MGT 366 Final
Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound per day. Lead time for each order is three days, and the pepperoni itself costs $3.00 per pound. At what point should she reorder pepperoni?
(Demand * Lead Time) + Safety Stock (20 * 3) + 0 60 pounds remaining
If average demand for an item is 20 units per day, safety stock is 50 units, and lead time is four days, the ROP will be:
(Demand * Lead Time) + Safety Stock (20 * 4) + 50 130
If average demand for an inventory item is 200 units per day, lead time is three days, and safety stock is 100 units, the reorder point is:
(Demand * Lead Time) + Safety Stock (200 * 3) + 100 700 units
Balridge Award
Annual award given by the U.S. government to recognize quality achievements of U.S. companies.
Costs of inspectors, testing, test equipment, and labs are examples of:
Appraisal costs
The lean philosophy suggests that workers are
Assets
Which of the following best describes aggregate planning? A. The link between intermediate-term planning and short-term operating decisions B. A collection of objective planning tools C. Make or buy decisions D. An attempt to respond to predicted demand within the constraints set by product, process, and location decisions E. Manpower planning
D. An attempt to respond to predicted demand within the constraints set by product, process, and location decisions
Which one of the following is not one of the building blocks that is the foundation of the lean philosophy? A. Product Design B. Process Design C. Personnel/Organizational Elements D. Manufacturing Planning and Control E. Kanban
E. Kanban
Which of the following would not usually be a main factor in selecting a vendor? A. Price B. Vendor services C. Location D. Quality E. Inventory turnover
E. Inventory turnover
Elements of TQM
Continual Improvement Competitive Benchmarking Employee Empowerment Team Approach Decisions based on facts not opinions Knowledge of Tools Supplier Quality TQM Champion "Quality at the Source" Suppliers are partners
Kaizen
Continuous improvement
Ohno and Shingo
Continuous improvement (Kaizen)
Failure Costs
Costs caused by defective parts or products
Appraisal Costs
Costs of activities designed to ensure quality or uncover defects
Prevention Costs
Costs of preventing defects from occurring.
4 Basic Sources of Variation
Variety of goods or services being offered Structural variation in demand Random variation Assignable variation
In using the chase strategy, variations in demand could be met by:
Varying output during regular time by changing employment levels
Examination of the sources of supply for purchased parts or materials in order to improve performance is called:
Vendor analysis
Juran
Viewed quality as fitness-for-use Quality management is a trilogy: quality planning/control/improvement
The kaizen philosophy applies to
Waste
Muda
Waste and inefficiency. Perhaps the driving philosophy. Waste and inefficiency can be minimized by using the following tactics.
What are the characteristics of lean systems?
Waste reduction, continuous improvement, use of teams, work cells, visual controls, high quality, minimal inventory, output tied to demand, quick changeovers, small lot sizes, lean culture
What are the risks of lean systems?
Increased stress Fewer resources Supply chain disruptions can halt operations
Quality of Design
Intention of designers to include or exclude features in a product or service
In the basic EOQ model, if annual demand doubles, the effect on the EOQ is:
It increases by about 40%
What is a highly coordinated activity that delivers goods and/or services when they are needed?
Just in time production
A conveyance __________ signals parts movement.
Kanban
Shewhart
Known as the father of statistical quality control; control charts and variance reduction
What is a flexible system that uses considerably fewer resources than a traditional system?
Lean operation
Consequences of Poor Quality
Loss of business Liability Productivity Costs
The interface between the firm and its suppliers is:
Purchasing
Jidoka
Quality at the source. A machine automatically stops when it detects a bad part (autonomation)
Feigenbaum
Quality is a total field; the customer defines quality
This is the degree to which goods and services conform to the intent of the designers.
Quality of conformance
The purchasing cycle begins with:
Receiving a requisition
What are the benefits of lean systems?
