MGMT4000 TEST 2
If the best operating level of a piece of equipment is at a rate of 400 units per hour and the actual output during an hour is 300 units, which of the following is the capacity utilization rate?
.75
Typically, fairly small values are used for alpha and delta in the range of what?
0.1 to 0.3
Linear Regression
10 to 20 observations.
hybrid process
Combine the features of both make-to-order and make-to-stock
Which of the following are advantages of the matrix form of project organization? Check all that apply.
Duplication of resources is minimized. Communication between functional divisions is enhanced. Policies of the parent organization are followed Team members have a functional "home" after project completion. A project manager is held responsible for successful completion of the project.
What are the points in time that we need to calculate for each activity in the project?
Early finish time Late start time Late finish time Early start time
Functional Project/ Functional Organization
How most businesses are structured today Advantages -technical expertise within that group -building of your skillset Disadvantages -motivation is often weak when it comes to projects at the top we have a division manager
Outsourcing is a common source of external capacity
TRUE
Decreasing Capacity
Temporary reductions Permanent reductions
Stable workforce-variable work hours
When overtime is used to meet demand and avoid the costs associated with hiring and firing. This strategy provides workforce continuity and avoids many of the emotional and tangible costs of hiring and firing associated with the chase strategy
historical analogy
a forecasting technique that uses data and experience from similar products to forecast the demand for a new product
trend
a straight line fitted to the data
chase strategy
a strategy that involves hiring and laying off employees to match the demand forecast. The success of this strategy depends on having a pool of already trained applicants should to draw on as order volume increases. There are obvious motivational impacts. As the workload becomes less employees b=may work slower to complete their work out of fear of being laid off.
Earned Value Management (EVM)
a technique that measures project performance in an objective manner. measures scope, schedule and cost in a project.
Collaborative Planning, Forecasting, and Replenishment (CPFR)
a web based tool used to coordinate demand forecasting, production, and purchase planning, and inventory replenishment between supply chain partners.
six components of demand
average demand for the period a trend a seasonal element cyclical elements random variation autocorrelation
service rate
average number of customers that can be processed over the same period of time when the facility is operating at maximum capacity
The output level where average unit cost is minimized is known as what?
best operating level
Causal forecasting
Assumes that demand is related to some underlying factor or factors in the environment.
decoupling points
occur when inventory is positioned in the supply chain to allow one operation to act independently of another
Capacity Management needs to take into account both
outputs and inputs
Which of the following is not a direct activity cost?
overhead
capacity must be stated relative to some
period of time
Which of the following can be used to operationalize the focused factory concept?
plant within a plant
relationship between learning curves and capacity
positive relationship between learning curves and capacity. As you move down the learning curve you are opening up room for more capacity.
A project where all members of the team work on the project full time is an example of which project organizational structure?
pure
What type of forecasts rely on the knowledge of experts and require judgment?
qualitative
best type of demand planning includes
quantitative and qualitative
A moving average can be useful in removing what for forecasting.
random fluctuations
When workers are penalized for finding a better way to do the job is called
rate cutting
What type of forecast should be used for strategy, sourcing and location decisions?
strategic forecasting
predetermined motion time data systems
sum data from tables of generic movement times developed in a laboratory to arrive at the time for a job
Minimum Cost Scheduling
the basic assumption of minimum cost scheduling, also known as "crashing" is that there is a relationship between activity completion time and cost of the project
throughput rate
the output rate that the process is expected to produce over a period of time
utilization
the ratio of the time that a resource is actually activated relative to the time that it is available for use
process velocity (throughput ratio)
the ratio of the value-added time to the flow time
operation time
the sum of the setup time and run time for a batch of parts that are run on a machine
Time Series Components
trend, cyclical, seasonal, random
Linear regression is used for both time series forecasting and
casual relationship forecasting
If one stage feeds a second stage with no direct link then the assumption is that the two stages are
directly linked
in general a make to stock process ends with
finished goods inventory
long range planning
generally done annually focusing on a horizon greater than one year
The longer material is kept in inventory, the __________ the investment cost.
higher
Which of the following describes the function of specifying work activities of an individual or a group?
job design
Which of the following describes an attempt to broaden workers' influence in the process by giving them certain managerial powers?
job enrichment
Example of input for a manufacturer
machine hours per shift
Level strategy
maintain a stable workforce working at a constant output rate. shortages and surpluses are absorbed by fluctuating inventory levels, order backlogs and lost sales. employees benefit from stable work hours at the cost of potentially decreased customer service levels and increased inventory costs. another concern is the possibility of inventoried products becoming obsolete.
smoothing constant delta
An additional parameter used in an exponential smoothing equation that includes an adjustment for trend. Both alpha and delta reduce the impact of the error that occurs between the actual and the forecast.
