COB 300 Operations Test 2 Review (Yuyun Zhong)

Manufacturing Cell

-A manufacturing cell is a dedicated area where products that are similar in processing requirements are produced. -Formed by allocating dissimilar machines to cells that are designed to work on similar products (shape, processing, etc.) -A firm may have many different cells in a production area, each set up to produce a single product/a similar group of products ex: computer chip manufacturing

Control chart

-A time ordered plot of representative sample statistics obtained from an ongoing process (e.g. sample means), used to distinguish between random and nonrandom variability -Each point on the control chart represents a sample of "n" observations

Cost of inspection

-Interruptions of process/delay -Destructive testing

break-even analysis

-Model seeks to determine the point in units produced where a company will start making profit on the process -Model seeks to determine the point in units produced where total revenue and total cost are equal

How to determine initial control limits

-Obtain 20 to 25 samples -Compute appropriate sample statistics for each sample (e.g., mean) -Establish preliminary control limits -Plot the data on the control chart and check for patterns -Determine if any points fall outside of the control limits -If you find no out-of-control signals, assume the process is in control -If you find an out-of-control signal, search for and correct the assignable cause of variation -Resume the process and collect another set of observations on which to base control limits

Cost of passing defectives

-Reputation damage -Demand decrease -Handling product returns/recalls

Work Center

-similar equipment or functions are grouped together -A part being worked on travels from work center to work center -Work center = Department -Arrange work centers in a way that optimizes the movement of material. -Place work centers with large interdepartmental traffic adjacent to each other ex: hospital procedure

A manufacturer has three options for obtaining a machined part: 1. Buy the part at $200 per unit; no fixed cost. 2. Make the part on a numerically controlled semiautomatic lathe at $75 per unit; fixed cost is $80,000. 3. Make the part on a machining center at $15 per unit; fixed cost is $200,000. Assume that we sell the part at $300/unit. A) What would be the best choice if expected demand were: 500 units? 1,000 units? 2,500 units? Which option should the manufacturer choose?

1. (Buy the part): $200 x Demand 2. (Make the part on a semiautomatic lathe) = $80,000 + ($75 x Demand) 3. (Make the part on a machining center). $200,000 + ($15 x Demand) Lets compute: (FC1 -FC2) / (VC1-VC2) $200x = $80,000 + 75x $125x = $80,000 = 640 Units $80,000 + 75x = $200,000 + $15x 60x = 120,000 = 2000 units So, anything below 640 units it would be cheaper to buy. Anything between 640 units and 2000 units it would be cheaper to make using the semiautomatic lathe. Anything above 2000 units, it would be cheaper to make using the machine center.

TQM Approach

1. Find out what the customer wants 2. Design a product or service that meets or exceeds customer wants 3. Design processes that facilitate doing the job right the first time 4. Keep track of results 5. Extend these concepts throughout the supply chain 6. Top management must be involved and committed

Inspection Issues

1. How much to inspect and how often 2. At what points in the process to inspect 3. Whether to inspect in a centralized or on-site location 4. Whether to inspect attributes (count the number of times something occurs) or variables (measure the value of a characteristic)

Benchmarking Process

1. Identify a critical process that needs improvement 2. Identify an organization that excels in this process 3. Contact that organization 4. Analyze the data 5. Improve the critical process

How are production process organized?

1. Project Layout 2. Work Center 3. Manufacturing Cell 4. Assembly Line 5. Continuous Improvement

Steps of Production Process

1. source the parts needed 2. make the product 3. deliver the product

Six Sigma

A business process for improving quality, reducing costs, and increasing customer satisfaction Statistically: -Having no more than 3.4 defects per million opportunities in any process, product, service -99.99966% of the area is within six standard deviations Conceptually: -Program designed to reduce defects -Requires the use of certain tools and techniques

cause and effect diagram

A diagram used to search for the cause(s) of a problem; also called fishbone diagram.

