Operations Management exam 1

What is Supply Chain Management?

the synchronization of a firm's processes with those of its suppliers and customers to match the flow of materials, services, and information with customer demand

Process Improvement

the systematic study of the activities and flows of each process to improve it

Why Good Decision Making?

•Realize consistent and optimal decisions in the long term •Reduce risk and keep costs to a minimum •Increase Quality and Compliance •Improve Efficiency, Effectiveness and Consistency •Create a culture of empowered employees, improve decision-making and increase business success -Reduce uncertainty

Order Winners

A criterion customers use to differentiate the services or products of one firm from those of another

Operation

A group of resources performing all or part of one or more processes

Total Quality Management

A philosophy that stresses three principles (customer satisfaction, employee involvement and continuous improvement) for achieving high level of process performance and quality

Analyze

A process analysis is done, using the data on measures, to determine where improvements are necessary

Efficiency

Always trying to do more with less (time, money, energy) to improve productivity, margins, and revenue

Prevention costs

Costs associated with preventing defects before they happen

Appraisal costs

Costs incurred when the firm assesses the performance level of its processes

Internal Failure costs

Costs resulting from defects that are discovered during the production of a service or product

Design-to-Order Strategy

Customer involved in the design process

Make-to-Stock Strategy

Mass production

Order qualifiers

Minimum level required from a set of criteria for a firm to do business in a particular market segment

Make-to-Order Strategy

Process begins with customer request

Customization

Service level ranging from highly customized to standardized

Nested Process

The concept of a process within a process

Competitive Priorities

The critical dimensions that a process or supply chain must posses to satisfy its internal or external customers, both now and in the future.

Productivity

The effectiveness of productive effort, especially in industry, as measured in terms of the rate of output per unit of input - Prod=Output/Input

Customer Contact

The extent to which the customer is present, is actively involved, and receives personal attention during the service process

Process Divergence

The extent to which the process is highly customized with considerable latitude as to how its tasks are performed

Common cause

The purely random, unidentifiable sources of variation that are unavoidable with the current process -must mitigate ramifications; negative impact

Acceptable Quality Level (AQL)

The quality level desired by the consumer

Define

The scope of boundaries of the process to be analyzed are first established

Decision Theory

a general approach to decision making when the outcomes associated with alternatives are often in doubt 1) List the feasible alternative 2) List the events (states of nature) 3) Claculate the payoff for each alternative in each event 4) Estimate the likelihood of each event 5) Select the decision rule to evaluate the alternatives

What is Operations Management?

The systematic design, direction, and control of processes that transform inputs into services and products for internal, as well as external, customers. OPERATIONS is about EXECUTION!

Improve

The team uses analytical and critical thinking to generate a long list of ideas for improvement

Benchmarking

a systematic procedure that measures a firm's processes, services, and products against those of industry leaders -Gold Standard -Winners become Qualifiers

Sensitivity Analysis

a technique for systematically changing parameters in a model to determine the effects of such changes

Assignable Cause

any variation-causing factors that can be identified and eliminated (ideally)

Statistical Process Control (SPC)

the application of statistical techniques to determine whether a process is delivering what the customer wants (quality)

Acceptance Sampling

the application of statistical techniques to determine whether a quantity of material from a supplier should be accepted or rejected based on the inspection or test of one or more samples

Competitive Capabilities

the cost, quality, time, and flexibility dimensions that a process or supply chain actually possesses and is able to deliver. Capabilities allow advantages.

3 sigma process

-3 standard deviations (on either side of the mean) of product fall within the set control limits (goal posts) -93% of products are defect free

Tolerance

-An allowance above or below the nominal value -How much defect or lack of quality are you willing to accept? Will the customer accept?

Break-even analysis

-Analysis to compare processes by finding the volume at which two different processes have equal total costs -A Decision Point

Process

-Any activity or group of activities that takes on or more inputs, transforms them, and provides one or more outputs for its customers. -All processes must add VALUE: TIME, MONEY, AND ENERGY

assemble-to-order strategy

-Components at the ready -Mass Customization

Type II error

-Concludes that the process is in control and only randomness is present, when actually the process is out of statistical control -No action is taken when it was necessary

Type I error

-Concludes that the process is out of control based on a sample result that fails outside the control limits, when in fact it was due to pure randomness -Action is taken when not necessary

Decision Making Under Uncertainty

-Full disclosure of information may not be available -Unknowns exist -4 approaches when uncertainty exists 1. Maximin (best of the worst) 2. Maximax (best of the best) 3. Laplace (the best weighted payoff) 4. Minimax Regret (best worst regret)

Variation of Outputs

-No two services of products are exactly alike -Processes used to produce them contain some sources of variation -Variation= Error= Quality issues

Z value (Z score)

-Number of standard deviations from the mean -Measure of how many standard deviations below or above the population mean a raw score is from the mean

Six Sigma Process

-Process by which six standard deviations (sigma) of product fall within the set control limits (tolerances) -99.9996% of the products are defect free -3.4 defects per million produced

Support Process

-Processes that amplify the core process -Create a synergistic effect

Operations Strategy

-The means by which operations implements the firm's corporate strategy and helps to build a customer-driven firm -Drive bottom line improvement

Core Process

-The primary function -The very reason the business exists

Supply Chain

An interrelated series of processes within and across firms that produces a service or product to the satisfaction of customers. -External/Internal customers -External/Internal suppliers

Defect

Any instance when a process fails to satisfy its customer

Attributes

Characteristics (data) that can be quickly COUNTED for acceptable performance

Variables

Characteristics that can be MEASURED

Measure of Effectiveness (MOE)

Is the process/product achieving the desired end state or effect? -ex: did the bomb neutralize the target?

Measure of Performance (MOP)

Is the process/product working as designed? -ex: did the bomb explode with the expected yield

Reegineering

The fundamental rethinking and radical redesign of processes to improve performance dramatically in terms of cost, quality, service, and speed

Measure

The metrics to evaluate how to improve the process are determined

Control

The process is monitored to make sure that high performance levels are maintained

Six Sigma

a comprehensive and flexible system for achieving, sustaining, and maximizing business success by minimizing defects and variability in processes