Final Exam 3203 Study Guide

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B items(moderately important)

40percent of the number of items in inventory but only about 15 percent of the annual dollar value

C items (least important)

40percent of the number of items in inventory but only about 5 percent of the annual dollar value

Cause-and-effect diagrams are also known as: A. Pareto charts B. flowcharts C. Ishikawa diagrams D. target specification graphs

Cause-and-effect diagrams are also known as: A. Pareto charts B. flowcharts C. fish-bone charts D. target specification graphs

__________ is the amount of time an individual activity in a network can be delayed without delaying the entire project.

Slack Time

T/F: A c-chart is a attribute control chart that measures the percent defective in a sample.

T/F: A p-chart is a variable control chart that measures the percent defective in a sample.

T/F: A well executed lean program requires a meaningful buyer-supplier relationship.

T/F: An attribute inspection focuses on items such as strength or dimension while a variable inspection focuses on the good or bad.

T/F: Attribute inspection classifies items as being either good or defective.

T/F: Cp is the standard criterion used to express process performance.

T/F: E-procurement helps reduce costs.

T/F: High quality products and services are the most profitable.

T/F: ISO 9000 is a quality standard with international recognition.

T/F: In a JIT system, production occurs in reaction to demands that have already happened.

T/F: Inspections are expensive and add value to the product.

T/F: Inventory turnover is calculated on an annual basis.

T/F: Inventory turnover is the reciprocal of weeks of supply.

T/F: JIT is right for every firm, so all firms should implement its principles.

T/F: JIT systems are designed to produce or deliver goods just as they are needed.

T/F: Lean systems require managers to reduce variability caused by both internal and external factors.

T/F: Long term suppliers are more likely to understand the broad objectives of the procuring firm and the end customer.

T/F: Quality lies in the eyes of the beholder related to product based quality.

T/F: Shipping accounts for 25% of the cost of a product.

T/F: Statistical Process Control (SPC) monitors standards, makes measurements, and takes corrective action as a product or service is being produced.

T/F: The R-chart is sensitive to shifts in the process standard deviation.

T/F: The lower the percentage of assets committed to inventory, the better.

T/F: The operations manager's objective is to build a total quality management system that identifies and satisfied customer needs.

T/F: The x-chart and R-chart go hand in when monitoring variables because they measure the two critical parameters of central tendency and quality.

T/F: The x-chart is sensitive to shifts in the process mean.

T/F: There is no variability with inspections.

T/F: Third party logistics fail to add innovation and expertise to the logistics division.

T/F: Using p-charts is the chief way to control attributes.

T/F: Warehousing adds 10-15% to the cost of a product.

T/F: With the few suppliers strategy, one supplier is played against another and the burden is placed on meeting the buyer's demands on the supplier.

Lead Time

Time interval between ordering and receiving the order

Two Bin System

Two containers of inventory; reorder when the first is empty

Which of the following is NOT an external failure cost? A. lost goodwill B. returned goods C. costs to society D. scrap

Which of the following is NOT one of the major causes of the bullwhip effect? A. demand forecast errors B. shared demand information C. order batching D. none of the above

Which of the following is a risk of using the few suppliers strategy? A. suppliers making other alliances or venturing out on their own B. having multiple suppliers to choose from C. low cost of changing partners D. none of the above

Which of the following is a variable control chart? A. c-chart B. x-chart C. p-chart D. all of the above

Which of the following is an attribute control chart? A. R-chart B. x-chart C. p-chart D. all of the above

Which of the following is not a major means of shipping? A. trucking B. door to door C. waterways D. railroads

Which of the following is true about the bullwhip effect? A. The bullwhip effect describes the tendency for larger order size fluctuations as orders are relayed to the supply chain from retailers. B. Channel coordination means determining lot sizes as though the full supply chain was one company. C. "Bullwhip" fluctuations create unstable production schedules, resulting in expensive capacity change adjustments. D. all of the above

Which of the following statements is TRUE? A. When multiple suppliers are used, having geographically centralized suppliers could lessen the probability of all failing simultaneously. B. The risk mitigation effectiveness of using multiple suppliers has nothing to do with the probability of a super-event occurring. C. It is usually less risky to use single suppliers rather than multiple suppliers. D. When multiple suppliers are used, having geographically dispersed suppliers could lessen the probability of all failing simultaneously.

Which order is correct for the stages of the supplier selection process? A. supplier development, supplier evaluation, contracting, negotiating B. supplier evaluation, supplier development, negotiations, contracting C. supplier evaluations, supplier development, contracting D. supplier evaluation, negotiations, contracting

Which type of inspection measures dimensions such as weight, speed, size, and strength? A. attribute B. variable C. JIT D. quality

Check sheet

a sheet listing a number of potential problems that receive a check mark every time a problem occurs

Capacity requirement planning (CRP)

a short-range capacity planning technique that is used to check the feasibility of the material requirements plan

C-Chart

a statistical process control technique that is used to monitor the total number of defects per unit

Time series

a time-ordered sequence of observations taken at regular time intervals

Process map

a tool that is the necessary first step to evaluating any manufacturing or service process; a drawing showing how products or people flow through a process

Pareto chart

a useful method for organizing applications of data in many formats

ABC System

a useful technique for determining which inventories should be managed more closely and which others should not

Joint Ventures

Formal collaboration -Enhance skills - Secure supply - Reduce costs

Which of the following statements regarding Gantt charts is true?

Gantt charts are visual devices that show the duration of activities in a project.

Project controlling

Monitor resources, costs, quality, and budgets; revise plans and shift resources to meet time and cost demands.

Project management techniques

Monitor resources, costs, quality, and budgets; revise plans and shift resources to meet time and cost demands.

Which of the following is a basic assumption of PERT?

No activity in the network must be repeated.

Prior to embarking on supply chain design, operations managers must first consider all of the following except: A. make-or-buy B. supply chain development C. outsourcing D. none of the agove

Which of the following technologies would enable a cashier to scan the entire contents of a shopping cart in seconds?

RFID - Radio Frequency Identification, or RFID, is a type of technology that has tremendous utility in terms of monitoring and tracking almost anything that moves - including groceries or any other good that can be purchased.

ROP under UNCERTAINTY

ROP=Expected demand during lead time + Safety Stock

ROP under CERTAINTY

ROP=d x LT

Share demand information throughout the supply chain

Remedy for demand forecast errors

Utilize channel coordination

Remedy for order batching

Price stabilization (everyday low prices)

Remedy for price fluctuations

Allocate orders based on past demand

Remedy for shortage gaming

Smooth FM Radio uses a __________ approach when it mixes pre-recorded local segments with its national music blocks.

mass customization - Mass customization is the term used to describe the process where a business tries to move to low-cost production (or service), but still meet the unique expectations of customers

Variable data

measurable data such as weight, time and length

Supply chain delivery performance

measures the average percentage of orders that are filled on or before the requested delivery date

Intermediately positioned strategy

midway between supply source and customers when distribution requirements are high and product comes from various locations

Inventory should be kept at the

minimum level necessary

Single Period

model for ordering perishables and other items with limited useful lives

Controlling

monitor resources, costs, quality, and budgets; Feedback enables revising plans and shift resources to meet time and cost demands

Controlling

monitor resources, costs, quality, and budgets; revise plans and shift resources to meet time and cost demands

Waste of Over-Processing

more work is done on a piece than is required by the customer

Waste of Motion

movement of equipment and workers

Indented Bill of Materials

multilevel bill of materials

Medium(intermediate)-range plans

normally span six to eighteen months -usually involve minor changes in capacity ex. changes in employment levels

Contract

not bound to serve the general public

Private

not subject to economic regulation and typically transports goods for the company owing the carrier

A way to measure the supply chain environmental performance

percentage of partners that have created a director of environmental sustainability position in their company

Company Reputation

perception of new products; employment practices; supplier relations

Managing perceived wait times

place magazines in the waiting room; keep patients informed about the wait times; have the patient fill out forms while waiting

TQM Concepts- cont improvement

plan, do, check, act (the plan)

Primary functions of organizations

planning, organizing, leading, and controlling.

