Operations Test 1
Six Phases of Generic Product Development Process (p 17)
0: Planning 1: Concept development 2: System-level design 3: Design detail 4: Testing and refinement 5: Production ramp-up * some processes may differ according to the company, this is a generic model * for product design of consumer products, market testing and understanding customer preferences are important
A retailer of electronic products is thinking of asking a particular manufacturer to begin daily deliveries rather than current deliveries on a weekly basis. Currently, the manufacturer delivers 1000 cases every Monday. The cost of each case is valued at $300. Assume 5 days per week and 20 days per month. The average inventory investment (in dollars) with dailyreplenishment (i.e. the proposed future system) is:
$30,000
average inventory
(Beginning Inventory + Ending Inventory) / 2
System design decisions
- Capacity, Facility location & layout , Product and service planning, Acquisition and placement of equipment - strategic decisions that usually require long-term commitment of resources - determine parameters of system operations
Primary business functions
- Marketing: identifies demand fir goods or services and develops the market - operations: assures supply of the product or service - finance: acquiring and allocating the capital resources for other functions
History of Operations Management
- Mass production (early 1900): moving assembly time (Ford) , utilizes earlier concepts of interchangeable parts and division of labor - Lean production (1980s): just-in-time, CAD, TQM, reduction of waste, drives out redundancy - Mass Customization: Dell, nike, postponement strategy
Make to Order (MTO)
- Process activated in response to an actual order May be either standard or custom product - WIP and finished goods inventory kept to a minimum - Tends to have longer response time - suitable for items with low-medium and variable demand - once customer places order, item is made - short manufacturing lead time
Competitive priorities
- cost - quality - dependability or reliability - flexibility - response time **operations strategies are adopted based on competitive priorities identified ** these are NOT independent - quicker response time --> more flexibility
Product Design Considerations (p 20)
- design for manufacturing and assembly (DFMA) - design for recycling (DFR) - design for disassembly (DFD) - Design for remanufacturing - design for logistics (packaging) - design for robustness (if operating condition varies, can it still operate) - design for reliability (on time)
Cellular layouts (Hybrid approach) 42
- grouping parts into families that flow for a common sequence of steps because of similar design or manufacturing characteristics (group technology) - identifying dominant flow pattern of parts families as a basis for location or relocation of process - physically grouping machines and processes into cells - higher utilization of machines - relatively less inventory EX: chip manufacturing, metal fabrication
System operations decisions
- management of personal, inventory management and control, scheduling, project management, quality assurance - generally tactical and operational decisions - operations managers spend more time on system operations decision than any other decision area - have vital stake in system design
Strategic Hierarchy
- mission - organizational goals - organizational strategies (action plan) - functional strategies (finance, marketing, management) - operations strategies - tactics - operating procedures
Assemble to Order (ATO) / Hybrid
- partially manufactured and held in unfinished state - customer order dictates final and configuration - quicker response than MTO and more flexible than MTS - usually includes work in progress step (WIP)
Designing Service Products
-Service products are very different -Direct customer involvement introduces significant variability in the process Questions to address: how will this variability be addressed? what are the implications for operational cost and the customer service experience?
Nature of services (53)
-The customer is the focal point of all decisions and actions. -The organization exists to serve the customer. -Operations is generally responsible for service systems. -Operations is also responsible for managing the work of the service workforce.
Phase 4: Testing and Refinement
-construction and evaluation of multiple preproduction versions of product: same geometry and materials as production version, not necessarily fabricated with the actual production process -prototypes tested to determine if the product will work as designed
Consumer customers value attributes
-cost -quality -convenience -timelessness -personalization -ethical issues -style/ fashion -technology
business customers value attributes
-cost -quality -dependability -flexibility -response time
A machine is made of 3 key components: A, B, and C. Reliabilities of A, B, and C are 0.95, 0.9, and 0.8 respectively. There is an additional component, A/, which has reliability of 0.9 and works as a backup unit for component A. What is the overall reliability of the machine?
0.7164
Process management sources of Variation
1) variety of goods/ services being offered: greater the variety, greater the variation in production or service requirements 2) structural variation in demand: predictable, important for capacity planning (travel) 3) Random variation: natural variation persistent in all processes. Generally it can't be influences by managers 4) assignable variation: identifiable sources, can be reduced or eliminated by analysis or corrective action **it is helpful to reduce or eliminate variation**
Assume a fixed cost for a process of $15,000. The variable cost to produce each unit of product is $10, and the selling price for the finished product is $25. Which of the following is the number of units that has to be produced and sold to break even?