Exponential Smoothing
A weighted-moving-average forecasting technique in which data points are weighted by an exponential function. Exponential smoothing is the most used of all of the forecasting techniques
Cyclical Component
-repeating up and down movements -affected by business cycle, political, and economic factors -multiple years duration -often causal or associative relationships
large capacity cushion
-required to handle uncertainty in demand -service industries -high level of uncertainty in demand (in terms of both volume and product mix) -to permit allowances for vacations, holidays, supply of materials delays, equipment breakdowns, etc. -if subcontracting, overtime, or the cost of missed demand is very high
Process Mapping Basics
-start or stop (oval) -boxes indicate activities -diamonds indicate decisions -flow and sequence: all steps connected -Unique Identifier for each of the process steps eg steps labeled 1.0, 2.0, a, b c, etc. -Who is performing the action?
In the exponential smoothing method, only three pieces of data are needed to forecast the future:
-the most recent forecast -the actual demand that occurred for that forecast period -a smoothing constant alpha
chase strategy
-trying to chase demand -utilizing Human Resources to increase/decrease capacity -best for service firms
small capacity cushion
-unused capacity still incurs the fixed costs -highly capital intensive businesses -time perishable capacity
What happens to service quality when utilization increases from 70% to 100% of service capacity?
-when workers are maxed out/exhausted they don't perform as well
Which of the following is not a way to reduce process flow time?
Add buffer to the process
Project Management Book of Knowledge
A book from the Project Management Institute required for certification
Project Charter
A document issued by the project initiator or sponsor that formally authorizes the existence of a project and provides the project manager with the authority to apply organizational resources to project activities. -Problem Statement and Objective -Business Case -Key Risks and Assumptions -Scope -Key Performance Indicators -Timeline -Project Financials
focused factory
A facility designed around a limited set of production objectives. Typically the focus would relate to a specific product or product group. The firm should not excel in every aspect of manufacturing performance: cost, quality, delivery speed, etc.
linear regression forecasting
A forecasting technique that assumes that past data and future projections fall around a straight line. Although this does limit its application sometimes, if we use a shorter period of time, linear regression analysis can still be used. For example, there may be short segments of a longer period that are approximately linear.
Panel Consensus
A judgmental forecasting technique by which a committee, sales force, or group of experts arrives at a sales estimate.
What are the essential features of any earned value management (EVM) system? Check all that apply.
A project plan that identifies the activities to be accomplished. Predefined earning or costing rules to quantify the accomplishment of work. A valuation of each activity work. In the case of a project that generates revenue.
Advantages of the Matrix Project
Advantages: Communication between functional divisions is enhanced Project manager is held responsible for successful completion of the project duplication of resources is minimized team members have a functional home after project completion, so they are less worried about life-after-project than if they were in a pure project organization policies of the parent organization are followed. This increases support for the project.
Pure Project Structure
Advantages: the project manager has full authority; team members report to one boss; shortened communication lines; team pride, motivation, and commitment are high Disadvantages: duplication of resources, organizational goals and policies are ignored, lack of technology transfer, and team members have no functional area "home" a self-contained team works full time on the project
Quantitative Approaches to Forecasting
Time Series Models and Casual Models Time Series -moving averages -exponential smoothing -trend projection Casual Models -linear regression -econometric models
Aggregate Operations Plan
Translating annual and quarterly business plans into labor and production output plans for the intermediate term. The objective is to minimize the cost of resources required to meet demand.
In solving a decision tree problem, calculations start at the ends of the "branches" of the tree and work backward to the base of the tree.
True
True or false: An advantage of a functional project is that team members can work on multiple projects at once.
True
True or false: The objective of job design structures is to meet the requirements of the organization and satisfy workers' personal requirements.
True
True or false: The presence of the customer in a service delivery system increases the volatility of demand.