The three phases of project management

planning, scheduling, controlling

Sustainable sourcing

practice aimed at ensuring that purchased products or materials meet environmental objective of the organization

Excess (or insufficient) capacity

prevents firm from taking advantage of the efficiency of manufacturing planning & control system

Product Liability

reduces risk

Project crashing

reducing project duration by increasing direct costs

Capacity

refers to a firms labor and machine resources. it is the maximum amount of output that an organization is capable of completing in a given period of time

Scheduling

relate people, money, and supplies to specific activities and activities to each other

Scheduling

relate people, money, and supplies to specific activities and shows relationship of activities to each other

Level strategy

relies on constant output rate while varying inventory and backlog according to fluctuating demand

An assembly line is an example of a __________.

repetitive process - Assembly line manufacturing is considered a repetitive process due to the fact that specific modules (preassembled parts and components) are assembled into a final product repetitively.

Differing distribution networks

response time, product variety, product availability, customer experience, time to market, order visibility, return-ability

To succeed in a JIT operation you need to

reduce waste & uncertainty by a process of continuous improvement

System Nervousness

small changes in the upper-level-production plan cause major changes in the lower-level production

Critical path

the computed longest time path(s) through a network.

Flow chart

tools that use annotated boxes representing process action elements and ovals representing wait periods, connected by arrows to show the flow of products or customers through the process

The crossover point is that production quantity where __________.

total costs for one process equal total costs for another process

Attribute data

yes/no kinds of data, indicate the presence of some characteristic such as color, satisfaction, workability or beauty

make or buy decisions

choosing between obtaining products and services externally as opposed to producing them internally

Conformance to specifications

does the product do what it is designed to do?

Conformance to customer needs

does the product do what the customers want it to do?

Earliest finish (EF)

earliest time at which an activity can be finished

Earliest start (ES)

earliest time at which an activity can start, assuming all predecessors have been completed

Employee Fulfillment

employee attitudes that can accomplish what is important

Economies of Scale

if output rate is less than the optimal level, increasing the output rat results in decreasing average per unit costs

Diseconomies of Scale

if the output rate is more than the optimal level, increasing the output rate results in increasing average per unit costs

Global Implications

improves ability to compete

Waste of Waiting

(no explanation given)

Seven Wastes is originated by

Shingo & Ohno

Additional S's- Safety

built in good practices

Capacity Considerations

(1) Forecast demand accurately. (2) Match technology increments and sales volume. (3) Find the optimum operating size (volume). (4) Build for change.

Waste of Marking Defective Products

(no explanation given)

Why study decision analysis?

-Help make better decisions -Gather your thoughts -Organize subjective ideas and judgments

LP Assumptions

-Linearity -Divisibility -Certainty -Nonnegativity

Keiretsu Networks

- A middle ground between few suppliers and vertical integration - Supplier becomes part of the company coalition - Often provide financial support for suppliers through ownership or loans - Members expect long-term relationships and provide technical expertise and stable deliveries - May extend through several levels of the supply chain

Vertical Integration

- Developing the ability to produce goods or services previously purchased - Integration may be forward, towards the customer, or backward, towards suppliers - Can improve cost, quality, delivery, and inventory but requires capital, managerial skills, and demand - Risky in industries with rapid technological change

Advantages of PERT/CPM

- Especially useful when scheduling and controlling large projects - Straightforward concept and not mathematically complex - Graphical networks help highlight relationships among project activities - Critical path and slack time analyses help pinpoint activities that need to be closely watched - Project documentation and graphics point out who is responsible for various activities - Applicable to a wide variety of projects - Useful in monitoring not only schedules but costs as well

Communications

- Interactive TV - e-books via Kindle

Supply Chain Risk

- More reliance on supply chains means more risk - Fewer suppliers increase dependence - Compounded by globalization and logistical complexity - Vendor reliability and quality risks - Political and currency risks

Wholesale/retail trade

- Point-of-sale (POS) terminals - e-commerce - electronic communication between store and supplier - bar-coded data - RFID

Disadvantages of PERT/CPM

- Project activities have to be clearly defined, independent, and stable in their relationships - Precedence relationships must be specified and networked together - Time estimates tend to be subjective and are subject to fudging by managers - There is an inherent danger of too much emphasis being placed on the longest, or critical path

Limitations of PERT/CPM

Virtual Companies

- Rely on a variety of supplier relationships to provide services on demand - Fluid organizational boundaries that allow the creation of unique enterprises to meet changing market demands - Relationships may be short- or long-term - Exceptionally lean performance, low capital investment, flexibility, and speed

Cost-Time Trade-Offs

- The project is behind schedule - The completion time has been moved forward

Restaurants and foods

- Wireless orders from waiters to kitchen - robot butchering - transponders on cars that track sales at drive-throughs

Utilities and government

- automated one-person garbage trucks - optical mail scanners - flood-warning systems - meters that allow homeowners to control energy usage and costs

Transportation

- automatic toll booths - satellite-directed navigation systems - Wi-Fi in automobiles

Few Suppliers

- buyer forms longer term relationships with fewer suppliers - create value through economies of scale and learning curve improvements - suppliers more willing to participate in JIT programs and contribute design and technological expertise - cost of changing suppliers is huge - trade secrets and other alliances may be at risk

Many Suppliers

- commonly used for commodity (common) products - purchasing is typically based on price - suppliers compete with one another - supplier is responsible for technology, expertise, forecasting, cost, quality, and delivery

Financial services

- debit cards - electronic funds transfer - ATMs - Internet stock trading - online banking via cell phone

factor-weighting technique

- each factor is assigned a weight and a score - the supplier with the best weighted score

Hotels

- electronic check-in/check-out - electronic key/lock systems - mobile Web bookings

Importance of Project Management

- international workforce, construction professionals, cooks, medical personnel, security - strategic value of time-based competition - quality mandate for continual improvement

Importance of Project Management

- international workforce, construction professionals, cooks, medical personnel, security - strategic value of time-based competition - quality mandate for continual improvement Ex.Bechtel Project Management

critical path

- longest path through the network - shortest time in which the project can be completed - any delay delays the whole project - has no slack time

Six Sourcing Strategies

- many suppliers - few suppliers - vertical integration - joint ventures - keiretsu networks - virtual companies

Education

- online newspapers and journals - interactive assignments via WebCT - Blackboard - smartphones

Health care

- online patient-monitoring systems - online medical information systems - robotic surgery

Service attributes

- reliability - responsiveness - assurance - empathy - tangibles

The Supply Chain's Strategic Importance

- the coordination of all supply chain activities, starting with raw materials and ending with a satisfied customer - includes suppliers, manufacturers and/or service providers, distributors, wholesalers, retailers, and final customers

Airlines

- ticketless travel - scheduling - internet purchases - boarding passes downloaded as two-dimensional bar codes on smart phones

Outsourcing

- transfer traditional internal activities and resources to outside vendors - efficiency in specialization - focus on core competencies

The Perpetual (Continuous) Review System versus the Periodic Review System

-A Continuous Review System is costly to conduct but requires less safety stock -The Periodic Review System, which reviews physical inventory at specific points in time but requires higher level of safety stock

Decision Tree

-A schematic representation of the available alternatives and their possible consequences -Useful for analyzing sequential decisions

Characteristics of decisions that are suitable for using decision theory:

-A set of possible future conditions that will have a bearing on the results of the decision (interest rates, demand) -A list of alternatives from which to choose -A known payoff for each alternative under each possible future condition

Revenue function

-Begins at the origin and proceeds upward to the right, increasing by the selling price of each unit - Where the revenue function crosses the total cost line is the break-even point

3 General Environment Categories:

-Certainty -Risk -Uncertainty

Decision Criteria

-Maximin Choose the alternative with the best of the worst possible payoffs -Maximax Choose the alternative with the best possible payoff -Laplace Choose the alternative with the best average payoff -Minimax regret Choose the alternative that has the least of the worst regrets

LP Model Components:

-Objective Function -Decision Variables -Constraints -Parameters

Forecasting time horizons

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

Uses of LP Models

-Staff Scheduling -Product Mix -Transportation and Distribution Networks (routing) -Financial Portfolios

Cost for quality mistakes

-future sales can be damaged

Non-binding constraints

-have shadow price values that are equal to zero -have slack (≤ constraint) or surplus (≥ constraint) -Changing the RHS value of a non-binding constraint (over its range of feasibility) will have no effect on the optimal solution

Binding constraint

-have shadow price values that are non-zero -have no slack (≤ constraint) or surplus (≥ constraint) -Changing the RHS value of a binding constraint will lead to a change in the optimal decision values and to a change in the value of the objective function

Economic Manufacturing Quantity (EMQ) or Production Order Quantity (POQ)

-relaxes the instantaneous replenishment assumption by allowing usage or partial delivery during production

Radio Frequency Identification (RFID)

-successor to the barcode

Effective Inventory Management Requires:

1)A system to keep track of inventory 2)A reliable forecast of demand 3)Knowledge of lead time and lead time variability 4)Reasonable estimates of holding costs ordering (set-up) costs shortage costs 5)A classification system for inventory items

Three basic production strategies for Aggregate Production Plan:

1)Chase production strategy 2)Level production strategy 3)Mixed production strategy

Model Formulation:

1)List and define the decision variables 2)State the objective function 3)List the constraints 4)Non-negativity constraints

The amount of safety stock that is appropriate for a given situation depends upon:

1)The average demand rate and average lead time 2)Demand and lead time variability 3)The desired service level

A items (very important)

20 percent of the number of items in inventory and about 60 to 80 percent of the annual dollar value

How to build a Lean Organization (not easy)

1. Build a culture of continuous improvement 2. Eliminate Waste 3. Open communication demonstrated, respect for people, empowered employees 4. Collaborative partnerships with suppliers

Implications of Quality

1. Company rep 2. Product liability 3. Global Implications

7 concepts of TQM

1. Continuous improvement 2. six sigma 3. employee empowerment 4. benchmarking 5. JIT 6. Taguchi concepts 7. knowledge of TQM tools

Six Steps PERT and CPM

1. Define project and prepare 2. Develop relationships among activities 3. Draw and Network connecting activities 4. Assign time and/or cost estimates 5. Compute longest time path (critical path) 6. Use network to help plan, schedule, monitor, and control the project

JIT Principles

1. Eliminate Waste 2. Worker Involvement (in quality and in process improvement) 3. Reduce set up time (increases flexibility)

Process analysis and design tools

1. Identify Opportunities 2. Define the scope 3. Document the process 4. Evaluate performance 5. Redesign the Process 6. Implement changes

Theory of constraints

1. Identify the constraints 2. Develop a plan for overcoming the constraints 3. Focus on resources on accomplishing Step 2 4. Reduce the effects of constraints by offloading work or expanding capability 5. Once overcome, go back to step 1 and find new constraints

Pull (push vs pull)

1. JIT 2. Production occurs in reaction to DEMANDS THAT HAVE ALREADY HAPPENED 3. Japanese way

Push (push vs pull)

1. MRP 2. Production occurs based on FORECASTS OF FUTURE demands 3. traditional way

Sources of variability

1. Poor processes resulting in improper quantities, late, or non-conforming units, inadequate maintenance 2. Unknown and changing customer demands, supplier factors, etc.

What do lean organizations do?

1. Understand the customer & expectations 2. Communicate and collaborate to make sure customer expectations are met 3. Implement the tools of lean in the organization

The Four Process Strategies

1. Process focus 2. Repetitive focus 3. Product focus 4. Mass customization

Ways to reduce waste & keep an efficient workplace

1. Sort/segregate 2. simplify/straighten 3. Shine/sweep 4. Standardize 5. Sustain/self-discipline

Lean Inventory Tactics

1. Use a pull system to move inventory 2. Reduce lot sizes (reduce setup time) 3. Develop JIT delivery systems with supplies 4. Deliver directly to point of use 5. use group technology 6. Remove quality problems 7. Scheduled maintenance

TQM Concepts- Employee Empowerment techniques

1. build communication networks that include employees 2. develop open, supportive supervisors 3. move responsibility to employees 4. build a high moral organization 5. create formal team structures

What is quality?

1. high performance or luxury product 2. conforms to specifications 3. conforms to customers needs

The flow of activities

1. organization practices 2. quality principles 3. employee fulfillment 4. customer satisfaction

The 4 classes of quality associated costs

1. prevention costs 2. appraisal costs 3. Internal failure costs 4. external failure costs

Four process strategies

1. process 2.Repetitive 3.Product 4.Mass customization

Key concepts of total quality management

1. quality as part of strategic planning 2. focus on internal and external customer satisfaction 3. effective collection and use of info 4. HR: teamwork, training and empowerment 5. effective design of products and processes 6. leadership: top management drive TQM

TQM Concepts- 6 sigma concepts

1. quality is delivering what the customer wants 2. customers perception of quality is not just driven by the avg quality by the variation in quality each time the customer interacts with the company 3. customers value consisten predictable interactions 4. processes need to be designed to minimize variability

Two ways quality improves profit

1. reduced costs via increased productivity, lower network and scrap costs, and lower warranty costs 2. sales gains via improves response, flexible pricing, improved reputation

____ of the land is suitable for farming

12%

_____ of japan is inhabitable/mountainous

73%

O.F. Coefficient Changes

A change in the value of an O.F. coefficient can cause a change in the optimal solution of a problem -not every change will result in a changed solution

Decision Analysis

A general approach to decision making that is suitable to a wide range of operations management decisions such as: -capacity planning -product and service design -equipment selection -location planning

A lawnmower assembly plant uses a variety of nuts, bolts, screws and other fasteners in its operation. Its supplier delivers these items directly to the point of use on the assembly line and ensures that there are always sufficient quantities of fasteners to maintain the production schedule. This is an example of which kind of? A. vendor managed inventory B. lost size reduction B. accurate pull data D. blanket ordering

Objective function

A mathematical statement of profit (or cost) for a given solution or other metric of measurement (ex. time)

A successful quality strategy begins with: A. satisfying customers and obtaining a competitive advantage. B. engaging employees in the necessary activities to implement quality. C. an organizational culture that fosters quality. D. an understanding of the principles of quality.

A supply chain ends with A. a satisfied customer B. suppliers C. distributors D. manufacturers

Which one of the following technologies is used only for material handling, not actual production or assembly?

AGV - technology is used only for material handling, not actual production or assembly. Automated guided vehicles (AGVs) are used specifically to move and handle materials during the production process.

"Automatic placement and withdrawal of parts and products into and from designated places in a warehouse" describes __________ technologies.

ASRS - ASRS (Automated Storage and Retrieval System) systems are useful because they reduce the amount of human labor involved in warehousing and storing inventory by relying on computer controlled storage and transport systems.

All of the following are four major categories of costs of quality except: A. Prevention Costs B. Internal/External Failure Costs C. Appraisal Costs D. none of the above

All of the following are included in Shingo and Ohno's 7 Wasted except: A. waste of motion B. waste of employee use C. waste of overproduction D. waste of waiting

All of the following are statutes of the central limit theorem except: A. regardless of the distribution of the population, the distribution of the mean of a sample will tend to follow a normal curve as the number of samples increases B. the mean of the distribution of samples will equal will equal the mean of the overall population C. the standard deviation of the sampling distribution will be the population standard deviation divided by the square root of the sample size D. none of the above

All of the following are three of the main types of quality except. A. customer based B. manufacturing based C. product based D. none of the above

All of the following are tools of Six Sigma except: A. check sheets B. total quality management C. histograms D. none of the above

Shadow Price

Amount by which the value of the objective function would change with a one-unit change in the RHS value of a constraint

Decision Variables

Amounts of either inputs or outputs

Total Cost=

Annual Holding Cost + Annual Ordering Cost

Total Annual Inventory Costs=

Annual Purchase Cost+Annual Holding Cost+Annual Order Cost

Anything that doesn't add value to the product or customer is referred to as: A. value B. quality C. waste D. unnceccessary

Sensitivity Analysis

Assessing the impact of potential changes to the numerical values of an LP model Three types of changes: -Objective function coefficients -Right-hand values of constraints -Constraint coefficients

Core competencies

COMPETITIVE ADVANTAGE A factor that a business see's as a key to their success.