1,000 units
A small dairy in the Shenandoah Valley area uses 250 hours of labor to produce 6,000 gallons of milk on a monthly basis. Assume labor cost is $8 per hour. The daily consumption of cow feed costs $50. The yearly leasing cost for the facility is $6,000. Other expenses (misc. items) cost $1,000 per month. Use 30 days in a month in your calculation.The multi-factor productivity (in gallons of milk / dollar spent) of this dairy is
1.2 - Costs of inputs used in a month: - Labor: 250 X 8 = $2,000 - Cow feed: 50 X 30 = $1,500 Leasing: 6000/12 = $500 - Misc. items: $1000 Total cost of inputs used in a month = 2000 + 1500 + 500 + 1000 = $5,000 Output in a month: 6,000 gallons of milk Multifactor productivity = 6000 / 5000 = 1.2 gallons of milk / dollar spent
throughput rate
1/cycle time *be cautious of time units here - max number of customers that can be served per hour
The main operation of a warehouse has three main steps: 1) take order, 2) pick order, and 3) pack order. Every day the 1st step is carried out for 12 hours and the other two can be carried out up to 24 hours. At the end each of these steps storage areas are placed so that work at each step can be continued without potential interruptions from others. The process flow diagram is provided below: What is the maximum number of orders that can be handled every day assuming no one works overtime?
1200
A small dairy in the Shenandoah Valley area uses 250 hours of labor to produce 6,000 gallons of milk on a monthly basis. Assume labor cost is $8 per hour. The daily consumption of cow feed costs $50. The yearly leasing cost for the facility is $6,000. Other expenses (misc. items) cost $1,000 per month. Use 30 days in a month in your calculation. The labor productivity (in gallons of milk / hour of labor) is
24 - Total cost of inputs used in a month = 2000 + 1500 + 500 + 1000 = $5,000 Output in a month: 6,000 gallons of milk Multi-factor productivity = 6000 / 5000 = 1.2 gallons of milk / dollar spent Labor productivity = 6000 / 250 = 24 gallons of milk / hour of labor
The main operation of a warehouse has three main steps: 1) take order, 2) pick order, and 3) pack order. Every day the 1st step is carried out for 12 hours and the other two can be carried out up to 24 hours. At the end each of these steps storage areas are placed so that work at each step can be continued without potential interruptions from others. The process flow diagram is provided below: Assume all three steps are started at the beginning of a business day and there is no breakdown. If order taking (i.e., 1st step) is stopped after 12 hours, what will be maximum number of orders accumulated for picking (i.e. number of orders sitting in the 1ststorage area)?
240
A retailer of electronic products is thinking of asking a particular manufacturer to begin daily deliveries rather than current deliveries on a weekly basis. Currently, the manufacturer delivers 1000 cases every Monday. The cost of each case is valued at $300. Assume 5 days per week and 20 days per month. If the annual demand (over 240 working days) is 48000 cases, the inventory turnover with daily replenishment (i.e. the proposed future system) is:
480
Costs of quality
65
Six sigma quality
67
Total qulaity management (TQM)
67
Kano Model
68
Process improvement approaches
68
The order fulfillment process of an online retailer has 3 sequential stages: A, B, and, C; and 3 people (resources) are assigned to do the job. Resources at stages A, B, C take slightly different times: 15, 20, and 18 seconds, respectively. The retailer has decided to pace the entire process. What will be the utilization of the resource at stage C if the paced order fulfillment process is continuously working without idling?
90%
Service System design matrix
A framework that relates to the customer service system encounter - enables systematic integration of operations and marketing strategy - clarifying exactly which combination of service delivery the firms providing - permitting comparison of how other firms deliver specific services - indicating life cycle changes as the firm grows (helps identify cell sufficiency trade off and provides direction)
Quality Function Deployment (QFD)
A process that helps a company determine the product characteristics important to the consumer and to evaluate its own product in relation to others. - inter-functional teams from marketing, design, engineering, and manufacturing - translates customer requirements into product/ service design - guides corresponding process design - begins with listening to the customer (market research) -QFD tool: house of quality
production line approach
A service design analogous to that in a manufacturing system with the tight control, use of low-skilled labor, and the offering of a standard service. EX: McDonalds
Operations management
A specialized area in management that converts or transforms resources (including human resources) into goods and services. -management of operations activities to generate value efficiently - operations manager should not work in a "silo" - enterprise view is critical to be successful - roles include: forecasting, capacity planning, scheduling, managing inventory, assuming quality, motivating employees, location and layout, etc
Phase 3: Detail Design
Analyze high level design; complete specification of the geometry, materials, and tolerances of all of the unique parts in the product and the identification of all of the standard parts to be purchased from suppliers. A process plan is established and tooling is designed for each part to be fabricated within the production system. The output of this phase is the control documentation for the product - the drawings or computer files describing the geometry of each part and its production tooling, the specifications of the purchased parts, and the process plans for the fabrication and assembly of the product. Two critical issues addressed in the detail design phase are production cost and robust performance.