True
Frequency of Capacity Additions
Two types of costs to consider when adding capacity: -Cost of upgrading too frequently -Cost of upgrading too infrequently
strategic forecasts
What do we expect the demand to be for a group of products over the next year? used to help set the strategy of how, in an aggregate sense, we will meet demand.
The basic questions in capacity planning
What kind of capacity is needed? How much is needed? When is it needed?
Little's Law
Which of the following describes the following relationship: Inventory = Throughput rate x Flow time?
Which of the following are direct observational methods for measuring work and setting standards?
Work sampling Time study data
Which of the following can be part of a statement of work? Check all that apply.
Work to be done Objectives to be achieved Performance measures Proposed schedule
Process
a collection of tasks, steps or activities that are performed usually in a specific order and result in an end product such as a tangible good or the provision of a service -how work gets done -transformation of inputs to outputs -y=f(x)
plant within a plant
a focused factory may have several plants within a plant, each of which may have separate sub organizations. This carries the focus concept down to the operating level.
weighted moving average
a forecasting model that assigns a different weight to each period's demand according to its importance. The sum of all weights equals one.
moving average
a forecasting model that computes a forecast as the average of demands over a number of immediate past periods. When demand for a product is neither growing or declining rapidly, and if it does not have seasonal characteristics, a moving average can be useful in removing the random fluctuations in forecasting.
decision tree
a graph of decisions and their possible consequences; it is used to create a plan to reach a goal -squares: decision points -circles: chance events
a job is said to be enlarged horizontally if the worker performs
a greater number or variety of tasks
Work Package
a group of activities combined to be assignable to a single organizational unit. It provides project milestones like a statement of work.
capacity utilization rate
a measure of how close the firm is to its best possible operating level
the smoothing constant alpha
a parameter in exponential smoothing that controls the reaction speed to differences between forecast and actual demand.
What is a process
a process is any part of an organization that takes inputs and transforms them into outputs that, it is hoped, are of greater value to the organization than the original inputs
Pure Project Structure
a self-contained team works full time on the project Advantages: the project manager has full authority; team members report to one boss; shortened communication lines; team pride, motivation, and commitment are high Disadvantages: duplication of resources, organizational goals and policies are ignored, lack of technology transfer, and team members have no functional area "home"
project
a series of related jobs usually directed toward some major output and requiring a significant period of time to perform
Yield management is the process of allocating which of the following to maximize revenue?
capacity
you don't want to have too much capacity because
capacity costs money
The term sales and operations planning was coined by companies to refer to a process that was traditionally referred to as
capacity planning
capacity utilization rate formula
capacity used/best operating level -expressed as a percentage and requires that the numerator and denominator be measured in the same units and time periods
Which forecasting model incorporates independent variables other than time to predict future demand?
casual relationship
projects can be categorized based on the type of __________ being planned
change
As the moving average period becomes shorter and fewer periods are used, there is more oscillation and there is a
closer following of the trend.
Sales and Operations Planning
coined by companies to refer to the process that helps firms keep demand and supply in balance. In operations planning this was typically known as aggregate planning. The new terminology is meant to capture the importance of cross functional work.
John Hopkins: Capacity Planning in Healthcare
command center used to manage operations.
costs associated with changes in the production rate
costs involved in hiring, firing and training personnel. hiring temporary help is a way of avoiding these costs.
success in project management requires careful control of
critical resources
capacity cushion formula
cushion = (1/ average utilization rate) -1
Aggregation on the demand side is done by groups of _______.
customers
Throughput rate is equal to the inverse of
cycle time
diving the time available to produce a certain product by customer demand for the product calculates the required
cycle time for a process
strategic planning
deals with determining long term capabilities of the production systems.
Process Planning
deals with determining the specific technologies, procedures and systems required to produce products or create services.
Laying out the steps of a capacity problem can be done through the use of
decision trees
Temporary Reductions and Permanent Reductions are ways to
decrease capacity
Work Breakdown Structure
defines the hierarchy of project tasks, subtasks, and work packages
Work Breakdown Structure
defines the hierarchy of project tasks, subtasks, and work packages. Breaks the project down into subcomponents
blocking occurs when the activities in a stage must stop because there is no place to
deposit the items that were just completed
Critical Path Method
developed for scheduling maintenance shutdowns at chemical processing plants owned by DuPont.