The Beta distribution is used in project management to

Calculate expected activity times

Capacity and Strategy

Capacity decisions impact all 10 decisions of operations management as well as other functional areas of the organization Capacity decisions must be integrated into the organization's mission and strategy

Choosing products and services that can be advantageously obtained externally as opposed to produced internally is known as: A. outsourcing B. make-or-break decision C. supply chain management D. make-or-buy decision

ABC Classification System

Classifying inventory according to some measure of importance, and allocating control efforts accordingly in terms of A, B, and C items; A being the most important

Assumptions about the Breakeven analysis

Cost and revenue are linear functions.. FALSE We actually know these costs ... FALSE they are difficult to verify

Which of these statements regarding time-cost tradeoffs in CPM networks is true?

Crashing shortens the project duration by assigning more resources to one or more of the critical tasks.

In order to have low inventory you need to

Create very high quality products which means you are producing right the first time with no mistakes

Decision Making Under Uncertainty

Decisions are sometimes made under complete uncertainty: No information is available on how likely the various states of nature are.

Selection of Equipment

Decisions can be complex as alternate methods may be available Important factors may be - Cost - Cash flow - Market stability - Quality - Capacity - Flexibility

Dependent Demand

Describes the internal demand for parts based on the demand of the final product in which the parts are used. Subassemblies, components, & raw materials are examples of dependent demand items

Excess Cost

Difference between purchase cost and salvage value of items left over at the end of the period =Cost per unit - Salvage value per unit

Collectivist Culture

work comes first; sacrifice life for your work; ex. Japan

Which of the following is determined during the forward pass?

Early Start

Risk

Environment in which certain future events have probable outcomes

Uncertainty

Environment in which it is impossible to assess the likelihood of various future events

Certainty

Environment in which relevant parameters have known values

What is Just-In-Time (JIT)

Get only the right PART, to the right PLACE, at the right TIME, and in the right QUANTITY

Service Blueprinting

Identifies potential failure points with the three levels of interaction which each have different management issues

If CGS is $19,810 and Inventory is $1,210, what is the inventory turnover? A. 19.32 B. 5.12 C. 16 D. 16.37

If CGS is $19,810, Inventory is $1,210, and Total Assets is $17, 590, what is the percent of assets committed to inventory? A. 12% B. 9.63% C. 6.88% D. 7.25%

Economies of Scale

If output rate is less than the optimal level, increasing the output rate results in decreasing average per unit costs -Reasons for economies of scale: Fixed costs are spread over a larger number of units, construction costs increase at a decreasing rate as facility size increases, processing costs decrease due to standardization

Diseconomies of Scale

If the output rate is more than the optimal level, increasing the output rate results in increasing average per unit costs Reasons for diseconomies of scale: Distribution costs increase due to traffic congestion and shipping, complexity increases costs, Inflexibility can be an issue, additional levels of bureaucracy, overtime costs

Selection of Equipment

Important factors may be - Cost - Cash flow - Market stability - Quality - Capacity - Flexibility

Demand Forecasts

Inventories are necessary to satisfy customer demand, so it is important to have a reliable estimates of the amount and timing of demand

JIT systems do all of the following except: A. improves quality B. cuts costs C. increases inventory D. none of the above

Constraints

Limitations that restrict the available alternatives

3 time horizons

Long-range planning, Intermediate range planning (aggregate planning), and Short-range planning (scheduling)

Which of the following is not a strategy for improving service productivity?

Mass customization

Which of the quadrants in the service process matrix has high labor intensity and low customization?

Mass service - The mass service quadrant in the service process matrix has high labor intensity and low customization.

LP Models

Mathematical representations of constrained optimization problems

Reduce Waste- Simplify/Straighten

Methods analysis tools

Single-Period Model

Model for ordering perishables and other items with limited useful lives -The goal of the single-period model is to identify the order quantity that will minimize the long-run excess and shortage costs

Project organization

Most helpful when: - work can be defined with a specific goal and deadline - the job is unique or somewhat unfamiliar to the existing organization - the work contains complex interrelated tasks requiring specialized skills - the project is temporary but critical to the organization - the project cuts across organizational lines

Nonnegativity

Negative values of decision variables are unacceptable

PERT and CPM

Network techniques developed in the 1950's -CPM by DuPont for chemical plants (1957) - PERT by Booz, Allan &Hamilton for US Navy Polaris Missile

Is JIT right for every business?

No, but all businesses can learn from the JIt principles

Divisibility

Noninteger values of decision variables are acceptable

Parameters

Numerical constants

Which of the following statements regarding PERT analysis is true?

Only critical activities contribute to the project variances.

Fixed-order-interval (FOI) model

Orders are placed at fixed time intervals -Reasons for using the FOI model: Supplier's policy may encourage its use, Grouping orders from the same supplier can produce savings in shipping costs, Some circumstances do not lend themselves to continuously monitoring inventory position

Importance of Project Management

Organizing activities so specific tasks can be completed. At the highest levels of an organization, management often involves juggling a portfolio of projects.

The three phases involved in the management of large projects are:

Planning, scheduling, and controlling

Determining the Project Schedule

Perform a critical path analysis

Periodic System

Physical count of items in inventory made at periodic intervals

This type of process-analysis tool is a schematic of the movement of material, product, or people.

Process mapping - The process mapping process-analysis tool is a schematic of the movement of material, product, or people. Process mapping, or time-function mapping, is a particular type of flowchart that adds time intervals to the horizontal axis. This helps managers identify redundant work processes, extra steps, or potential issues that could lead to production delays.

Low-volume, high-variety production is best suited for which of the following process strategies?

Process-focused - Process-focused strategies are implemented when businesses would benefit from organizing production and equipment around specific production activities (such as product design, welding, assembly, etc.). Process-focused operations allow for a high degree of flexibility and customization because products can move intermittently between processes.

High-volume, low-variety production is best suited for which of the following process strategies?

Product-focused - Product-focused production facilities are organized around the finished product (such as light bulbs, toilet paper, or potato chips). In order for a firm to effectively use this option, it must operate with high levels of standardization and quality control.

Which of the following transformations generally has the highest equipment utilization?

Product-focused process

Products that can be produced uniformly and consistently in adverse manufacturing and environmental conditions are said to be: A. target oriented quality B. quality robust C. quality strong D. none of the above

Which of the quadrants in the service process matrix has high labor intensity and high customization?

Professional service

Deriving EOQ

Q= sqroot[(2DS)/H]

Project Planning

Relate people, money and supplies to specific activities and activities to each other.

Additional S's- Support/Maintenance

Reduce variability and unplanned downtime

Reduce Waste- Sustain/Self-discipline

Review work and recognize the process

Reduce Waste- Standardize

Remove variations from the process

Which of the following industries is most likely to have low equipment utilization?

Restaurants

Two additional S's of reducing waste

Safety & support/maintenance

Of the five tools used for process analysis and design, which one focuses on the customer interaction?

Service blueprinting - service blueprinting focuses on the customer interaction. Service blueprinting is a process-analysis technique that examines the interaction between the service provider and the customer.

Service Capacity

Service capacity planning can present a number of challenges related to: -The need to be near customers (Convenience) -The inability to store services Cannot store services for consumption later -The degree of demand volatility Volume and timing of demand Time required to service individual customers

The EF of an activity is the:

The EF of an activity is the ES + Activity time. EF, or early finish, is the earliest an activity can be completed and is determined by identifying the early start time (ES) and adding in the amount of time it will take to complete the activity (Activity Time).