urrently, a large furniture distributor receives a particular model of office desk every 45 days from the manufacturer. Each desk costs $40 and in each year approximately 7200 desks are sold. They are negotiating with the manufacturer to change the receiving frequency to every 30 days. If replenishment is received ONCE EVERY 30 DAYS, what is the INVENTORY TURN?NOTE: Use 360 days in a year in your calculation and assume ending inventory is zero.
Annual demand = 7200 desks Daily demand = 7200/360 = 20 Number of desks received each time should cover for future demand up to next receipt. Annual cost of goods sold (COGS) = 7200 X 40 = $288,000 Receive supplies every 30 days. Thus, demand of 30 days should be covered. Hence, number of desks received each time = 20 (daily demand) X 30 (days) = 600. Beginning Inventory = 600 Ending Inventory = 0 Average level of inventory = (600+0)/2 = 300 Average inventory investment = 300 X 40 = $12,000 Inventory turnover = $288,000 / $12,000 = 24
Currently, a large furniture distributor receives a particular model of office desk every 45 days from the manufacturer. Each desk costs $40 and in each year approximately 7200 desks are sold. They are negotiating with the manufacturer to change the receiving frequency to every 30 days. If replenishment is received ONCE EVERY 45 DAYS, what is the INVENTORY TURN?NOTE: Use 360 days in a year in your calculation and assume ending inventory is zero.
Annual demand = 7200 desks Daily demand = 7200/360 = 20 Number of desks received each time should cover for future demand up to next receipt. Annual cost of goods sold (COGS) = 720040 = $288,000 Receive supplies every 45 days. Thus, demand of 45 days should be covered. Hence, number of desks received each time = 20 (daily demand) 45 (days) = 900. Beginning Inventory = 900 Ending Inventory = 0 Average level of inventory = (900+0)/2 = 450 Average inventory investment = 450*40 = $18,000 Inventory turnover = $288,000 / $18,000 = 16
five types of variability (55)
Arrival variability: customers arrive at times where there is not enough service providers request variability: travelers requesting a room with a view capability variability: a patient being unable to explain symptoms to a doctor effort variability: shoppers not putting up carts subjective preference variability: interpreting service action differently
At a small concert venue tickets are sold from a single counter. On an average, it takes 10 minutes to buy ticket (it includes time spent both in line and at the counter). If on an average there are 8 customers in the ticketing area (both in line and at the counter), how many customers are expected to show up in an hour?
Average number of customers in the ticketing area = Arrival rate X Average time to buy ticket 8 customers = Arrival rate X 0.16667 hour (Note: 10 minutes = 10/60 hour = 0.1667 hour) Arrival rate = 8 customers / 0.16667 hour = 48 customers / hour
order qualifiers
Basic characteristics of products/services to be considered as candidates for purchase by customers - they are necessary but may not be sufficient to win the customer over
In a work center, machine A has a 10-minute set-up time per batch and a 2-minute per unit run time. Machine B performs the identical function but has a set-up time of 30 minutes and a 1-minute run time per unit. The work center makes products in batches ranging from 1 unit to 100 units. Assuming capacity is not a limitation on either machine, in order to minimize the total processing time, on which batches should machine B be used?
Batches of more than 20 units should be run on machine B.
The process of identifying other organizations that are best at some facets of 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
order winners
Characteristics of an organization's goods or services that cause it to be perceived as better than the competition - service may be added to the product to make it an order winner - order winner may become a qualifier over time (they can change)
A cruise-liner asking its passengers to make advanced reservations for various activities at a port-of-call is an example of:
Classic reduction
Benchmarking (70)
Comparing an organization's practices, processes, and products against the world's best. - Industry focused: incorporate best practices within another firm within your same industry - Process focused: not same industry
Which dimensions of quality may be MOST important in a Zoom / WebEx virtual session?
Convenience Reliability Time Assurance Consistency
Michael Porter's 3 strategy categories
Cost Leadership: - price lower than competitors - provide the maximum value as perceived by the customer - does not imply to low value or low quality Differentiation: - distinguish offerings of the organization that customers perceive as value add - EX: apple Focus: - target specific segment of the market (niche markets)
Strategy includes both organizational and functional strategies. Operations strategy falls under functional strategies. Let us focus on Amazon. Which one of the following does describes best the organizational strategy of Amazon? Select ONE that you think is MOST appropriate.
