait while the order is being made -the product is expensive to make and to store -Several product options are offered

Generally, firms make to order when:

priority

relates to what products are needed, how many are needed, and when they are needed. -The marketplace establishes this. Manufacturing is responsible for devising plans to satisfy the market demand if possible -Also known as demand

1. What are we going to make or provide to customers? 2. What does it take to make it? 3. What do we have? 4. What do we need? -These are questions of priority and capacity.

A good planning system must answer the following four questions:

Make-to-stock items

Backorders are apart of what product-process matrix?

The customers specifications require unique engineering design or significant customization. Customer is highly involved in the product design, and inventory will not normally be purchased until needed by manufacturing. -Delivery lead time is long because it includes not only purchase lead time but also design lead time.

Engineer-to-Order

-Engineer-to-Order -Make-to-Order -Configure-to-Order -Assemble-to-Order -Make-to-Stock

Five Basic Process-Strategy Choices

medium

Sales and operations planning is ___________ range and includes the marketing, production, engineering, and finance plans. Sales and Operations planning has several benefits: -It provides a means of updating the strategic plan and the strategic business plan as conditions change. -It provides a means of managing change. Rather than reacting to changes in market conditions or economy after they happen, SOP forces management to look at the economy at least monthly and places it in a better position to plan changes. -It ensures that the various department plans are realistic and coordinated and support the business plan. -It provides a realistic plan that can achieve the company objectives. -It permits better management of production, inventory, and backlog.

Mission Statement Goals Strategy Tactics

Sequence of planning for a company's success:

Resource-Base View (RBV)

States that in order to maintain a competitive advantage, you have to have to be valuable, rare, difficult to substitute and obtain -having something with a sustainable competitive advantage.

The Production Planning problem typically has these following characteristics:

-A time horizon of 12 months or more is used, with periodic updating perhaps every month or quarter. -Production demand consists of one or a few product families or common units. -Demand is fluctuating or seasonal -Plant and equipment are fixed within the time horizon -A variety of management objectives are set, such as low inventories, efficient plant operation, good customer service, and good labor relations.

Marketing department Objectives

-Marketings objective is to maintain and increase revenue; therefore it must provide the best customer service possible. -There are several ways to do this: maintain high inventories so goods are always available for the customer, interrupt production runs so that a non-inventoried item can be manufactured quickly, create an extensive, and consequently costly, distribution system so goods can be shipped to the customer rapidly.

Batch Process

-Multiple products -Low volume -Moderate variety -economies of scale -less-skilled workers than job shops

Changes that can be made during the production planning time horizon:

-People can be hired and laid off, overtime and short time can be worked, and shifts can be added or removed -Inventory can be built up in slack periods and sold or used in periods of high demand. -Work can be subcontracted or extra equipment leased. -Large changes in capacity are usually not possible. Additions or subtractions in plant and equipment are impossible or very difficult to accomplish in this period.

Triple bottom line for sustainability (The 3 P's)

-Profit -Planet -People -"We want to make a profit but we don't want to hurt the plant, and we also want to take care of people."

Assembly Line

-Standardized product -High volume -Low variety

Job-Shop

-Unique product -Low volume -High variety -Highly skilled workforce

Performance Measure

-must be both quantified and objective -must have atleast two parameters- # of units/unit of time

monthly

Although the strategic plan and strategic business plan are usually update annually, sales and operations planning is a dynamic process in which the company plans are updated on a regular basis, usually at least _______________. The process starts with the sales and marketing departments, which compare actual demand with the sales plan, asses market potential, and forecast future demand. The updated marketing plan is then communicated to manufacturing, engineering, and finance, which adjust their plans to support the revised marketing plan. If these departments find they cannot accommodate the new marketing plan, then the marketing plan must be adjusted.

The product is made from standard components or options that the manufacturer can inventory and assemble according to a customer order. This is usually done at a later stage in the process. Dell is a company that does this- they keep all the parts and simply assemble the computer. -Delivery lead time is reduced further because there is no design time needed and inventory is held ready for assembly. Customer involvement in the design of the product is limited to selecting the assembly options selected.

