C215 Operations Management (WGU, November 2019)

W. Edwards Deming

+"Father of quality control." +Stressed management's responsibility for quality. +Developed "14 points" to guide companies in quality improvement. +Stressed that quality improvements cannot happen without organizational change from upper management.

Walter A. Shewhart

+"Grandfather of quality control." +Stressed eliminating variability improves quality. +Contributed to understanding of process variability. +Developed concept of statistical control charts.

Philip B. Crosby

+Coined phrase "quality is free." +Introduced concept of zero defects. +"Do it right the first time"

Joseph M. Juran

+Defined quality as "fitness for use". +Developed concept of cost of quality. +Quality trilogy: quality planning, quality control, and quality improvement.

Kaoru Ishikawa

+Developed cause-and-effect diagrams (aka fishbone diagrams or Ishikawa diagrams) +Identified concept of "internal customer." +Quality circles: small teams of employees volunteering to solve quality problems

Genichi Taguchi

+Focused on product design quality (applied "design of experiment") +Developed Taguchi loss function.

counteracting the bullwhip effect (4 ways)

1. Change the way suppliers forecast product demand by making this information from the final-seller level available to all levels of the supply chain. 2. Eliminate order batching by lowering ordering costs. 3. Stabilize prices by creating a uniform wholesale pricing policy. 4. Eliminate gaming by allocating products in proportion to past sales records, rather than filling an order based on a set percentage, removing customers' incentive to over-order.

capacity alternatives

1. Do nothing. 2. Expand large now 3. Expand small now, with option to add later

Benefits of B2B E-commerce

1. Lower procurement administrative costs 2. Low cost access to global suppliers 3. Lower inventory investment due to price transparency/reduced response time 4. Better product quality because of increased cooperation between buyers and sellers, especially during the product design and development

causes of the bullwhip effect

1. demand forecast updating 2. order batching 3. price fluctuation 4. rationing and gaming

components of a manufacturing supply chain

1. external distributors 2. internal functions 3. external distributors

two types of repetitive operations

1. line processes 2. continuous processes (large volumes of standardized products)

two types of intermittent operations

1. project processes 2. batch processes (low product volumes, offer customization)

Which total quality management (TQM) process was developed to stress management's responsibility for quality?

14 points for quality improvement

A company's monthly widgets demand has been consistent for the past few years but now a variable shift in demand is forecasted. The demands are predicted to be: • January 20,000 units • February 17,000 units • March 19,000 units • April 21,000 units • May 22,000 units • June 24,000 units Beginning inventory of 10,000 units should be maintained. What is the average monthly net widget production demand for the company?

20,500

The annual cost of goods sold for a company is $8,400,000 and the average inventory is $1,200,000. What is the number of weeks of supply?

7

Deming Prize

A Japanese award given to companies to recognize efforts in quality improvement.

kaizen

A Japanese term that describes the notion of a company continually striving to be better through learning and problem solving.

subscription revenue model

A Web site that charges a subscription fee for access to its contents and services.

kanban card

A card that specifies the exact quantity of product that needs to be produced.

process flowchart

A chart showing the sequence of steps in producing the product or service.

cause-and-effect (fishbone) diagram

A chart that identifies potential causes of particular quality problems.

histogram

A chart that shows the frequency distribution of observed values of a variable.

Which type of aggregate plan is preferable when a company produces custom or special purpose equipment, one-of-a-kind items, or highly perishable products?

A chase aggregate plan

flexibility

A company can quickly adapt to the changing needs of its customers.

transaction fee model

A company receives a fee for executing a transaction.

economies of scale

A condition in which the average cost of a unit produced is reduced as the amount of output is increased.

diseconomies of scale

A condition in which the cost of each additional unit made increases.

undertime

A condition occurring when there are more people on the payroll than are needed to produce the planned output.

uniform plant loading

A constant production plan for a facility with a given planning horizon.

percentage of orders shipped on schedule

A customer service measure appropriate for use when orders have similar value.

percentage of line items shipped on schedule

A customer service measure appropriate when customer orders vary in number of line items ordered.

percentage of dollar volume shipped on schedule

A customer service measure appropriate when customer orders vary in value.

fitness for use

A definition of quality that evaluates how well the product performs for its intended use.

robust design

A design that results in a product that can perform over a wide range of conditions.

plan-do-study-act (PDSA) cycle

A diagram that describes the activities that need to be performed to incorporate continuous improvement into the operation.

electronic data interchange (EDI)

A form of computer-to-computer communications that enables sharing business documents.

capacity-based options

A group of options that allow the firm to change its current operating capacity.

demand-based options

A group of options that respond to demand fluctuations through the use of inventory or back orders, or by shifting the demand pattern.