Differentiation: service
Which of the following is NOT a step in developing a cellular layout?
Disposing of leftover machinery and outsourcing ungrouped processes
Which of the following is NOT a typical phases of product development?
Early market feedback
The positioning of inventory in the supply chain to fulfill customer order may vary depending on the specific situation. Which of the following provides opportunity for MAXIMUM customization?
Engineer-to-order
A customer order decoupling point is important because:
Essentially a customer order decoupling point is where inventory is stored awaiting demand from the customer. It is important because it affects the lead time to fulfill the customer's order and the amount of inventory investment necessary.
Usually it is easier to manage service operations, as many services do not have any tangible component.
False- it is harder to manage service operations
Competing on resources
Flexibility: - ability to match changes in the marketplace EX: HP responding to design and volume changes of PC Reliability: - on time delivery EX: competitiveness of german machine firms despite higher labor costs Quickness: EX: lunch delivered in 15 minutes
which of the following is true
Functional strategies are shaped by organizational/ corporate strategy.
Which of the following is primarily used to help design products that will connect product attributes with customer desires?
House of quality matrix
An apparel company sells customized T-shirts (with variety of printed designs) online. The cost of making T-shirt from fabric is high and hence it is important to take advantage low cost labor abroad. The customers expect to receive the item(s) soon after placing the order. Which process would be MOST suitable?
Hybrid
Which of the following ISO series is associated with environmental performance?
ISO 14000
A credit union branch is considering to introduce one of the following 3 loan application systems. System Fixed Cost ($) Variable Cost ($/applicant) System 1 6,600 0.85 System 2 5,000 1.10 System 3 6,000 1.00 Each system has a service life of 4 years. How will the branch manager will take decision based on number of applicants (in next four years)?
If number of applicants is less than 6400 select System 2 If number of applicants is more than 6400 select System 1 Never select System 3
Fixed Position Layouts
Layout in which the product or project remains stationary, and workers, materials, and equipment are moved as needed - used for large items EX: ship and aircraft building
In the service-system design matrix, a face-to-face total customization service encounter is expected to have which of the following?
Low production efficiency
You are hired as a consultant to decide if your client should purchase a new, highly specialized piece of equipment. The product to be produced by this equipment is forecast to have a total worldwide demand of 15,000 units over the entire product life. The initial investment to acquire and install the equipment is $256,000. The variable cost to produce each unit will be $15, and the selling price for the finished product will be $30. Which of the following best describes the situation the firm is facing?
Margin per unit = $30 - $15 = $15; $15 x 15,000 units = $225,000. Because $225,000 < $256,000, the total projected margin for this product will be less than the investment required.
Which company is mentioned in the text as a pioneering of the production line approach to delivering on-site service?
McDonalds
The organizations operating above the diagonal of the product-process matrix are likely to have
More flexibility, higher unit cost
organizational strategies
Overall strategies that relate to the entire organization - Support the achievement of organizational goals and mission
Product and process life cycles
P 48
Concept development assumes a proven technology in which variant of the generic product development process?
Platform products
In which variant of the generic product development process are the consumer electronic products?
Platform products
In which variant of the generic product development process, does concept development assume a proven technology?
Platform products
Service Fail-Safing/Poka-Yokes (55)
Polka yokes: japanese term that means avoid mistakes; procedures that block a mistake from becoming a service defect - common in factories Three T's of fail-safing: - task to be done - treatment accorded to the customer - tangible features of the service *must often fail safe actions of the customer as well as the service workers
Phase 0: planning
Precedes project approval Begins with corporate strategy Includes assessment of technology developments and market objectives Output is the project mission statement (target market and goals)
An agreement is made between a supplier and a customer such that the supplier must ensure that all parts are within tolerance before shipment to the customer. What can be said regarding different components of cost of quality for the CUSTOMER.
Prevention cost - likely to increase (customer has to pay higher for better quality parts) Appraisal cost - likely to decrease (if better quality parts are purchased / sourced, customer may reduce level of appraisal) Internal failure cost - likely to decrease (with better quality parts chances of internal failure and the corresponding cost will decrease) External failure cost - likely to decrease (with better quality parts, finished goods are likely to be of better quality)
An agreement is made between a supplier and a customer such that the supplier must ensure that all parts are within tolerance before shipment to the customer. What can be said regarding different components of cost of quality for the SUPPLIER. Match the items.