Assemble-to-Order

Make-to-order items

Backlogs are apart of what product-process matrix?

individual products, colors, styles, options

Based on the market plan and available resources, the production plan sets the limits or levels of manufacturing activity for some time in the future. It integrates the capabilities and capacity of the factory with the market and financial plans to achieve the overall business goals of the company. -The production plan sets the general levels of production and inventories over the planning horizon. Its prime purpose is to establish production rates that will accomplish the objectives of the strategic plan and the strategic business plan. -These include inventory levels, backlogs, market demand, customer service, low-cost plant operation, labor relations, and so on. -The plan must extend far enough in the future to plan for the labor, equipment, facilities, and material needed to accomplish it. Typically, this is a period of 6 to 18 months and is done in monthly and sometimes weekly periods. -The planning process at this level ignores such details such as __________ _____________, ______________, ________________, or ___________________. With the time spans involved and the uncertainty of demand over long periods, the detail would not be accurate or useful, and the plan would be expensive to create.

Aggregate Production Plan

Because the production plan tends to combine product groups or product families rather than individual products, it is sometimes referred to as ____________________.

Conflicts in Traditional Systems

Companies have to be careful to not have different departments have conflicting objectives. Production, marketing, and finance departments butt heads on what to do depending on the specific department goals and responsibilities. -These conflicts among marketing, finance, and production center pm customer service, disruption of production flow, and inventory levels.

manufacturing

Essentially, ERP encompasses the total company, whereas MRP II encompasses just ________________.

Finance department objectives

Finance must keep investment and costs low. This can be done in the following ways: -reduce inventory so inventory investment is at a minimum -decrease the number of plants and warehouses -produce large quantities using large production runs -manufacture only to customer order

similarity

Firms need to establish product groups based on the ________ of manufacturing processes and resources used.

1) Strategic Business Plan 2) Production Plan 3) Master Production Schedule 4) Purchasing and production activity control -Each level varies in purpose, time span, and level of detail. As the process moves from strategic planning to production activity control, the purpose changes from general direction to specific detailed planning, the time span decreases from years to days, and the level of detail increases from general categories to individual components or workstations.

Five major levels in the manufacturing planning and control system -The manufacturing planning and control system is a master game plan for all departments in the company.

The Production Plan

Given the objectives set by the strategic business plan, this is concerned with the following: -the quantities of each product group that must be produced in each period -the desired inventory levels -the resources of equipment, labor, and material needed in each period -the availability of the resources needed -The level of detail in this is not high and is still very broad. The planning horizon is usually 6 to 18 months and is usually reviewed every month or quarter. -It's about product groups. It ignores details such as individual products, colors, styles, or options. -Planners must devise a plan to satisfy market demand within the resources available to the company. This will involve determining the resources needed to meet market demand, comparing the results to the resources available, and devising a plan to balance requirements and availability.

strategy

In order to achieve the goals, you have to have some form of _________.

Marketing Finance Operations

In order to have an order winner, you must have a... - _____________ strategy - ______________ strategy or an -_________________ strategy.

Reverse Supply Chain

In some cases companies will establish a formal supply chain used to retrieve a used product in order to dispose of it, reclaim materials from it, or reuse it in some fashion. This is sometimes referred to as ____________________.

The manufacturer does not start to make the product until a customer's order is received. The final product is usually made from standard items but may include custom-design components as well. Example: German luxury car manufacturer BMW. The carmaker allows customers to buy a car that it has already made. However, they can customize their vehicle according to their requirements. -Delivery lead time is reduced because there is little design time required and inventory is held as raw material.

Make-to-Order

The supplier manufactures the goods and sells from a finished goods inventory. -Delivery lead time is the shortest as manufacturing and assembly have already been completed. The customer has little direct involvement in the product design.

Make-to-Stock

Operations -Making things, manufacturing, services

Of the three functions of business- which one actually creates wealth?

Resource Planning (resource requirements planning)

Once the preliminary production plan is established, it must be compared to the existing resources of the company. This is called __________ ______________. Two questions must be answered: 1) Are the resources available to meet the production plan? 2) If not, how will the difference be reconciled?

another application of assemble-to-order. It's a product design strategy that shifts product differentiation closer to the consumer by postponing identity change to the last possible supply chain location. -This strategy reduces the number of different items in the supply chain, lowering the amount of in-process inventory. -An example of this would be computer printers for a global market that uses universal power supplies that can be switched to different voltages. Upon receipt of a customer's order, they are packaged with the appropriate cords, instructions, and labeling. This avoids fulling an entire supply chain with expensive printers destined for many different countries. Foreign suppliers of appliances, such as vacuum cleaners destined for multiple customers, postpone the packaging of their products, applying customer-specific labels, bar codes, boxes, instructions, and so forth until after receipt of the customer order.

Postponment

customer supplier

Product or services usually flow from supplier to customer; design, demand information, and cash usually flow from ____________ to ______________.