Six Sigma quality

A high level of quality associated with approximately 3.4 defective parts per million.

job enlargement

A horizontal expansion of the job through increasing the scope of the work assigned.

production card

A kanban card that authorizes production of material.

withdrawal card

A kanban card that authorizes withdrawal of material.

fixed-position layout

A layout in which the product cannot be moved due to its size and all the resources have to come to the production site.

checklist

A list of common defects and the number of observed occurrences of these defects.

theory of constraints (TOC)

A management philosophy that extends the concepts of OPT.

shifting demand

A marketing strategy that attempts to shift demand from peak periods to nonpeak periods to smooth out the demand pattern.

sales revenue model

A means of selling goods, information, or services directly to customers.

productivity

A measure of how well a company uses its resources (output/input)

inventory turnover

A measure of inventory policy effectiveness.

weeks of supply

A measure of inventory policy effectiveness.

process velocity

A measure of wasted time in the system (throughput time/value-added time)

automated order entry system

A method using telephone models to send digital orders to suppliers.

supply chain

A network of all the activities involved in delivering a finished product or service to the customer.

continuous improvement

A philosophy of never-ending improvement.

periodic counting

A physical inventory is taken periodically, usually annually.

level aggregate plan

A planning approach that produces the same quantity each time period. Inventory and back orders are used to absorb demand fluctuations.

hybrid aggregate plan

A planning approach that uses a combination of level and chase approaches while developing the aggregate plan.

chase aggregate plan

A planning approach that varies production to meet demand each period.

virtual private network (VPN)

A private Internet-based communications environment that is used by the company, its suppliers, and its customers for day-to-day activities.

load-distance model

A procedure for evaluating location alternatives based on distance.

factor rating

A procedure that can be used to evaluate multiple alternative locations based on a number of selected factors.

internal resource constraint

A regular bottleneck.

lot-size inventory

A result of the quantity ordered or produced.

flowchart

A schematic of the sequence of steps involved in an operation or process.

ISO 9000

A set of international quality standards and a certification demonstrating that companies have met all the standards specified.

ISO 14000

A set of international standards and a certification focusing on a company's environmental responsibility.

strategic business plan

A statement of long-range strategy and revenue, cost, and profit objectives.

performance rating factor

A subjective estimate of a worker's pace relative to a normal work pace.

material requirements planning (MRP)

A system that uses the MRP, inventory record data, and BOM to calculate material requirements.

quality circle

A team of volunteer production employees and their supervisors who meet regularly to solve quality problems.

time study

A technique for developing a standard time based on actual observations of the operator.

work sampling

A technique for estimating the proportion of time a worker spends on a particular activity.

input/output control

A technique for monitoring the flow of jobs between work centers.

process flow analysis

A technique used for evaluating a process in terms of the sequence of steps from inputs to outputs with the goal of improving its design.

Pareto analysis

A technique used to identify quality problems based on their degree of importance.

quality function deployment (QFD)

A tool used to translate the preferences of the customer into specific technical requirements.

order batching

A type of inventory control that occurs when small orders are combined into one large order. This amplifies demand variability and adds to the use of safety stock, creating the bullwhip effect.

job enrichment

A vertical expansion of the job through increased worker responsibility.

psychological criteria

A way of defining quality that focuses on judgmental evaluations of what constitutes product or service excellence.

expected value (EV)

A weighted average of chance events, where each chance event is given a probability of occurrence.

logistics

Activities involved in obtaining, producing, and distributing materials and products in the proper place and in proper quantities (includes traffic management and distribution management)

Which formula would indicate that a fast-food restaurant was performing at, above, or below its benchmark?

Actual output/standard output

capacity cushions

Additional capacity added to regular capacity requirements to provide greater flexibility.

What is one advantage of a periodic review system?

All items are reviewed during the same time interval.