Total Quality Management (TQM)

A philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction -Continuous improvement -Involvement of everyone in the organization -Customer satisfaction

Quality Control

A process that evaluates output relative to a standard and takes corrective action when output doesn't meet standards ♦ If results are acceptable no further action is required ♦ Unacceptable results call for correction action

ISO 14000

A set of international standards for assessing a company's environmental performance

Project Layout

A setup in which the product remains at one location, and equipment is moved to the product. ex: Making a movie, airplanes, houses

DMAIC

A six-sigma process: define, measure, analyze, improve, and control.

external failure costs

All costs incurred to fix problems that are detected after the product/service is delivered to the customer E.g., handling of complaints, replacements, liability/litigation, payments to customers or discounts used to offset the inferior quality, loss of customer goodwill, and opportunity costs related to lost sales.

Inspection

An appraisal activity that compares goods or services to a standard ♦ Purpose: provide information on the degree to which items conform to a standard ♦ For well-designed processes, little is necessary ♦ Outsourcing: inspection can be significant

process variability

Are the variations random? Yes The process is stable No The process is unstable

Discrete process

Assembly line (e.g., toys, appliances, automobiles)

Where to inspect in the process

Before production 1. Raw materials and purchased parts After production 2. Finished products During production 3. Before a costly operation 4. Before an irreversible process 5. Before a covering process

Dimensions of Quality

Categories that customers use to judge the quality of a product

Assemble to order

Combine a number of preassembled modules to meet a customer's specifications ex: dell computers

Continuous Process

Continuous process (e.g., chemicals, petroleum)

mean chart

Control chart used in monitoring the central tendency of some characteristic within a sample, also known as an x-bar chart in reference to the plotting of averages.

internal failure costs

Costs incurred to fix problems that are detected before the product/service is delivered to the customer. E.g., lost production time, scrap and rework, possible equipment damage, and possible employee injury

Assembly Line

Designed for the special purpose of building a product by going through a series of progressive steps ex: car production

Capability Analysis

Determines whether the inherent variability of the process output falls within the acceptable range of the variability allowed by the design specifications for the process output A process should be both in control and within specifications before production begins

Approaches to Quality Assurance

In order from least progressive to most progressive Inspection Alone - Inspection Process Control - Inspection and Corrective action during production Continuous Improvement - Quality built into the process

Ease-of-Use and user instructions

Increase the likelihood that a product will be used for its intended purpose and in such a way that it will continue to function properly and safely

quality of design

Intention of designers to include or exclude features in a product or service

ISO

International Organization for Standardization

Performance

Main characteristics of the product

Make to order

Make the customer's product from raw materials, parts, and components ex: some restaurants

Information

Operations data or information ex: accurate and useful information provided about the product to the customer

ISO 24700

Pertains to the quality and performance of office equipment that contains reused components

Process Capability Index

Process Capability Index: Used to assess the ability of a process to meet specifications -For a process to be deemed capable, it must have a capability index of at least 1.00 -The current trend is to aim for an index of at least 1.33

implicit services

Psychological benefits the customer may sense only vaguely ex: customer service, is my payment information secured, good atmosphere

On-Site

Quicker decisions are rendered Avoid introduction of extraneous factors Quality at the source

Variation

Random (Common Cause) variation: Natural variation in the output of a process, created by countless minor factors Assignable (special cause) variation: A variation whose cause can be identified A nonrandom variation

Six Sigma Principles

Reduction in variation is an important goal The methodology is data driven; it requires data validation Outputs are determined by inputs Only a critical few inputs have a significant impact on outputs

ISO 9000

Set of international standards on quality management and quality assurance, critical to international business

Centralized

Specialized tests that may best be completed in a lab More specialized testing equipment More favorable testing environment

Statistical Process Control (SPC)

Statistical evaluation of the output of a process Helps us to decide if a process is "in control" or if corrective action is needed

after-sales service

Taking care of issues and problems that arise after the sale

Pareto Chart

Technique for classifying problem areas according to degree of importance, and focusing on the most important Pareto principle (80/20 rule): 80% of the effects come from 20% of the causes

Quality

The ability of a product or service to consistently meet or exceed customer expectations

quality of conformance

The degree to which goods or services conform to the intent of the designers

facilitating goods

The material purchased by the buyer or the items provided to the customer ex: consistency and quality of the product

supporting facility

The physical resources that must be in place before a service can be offered ex: location (is it centrally located?)