Production department objectives

Production must keep its operating costs as low as possible. This can be done in the following ways: -make long production runs of relatively few products. Fewer changeovers will be needed and specialized equipment can be used, thus reducing the cost of making the product -maintain high inventories of raw materials and work-in-process so production is not disrupted by shortages.

senior

The development of the strategic plan is the responsibility of ________ management. Using information from marketing finance, production, and other functions the strategic plan provides a framework that sets the goals and objectives for further planning by the marketing, finance, engineering, and production departments.

Manufacturing Resource Planning (MRP II)

The manufacturing planning and control system is a master game plan for all departments in the company. This fully integrated planning and control system is called a _____________ ___________________ __________________. -It provides coordination between marketing and production. Marketing, finance, and production agree on a total workable plan expressed in the production plan. Marketing and production must work together on a weekly and daily basis to adjust the plan as changes occur. Order sizes may need to be changed, orders canceled, and delivery dates adjusted. This kind of change is made through the master production schedule. Marketing managers and production managers may change master production schedules to meet changes in forecast demand. Senior management may adjust the production plan to reflect overall changes in demand or resources. However, they all work through the MRP II system. It provides the mechanism for coordinating the efforts of marketing, finance, production, and other departments in the company. It is a method for the effective planning of all resources of a manufacturing company.

consistent

The mission statement, goals, strategy, and tactics of a company must remain _____________.

less, more

The product-process matrix becomes ______ labor-intensive and _______ capital-intensive as you go down the diagonal line.

Sustainability

There are recent trends in business that sometimes impact the development and management of strategic plans. One of these is the issue of ________________, basically meaning the capability to continue (sustain) operations into the long term. -Much of the interest in sustainability evolved from the perspective of pollution control, saving the environment, and social responsibility (establishing company policies that establish a positive relationship with society and strike some balance between the economy and the environment).

Supplier--> Manufacturer-->Distribution

There are three phases to the flow of materials. Raw materials flow into a manufacturing company from a physical supply system, they are processed by manufacturing, and finally, finished goods are distributed to end consumers through a physical distribution system. -Question to answer: what are the 3 phases to the flow of materials?

kk

This picture shows the planning hierarchy. The first four levels are planning levels. The result of the plans is authorization to purchase or manufacture what is required. The final level is when the plans are put into action through purchasing and production activity control. (choose kk)

Manufacturing

___________ companies are in the business of converting raw materials to a form that is of far more value and use to the consumer than the original raw materials. Logs are converted into tables and chairs, iron ore into steel, and steel into cars and refrigerators. -This conversion process, called manufacturing or production, makes a society wealthier and creates a better standard of living.

Mission Statement

___________ shows people what a business wants to achieve, you should have it in less than 2 sentences.

tactics

____________ is the day-to-day things we will do to make the strategy work.

Assemble

_____________ to order is a subset of make-to-order. When manufacturers receive an order from a customer, they assemble the component parts from inventory according to the order. Since the components are stocked, the firm needs only time to assemble before delivering to the customer.

Backorders

a customer order that cannot be filled when promised or demanded but is filled later -you ran out of inventory and can't fill the order

Product Group

a group of products that have similar planning characteristics -doesn't deal with the specific end products, but groups of products. -In a bicycle factory, it wouldn't deal with the making of a pink or green bike, but rather the major product groups or families- like bicycles, tricycles, and scooters.

The Master Production Schedule

a plan for the production of individual end items. It breaks down the production plan to show, for each period, the quantity of each end item to be made. This is when you begin to look at SKUs. -For example, it might show that 200 Model A23 scooters are to be built each week. -Inputs to this are the production plan, the forecast for individual end items, sales orders, inventories, and existing capacity. -The planning horizon usually extends from 3 to 18 months but primarily depends on the purchasing and manufacturing lead times. Usually, the plans are reviewed and changed weekly or monthly.

Sales and Operations Planning

a process of continuously revising the strategic business plan and coordinating plans of the various departments. -It is a cross-functional business plan that involves sales and marketing, production development, operations, and senior management. Operations represent supply, whereas marketing represents demand.