Malcolm Baldrige National Quality Award

An award given annually to companies that demonstrate quality excellence and establish best practice standards in industry.

Which two statements are true about effective capacity?

An effective capacity is lower than design capacity. An effective capacity is a permanent measure used to achieve design capacity.

electronic request for quote (eRFQ)

An electronic request for a quote on goods and services.

respect for people

An element of JIT that considers human resources as an essential part of the JIT philosophy.

process capability index

An index used to measure process capability. It is computed as the ratio of the specification width to the width of the process variability where the specification width is the difference between the upper specification limit (USL) and the lower specification limit (LSL) of the process. The process width is computed as 6 standard deviations of the process being monitored. Cp=1 -> process is minimally capable Cp<1 -> process not capable of producing within specs Cp>1 -> process exceeds minimal capability

enterprise resource planning (ERP)

An information system designed to integrate internal and external members of the supply chain.

total quality management (TQM)

An integrated effort designed to improve quality performance at every level of the organization.

deterministic time estimate

Assumption that the activity duration is known with certainty.

Which statement is true about capacity requirements planning (CRP)?

Available capacity is compared to calculated workloads of relevant items.

throughput time

Average amount of time it takes a product to move through the system.

Which instrument would use an allocation process for space requirements in an industry scenario?

Block plan

alternative workplace

Brings work to the worker rather than the worker to the workplace.

Which element is part of a financial plan?

Budget projections

business-to-business e-commerce (B2B)

Businesses selling to and buying from other businesses.

How do just-in-time (JIT) and lean systems add value?

By reducing waste

A manufacturing company decides to open a new distribution center location in order to minimize distribution costs to warehouses or stores. What tool should the manufacturing company use to determine where the new distribution center should be located?

By using the center-of-gravity approach

external setup

Can be performed while the machine is still running.

multifunction workers

Capable of performing more than one job.

What helps an organization identify and plan the actions necessary to meet current and future customer demands?

Capacity planning

Which capacity planning measurement tells how much capacity a company is using?

Capacity utilization

seven tools of quality control

Cause-and-Effect Diagrams Flowcharts Checklists Control Charts Scatter Diagrams Pareto Analysis Histograms

assignable causes of variation

Causes that can be identified and eliminated.

control charts

Charts used to evaluate whether a process is operating within set expectations.

A company manufactures shoes using a quality management system. The company needs to put a process in place to measure any defects. The company would like to measure the number of defects and observe the number of occurrences to isolate the particular defect. Which quality tool should the company use to focus on correcting this particular issue?

Checklist

How does a just-in-time (JIT) system influence all functional areas within a company? Choose 2 answers

Companies are able to reduce waste. Companies develop new ways to generate revenue.

affiliate revenue model

Companies receive a referral fee for directing business to an affiliate.

ALDEP and CRAFT

Computer software packages for designing process layouts.

A company decides and makes plans to enter into a new market. Which project life cycle phase does this strategy directly relate to?

Conception

Which project life cycle phase includes identifying the need for a project?

Conception

Which quality control tool should be used to monitor the current status or end result of a process?

Control chart

supply chain management

Coordination and management of all of the activities of a supply chain

setup cost

Cost incurred when setting up equipment for a production run.

Taguchi loss function

Costs of quality increase as a quadratic function as conformance values move away from the target.

setup cost

Costs such as scrap costs, calibration costs, and downtime costs associated with preparing the equipment for the next product being produced.

behavioral feasibility

Degree to which the job is intrinsically satisfying to the employee.

dependent demand

Demand for component parts is based on the number of end items being produced.

SCM software

Designed to improve decision making in the supply chain.

group incentive plans

Designed to reward employees when the company achieves certain performance objectives. Two methods: profit-sharing and gain sharing.

work measurement

Determines how long it should take to do a job.

capacity requirements planning (CRP)

Determines the labor and machine resources needed to fill the open and planned orders generated by the MRP.

tier two supplier

Directly supplies materials or services to a tier one supplier in the supply chain (dairy products ex. the paper mill and the chemical processing plant)

tier three supplier

Directly supplies materials or services to a tier two supplier in the supply chain (dairy products ex. The lumber company that provides wood to the paper mill and the chemical extraction plant that supplies raw materials to the chemical processing plant)

defining beliefs of JIT

Elimination of waste, broad view of operations, simplicity, continuous improvement, visibility, and flexibility.

supply chain intelligence (SCI)

Enables strategic decision making along the supply chain.