Reduced waste Lower costs Increased quality Reduced cycle time Increased flexibility Increased productivity
_____ is the ability of a business to recover from an event that negatively impacts the supply chain.
Resiliency
Lean vs. Six Sigma
Six sigma is considered quality tool Lean is an improvement to a process
Pareto Analysis
Technique for classifying problem areas according to degree of importance, and focusing on the most important
Brainstorming
Technique for generating free flow of ideas in a group of people
TQM stands for:
Total quality management
9 Dimensions of Product Quality
1. Performance 2. Aesthetics 3. Special features 4. Conformance 5. Reliability 6. Durability 7. Perceived quality 8. Serviceability 9. Consistency
9 Dimensions of Service Quality
1. Convenience 2. Reliability 3. Responsiveness 4. Time 5. Assurance 6. Courtesy 7. Tangibles 8. Consistency 9. Expectations
Demin's 14 Points Needed to Achieve Quality in an Organization
1. Create constancy of purpose for improving products and services. 2. Adopt the new philosophy. 3. Cease dependence on inspection to achieve quality. 4. End the practice of awarding business on price alone; instead, minimize total cost by working with a single supplier. 5. Improve constantly and forever every process for planning, production, and service. 6. Institute training on the job. 7. Adopt and institute leadership. 8. Drive out fear. 9. Break down barriers between staff areas. 10. Eliminate slogans, exhortations, and targets for the workforce. 11. Eliminate numerical quotas for the workforce and numerical goals for management. 12. Remove barriers that rob people of pride of workmanship, and eliminate the annual rating or merit system. 13. Institute a vigorous program of education and self-improvement for everyone. 14. Put everybody in the company to work accomplishing the transformation.
Basic Steps of Problem Solving
1. Define the problem and establish an improvement goal 2. Collect data 3. Analyze problem 4. Generate potential solutions 5. Choose a solution 6. Implement the solution 7. Monitor the solution to see if it accomplishes the goal
Kaizen Tenents
1. Waste is the enemy and to eliminate waste it is sometimes necessary to get hands dirty 2. Improvement should be done gradually and continuously; the goal is not big improvements done intermittently 3. Everyone should be involved - top managers, middle managers, and workers 4. Kaizen is built on a cheap strategy, and does not require spending great sums on technology or consultants 5. It can be applied anywhere 6. It is supported by a visual system: a total transparency of procedures, processes, and values, making problems and wastes visible to all 7. It focuses attention where value is created 8. It is process oriented 9. It stresses that the main effort of improvement should come from new thinking and a new work style. 10. The essence of organizational learning is to learn while doing.
The weekly output of a fabrication process is shown below, together with data for labor and material inputs. Standard selling price is $125 per unit. Overhead is charged weekly at the rate of $1,500 plus .5 times direct labor cost. Assume a 40-hour week and an hourly wage of $16. Material cost is $10 per foot. What is the average multifactor productivity? Week Output Workers Materials 1 392 5 2720 2 408 6 2790
1.457
In an assembly operation at a furniture factory, 6 employees assembled an average of 450 standard dining chars per 5-day week. What is the labor productivity of this operation?
15 chairs per worker per day
Information for firm ABC Inventory at the end of April 2008: 200 units Expected demand during April 2008: 50 units Production expected during April 2008: 100 units What is the expected inventory at the end of March 2008?
150
The manager of a carpet store is trying to determine the best installation crew size. He has tried various crew sizes with the results shown below. Based on productivity, what crew size do you recommend? Crew Size: Yards Installed: 2 716 4 1298 3 1017 3 1002 4 1278 2 702
2
Information for firm ABC Inventory at the end of April 2008: 200 units Expected demand during April 2008: 50 units Production expected during April 2008: 100 units What is the expected inventory at the end of April 2008?
250
Six Sigma
A business process for improving quality, reducing costs, and increasing customer satisfaction
Histogram
A chart of empirical frequency distribution
ISO 14000
A collection of the best practices for managing an organization's impact on the environment.
Flowchart
A diagram of the steps in a process
Cause-and-Effect Diagram
A diagram used to search for the cause(s) of a problem; AKA fishbone diagram
Pareto Phenomenon
A few factors account for a high percentage of the occurrence of some event(s)
Scatter Diagram
A graph that shows the degree and direction of relationship between 2 variables
A quality circle is:
A group of employees who meet to discuss ways of improving products or processes.
In the A-B-C classification system, items which account for about 60 percent of the annual dollar value, but only about 10 to 15 percent of the items in inventory, would be classified as:
A items
Kanban
A manual system that signals the need for parts or materials.
5W2H Approach
A method of asking questions about a process that includes what, why, where, when, who, how, and how much.
Total Quality Management
A philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction.
ISO 24700
A set of international standards that pertains to the quality and performance of office equipment that contains reused components.