Reverse Logistics/Remanufacturing

a process of reclaiming recyclable and reusable materials, returns, and reworks from the point of consumption or use for repair, remanufacturing, redistribution, or disposal. -Recycling and reusing material is a major part of sustainability

The Strategic Business Plan

a statement of the major goals and objectives the company expects to achieve over the next 2 to 10 years or more. -It is a statement of the broad direction of the firm and shows the kind of business- product lines, markets, and so on- the firm wants to do in the future. The plan gives general direction about how the company hopes to achieve these objectives and really represents a commitment to take various actions designed towards growth, defining and attracting customers, defining markets, and includes participation from marketing, finance, production, engineering, and all other major functions of the firm.

Metric

a verifiable measure stated in either quantitative or qualitative items defined with respect to a reference point. It gives businesses control, data, communication, learning, and we use it for improvement. -Businesses have to be able to measure things, which is one of the problems with services. Quality and productivity is low in services. Services is the least productive- quality is lower because it is difficult to judge a service as a service is intangible and the quality of the service is subjective as quality means different things to different people.

Performance Standards

create goals that have target values. -An example of this would be to improve order fill rate to 98%.

Flexibility of Product

ability to offer wide variety of products -Henry Ford did the exact opposite of this- only produced Model T's and only produced them in black. "You can have any color as long as it's black." -Founder of Canes only does one thing -McDonalds has none of this, which is why you are asked to pull over and wait in he drive thru when you ask for a customization because the food preparation is very standardized.

Flexibility of Volume

ability to respond to changes in demand

Subcontracting

can mean buying the extra amounts demanded from external sources. -Advantages: production cost. Costs associated with excess production capacity are avoided, and because production is leveled, there are no costs associated with changing production levels. -Disadvantages: the cost of purchasing (item cost, purchasing, transportation, inspection costs) may be greater than if the item were made in the plant.

Order Qualifiers

certain standards that a product has to meet in order for a consumer to consider purchasing it- customer requirements may be based on price, quality, delivery, and so forth. But being considered does not mean winning the order.

Order Winners

characteristics of a product that encourage consumers to choose its products and services over competitors'. These characteristics, or a combination of characteristics, persuade a company's customers to choose its products or services.

Hybrid Strategy

combination of level and chase strategies

Production Leveling (level strategy)

continually producing an amount equal to the average demand. -Companies calculate their total demand over the time span of the plan, and, on the average, produce enough to meet it. Sometimes demand is less than the amount produced and an inventory builds up. At other times demand is greater and inventory is used up. -Means that the company will use its resources at a uniform rate and produce the same amount each day it is operating. The exact amount produced each month (or sometimes each week), however, will not be constant because the number of working days varies from month to month.

Max Rate Output

how much output you can manage

k!

look at figure 2.5 on page 24 (select k!)

Chase (demand matching) Strategy

producing the amounts demanded at any given time. Inventory levels remain stable while production varies to meet demand. The firm manufactures just enough at any one time to meet demand exactly. -In these cases, the company must have enough capacity to be able to meet the peak demand. Companies with seasonal or cyclical demand often have to hire and train people for the peak periods and lay them off when the peak is past. Sometimes they have to add extra shifts and overtime. All these changes add cost.

Purchasing and Production Activity Control

represent the implementation and control phase of the production planning and control system. -Purchasing is responsible for establishing and controlling the flow of raw materials into the factory. -Production activity control (PAC) is responsible for planning and controlling the flow of work through the factory. -The planning horizon is very short, perhaps from a day to a month. The level of detail is high since it is concerned with individual components, workstations, and orders. Plans are reviewed and revised daily.

Enterprise Resource Planning (ERP)

similar to MRP II except it does not dwell on manufacturing and takes the entire enterprise into account. -Framework for organizing, defining, and standardizing the business processes necessary to effective plan and control an organization so the organization can use its internal knowledge to seek external advantage. -Basically, it encompasses the total company, whereas MRP II encompasses just manufacturing. It allows for the tracking of orders and other important planning and control information throughout the entire company, from procurement to ultimate customer delivery. In addition, many of these systems are capable of allowing managers to share data between firms, meaning that these managers can potentially have visibility across the complete span of the supply chain.

SKU

stock keeping unit -Shoe example: You are starting a shoe company. You can make brown or black shoes, and they could either then be loaders or oxfords. They can also be sized anywhere from a 6 to a 10. With that, you have 40 different SKUs. -A brown loader sized 8 is one SKU.

Capacity

the ability to produce goods and services -it means having the resources available to satisfy demand.

capacity

the capability of manufacturing to produce goods and services. -It is the quantity of work that labor and equipment can perform in a given period. -It is how much output you can manage, or max rate output

Backlogs

unfilled customer orders. It represents products that will be out for delivery in the future and does not represent orders that are late or past due.