Which group of keywords or phrases describes the critical role that marketing plays in the total quality management (TQM) process?

Enhance competition; understand consumer preferences; maintain communication with operations

What are two ways management can assist employees' focus in a just-in-time (JIT) processing environment? Choose 2 answers

Ensure that workers receive multifunctional training Develop an incentive system to reward workers for their efforts

elemental time data

Establish standards based on previously completed time studies, stored in an organization's database.

precedence relationships

Establishes the sequencing of activities to ensure that all necessary activities are completed before a subsequent activity is begun.

Plan (PDSA)

Evaluate the current processes, identify problems, develop a plan for improvement as well as specific measures to evaluate performance.

Study (PDSA)

Evaluate the data collection during the do phase Check results against goals formulated during the plan phase

time-phased

Expressing future demand, supply, and inventories by time period.

Which role do third-party logistics providers play in the supply chain?

External distributors

focused factories

Facilities that are small, specialized, and focused on a narrow set of objectives.

A manufacturing firm uses warehouses and shippers in their supply chain. At which stage of the firm's inventory management system would the statement "percentage of line items shipped on schedule" be used?

Finished goods

distribution inventory

Finished goods in the distribution system.

Which definition used for quality evaluates how well a product performs its intended function?

Fitness for use

green supply chain management

Focuses on the role of the supply chain with regard to its impact on the environment.

What would be an organization's next step after it has revised or implemented new operations?

Follow up to make sure the new operation resolves quality problems

Which term means to schedule a job that starts immediately, regardless of the due date?

Forward scheduling

scatter diagrams

Graphs that show how two variables are related to each other.

A construction company produces furnished pre-fabricated manufactured homes. The production manager has discovered the following challenges within one of the facilities: • Production qualities are low and only a small number of homes are built efficiently. • The facility space allows for low handling of materials. • There is limited space available for employees to operate. Which hybrid layout should be used to address the company's needs?

Group technology

special-purpose teams

Highly focused, short-term teams addressing issues important to management and labor.

A company suddenly finds demand has increased to 140% of its previous capacity. It has been able to hire only a fraction of the employees previously laid off, and a warehouse fire destroyed 80% of its inventory. Which two options does the company have to rapidly meet the new demand? Choose 2 answers

Hire temporary workers Subcontract a portion of production capacity

Which continuous improvement method does Cpk measure?

How close one is to a target and how consistent one is with the average performance

frequency of occurrence

How often the work element must be done each cycle.

conformance to specifications

How well a product or service meets the targets and tolerances determined by its designers.

group technology (GT) or cell layouts

Hybrid layouts that create groups of products based on similar processing requirements.

Which total quality management (TQM) process consists of 13 published standards and guidelines?

ISO 9000

engineering plan

Identifies new products or modifications to existing products that are needed to support the marketing plan.

marketing plan

Identifies the markets to be served, desired levels of customer service, product competitive advantage, profit margins, and the market share needed to achieve the objectives of the strategic business plan.

financial plan

Identifies the sources and uses of funds; projects cash flows, profits, return on investment; and provides budgets in support of the strategic business plan.

Act (PDSA)

If the results are successful, standardize the new method and communicate it to the relevant personnel Implement training for the new method If unsuccessful, revise the plan and repeat the process

Do (PDSA)

Implement the plan, document any changes made, collect data for analysis

bullwhip effect

Inaccurate or distorted demand information created in the supply chain that can result in: 1. excessive inventory investment 2. poor customer service levels 3. ineffective transportation use 4. misused manufacturing capacity 5. lost revenues.

aggregate plan

Includes the budgeted levels of finished products, inventory, backlogs, workforce size, and aggregate production rate needed to support the marketing plan.

What are two strategic objectives for every member of the supply chain? Choose 2 answers

Increasing cost effectiveness Becoming more efficient

rationing and shortage gaming

Instead of giving some people their full orders, you give all customers some of their orders

self-directed teams

Integrated teams empowered to control portions of their process.

extranets

Intranets that are linked to the Internet so that suppliers and customers can be included in the system.