The advantage of having few suppliers is to: A. look for short-term attributes B. form a long-term relationship C. take advantage of dis-economies of scale D. pursue low cost

Effective Capacity

The capacity a firm expects to achieve given current operating constraints

Independent Demand

The demand for final products & has a demand pattern affected by trends, seasonal patterns, & general market conditions

Linearity

The impact of decision variables is linear in constraints and in the objective function

Design capacity

The maximum theoretical output of a system

The objective of a statistical process control (SPC) system is to A. provide a statistical signal when natural causes of variation are present. B. eliminate natural variations C. provide a statistical signal when assignable causes of variation are present. D. assess customer expectations

Distribution Management

The outbound flow of products

Service Level

The probability that demand will not exceed supply during lead time Service level = 100% - Stockout risk

The process of ensuring that the natural variation of the process must be small enough to produce products that meet the standard is known as: A. process capability B. statistical process control C. cross sourcing D. resizing

The processes for sending returned products back up the supply chain for resale, repair, reuse, remanufacture, recycling, or disposal is known as: A. reverse logistics B. closed-loop logistics C. inventory turnover D. none of the above

Range of Optimality

The range of O.F. coefficient values for which the optimal values of the decision variables will not change

PERT analysis computes the variance of the total project completion time as:

The sum of the variances of all activities on the critical path.

Capacity

The throughout, or the number of units a facility can hold, receive or store -determines fixed cost and if demand will be satisfied

A simple CPM network has five activities, A, B, C, D, and E. A is an immediate predecessor of C and of D. B is also an immediate predecessor of C and of D. C and D are both immediate predecessors of E. Given the above scenario, which of the following is correct?

There are four paths in this network.

What is the point of lean inventory tactics

There will be no inventory or problems

Transferring a firm's activities that have traditionally been internal to external suppliers is known as: A. make-or-buy B. outsourcing C. keiretsu network D. vertical integration

Certainty

Values of parameters are known and constant

What is the first stage in the supplier selection process? A. negotiations B. contracting C. supplier evaluation D. supplier development

What is the objective of supply chain management? A. to structure the supply chain to maximize its competitive advantage and benefits to the ultimate consumer B. to encourage everyone in the supply chain to reduce their costs C. to implement a JIT system that brings supplies directly to the customer at low costs D. to aim for multiple suppliers as opposed to fewer suppliers

What is the purpose of logistics management? A. to obtain quality in the manner of production and shipping B. to secure a strong POS system that allows a firm to gather much needed data C. to obtain efficiency of operations through the integration of all material acquisition, movement, and storage activities D. to obtain efficiency of operations through the integration storage activities only

Reduce Waste- Sort/Segregate

When in doubt, throw it out

Which of the following could reduce costs and increase profit? A. JIT B. using p-charts C. increasing production D. A and C

Which chart tells us that a gain or loss in dispersion has occurred? A. p chart B. c chart C. x chart D. R chart

Which chart tells us whether changes have occurred in the central tendency of a process? A. x chart B. histogram chart C. R chart D. p chart

Which model is used to identify, measure, reorganize, and improve supply chain processes? A. SERVQUAL B. SCOR C. JIT D. all of the above

Which negotiation strategy bases price on a published, auction, or index price? A. cost based B. market based C. competitive bidding D. none of the above

Which of the following DOES NOT increase profit by improving quality? A. higher warranty costs B. increased productivity C. flexible pricing D. none of the above

Which of the following TQM tools would be best suited for displaying the number of students majoring in each business discipline? A. check sheets B. p-charts C. histograms D. flow charts

Which of the following are issues with developing an efficient integrated supply chain? A. global optimization B. small lots C. low costs D. none of the above

Which of the following are services of warehouses? A. break-bulk function B. consolidation point C. cross docking facility D. all of the above

Which of the following are sourcing strategies used by firms? A. vertical integration B. virtual companies C. many suppliers D. all of the above

Which of the following costs is NOT a cost of quality? A. appraisal costs B. internal failure costs C. prevention costs D. research and development

With regard to the cost-based price model negotiation strategy, which of the following is true? A. Potential suppliers each submit quotations as to price, delivery, and so on. B. Prices are based upon supplier costs. C. Prices are based in some way upon market standards agreed to by both supplier and purchaser. D. Prices float based on what the customer is willing to pay.

WBS stands for which of the following project management tools?

Work Breakdown Structure

__________ is a widely used instrument that provides direct comparisons between customer service expectations and the actual service provided. A. LEARN Routine B. SPC C. SERVQUAL D. Poka-Yoke

____________ is the Japanese word used to describe the ongoing process of unending improvement. A. Kizen B. Kazen C. Kaizen D. Kaizin

_____________ is the ability of a process to meet design specifications, which are set by engineering design or customer requirements. A. process control B. statistical process control C. JIT D. none of the above

______________ is a foolproof device or technique that ensures production of good units every time. A. SPC B. JIT C. Poka-Yoke D. Kaizen

______________ is a method of measuring random samples of lots or batches of products against predetermined standards. A. random sampling B. JIT sampling C. acceptance sampling D. lean sampling

______________ is a tool used to help identify the kind of abnormalities in a process. A. Poka-Yoke B. run test C. SPC D. process capability

______________ is known as any deviation from the optimum process. A. variance B. difference C. optimal error D. standards of deviation

_______________ is a concept that results in material being produced only when requested and moved to where it is needed just as it is needed. A. put system B. pull system C. thrust system D. push system

_______________ is known as variability that affects every productions process to some degree and is to be expected, also known as common cause. A. assignable variation B. natural variation C. expected variance D. optimal variation

________________ Involves selecting a demonstrated standard that represents the very best performance for processes or activities very similar to your own. A. benchmarking B. quality checks C. histogramming D. JIT operations

________________ is a hybrid technique where two suppliers each provide a different component, but they have the capability of producing each other's component. A. many suppliers B. outsourcing C. cross-sourcing D. optimization

________________ is the number of times inventory is sold or used in a time period. A. inventory turnover B. turnover rate C. inventory status D. none of the above

________________ moves parts through production via a pull from a signal. A. kanban B. kaizen C. Poka-yoke D. none of the above

_________________ sets and enforces product standards by banning products that don't reach quality standards. A. User Product Safety Act B. Consumer Product Safety Act C. Producer's Risk D. Quality Assurance Act

__________________ is defined as the totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs. A. JIT B. Lean Operations C. Kaizen D. Quality

__________________ is variation in a production process that can be traced to specific causes. A. assignable variation B. natural variation C. expected variance D. optimal variation

___________________ is developing the ability to produce goods or services previously purchased or to actually buy a supplier or a distributor. A. backward integration B. vertical integration C. forward integration D. horizontal integration

___________________ refers to the proactive design of a supply chain that tries to optimize all forward and reverse flows. A. reverse logistics B. weeks of supply C. closed-loop supply chain D. open-loop supply chain

Legacy MRP system

a broad label used to describe an older information system that usually works at an operational level to schedule production within an organization

R-Chart

a chart that is used to track sample ranges, or the variation of the measurements within each sample

P-chart

a chart that monitors the percent defective in each sample

Sustainability

a commitment to environmental responsibility

Continuous Review System

a continuous review of physical inventory to make sure orders are initiated when physical inventories reach their reorder points -very costly and difficult to achieve

X-chart

a control chart that tracks the central tendency of the sample means for variable data

Variable cost

a cost that varies with volume of units produced

Sustainable Development

a development that meets the needs of the present without compromising the ability of future generations to meet their own needs

A system using an automated work cell controlled by electronic signals from a common centralized computer facility is called __________.

a flexible manufacturing system - Flexible manufacturing systems use centralized computer systems to automate portions of the production process.