Capacity: Disney Reopening
developed new technology to make parks safer due to COVID
Point-of-sale (POS) data would be used in which step of the CPFR process?
development of demand forecasts
when work is done in conjunction with fixed processing time equipment, elemental data are often used to reduce the need for
direct observation
If a plant becomes too large, _________ become a problem
diseconomies of scale
Project managers are as much concerned with the cost as the
duration
A schedule that lists all activities by their early start times is a(n)
early start schedule
Which technique combines measures of scope, schedule and cost for evaluating project progress?
earned value management
Formulating an exponential smoothing forecasting model is relatively
easy
When multiple products can be combined and produced at one facility at a lower cost than they can be produced separately is known as what?
economies of scope
Economic of Scope
economies that reflect the ability to produce multiple products more cheaply in combination than separately
Understanding how processes work is key to
ensuring the competitiveness of a company
job enrichment
entails modifying a job such that an employee has the opportunity to experience achievement, recognition, stimulating work, responsibility, and advancement
work sampling
entails recording random observations of a person or teams at work
If the magnitude of the tracking signal is non zero and negative, which of the following is true
error= actual- forecast If its negative the forecast was more than the actual demand for that period...forecast was too high
When decisions in forecasting are at a broader, higher level (as when introducing a new product line or concerning strategic product decisions such as new marketing areas), the term ______________ _________________ is generally used
executive judgement
When the most recent occurrences are more indicative of the future than those in the distant past, one should use which time series model?
exponential
capacity cushion
extra capacity used to offset demand uncertainty
More than 70% of projects
fail
Which of the following are the basic elements of a process flowchart?
flows, tasks, storage areas
Random errors are those which cannot be explained by the
forecast model being used
Delphi Method
forecasts developed by asking a panel of experts to individually and repeatedly respond to a series of questions. The Delphi method conceals the identity of individuals participating in the study so that no one lower level people will not feel threatened and therefore not contribute their true beliefs.
Which of the following is an example of an input to a manufacturing process?
labor
If one of your competitive priorities is to have fast delivery you need a
larger capacity cushion
If you have less reliance on inventory you need a
larger capacity cushion
If you need greater resource flexibility you need a
larger capacity cushion
The time between the issuance of a replenishment order and the receipt of stock is:
lead time
the time between issue of a replenishment over and the receipt of stock
lead time
Which of the following states a mathematical relationship between throughput rate, flow time, and the amount of work-in-process inventory?
littles law
short term forecasts are more accurate than
long term forecasts
Capacity Bottlenecks
longest cycle time shortest units/hour rate
if capacity is too low the firm will
lose customers and encourage competitors
In throughput rate the bottleneck occurs where the throughput rate is the
lowest. Bc throughput rate is the number of units you can get through in an hour.
Which of the following is not a form of a matrix project?
major
A process that is activated only in response to an actual order is known as which is of the following?
make to order
Because of volatility, service capacity is generally planned in increments as small as 10 to 30 minutes as opposed to one week increments which are common in
manufacturing
The number of items that can be produced in a given period of time.
manufacturing capacity
make to stock process
mass produces standard goods which can be delivered quickly to the customer
Which measurement of error measures the dispersion of some observed value from some expected value?
mean absolute deviation
____________ strategies are more widely applied in industry
mixed
In trying to forecast demand for a new product, an ideal situation would be one where an existing product or a generic product could be used as a
model
Total factor productivity is usually measured in
monetary units
When demand for a product is neither growing nor declining rapidly, and if it does not have seasonal characteristics, a simple _________________________ can be useful in removing the random fluctuations for forecasting.
moving average
Which of the following terms describes a process that has several groups of activities linked through flows?
multistage
in face to face settings the service capacity must be located
near the customer
where high autocorrelation exits, the rate of change of demand is not expected to change very much from one week to the
next
Inputs for a theater
number of seats
Examples of input for an airline
number of seats on the airplane
workforce level
number of workers needed for production production=production rate* workforce level
Bias errors
occur when a consistent mistake is made
How many immediate predecessors does B have?