Armand V. Feigenbaum

Introduced concept of total quality control

anticipation inventory

Inventory built in anticipation of future demand.

transportation inventory

Inventory in movement between locations.

major issues affecting supply chain management

Issues such as information technology, the Internet, demand uncertainty, government regulations, the need for greener supply chains, inadequate infrastructures, and product proliferation can affect all supply chains.

Why might a company avoid using demand-based options such as inventory and backorders over a long period of time?

It is more risky.

How does the status of overall customer satisfaction support supply chain objectives?

It measures efficiency.

Why is capacity requirements planning (CRP) important?

It provides the ability to compare available production capabilities to the planned workload. It enables an assessment of employee production efficiency.

Why is kanban significant to the "pull" system?

It specifies the exact quantity of a product that needs to be produced.

What are two common drawbacks of implementing an enterprise resource planning (ERP) solution? Choose 2 answers

It takes a long time to implement and to see any benefits. It requires extensive, often complex, training.

work-in-process (WIP)

Items in process throughout the plant.

maintenance, repair, and operating inventory (MRO)

Items used in support of manufacturing and maintenance.

pull system

JIT is based on a "pull" system rather than a "push" system. Push systems anticipate future demand and produce in advance in order to have products in place when demand occurs (resulting in excess inventory). Pull systems work backward. The last workstation in the production line (or the customer) requests the precise amounts of materials required.

Which function does marketing play in a just-in-time (JIT) organization?

JIT marketing focuses on customer-driven quality.

Which design work system minimizes repetitiveness in tasks by assigning employees the role of planning and scheduling?

Job enrichment

Which work system acknowledges the benefits of employee proficiency?

Labor specialization

product layouts

Layouts that arrange resources in sequence to allow for an efficient buildup of the product.

hybrid layouts

Layouts that combine characteristics of process and product layouts.

process layouts

Layouts that group resources based on similar processes or functions.

Which concept takes a total system approach to creating an efficient operation and combines concepts such as just-in-time (JIT), total quality management (TQM), and continuous improvement?

Lean systems

Which two types of operations include repetitive processes?

Line process Continuous process

bill of material (BOM)

Lists all the subassemblies, component parts, and raw materials that go into an end item and shows the usage quantity of each required.

hiring and firing

Long-term option for increasing or decreasing capacity.

bottleneck

Longest task in the process.

A company is experiencing an unusual amount of deliveries that are either late or an incorrect quantity. Which type of system is used to identify and manage this type of problem?

MRP (material requirements planning)

demand forecast updating

Manipulation of the actual demand to accommodate future demand and safety stock for lead times

How does inventory management differ for manufacturing organizations compared to service organizations?

Manufacturing organizations must maintain tangible inventory.

Which concept of variation measures the central tendency of a set of data?

Mean

process performance metrics

Measurements of different process characteristics that tell how a process is performing.

efficiency

Measures performance relative to a standard (actual output/standard output)

decision tree

Modeling tool used to evaluate independent decisions that must be made in sequence.

activity-on-nodes

Network diagramming notation that places activities in the nodes and arrows to signify precedence relationships.

program evaluation and review technique (PERT)

Network planning technique used to determine a project's planned completion date and identify the project's critical path.

critical path method (CPM)

Network planning technique, with deterministic times, used to determine a project's planned completion date and identify the project's critical path.

intranets

Networks that are internal to an organization.

price fluctuation

Offering price discounts to buyers, causing erratic buying patterns

business-to-consumer e-commerce (B2C)

On-line businesses sell to individual consumers.

electronic storefronts

On-line catalogs of products made available to the general public by a single supplier.

What do assignable causes of variation indicate?

Out-of-control signals were found in the process.

What are two reasons a company might be hesitant to provide overtime as a capacity-based option? Choose 2 answers

Overtime is not a long-term solution. Overtime is typically a 50% wage premium.

components

Parts or subassemblies used in the final product.

time-based compensation systems

Pay based on the number of hours worked.

output-based (incentive) systems

Pay based on the number of units completed.

capacity utilization

Percentage measure of how well available capacity is being used (calculated as actual output rate/capacity)

cell manufacturing

Placement of dissimilar machines and equipment together to produce a family of products with similar processing requirements.

product specifications (tolerances)

Preset ranges of acceptable quality characteristics.

cycle counting

Prespecified items are counted daily.

visibility

Problems must be visible to be identified and solved.