T/F: Services with high customer contact are more difficult to control

True

Control Limits

Upper and lower control limits define the range of acceptable variation Suppose we establish the Upper Control Limits (UCL) and the Lower Control Limits (LCL) with plus or minus 3 standard deviations. Based on this we can expect 99.7% of our sample observations to fall within these limits.

When to use a c-chart

Use only when the number of occurrences per unit of measure can be counted; non-occurrences cannot be counted. Scratches, chips, dents, or errors per item Cracks or faults per unit of distance Breaks or Tears per unit of area Bacteria or pollutants per unit of volume Calls, complaints, failures per unit of time

When to use a P-Chart

When observations can be placed into two categories. Good or bad Pass or fail Operate or don't operate When the data consists of multiple samples of several observations each

When to use Cp

When the process is centered at its target value

When to use Cpk

When the process is not centered at its target value

Engineer to order

Work with the customer to design and then make the product ex: aircrafts

service package

a bundle of goods and services that is provided in some environment

Histogram

a chart of an empirical frequency distribution

P-chart

a chart used for controlling the proportion of defective services or products generated by the process

Range chart

a control chart based on the range (from the highest to the lowest values) of the samples taken

scatter diagram

a graph that shows the degree and direction of relationship between two variables

Control Chart

a statistical chart of time-ordered values of a sample statistic

Check Sheet

a tool for recording and organizing data to identify a problem

Aesthetic

appearance, feel, smell, taste, etc.

explicit services

benefits readily observable by customer and an essential feature of the service ex: is the company legit? did I get what I ordered?

Dimensions of Service Quality

categories that customers use to judge the quality of a service

Reliability

consistency of performance

How do we make decisions?

cost vs benefit

Failure Costs

costs caused by defective parts or products or by faulty services

Determinants of Quality

decisions that impact ability of product or service to consistently meet or exceed customer expectations

Centralized vs On-site inspection

effects on cost and level of disruption are a major issue in selecting centralized vs. on-site inspection

specification (tolerances)

established by engineering design or customer requirements. They indicate a range of values in which individual units of output must fall in order to be acceptable.

special features

extra characteristics

Servicability

handling of complaints or repairs

conformance

how well the product conforms to design specifications

percieved quality

indirect evaluation of quality

assurance

knowledge exhibited by personnel and their ability to convey trust and confidence

expectency

meet (or exceed) customer expectations

Consistency

quality doesn't vary

apprasial costs

relate to inspection, testing, and other activities intended to uncover defective products or services, or to assure that there are none E.g., Cost of inspectors, testing, test equipment, labs, quality audits, field testing

Make to stock

serve customers from finished goods inventory ex: packaged food

Prevention Costs

sum of all the costs to prevent defects E.g., training, quality control procedures, extra attention in both design and production phases

reliability

the ability to perform a service dependably, accurately, and consistently

Consistency

the ability to provide the same level of good quality repeatedly

tangibles

the appearance of physical facilities, equipment, personnel, and communication materials

convenience

the availability and accessibility of the service

Process Capability

the inherent variability of process output relative to the variation allowed by the design specification

extent of contact

the percentage of time the customer must be in the system relative to service time

Customer contact

the physical presence of the customer in the system

time

the speed in which the service is delivered

Lead time

the time needed to respond to a customer order

durability

the useful life of the product

courtsey

the way customers are treated by employees

c-chart

used when products or services can have more than one defect.

Customer order decoupling point

where inventory is positioned to allow entities in the supply chain to operate independently

Responsiveness

willingness to help customers in unusual situations and to deal with problems