Sales-force composite

a forecast in which field sales personnel are asked to estimate their customers' purchases for the period in question

Resource Requirement Planning (RRP)

a long-range capacity planning module, checks whether aggregate resources are capable of satisfying the aggregate production. Resources considered include gross labor hours & machine hours

Fishbone Chart

a method that can be used to aid in brainstorming and isolating the causes of a problem

Control charts

a method that monitors process variability and then collects and plots sample measurement of the process over time

Green purchasing

a practice aimed at ensuring that purchasing personnel include environmental considerations and human health issues when making purchasing decisions

Lead Capacity Strategy

a proactive approach that adds or subtracts capacity in anticipation of future market condition and demand

Fair trade products

a product manufactured or grown by a disadvantaged producer in a developing country that receives a fair price for its goods

Delphi method

a qualitative forecasting method in which a group of experts are surveyed during several rounds to gain consensus on future events. Because the group members do not physically meet, they thus avoid the scenario where one or a few experts could dominate a discussion

Jury of executive opinion

a qualitative forecasting method in which a group of experts collectively develop a forecast

Consumer surveys

a questionnaire that seeks input from customers on important issues such as future buying habits, new product ideas and opinions about existing products

Lag Capacity Strategy

a reactive approach that adjusts capacity in response to demand

Periodic

a review of inventory at specific points in time

price fluctuations

buying in advance of demand to take advantage of low prices, discounts, or sales

Drop shipping and special packaging

bypasses the seller and reduces costs

Forward vertical integrations

acquiring downstream customers

Backward vertical integration

acquiring upstream suppliers

How purchasing contributes to these goals

actively seeking better materials and reliable suppliers, work closely with and exploiting the expertise of strategic suppliers to improve quality and materials, involving suppliers and purchasing personnel in new product design and development efforts

Tracking capacity strategy

adds capacity in relatively small increments to keep pace with increasing demand

Chase strategy

adjust capacity to match demand

Customer Satisfaction

an effective organization with a competitive advantage (winning orders, repeat customers)

A job shop is an example of __________.

an intermittent process - The term intermittent process is used because these facilities are designed to handle low-volume/high-variety production runs with frequent changes based on customer orders. Thus, each job is essentially a different product line.

Perpetual (Continuous)

an inventory management system where the physical inventory levels are counted on a daily basis

Variability

any deviation from optimum process

Waste

anything that doesn't add value ego a product or customer

Dummy activities__________

are used when two activities have identical starting and ending events.

Project manager responsibilities

assigned by the performing organization to lead the team that is responsible for achieving the project objectives

Once the supply chain partner requirements are understood, supply chain members can then

audit their capabilities to see if they are consistent with the needs of the end customers

In a PERT network, non-critical activities that have little slack need to be monitored closely__________

because near-critical paths could become critical paths with small delays in these activities

Reasons to outsource

better quality, cost, technical support and expertise, capacity, volatile demand, gain information on latest trends

Order Costs

direct variable costs associated with placing an order with the supplier

Lead capacity strategy

build capacity in anticipation of future demand increases

Lag capacity strategy

build capacity when demand exceeds current capacity

Assignable variation

can be traced to a specific cause

Local optimization

can magnify fluctuations

Variable Costs

change as a function of the output level

Random variation

changes due to unexpected or unpredictable events such as natural disasters, strikes and wars

Reduce Waste- Shine/Sweep

clean daily

Product positioned strategy

close to supply source for firm to collect goods and consolidate

Total quality management

commitment by management to have a continuous company wide drive toward excellence in all aspects of products/services that are important to the customer

Four Legal Forms of Transportation

common contract, exempt, and private

Internal Failure Costs

costs associated with fixing poor products quality BEFORE it reaches the customer (rework, scrap, equipment downtime)

External Failure costs

costs associated with product quality problems that occur AFTER it reaches the customer (recall logistical costs, repair costs, brand loyalty, litigation)

Holding (carrying) Costs

costs incurred for holding inventory in storage

Prevention Costs

costs incurred in the process of preventing poor quality (planning, training, design)

Appraisal Costs

costs incurred in the process of uncovering defects (inspections, tests, audits)

Fixed cost

costs that continue even if no units are produced (deprecation, taxes, mortgage payments, rent)

demand forecast errors

cumulative uncertainty in the supply chain

Distribution network performance

customer needs that are met, cost of meeting customer needs

Goal of total quality management

customer satisfaction from continuous improvement of key processes

In the mass service and service factory quadrants of the service process matrix, the operations manager could focus on all of the following except __________.

customization - Customization is a technique that is more common in professional service business models (i.e., orthodontics) and service shops (i.e., heart hospitals or hospitals that specialize in a specific type of service or treatment).

TQM Concepts- 6 sigma method

define, measure, analyze, improve, control

Successful supply chains are those that in the face of ever changing customer needs can continue to

deliver the right combination of cost, quality, and customer service

Independent Demand

demand for final products affected by trends, seasonal patterns, & general market conditions

TQM Concepts- Benchmarking (Steps)

determine benchmark, form team, identify partners, collect/analyze info, take action

channel coordination

determine lot sizes as though the full supply chain was one company

Capacity analysis

determines the throughput capacity of workstations in a system

Super Bill of Materials

enables firm to forecast the total demand of ATVs and then break down the forecast into different models and transmission options using the correct percentage instead of forecasting the demand for each option individually.

TQM Concepts- Taguchi Concepts

engineering and experimental design methods to improve products and process design

Three primary goals of purchasing

ensure uninterrupted flows of raw materials at the lowest total cost, improve quality of the finished goods produced and optimize customer satisfaction

Total quality management encompasses the

entire company organization from supplier to consumer

A problem associated with using costs, revenues, and profits as metrics to gauge performance

environmental, political and/or economic events may skew in these numbers

Mass Customization

ex. Dell Computers - The rapid, low-cost production of goods and service to satisfy increasingly unique customer desires - Combines the flexibility of a process focus with the efficiency of a product focus

Mass Customization

Product Focus

ex. Frito-Lay Chips - Facilities are organized by product - High volume but low variety of products - Long, continuous production runs enable efficient processes - Typically high fixed cost but low variable cost - Generally less skilled labor

Process Focus

ex. Hospitals - Facilities are organized around specific activities or processes - General purpose equipment and skilled personnel - High degree of product flexibility - Typically high costs and low equipment utilization - Product flows may vary considerably making planning and scheduling a challenge

Repetitive Focus

ex. Motorcycles - Facilities often organized as assembly lines - Characterized by modules with parts and assemblies made previously - Modules may be combined for many output options - Less flexibility than process-focused facilities but more efficient

Exempt

excused from regulation of services and rates and if they transport certain excused products like produce, livestock, coal or newspapers

Social sustainability

exhibiting long-term concern for worker safety, hourly wages, working conditions, child workers and basic human rights

Capacity Management when demand exceeds available service capacity

firms turn away customers or hire personnel

Supply Chain Management

flow of goods and services, involves the movement and storage of raw materials, of work-in-process inventory, and of finished goods from point of origin to point of consumption. o Outsourcing-Hiring another organization to perform service to save costs, gain expertise, free up management time, & refocus on core competencies o Bullwhip effect-the variability in demand is magnified as we move from the customer to the producer in the supply chain (moving upstream) o Logistics management-Management of the movement and storage of materials at lowest cost while still meeting customer requirements o Six Sigma-a customer focused, well defined problem solving methodology supported by a handful of powerful analytical tools (99.9997% perfection)

Process redesign

focuses on activities that cross functional lines, basic process and its objectives must be reexamined

Service blueprinting __________.

focuses on the provider's interaction with the customer

Inventory Management Models

generally classified as dependent demand and independant demand models

Shortage Cost

generally the unrealized profit per unit =revenue per unit - cost per unit

TQM Concepts- Employee Empowerment

getting employees involved in product and process improvements

Project planning

goal setting, defining the project, team organization

quality circles

group of employees who meet regularly to solve problems (led by a facilitator)

Questions needed to be answer before designing the appropriate product/service to fulfill customer service expectations

how much is the customer willing to pay; what level of variety is required to satisfy the customer; how often will customers place orders and how many units will they want

Quality Principles

how to do what is important and to be accomplished (customer focus, contain improvement, benchmarking, JIT, TQM)

In mass service and professional service, the operations manager should focus on __________.

human resources - In mass service and professional service, the operations manager should focus on human resources. Human resources are particularly important to service firms because of the direct interaction between customers and employees.

Aggregate Production Plan

hierarchical long-range materials planning process that translates annual business plans into production plan for all products -capacity is usually considered fixed during planning horizon

Improving service productivity is challenging due to

high labor content, individual customized services, difficulty of automating services, and problem of assessing service quality

shortage gaming

hoarding supplies for fear of a supply shortage

Stochastic demand

incorporates uncertainty by using probability distributions.