Prevention cost - likely to increase (investment in better process / materials) Appraisal cost - likely to increase (more testing) Internal failure cost - may increase/decrease - cannot say definitely External failure cost - likely to decrease (with better prevention and/or appraisal chances of external failure and the corresponding cost will decrease)
General purpose quality tools (68-69)
Process flow chart, run chart, cause and effect diagram, pareto chart, histogram, check sheet, scatter diagram, control chart
Phase 5: Production Ramp-Up
Product is made using the intended production system Need to train workers and resolve any remaining problems Products may be supplied to preferred customers for evaluation Transition to ongoing production is gradual
A reason that firms must develop more new products than ever is which of the following?
Product life cycles are shorter
Outputs
Products: - tangible, can be stored, quality (later actions possible), less customer contact, higher uniformity in outputs Services: - intangible, can't be stored, altercations not possible, higher customer contact, process may effect customer, lower uniformity in outputs *harder to manage service operations *many outputs are a bundle of goods/ products and services
Which of the following is NOT a characteristic of a well-designed service system?
Puts customers in charge It IS: It is robust. It is user-friendly. It is structured so that consistent performance by its people and systems is easily maintained. It provides effective links between the back office and the front office so that nothing falls between the cracks. It manages the evidence of service quality in such a way that customers see the value of the service provided. It is cost-effective.
Currently, a large furniture distributor receives a particular model of office desk every 45 days from the manufacturer. Each desk costs $40 and in each year approximately 7200 desks are sold. They are negotiating with the manufacturer to change the receiving frequency to every 30 days. Which arrangement is better?NOTE: Use 360 days in a year in your calculation and assume ending inventory is zero in both cases.
Receiving desks every 30 days is better as it has higher inventory turn (of 24). Higher inventory turn suggests that the organization can meet the same sales target with less inventory (i.e. continue to do business with less money invested in inventory). This is finitely preferable.
A tool that is NOT used for quality management is:
Redesign is NOT a tool used in quality management.
Which of the following may warrant DRASTIC changes in the existing processes?
Reengineering
Personal Attention Approach
Ritz-Carlton Hotel Company
At an airport 3 shuttle buses run between the parking lot and the terminal. From the parking lot to the terminal it takes 15 minutes in a shuttle and the return trip also takes the same time. If you are planning to park there, how much should you expect to wait to avail the next available shuttle?NOTE: Assume 3 shuttle buses are spaced equidistantly and always space is available in each shuttle.
Round-trip journey = 15 + 15 = 30 minutes Average wait = (30 + 0) / 2 = 15 minutes or HALF of the CYCLE TIME (of 30 minutes) If there are THREE (3) shuttle buses and someone is sitting at a spot (parking lot or terminal), that person will see a shuttle passing once every 30/3 = 10 minutes (spaced equidistantly). Thus, with THREE shuttle buses CYCLE TIME = 10 minutes. Average wait = HALF of the CYCLE TIME (of 10 minutes) = 0.5 X 10 = 5 minutes
Which of the following is a characteristic of concurrent engineering?
Separate development teams working at once
Whose name is associated with the PDCA cycle?
Shewhart
Design for manufacturing and assembly (DFMA) delivers product improvements by emphasizing the following:
Simplification of the product by reducing the number of separate parts
Quality function deployment (QFD):
Starts with studying and listening to customers.
You are hired as a consultant to decide if your client should purchase a new, highly specialized piece of equipment. The product to be produced by this equipment is forecast to have a total worldwide demand of 15,000 units over the entire product life. The initial investment to acquire and install the equipment is $256,000. The variable cost to produce each unit will be $15, and the selling price for the finished product will be $30. Which of the following BEST describes the situation the firm is facing?
The company's total margin will be less than its investment.
customer contact
The physical presence of the customer in the system extent of contact: percent of time the customer must be in the system relative to the service time - Service systems with a high degree of customer contact are more difficult to control, there is more uncertainty
positioning inventory in the supply chain
The shorter the customer lead time, the higher the inventory investment. Shows the process of source to make to deliver and how much time and investment it takes for each type of order. The inverted triangles represent customer order decoupling points. Make-to-stock orders: customer lead time is short, and inventory investment is high, bc finished goods are more expensive then raw materials. Decoupling point is at the end of the make cycle. Assemble-to-Order: Customer lead time is medium, inventory investment is medium, and the decoupling process happens halfway through the make time. Make-to-Order: Customer lead time is longer, inventory investment is low, and the decoupling process happens before the make cycle. Engineer-to-order: Customer lead time is long, inventory investment is low, and the decoupling point is at it's source. many firms serve a combination of these environments and a few will have all simultaneously.