Control Chart
A statistical chart of time-ordered values of a simple statistic
Check Sheets
A tool for recording and organizing data to identify a problem
Value Steam Mapping
A visual tool to systematically examine the flow of materials and information; AKA material and information flow mapping
Which of the following is not a benefit of lean systems? A. Fewer resources B. Lower inventories C. Increased flexibility D. Increased productivity E. Reduced waste
A. Fewer resources (this is a risk)
Which of the following is not a benefit of centralized purchasing? A. Quick response to local needs B. Supplier research C. Potential for quantity discounts D. Potential for use of purchasing specialists E. Better service from suppliers
A. Quick response to local needs
Which of the following is not a risk of lean systems? A. Reduced cycle time B. Increased stress C. Increased responsibilities D. Fewer resources E. Supply chain disruptions
A. Reduced cycle time (this is a benefit)
Ishikawa
Cause-and-effect diagrams; quality circles
A tool that is useful in the collection and organization of data is a:
Check sheet
Aggregate planners seek to match supply and demand...
At minimum overall cost
The term that refers to the automatic detection of defects is:
Autonomation
Which of the following is an input to aggregate planning? A. Ending inventory B. Demand forecasts for each period C. Customer levels D. Setup costs E. Quantity discounts
B. Demand forecasts for each period
For an organization to grow its market share, it must: A. Broaden its mission statement B. Exceed minimum standards of acceptability for its products or services C. Advertise using multimedia D. Establish an Internet website E. Reduce prices
B. Exceed minimum standards of acceptability for its products or services
All of the following were key contributors to quality management except? A. Taguchi B. Kawzuki C. Ishikawa D. Juran E. Shewhart
B. Kawzuki
The ultimate goal in a lean system is
Balanced and rapid flow
In the quantity discount model, with carrying cost stated as a percentage of unit purchase price, in order for the EOQ of the lowest curve to be optimum, it must:
Be in a feasible range
The process of identifying other organizations that are best at some facet of your operations, analyzing your performance versus theirs in order to establish a standard against which to judge performance, and identifying a model for learning how to improve is known as:
Benchmarking
Which of the following is not something commonly found in lean systems? (I) waste reduction (II) output match to a detailed forecast (III) visual controls (IV) quick changeovers (V) long production runs
Both II and V
A quality improvement technique that involves the sharing of thoughts and ideas in a way that encourages unrestrained collective thinking is:
Brainstorming
Methods for Generating Ideas
Brainstorming Quality Circles Benchmarking
Small changes in consumer demand can result in large variations in orders placed because of the
Bullwhip effect
SERVQUAL
Commonly used tool for assessing service quality; designed to obtain feedback on an org's ability to provide quality service to customers. Focuses on tangibles, reliability, responsiveness, assurance, and empathy.
The Five S's do not include: A. Sort B. Straighten C. Sanitize D. Sweep E. Standardize
C. Sanitize
Which of the following differs between aggregate planning in services and aggregate planning in manufacturing? A. Uncertainty in demand B. Costs of storing inventory C. The perishability of capacity D. Cost of overtime E. Cost of hiring
C. The perishability of capacity
Which of the following is not an output to the aggregate planning process? A. Inventory levels B. Employees required C. Backorder projections D. Demand forecast E. Subcontracting needed
D. Demand forecast
Which of the following is not characteristic of preventive maintenance in lean systems? A. Maintaining equipment in good operating condition B. Replacing parts that have a tendency to fail before they fail C. Workers maintaining their own equipment D. Eliminating supplies of spare parts to reduce capital investment E. Perceiving breakdowns as an opportunity for improvement
D. Eliminating supplies of spare parts to reduce capital investment
Which of the following is true? A. Corporate mission is shaped by functional strategies B. Corporate strategy is shaped by functional strategies C. External conditions are shaped by corporate mission D. Functional strategies are shaped by corporate strategy E. Corporate mission is shaped by corporate strategy
D. Functional strategies are shaped by corporate strategy
Which of the following is not a typical goal of process improvement? A. Increasing customer satisfaction B. Reducing waste C. Achieving higher quality D. Increasing market share E. All are the goals
D. Increasing market share
Marketing depends on operations for information regarding: A. Cash flow B. Budgeting C. Productivity D. Lead Time E. Corporate Intelligence
D. Lead Time
Which of the following is not an input to the aggregate planning process? A. Resources available B. Demand forecast C. Policies on workforce changes D. Master production schedules E. Cost information
D. Master production schedules
A tool that is not used for quality management is a A. Flowchart B. Histogram C. Pareto analysis D. Redesign E. Check sheet
D. Redesign
Which of the following is not a basic option for altering demand? A. Promotion B. Backordering C. Pricing D. Subcontracting E. All of these are demand options
D. Subcontracting
DMAIC
Define, Measure, Analyze, Improve, Control
What are the 3 basic elements of lean operations?