In which organizational layout would one expect to see items arranged by type?

Process

probabilistic time estimate

Process that uses optimistic, most likely, and pessimistic time estimates.

intermittent operations

Processes used to produce a variety of products with different processing requirements in lower volumes.

repetitive operations

Processes used to produce one or a few standardized products in high volume.

make-to-order strategy

Produces products to customer specifications after an order has been received.

assemble-to-order strategy

Produces standard components that can be combined to customer specifications.

make-to-stock strategy

Produces standard products and services for immediate sale or delivery.

finished goods inventory

Products available for shipment to the customer.

finished goods

Products sold to customers.

A comprehensive automobile collision shop offers body and engine repair as well as custom vehicle paint options. Which two operational processes would suit this shop? Choose 2 answers

Project process Batch process

fluctuation inventory

Provides a cushion against unexpected demand.

advertising revenue model

Provides users with information on services and products and provides an opportunity for suppliers to advertise.

What is a key factor of a location analysis for a service company?

Proximity to customers

What is a major factor in the decision to locate a business near its primary market territory?

Proximity to customers

Which two factors affect a service location decision?

Proximity to customers Quality-of-life issues

Which two capacity measurement concepts should a firm consider when conducting a location analysis?

Proximity to sources of supply Site considerations

predetermined time data

Published database of elemental time data used for establishing standard times.

raw materials

Purchased items or extracted materials transformed into components or products.

What are two product system differences between the push and pull processes?

Push moves the product forward in anticipation for demand. Pull eliminates excessive inventory.

value for price paid

Quality defined in terms of product or service usefulness for the price paid.

support services

Quality defined in terms of the support provided after the product or service is purchased.

common causes of variation

Random causes that cannot be identified.

open shop orders

Released manufacturing orders.

internal setup

Requires the machine to be stopped in order to be performed.

What is the third basic element in the just-in-time (JIT) system if the first element is total quality management (TQM) and the second is JIT manufacturing?

Respect for people

traffic management

Responsible for arranging the method of shipment for both incoming and outgoing products or materials (selection and monitoring of trucking companies/airlines/railroads/shipping companies/couriers, aka external carriers or internal fleets of carriers)

distribution management

Responsible for movement of material from the manufacturer to the customer (packaging, storing, and handling of products at receiving docks, warehouses, and retail outlets)

What is the name of the model that has been created to examine the four different supply chain perspectives of reliability, flexibility, expenses, and assets/utilization?

SCOR (Supply Chain Operations Reference)

forward scheduling

Schedule that determines the earliest possible completion date for a job.

backward scheduling

Scheduling method that determines when the job must be started to be done on the due date.

infinite loading

Scheduling that calculates the capacity needed at work centers in the time period needed without regard to the capacity available to do the work.

finite loading

Scheduling that loads work centers up to a predetermined amount of capacity.

block plan

Schematic showing the placement of resources in a facility.

Which strategy is used by some emergency rooms to overcome customer frustrations about long waiting times?

Screen patients and fast-track those with minor ailments

subcontracting

Sending production work outside to another manufacturer or service provider.

application service provider (ASP)

Sets up and runs ERP systems.

problem-solving teams

Small groups of employees and supervisors trained in problem-solving techniques who meet to identify, analyze, and propose solutions to workplace problems.

project activities

Specific tasks that must be completed and that require resources.

job design

Specifies the contents of the job.

Which factor determines how long it takes a qualified operator to perform a duty of the job requirements under the assumption that the operator is working at a sustainable pace with the proper tools for the process?

Standard time

backward scheduling

Starts with the due date for an order and works backward to determine the start date for each activity.