Fixed Costs

independent of the output quantity

Decentralized

individual, local purchasing department; advantages: closer knowledge of requirements, local sourcing, less bureaucracy

Changes in distribution networks affects

inventories, transportation, facilities and handling, information

bottleneck time

is a limiting factor or constraint - slowest workstation time

Static demand

is stable demand.

With respect to PERT and CPM, slack__________

is the amount of time a task may be delayed without changing the overall project completion time.

throughput time

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

Rough-Cut capacity plan (RCCP)

is used to check the feasiblity of the master production schedule

Deterministic demand

is when uncertainty is not included in its characteristics.

Waste of Inventory

items are not being actively processed

ABC inventory matrix

items based on current inventory should match the items based on annual inventory dollar usage for the specific categorie

Waste of Transportation

items move in between processing centers

order batching

large, infrequent orders leading suppliers to order even larger amounts

Latest start (LS)

latest time at which an activity can start so as to not delay the completion time of the entire project

Latest finish (LF)

latest time by which an activity has to be finished so as to not delay the completion time of the entire project

Dominant companies within a supply chain can use their buying power to

leverage demands for supplier conformance to its supply chain requirements

World class performance measuring systems should

link performance measures between the firm's strategies and operational decisions to customer requirements

The critical path of a network is the__________

longest time path through the network

Reasons not to outsource

loss of control (production decisions and intellectual property), increased reliance on suppliers, increased need for supplier management

Increasing productivity may increase costs due to

lower morale, increase in sick calls, lower customer service and quality

Mixed strategy

maintains stable core workforce while using other short-term means

Quality

o Cost of quality: All costs attributable to the production of quality that is not 100% perfect. -Prevention -Appraisal -External failure -Internal failure o TQM-it provides both a management process for improvement of quality in all aspects of work. o Process control-corrective action during production to ensure that processes meet standards.

Inventory management

o Motives-to achieve a desired level of customer service while keeping inventory costs reasonable o Polices o Safety stock- Extra inventory carried for uncertainties in supply and demand. Buffer stock. o Models- Dependent Demand: internal demand for parts based on the demand of the final product in which the parts are used. Sub-assemblies, components, and raw materials are examples of dependent demand items. Independent demand: The demand for final products and has a demand pattern affected by trends, seasonal patterns, and general market conditions.

Logistics management

obtaining efficient operations through the integration of all material acquisition, movement, and storage

Common

offer transportation services to all shippers at published rates between designated locations without discrimination

Master Requirement Planning (MRP)

once the independent demand of the final product is known or forecasted, the dependent demand item requirements can be exactly calculated using MRP sotfware, along with when the items should be assembles or purchased

Green Development

prioritizes what its proponents consider to be environmental sustainability over economic and cultural considerations

Demand Management

proactive, shape the quantity and timing of demand to meet a company's needs

The use of information technology to monitor and control a physical process is known as __________.

process control

Three types of processes are __________.

process focus, repetitive focus, and product focus

TQM Concepts-6 sigma definition

process focused on delivering near-perfect products

hierarchical planning

process that translates annual business plans, marketing plans, and demand forecasts into a production plan for a product family in a plant or facility leading to the aggregate production plan

Waste of Overproduction

production ahead of demand

Centralized

purchasing department located at the firm's corporate office or centralized location makes all the purchasing decisions; advantages: concentrated volume, leveraging purchase volume, avoid duplication, specialization, lower transportation costs, no competition within business units, common supply base

Incentives

push merchandise into the supply chain for sales that have not occured

the reduces costs and increase in sales increase

quality and profits

TQM Concepts- Taguchi key Concepts

quality robustness, target-oriented quality, quality loss function

World-class performance provides measures in

quality; dependability; innovation

Large lots

reduce shipping and production costs but increase inventory holding and do not reflect actual sales

Lean systems require managers to

reduce variability caused by both internal and external factors

Foreign Trade Zones

secure sits in U.S. under supervision of U.S. customs

Proactive demand management

seeks to actively influence demand (advertising, pricing, product/service modifications), shape the quantity and timing of demand to meet a company's need, generally requires either an explanatory model or a subjective assessment of the influence on demand

TQM Concepts- Benchmarking

selecting best practices to use as a standard for performance

Time-fence system

separates the planning horizon into two segments; a firmed and tentative segment. Firmed stipulates that the production plan or MPS cannot be altered except with authorization of senior management. Tentative Segment typically stretches from the end of the firmed segment to several weeks farther into the future.

Strategies for improving productivity in services are __________.

separation, self-service, automation, and scheduling

Accurate pull data

shared information

Lot size reduction

shipping, discounts, reduced ordering costs

Project crashing

shortening the duration of the project

Time-Function Mapping

shows flows and time frame

Flowchart

shows the movement of materials

Single stage control of replenishment

single supply chain member responsible for ordering

Safety Stock

stock that is held in excess of expected demand due to variable demand and/or lead time -higher the safety stock, the lower the risk of stockout

Distribution

steps taken to move and store a product from the supplier to the customer in the supply chain

Electronic ordering and funds transfer

speed transactions and reduce paperwork

E-procurement

speeds purchasing, reduces costs, integrates supply chain

Lean Operations

systematic method in which a business's goal is to deliver value to customers while improving processes and reducing waste o Waste- anything that doesn't contribute value to the customer 1. Overproduction 2. Waiting/Queues 3. Transportation 4. Overprocessing 5. Excess Inventory 6. Excess Movement 7. Scrap and Rework o JIT- To produce only what is needed, when it is needed o Lean Inventory- reduce cost, improve quality, shorten LT by shortening production flow by eliminating waste

break-even analysis

technique used for evaluating process and equipment alternatives -finds point in units (x) and dollars ($) -requires estimation on fixed costs, variable costs and revenue

Flexibility

the ability to respond with little penalty in time, cost, or customer value

Strategic Procurement

the added activities of specifications development, expediting, supplier quality control and some logistics activities

Why waiting lines cause concern

the cost to provide waiting space, possible loss of business when customers leave the line before being served or refuse to wait at all, a possible loss of good will, a possible reduction in customer satisfaction, resulting congestion may disrupt other business operations and/or customers

Available-to-promise (ATP) quantity

the difference between confirmed customer orders and the quantity the firm planned to produce

Performance variance

the difference between the standard and the actual performance

Process Redesign

the fundamental rethinking of business processes to bring about dramatic improvements in performance

Price Break Point

the minimum quantity required to get a price discount

Ethical sourcing

the practice of purchasing from suppliers that are governed by social and ethical practices

One fundamental difference between a process chart and a process map is that __________.

the process chart is more like a table, while the process map is more like a schematic diagram

Resource Planning

the process of determining the production capacity required to meet demand

Risk Pooling

the relationship between the number of warehouses, inventory and customer service; it can be explained intuitively as follows: when market demand is random, it is very likely that higher-than-average demand from some customers will be offset by lower-than-average demand from other customers

bullwhip effect

the tendency for larger order size fluctuations as orders are relayed through the supply chain

Statistical Reorder Point with Probabilistic Demand and Constant Lead Time

this model assumes the lead time of a product is constant while the demand during the delivery lead time is unknown but can be specified using a normal distribution

Direct Costs

those that are directly traceable to the unit produced, such as the amount of materials and labor used to produce a unit of the finished good.

Process time

time to produce a unit or specified batch size

Value-Stream Mapping (VSM)

value is added in the entire production process, including the supply chain

Managing supply chains difficult

variability and complexity

Commodities (suppliers)

use more to promote competition to lower prices

Medium-range capacity plan, or rough-cut capacity plan (RCCP)

used to check feasibility of MPS. Converts MPS from production needed to capacity required, then compares it to capacity available

Dynamic demand

varies over time.

Reactive demand management

view forecasts as probable future demand, react to meet that demand

In many applications, human quality inspectors can be replaced effectively by __________.

vision systems - Vision systems combine cameras and computer technology to visually inspect products during the manufacturing process.