At an airport 3 shuttle buses run between the parking lot and the terminal. From the parking lot to the terminal it takes 15 minutes in a shuttle and the return trip also takes the same time. During each of the peak hours, 1200 passengers use the shuttle system on an average. Half of the passengers go from the parking lot to the terminal and the other half take the return trip. What is LOAD (demand) on EACH of the shuttle buses during a typical peak hour?
There are 1200 passengers, who use the system during each of the peak hours Each passenger rides for 15 minutes Thus, the load on the entire system (during each of the peak hours) = 1200 passengers X (15/60) hour = 300 passenger hours The load on EACH shuttle bus (during each of the peak hours) = 300 / 3 = 100 passenger hours
Little's Law (p 31)
There is a long-term relationship among inventory, throughput, and flow time - inventory = throughput rate x flow time - L = lamba x W L: average # customers in the system lambda: arrival rate W: average time spent in the system
Competitive pressure and increasing globalization are among the key drivers that impact an organization's supply chain decisions.
True
Many of the businesses sell combination of products and services.
True
a university admitting only students with minimum SAT score can be considered as an example of:
Uncompromised reduction
Balanced Scorecard (p 11)
a combination of performance measures directed toward the company's long and short term goals and used as the basis for awarding incentive pay - develop objectives - develop metrics and targets for each objective - initiatives to achieve objectives -identify links among the various perspectives - monitor results -doesnt pay attention to gov't regulations - universal appeal - balanced perspective - past and future performance - no role in strategy formulation
Total involvement
a commitment at all levels of the firm (management point of view)
Buffering
a storage area between stages where the output of a stage is placed prior to being used in a downstream stage (helps to store when two stages are not at the same pace- represented by upside-down triangle)
Agile operations
a strategic approach for competitive advantage that emphasizes the use of flexibility to adapt and prosper in an environment of change - involves the blending of several core competencies: - cost, quality, reliability, flexibility, response time *create slack
which of these factors would be least likely to affect productivity
advertising
Who is responsible for poor quality?
all members in the organization - One of the three main pillars of TQM is total involvement.
average inventory investment
average level of inventory * unit cost of inventory
Service package (53)
bundle of goods and services - supporting the facility - facilitating the goods - information - explicit services - implicit services
Manufacturing process analysis
capacities must be balanced
Product process matrix
categorizes processes into structures based on output volume and variety - two dimensional - provides link between process decisions and strategy for manufacturing firms - general direction of the type of processes that would be supportive of a particular strategy, but does not provide level of details required for actual process - as volume increases, capability to produce a variety of products decreases (flexibility of process cost decreases) - as you move along the x-axis there is a trade off between volume and variety p 46
Which one of the following should have the most significant impactto reduce process flow time?
change the sequence of activities
the tool that is most useful in the collection and organization of data is
check list
What strategy do the Ritz-Carlton hotels seem to use to manage customer-introduced variability?
classic accommodation
Continuous process improvement
constantly trying to eliminate variability
Dimensions of Quality: Service (64)
convenience reliability responsiveness time assurance courtesy tangibles consistency
Inventory turnover (p 32)
cost of goods sold/average inventory
Internal failure costs
costs resulting from defects that are discovered during the production of a service or product - before it gets to the customer
External failure costs
costs that arise when a defect is discovered after the customer receives the service or product - exposed to poor quality
concurrent approach
cross functional integration, different functions happening at the same time - more efficient/ faster
Self-Service Approach
customer takes a greater role in the production of the service (ATM machines)
Batch/ manufacturing cell
dedicated area where similar products are produced - few major products, high volumes EX: fast food restaurant, drugs
Phase 2: System-Level Design
definition of the product architecture and the decomposition of the product into subsystems and components. The final assembly scheme for the production system is usually defined during this phase as well. The output of this phase usually includes a geometric layout of the product, a functional specification of each of the product's subsystems, and a preliminary process flow diagram for the final assembly process (main steps needed)
sequential approach
each stage completed before moving to next phase of the project, different functions work independently and one after another
Giving workers responsibility for quality improvements and authority to make changes is known as:
employee empowerment
Product Oriented (flow shop) layout (42)
equipment/ operations are located according to the progressive steps required to make the product - repetitive focus - cafeteria lines A: smooth and streamlined, efficient, repetition makes person become better at it, larger scale D: boring, not good in handling a variety of products or jobs
Appraisal costs
evaluating products, parts, and services -monitor proactive - inspection -testing Destructive: crash testing for vehicles non-destructive: testing operating systems -auditing
classic accommodation
extra employees or additional employee skills to compensate for variations among customers
Make-to-order (MTO) production processes are well suited for high-volume production of standardized products.
false
Once an order winning feature is incorporated a firm can rest assured that it is going provide competitive edge permanently.
false
The concept of lean production evolved before mass production.
false - mass production evolved before lean production
Among strategies functional strategies are at the top-most level.
false - mission strategies
Value analysis / value engineering is not the right approach for simplifying products.
false- Value analysis / value engineering is used to simplify products with goal of achieving better performance at a lower cost.