Six Sigma DMAIC Approach

Step 1: Define the quality problem of the process Step 2: Measure the current performance of the process Step 3: Analyze the process to identify the root cause of the quality problem Step 4: Improve the process by eliminating the root causes of the problem Step 5: Control the process to ensure the improvements continue

three steps to design process layouts

Step 1: Gather information. Step 2: Develop a block plan or schematic of the layout Step 3: Develop a detailed layout

three-step procedure for making capacity planning decisions

Step 1: Identify Capacity Requirements Step 2: Develop Capacity Alternatives Step 3: Evaluate Capacity Alternatives

procedure for making location decisions

Step 1: Identify Dominant Location Factors Step 2: Develop Location Alternatives Step 3: Evaluate Location Alternatives

steps to develop a factor rating

Step 1: Identify dominant factors (e.g., proximity to market, access, competition, quality of life). Step 2: Assign weights to factors reflecting the importance of each factor relative to the other factors. The sum of these weights must be 100. Step 3: Select a scale by which to evaluate each location relative to each factor. A commonly used scale is a five-point scale, with 1 being poor and 5 excellent. Step 4: Evaluate each alternative relative to each factor, using the scale selected in Step 3. For example, if you chose to use a five-point scale, a location that was excellent based on quality of life might get a 5 for that factor. Step 5: For each factor and each location, multiply the weight of the factor by the score for that factor and sum the results for each alternative. This will give you a score for each alternative based on how you have rated the factors and how you have weighted each of the factors at each location. Step 6: Select the alternative with the highest score.

theory of constraints (TOC) procedure (5 steps)

Step 1: Identify the System's Bottleneck(s). Step 2: Exploit the Bottleneck(s). Step 3: Subordinate All Other Decisions to Step 2. Step 4: Elevate the Bottleneck(s). Step 5: Do Not Let Inertia Set In.

benchmarking

Studying the business practices of other companies for purposes of comparison.

net marketplaces

Suppliers and buyers conduct trade in a single Internet-based environment.

tier one supplier

Supplies materials or services directly to the processing facility (dairy products ex. the dairy farm, the cardboard container manufacturer, the label company, and the plastic container manufacturer)

from-to matrix

Table that gives the number of trips or units of product moved between any pair of departments.

REL chart

Table that reflects opinions of managers with regard to the importance of having any two departments close together.

broad view of the organization

Tasks and procedures are important only if they meet the company's overall goals.

What are two important aspects of Six Sigma?

Technical tools People involvement

break-even analysis

Technique used to compute the amount of goods that must be sold just to cover costs.

process capability

The ability of a production process to meet or exceed preset specifications.

small-lot production

The ability to produce small quantities of products. It shortens manufacturing lead time.

customer service

The ability to satisfy customer requirements.

slack

The amount of time a job can be delayed and still be finished by its due date.

allowance factor

The amount of time the analyst allows for personal time, fatigue, and unavoidable delays.

master production schedule

The anticipated production schedule for the company expressed in specific configurations, quantities, and dates.

mean observed time

The average of the observation times for each of the work elements.

quality at the source

The belief that it is best to uncover the source of quality problems and eliminate it.

specialization

The breadth of the job design.

policy constraint

The condition that results when a specific policy dictates the rate of production.

market constraint

The condition that results when market demand is less than production capacity.

economic feasibility

The cost of the job should be less than the value it adds.

independent demand

The demand for an item is unrelated to the demand for other items.

just-in-time manufacturing

The element of JIT that focuses on the production system to achieve value-added manufacturing.

duration of the change

The expected length of time the different capacity level is needed.

technical feasibility

The job must be physically and mentally doable.

standard time

The length of time it should take a qualified worker using appropriate process and tools to complete a specific job, allowing time for personal fatigue and unavoidable delays.

What is meant by "duration of the change"?

The length of time one expects to need the different level of capacity

project life cycle

The life cycle begins with an initial concept, followed by a feasibility study, the planning of the project, the execution of the plan, and finally the termination of the project.

critical path

The longest sequential path through the network diagram.

What is a bottleneck in a flowchart?

The longest task in the process

pessimistic time estimate

The longest time period in which the activity will be completed.

Why is the marketing plan essential to the creation of the aggregate plan?