Demand-driven, focused on waste reduction, culture that is dedicated to excellence and continuous improvement
Crosby
Developed concept of zero defects; "Do it right the first time." Believed that quality is free
External Failures
Discovered after delivery to the customer
Internal Failures
Discovered during production process
One important role of purchasing is to: A. Set quality standards for purchased items from suppliers B. Obtain the lowest prices on all purchased items C. Determine the processes that should be used by suppliers D. Maintain numerous sources of supply E. Be knowledgeable about new products from suppliers
E. Be knowledgeable about new products from suppliers
Which of the following is not a characteristic of service operations? A. High customer contact B. High labor content C. Low uniformity of input D. Intangible output E. Easy measurement of productivity
E. Easy measurement of productivity
Farming is an example of: A. Customized manufacturing B. A virtual organization C. A growth industry D. An obsolete activity E. Nonmanufactured goods production
E. Nonmanufactured goods production
Which of the following is least likely to affect the cost an organization incurs in producing its products or services? A. Quality B. Location C. Inventory management D. Productivity E. Price
E. Price
Core competencies in organizations generally do not relate to: A. Time B. Flexibility C. Quality D. Cost E. Sales Price
E. Sales Price
Which of the following would not be a strategy associated with adjusting aggregate capacity to meet expected demand? A. Subcontract B. Vary the size of the workforce C. Schedule overitme D. Allow inventory levels to vary E. Use back orders
E. Use backorders
What are the goals of the lean system?
Eliminate disruptions Make the system flexible Eliminate waste, especially excess inventory
Benefits of Good Quality
Enhanced reputation for quality Ability to command premium prices Increased market share Greater customer loyalty Lower liability costs Fewer production or service problems Lower production costs Higher profits
What are the two functions that management must be concerned with in regard to inventory?
Establishing a system to track items Making decisions about the quantity and when to order
European Quality Award
European award for organizational excellence
8 Muda
Excess inventory Overproduction Waiting time Unnecessary transporting Processing waste Inefficient work methods Product defects Underused people
Cycle stock inventory is intended to deal with
Expected demand
If no variations in demand or lead time exist, the ROP will equal:
Expected usage during lead time
Cause-and-effect diagrams are sometimes called:
Fishbone (Ishikawa) diagrams
The tool that is useful in documenting the current process is a:
Flowchart
7 Basic Quality Tools
Flowchart Check Sheets histogram Pareto Analysis Scatter Diagram Control Chart Cause and Effect Diagram
The more __________ a company's supply chain, the more difficult it is to ensure that the supply chain is managed ethically.
Global
Quality Circles
Groups of workers who meet to discuss ways of improving products or processes
Deming
Holistic view of responsibility for quality variability as source of most problems importance of customer; differentiated special and common causes of variation
Which of the following, while desirable from some perspectives, might actually increase the risk of supply chain disruptions? (I) fewer supply chain partners (II) a shorter supply chain (III) greater supply chain visibility
I only
Aggregate planning requires which of the following information? (I) a forecast of expected demand (II) current levels of inventory (III) policies regarding employment levels
I, II, and III
Which of the following is part of the purchasing cycle? (I) Purchasing selects a supplier. (II) Orders from vendors are received. (III) Purchasing receives a requisition.
I, II, and III.
What are the 5 principles of lean systems?
Identify customer values Focus on processes that create value Eliminate waste to create flow Produce only according to customer demand Strive for perfection
The purchasing perspective of the supplier as a partner is characterized by:
One or a few suppliers
The approaches used in lean systems to deal with quality include (I) designing quality into products and processes (II) insisting vendors provide high-quality materials (III) expecting workers to be involved in continuous improvement (IV) training workers in statistical process control (V) 100 percent inspection of raw materials, work-in-process, and finished goods
Only I, II, III, and IV
The external elements of SWOT analysis are:
Opportunities and threats
Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound per day. Lead time for each order is three days, and the pepperoni itself costs $3.00 per pound. If she were to order 80 pounds of pepperoni at a time, what would be the average inventory level?