Operations managers have to ensure getting sufficient amount of supplies. This is one of the system design decisions.
false- this is a system operations decision
Which of the following terms describes the time a unit spends actually being worked on together with the time spent waiting in a queue?
flow time
continuous
highest volumes,highly standardized commodity products, low variety EX: sugar, oil refinery, making chemicals
Strategy
how an organization expects to achieve its missions and goals (how you are going to get there: an action plan)
The "Control" phase of DMAIC is intended to ensure that:
improvements are sustained. -
lost production time, scrap, and rework are examples of
internal failure costs
Which of the following is an alternative possible service encounter included in the service-system design matrix?
internet
after a job shop is successfully converted into a cellular layout (work cell), which of the following is usually true
inventory decreases while equipment utilization increases
Assembly line
item is produced through a fixed sequence of workstations, designed to achieve specific production rate EX: auto assembly
In which of the following processes, similar equipment or functions are grouped together?
job shop
In the service-system design matrix, a mail contact service encounter is expected to have which of the following?
low sales opportunity
consider a business that can be run using either a make-to-stock or a make-to-order prices. the manufacturing lead-time is quite short. The approximate demand is 10,000 per month and it is spread out evenly throughout the month. the processing capacity is 15,000 per month. Based on this information, which would you choose?
make-to-order
Supporting business functions
management, accounting, IT
among the following, which is the latest
mass customization
Phase 1: Concept Development
needs of the target market are identified, alternative product concepts are generated and evaluated, and one or more concepts are selected for further development and testing concept: a description of the form, function, and features of a product (specification/ analysis)
Complexity
number of steps involved in a service and possible actions that can be taken at each step
Key Issues for Operations Managers Today
o Economic conditions o Innovation o Quality problems o Risk management o Competing in a global economy * these are the highest priority issues* also there are environmental concerns (these affect product and service design, outsourcing decisions, supply chain waste management, consumer education programs, disaster penetration and response) also ethical issues may arrise
Blocking
occurs when the activities in a stage must stop because there is no place to deposit the item (when storage is full)
Starving
occurs when the activities in a stage must stop because there is no work (usually occurs after the slowest stage)
Process Management
one or more actions that transform inputs into outputs - upper management: govern ops of entire org - operational: core processes that make up value stream - supporting: support core processes
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
managing the supply chain has become more important as a result of firms increasing their levels of:
outsourcing
Single-stage process vs multistage
p 30 - most are multi stage
Process analysis example
p 32/ 33
break-even analysis
p 52
Managing customer introduced variability
p 61
managing customer induced variability
p 61
quality awards and standards
p 65-66
Variants of Product Development Process
p. 23
The quality tool which helps focus on the most important problem areas based on the 80-20 rule is:
pareto chart
Dimensions of Quality: Product (64)
performance aesthetics features conformance reliability durability perceived quality serviceability
ritz-carlton hotel is a good example of the following:
personal attention approach
Operations Strategies/ organizational strategy
pg 8 of book (look at chart)
Which of the following is NOT an example of technology-push product?
plant seeds
which of the following is least likely (relative to other choices) to affect the cost an organization incurs in producing its products or services
price
Make to Stock (MTS) p 35
process activated to meet forecast (predicted) demand -customer orders are served from target stocking level - shorter lead time for stocked items - suitable for items with high and stable demand - required when customer lead time is less than manufacturing lead time
project
process remains at 1 location and equipment is moved to the product - low volume, customized, one of a kind - high variety EX: movie production, shopping mall
in which variant of the genetic product development process are the cleaning products
process-intensive products
Orders losers
product / service characteristics that repel customers
Which is the least important performance dimension for product development projects?
product flexibility
the main focus of the concurrent approach is to
reduce the time requires to complete all design functions
Prevention costs
reducing the potential for defects (proactive)
classic reduction
requires customers to engage in more self-service, use reservation systems, or adjust their expectations
What type of service design approach is used by IKEA for most of the customers purchasing furniture at their store?