The marketing plan provides insight into operations goals and activities for the year.

design capacity

The maximum output rate that can be achieved by a facility under ideal conditions.

capacity

The maximum output rate that can be achieved by a facility.

effective capacity

The maximum output rate that can be sustained under normal conditions.

normal time

The mean observed time multiplied by the performance rating factor by the frequency of occurrence.

most likely time estimate

The normal time that the activity is expected to take.

point of departure

The percentage of normal capacity the company is currently using.

reliability

The probability that a product, service, or part will perform as intended. If all the parts in a product must work for the product to function, then the reliability of the system is computed as the product of the reliabilities of the individual components.

capacity planning

The process of establishing the output rate that can be achieved by a facility.

sales and operations planning

The process that brings together all the functional business plans (marketing, operations, engineering, and finance) into one integrated plan.

utilization

The proportion of time a resource is actually used (time a resource used/time a resource available)

magnitude of the change

The relative size of the change needed.

rectilinear distance

The shortest distance between two points measured by using only north-south and east-west movements.

optimistic time estimate

The shortest time period in which the activity can be completed.

simplicity

The simpler a solution, the better it is.

vendor-managed inventory (VMI)

The supplier maintains an inventory at the customer's facility.

JIT system

The three elements are just-in-time manufacturing, total quality management, and respect for people.

gross requirements

The total-period demand for an item.

best operating level

The volume of output that results in the lowest average unit cost.

Which two areas should managers consider in order to adapt to the business dynamics affecting their company? Choose 2 answers

Their control over internal operations Their influence and leverage over supplies

Why is it beneficial for an organization to designate employees to communicate alternative ways to complete a job in a methods analysis?

They may have suggestions for improving the operation.

Which formula would compute process velocity?

Throughput time/value-added time

Which tier-level supplier directly supplies materials or services to a processing and packaging plant?

Tier one suppliers

due date

Time when the job is supposed to be finished.

What is the primary purpose in using the master production schedule (MPS) in the marketing department of an organization?

To manage the demand for promised deliveries

What is the common theme in total quality management (TQM) across all functions in an organization?

To satisfy customer needs

beta probability distribution

Typically represents project activities.

back orders

Unfilled customer orders

speculative inventory

Used to protect against some future event.

e-commerce

Using the Internet and Web to transact business.

What is the measure of how much supply chain is owned or operated by the manufacturer?

Vertical integration

When is capacity measurement at the best operating level?

When the average unit cost is minimized

A company manufactures and distributes its own products. When should the company consider outsourcing its distribution?

When the company determines that distribution is no longer a core function

overtime

Work beyond normal established operation hours that usually requires a premium be paid to the workers.

job rotation

Workers shift to different jobs to increase understanding of the total process.

c-chart

a quality control chart for attributes, used to monitor the number of defects per unit

p-chart

a quality control chart for attributes, used to monitor the proportion of defective items in a process

R-chart

a quality control chart for variables that indicates when a gain or loss in uniformity has occurred in a dispersion of a production process

x-bar chart

a quality control chart for variables that indicates when changes occur in the central tendency of a production process

JIT defines waste as...

anything that does not add value (ex. unnecessary space, energy, time, or motion)

repetitive operations critical resource

capital-intensive operation (equipment, automation, technology, important)

TQM Philosophy

customer focus, continuous improvement, employee empowerment, use of quality tools, product design, process management, and managing supplier quality

intermittent operations factor driving production

customer orders

line process

designed to produce a large volume of a standardized product for mass production (ex. assembly lines, cafeteria)

repetitive operations factor driving production

forecast of future demands

intermittent operations type of equipment

general-purpose

intermittent operations product variety

great

intermittent operations organization of resources

grouped by function

repetitive operations degree of automation

high

repetitive operations product variety

high

intermittent operations path of products through facility

in a varied pattern, depending on product needs

intermittent operations critical resource

labor-intensive operation (worker skills important)

repetitive operations work-in-process inventory

less

repetitive operations path of products through facility

line flow

repetitive operations organization of resources

line flow to accommodate processing needs

intermittent operations throughput time

longer

intermittent operations degree of automation

low

intermittent operations degree of standardization

low

intermittent operations work-in-process inventory

more

continuous process

operate continually to produce a very high volume of a fully standardized product (ex. oil refineries, water treatment plants)

four categories of quality costs

prevention costs, appraisal costs, internal failure costs, external failure costs

repetitive operations throughput time

shorter

repetitive operations product variety

small

repetitive operations type of equipment

specialized

project process

used to make one-of-a-kind products exactly to customer specifications (ex. custom job shop, tailoring, construction)

batch process

used to produce small quantities of products in groups or batches based on customer orders or product specifications (ex. education classes, bakery, printing shop)