Order Quantity / 2 80 / 2 40
Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound per day. Lead time for each order is three days, and the pepperoni itself costs $3.00 per pound. If she were to order 80 pounds of pepperoni at a time, what would be the length of an order cycle?
Order Quantity/Demand Rate 80/20 4 days
Years ago in the overnight delivery business, providing package tracking capability gave some firms a competitive advantage. Now, all firms must offer this capability simply to be in this line of business. This is an example of ______________ becoming ____________ over time.
Order winners; order qualifiers
_________ has/have helped firms to concentrate on their core business.
Outsourcing
A technique for focusing attention on the most important problem areas is:
Pareto analysis
PDSA Cycle
Plan, Do, Study, Act; Shewhard cycle / Deming wheel; framework for problem solving and improvement activities
Loss of business, increased liability, decreased productivity, and higher costs are all likely consequences of:
Poor quality
Quality planning and administration, quality training, and quality control procedures are examples of:
Prevention costs
Benchmarking
Process of measuring performance against the best in the same or another industry
JIT II
Process that allows suppliers to manage restocking of inventory obtained from the suppliers. AKA vendor managed inventory
What are the building blocks of lean production systems?
Product design Process design Personnel/organizational elements Manufacturing planning and control
The materials manager for a billiard ball maker must periodically place orders for resin, one of the raw materials used in producing billiard balls. She knows that manufacturing uses resin at a rate of 50 kilograms each day, and that it costs $.04 per day to carry a kilogram of resin in inventory. She also knows that the order costs for resin are $100 per order, and that the lead time for delivery is four days. What is the economic order quantity for resin?
Sq rt(2SD/H) Sq rt((2x100x50)/.04) 500 kilograms
Ann Chovies, owner of the Perfect Pasta Pizza Parlor, uses 20 pounds of pepperoni each day in preparing pizzas. Order costs for pepperoni are $10.00 per order, and carrying costs are 4 cents per pound per day. Lead time for each order is three days, and the pepperoni itself costs $3.00 per pound. What is the economic order quantity for pepperoni?
Sq rt(2SD/H) Sq rt((2x10x20)/(.04)) 100 pounds
___________ is generally used to facilitate an organization strategy that emphasizes low cost.
Standardization
Although lean systems tend to produce standardized product lines, to provide production variety without accompanying waste, lean producers often use __________ in __________.
Standardized parts; modular designs
Produce design and choice of location are examples of _______ decisions.
Strategic
This is known as the strategic coordination of the supply chain for the purpose of integrating supply and demand management.
Supply chain management
Taguchi
Taguchi loss function - formula for determining cost of poor quality
Run Charts
Tool for tracking results over a period of time
ISO 9000
The common name given to quality management and assurance standards
Quality of Conformance
The degree to which goods or services conform to the intent of the designers
Value-added
The difference between the costs of inputs and the value or price of outputs
Aggregate planning is capacity planning for:
The intermediate range
Heijunka
The leveling of production load by both volume and variety to achieve a steady flow of work
What is the most serious impediment to converting to a lean system?
The management is not committed
What is implied by a lead time service level of 95 percent?
The probability is 0.95 that demand during lead time will not exceed the amount on hand at the beginning of lead time.
Essentially, the output of aggregate planning is:
The production plan
Operational Processes
These are the core processes that make up the value stream. Examples include purchasing, production and/or service, marketing, and sales.
Upper-Management Processes
These govern the operation of the entire organization. Examples include organizational governance and organizational strategy.
Supporting Processes
These support the core processes. Examples include accounting, human resources, and IT (information technology).
Using variable pricing in response to demand variability to maximize revenue using perishable capacity is known as:
Yield management
Modern firms increasingly rely on other firms to supply goods and services instead of doing these tasks themselves. This increased level of _____________ is leading to increased emphasis on ____________ management.
outsourcing; supply chain
In the basic EOQ model, if D = 60 per month, S = $12, and H = $10 per unit per month, EOQ is:
sq rt(2SD/H) sq rt((2 x 12 x 60)/(10)) sq rt(1440/10) sq rt(144) 12