self-service approach
Operations functions
set of activities in business that generate value by transforming inputs into outputs using efficient processes
Process Selection using Breakeven Analysis (43)
set two equations equal to each other - lower variable cost goes on the upper end of the scale
Workcenter/ jobshop
similar equipment or junctions grouped together - strutcure suited for multiple products, low volume, high variety EX: printing shop, airplane repair
Process oriented (Job shop) layout
similar operations are performed in a common or functional area, regardless of the product in which the parts are used - jobs may flow in a zig-zag fashion from one functional area to another - high variety and flexibility - lower efficiency - not designed for large scale production - flow time increases - resource utilization will be lower - WIP will be higher
Design for manufacturing and assembly delivers product improvements by emphasizing which of the following?
simplification by reducing the number of separate parts
bottleneck
stage that limits the capacity of the process - slowest stage is the bottleneck - this defines the process / overall capacity of the system (cycle time)
Service Blueprinting
standard tool for service process design is the flowchart - includes failure points, wait points and line of visibility - whats visible and not to the customer -captures points of customer interaction
Mission
states rationale of organization's existence - mission statement
quality based strategies
strategies that focus on quality in all phases of an organization pursuit of such strategy is rooted in a number of factors: - trying to overcome poor quality reputation - desire to maintain a quality image - desire to catch up with competition - part of a cost reduction strategy
Time-based strategies
strategies that focus on the reduction of time needed to accomplish tasks - it is believed that by reducing time, costs are lower, quantity and productivity is higher, time to market is faster, customer service is improved
functional level strategies
strategies that relate to each of the functional areas and that support achievement of the organizational strategy
Decision making roles of Operations Management
system design decisions system operations decisions
How organizations implement strategies
tactics: the methods and actions taken to accomplish strategies - the "how to" part of the process operating procedures: the actual "doing" part of the process
Strategy formulation
take into account: - core competencies - environmental scanning - SWOT - internal factors (strengths and weakness) - external factors (opportunities and threats) - order qualifiers and winners
which of the following is not a reason for poor performance of our organization in the marketplace
taking advantages of strengths/ opportunities, and recognizing competitive threats
flow time p 37
the average time that it takes a unit to move through an entire process - time it takes one item from start to finish - add time time from each stage - value added time + queue time - inventory / throughput rate
Customer focus
the customer determines what quality is - Internal customers: stakeholders inside - external customers: who its sold to
cycle time
the maximum time allowed at each workstation to complete its set of tasks on a unit ( time it takes to complete one stage usually when pacing this will be the time of the bottleneck)
Divergence
the number of ways a customer/service provider interaction can vary at each step according to the needs and abilities of each - an upscale service business may need to consider a higher complexity/ divergence - offering more alternatives to a customer is likely to increase divergence and complexity in service operations
utilization
the ratio of the time that a resource is actually activated relative to the time that it is available for use - you don't want this to be 100% overall
core competencies
the special attributes or abilities that give an organization a competitive edge - to be effective core competencies and strategies need to be aligned EX: Sony: miniaturization black and decker: small electrical motors and industrial design Honda: engines and power trains Cannon: optics, imaging, and electronic controls Mayo clinic: diagnostic services
Process Flowcharting
the use of a diagram to present the major elements of a process (how the steps are done) Basic elements can include: - task (rectangle) -flows of materials or customers (arrows) - decision points (diamonds) - storage areas or queues (upside-down triangle) * it is an ideal methodology to be used to begin analyzing a process
Efficiency
throughput rate / standard output
Measuring Product Development Performance (p 27)
time to market, productivity, quality
the main focus on quality function deployment (QFD) is:
to get the voice of the customer into the design of a product
An upscale service business may need to consider higher complexity/divergence.
true
As order decoupling point moves toward upstream side of supply chain, inventory investment goes down. As order decoupling point moves toward downstream side of supply chain, customer lead time gets shorter.
true
Higher inventory turn indicates a well managed operations
true
It is important to distinguish between consumer customers and business customers.
true
Software is an example of a quick-build product.
true
UPS is a good example of competing on response.
true
lower inventory turn indicates lower investment
true
uncompromised reduction
uses knowledge of the customer to develop procedures that enable good service, while minimizing the variation impact on the service delivery system
low-cost accommodation
uses low-cost labor, outsourcing, and self-service to cut the cost of accommodation
Importance of quality (65)
value: difference between benefit and cost quality enhances benefit quality may increase/ decrease overall cost balance is needed quality standards may vary across product/ service offerings
How to manage supply and demand
variations can be disruptive to operations & supply chain; processes need to maintain supply and demand - supply > demand = wasteful, costly - supply < demand = opportunity loss, customer dissatisfaction - supply = demand = deal
Goals
where you are going - provide detail and the scope of the mission
In which of the following basic types of process structures, are similar equipment or functions grouped together?
workcenter / jobshop