Market-positioned strategy

warehouses close to customers to maximize distribution services and improve transportation economies of scale

Dashboards

web-based scorecard application

Organizational Practices

what is important and what it to be accomplished (leadership, mission statement, staff support, training)

The Statistical Reorder Point with Probabilistic Demand and Lead Time

when both the demand and lead time of a product are unknown but can be specified by means of a normal distribution, safety stock must be held to cover the variations in demand and lead time.

The Statistical Reorder Point with Constant Demand and Probabilistic Lead Time

when the demand of a product is constant and the lead time is unknown but can be specified by means of normal distribution, safety stock is used as a buffer.

Two key managerial decisions

will the product be delivered to the customer location or picked up from a predetermined site; will the product flow through an intermediary or intermediate location

Postponement

withholds modification as long as possible

Primary Functions of Inventory

- to buffer uncertainty in the marketplace and to decouple, or break the dependencies between stages in the supply chain

Inventory turnover ratio

- a widely used measure to determine how efficiently a firm is using its inventory to generate revenue = Cost of Revenue/Avg Inventory

Quantity Discount Model (Price Break Model)

- price reduction offered to customers for placing larger orders = (Q/2)H+(D/Q)S+PD

Service Industry Inventory

-Airplane Seats -Tour Bus Service -Cruises (Cabins) -Hotels (Rooms) -Hospital Beds

MRP Benefits

-Enables managers to easily determine the quantities of each component for a given order size, to know when to release orders for each component, and to be alerted when items need attention -Additional benefits; Low levels of in-process inventories, the ability to track material requirements, the ability to evaluate capacity requirements, a means of allocating production time

Nature of Demand

-Independent Demand -Dependant Demand -Deterministic Demand -Stochastic Demand -Static Demand -Dynamic Demand

Capacity Strategies

-One Large Capacity Increase -Leading Build capacity in anticipation of future demand increases -Following Build capacity when demand exceeds current capacity -Tracking Similar to the following strategy, but adds capacity in relatively small increments to keep pace with increasing demand

Enterprise Resource Planning Systems Implementation Failures

-Outlining Specifications and Company Needs-current and future -Lack of top management commitment -Lack of adequate resources-project management -Lack of proper training -Lack of communication -Incompatible system environment

Inventory Counting Systems

-Periodic System -Perpetual Inventory System

Inventory Management Four + 1 broad categories:

-Raw Materials -Work-in-process -Finished goods -Maintenance, repair, and operating (MRO) + -Goods-in-transit

Inventory Counting Technologies

-Universal product code (UPC) -Radio frequency identification (RFID) tags -Point-of-sale (POS) systems A system that electronically records actual sales Such demand information is very useful for enhancing forecasting and inventory management -Physically Count It

Reorder Point

-When the quantity on hand of an item drops to this amount, the item is reordered. Determinants of the reorder point: -The rate of demand -The lead time -The extent of demand and/or lead time variability -The degree of stockout risk acceptable to management

Material Requirements Planning (MRP)

-a computer based materials management system that calculates the exact quantities, need dates, and planned order releases for subassemblies and materials required to manufacture a final product -requires independent demand info, parent-company relationships from the BOM, inventory status of final product and components -is designed to answer three questions: 1)What is needed? 2)How much is needed? 3)When is it needed?

Chase Production Strategy

-adjusts capacity to match the demand pattern;firm hires and lays off workers to match its production rate to demand. -works well with make-to-order manufacturing firms Advantages: investment in inventory is low and labor utilization is high Disadvantages: the cost of adjusting output rates and/or workforce levels, low employee moral

Manufacturing Resource Planning

-aggregate production plan -master production schedule -material requirements plan -capacity requirements plan

Implementing Enterprise Resource Planning Systems

-best-of-breed solution- picks the best application or module for each individual function in the supply chain;results in several different applications that must be integrated to work as a single coordinated system -single integrator approach picks all the desired applications from a single vendor for the ERP system

Level Production Strategy

-relies on a constant output rate and capacity while varying inventory and backlog levels to handle the fluctuating demand pattern -keeps workforce levels constant and more suitable for firms that require highly skilled labor Advantages:stable output rates and workforce Disadvantages:greater inventory costs, increased overtime and idle time, and resource utilizations vary over time

Mixed Production Strategy

-strives to maintain stable workforce while using other short-term means such as overtime, subcontracting, or hiring part time and temporary workers during periods of fluctuating demand

Disadvantages of Enterprise Resource Planning

-substancial capital investment is needed to purchase and implement the system -considerable time and money must be set to the side to train employees -adopting firm must restructure its processes to be compatible with the new ERP system

Manufacturing Resource Planning (MRP-II)

-the developed version of MRP, it syncronizes an organizations information systems and provides insight into the implications of aggregate production plans, master production schedules, capacities, materials plans and sales, and primarily focuses on one units internal operations

Master Production Schedule (MPS)

-the heart of production planning and control, it determines the quantity needed to meet demand from all sources -time phased, detailed disaggregation of the aggregate production plan, listing the exact end items to be produced by a specific period -may be the "appointment log" where capacity is balanced with demand -planning horizon is shorter than APP but longer than lead time to produce the item

Advantages of Enterprise Resource Planning Systems

-uses single database -common software infrastructure provides real time info -helps reduce supply chain inventories due to added visability -reductions of the bull-whip effect

Inventory Managements 2 basic Funtions

1)Establish a system for tracking items in inventory 2)Make decisions regarding... When to order? How much to order?

Master Production Scheduling

Inputs: beginning inventory, forecast, customer orders Outputs: projected inventory, master production schedule, uncommitted inventory

Perpetual Inventory System

System that keeps track of removals from inventory continuously, thus monitoring current levels of each item

Dependent Demand

the internal demand for parts based on the demand of the final product in which the parts are used (subassemblies)

Bill of Materials (BOM)

document that shows an inclusive listing of all component parts and assemblies making up the final product

Dependant demand

is demand directly related to the demand for other items and can be calculated without needing to be forecast.

Independent demand

is demand for an item that is unrelated to the demand for other items and needs to be forecast.

Periodic Review System

physical inventory is reviewed at regular intervals, such as weekly or monthly -lowered costs -higher level of safety stock required

Operations Planning

planning that efficiently balances production plans with capacity and production is planned to meet customer demands -is usually hierarchical, divided into three broad categories; 1)Long-range 2)Intermediate or Medium Range 3)Short-range planning horizons

Enterprise Resource Planning System

the concept of the manufacturing information system thus evolved to directly connect all functional areas and operations of an organization and, in some cases, its suppliers and customers via a common software infrastructure and database. -enables an organization to deal directly with key suppliers to asses the availability of their resources, as if an extended member of the firm -integrates the internal operations of an enterprise with a common software platform and centralized database system

Indirect Costs

those that cannot be traced directly to the unit produced and they are synonymous with manufacturing overhead

Distribution Requirements Planning (DRP)

time-phased finished-goods inventory replenishment plan in a distribution network -a logical extension of the MRP system -ties the physical distribution system to the manufacturing planning and control system by determining the aggregate time-phased net requirements of the finished goods, and provides demand information for adjusting the MPS.

geographical specialization

to manufacture their products in the developing countries specializing in cheap labor and abundant raw materials, where manufacturing firms provide the technology and capital to produce the goods

Economic Order Quantity (EOQ) Model

used to find a fixed order quantity, a classic independent demand inventory system that provides many useful ordering decisions; determines optimal order size that minimizes total annual inventory costs

Cycle Counting

used to reconcile discrepancies between physical inventory and inventory record on a monthly or quarterly basis -helps identify obsolete stocks and inventory problems

Short-range plans

usually cover a few days to a few weeks depending on the firm -usually most detailed and specify the exact end items and quantities to make on weekly, daily, or hourly basis.

Long-range plans

usually cover a year or more, tend to be more general, and specify resources and outputs in terms of aggregate hours and units. -usually established first to guide the medium-range, which then guides the short-range plans -usually involve major strategic decisions in capacity ex. construction of new facility

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