one
Single-stage process
one stage in the process
The main purpose of an aggregate plan is to specify the:
optimal combination of production rate, workforce level and inventory on hand
Many industries measure capacity in terms of
output
Project Indirect Costs
overhead, facilities and resource opportunity costs, and, under certain contractual situations, penalty costs or lost incentive payments
Which qualitative forecasting technique is based upon the idea that a group of people with various backgrounds can develop a more reliable forecast than a narrower group?
panel consensus
Often, activities, stages, and even entire processes are operated in
parallel
time series forecasting models try to predict the future based on
past data
Wait and See Strategy
postponing form commitments to build expensive new facilities until demand has already exceeded capacity. Not making decisions about expanding capacity until demand exceeds your current capacity and you are essentially forced to. Good because you don't have any unused capacity
Bottleneck is the stage that limits the capacity of a
process
real (or effective capacity) depends on what is to be
produced
Four Major Types of Change in Project Management
product change process change research and development alliance and partnership
Aggregation on the supply side is done by
product families
The main purpose of the aggregate production plan is to specify the optimal combination of workforce level and inventory on hand and
production rate
Aggregate Operations Planning specifies the optimal combination of
production rate workforce level inventory on hand
EG A new manufacturing facility for producing lithium ion battery
project
a project milestone is a specific event in a
project
What is a project?
projects are a complex, one-time endeavor projects are limited by budget, schedule and resources projects are developed to resolve a clear goal or set of goals projects are customer focused
buffer
refers to a storage area between stages where output of a stage is placed prior to being used in a downstream stage. buffering allows stages to operate independently.
crashing
refers to the compression or shortening of the time to complete the project.
pacing
refers to the fixed timing of the movement of items through the process
production rate
refers to the number of units completed per unit of time, such as per hour or per day
utilization is always measured in reference to some
resource
when looking at capacity, resource managers need to look at both
resource inputs and product outputs
By simulating various master production schedules and calculating corresponding capacity, labor and equipment requirements, one is developing a(n):
rough-cut plan
Little's Law
says there is a long-term relationship between the inventory, throughput, and flow time of a production system in steady state Inventory= throughput rate*flow time
Capacity Planning in Services Versus Manufacturing
service capacity planning is more time and location dependent, subject to more volatile demand functions and utilization directly impacts service quality
The average number of customers that can be processed over the same period of time when the facility is operating at maximum capacity is known as the
service rate
work measurements
sets time standards for a job
How many PWPs might a focused factory have?
several
In general, the _____ models compensate for random variation and adjust for changes over a brief period of time.
short term
This type of capacity planning typically involves such alternatives such as overtime, personnel transfers, and alternative production routings.
short-range
Tactical forecasts are _____ term, while strategic forecasts are ______ term.
short; medium and long
Crashing creates a ______ project that costs ______.
shorter; more
Gantt chart (sometimes referred to as a bar chart)
shows both the amount of time involved and the sequence in which the activities can be performed.
Which forecasting model is based upon merely average past demand?
simple moving average
Qualitative Methods best used when
situation is vague and little data exists -new products -new technology -involved intuition, experience e.g. forecasting sales on internet quantitative methods -used when the situation is stable and historical data exists -existing products -current technology -involved mathematical techniques -eg forecasting sales of cambells soup
Efficiency ratio is a ratio of the actual output of a process relative to
some standard
A system where simple, repetitive jobs are assigned to each worker is called
specialization of labor
A project milestone is a
specific event in a project
The term ______ is used to indicate that multiple activities have been pulled together for analysis purposes.
stage
Blocking Example
stage one cycle time 30 seconds stage two cycle time 45 seconds Stage one will finish units sooner but there will be nowhere for them to go... so you have a deposit of goods with nowhere to go Bottleneck: Stage Two
A project starts out with a
statement of work
What term best describes the written description of the objectives to be achieved in a project?
statement of work
Little's law says there is a long-term relationship between the inventory, throughput rate ,and flow time of a production system in
steady state
An external factor that influences a production plan is?
subcontractor capacity
elemental data
sums times from a database of similar combinations of movements to arrive at job time
In services, managers must consider time as one of their
supplies
With market research, the data collection methods are primarily
surveys and interviews
You generally use short-term forecasts for ___________ decisions such as replenishing inventory or scheduling employees in the near term.
tactical
yield management
takes into account fluctuations in demand and adjusting prices based off of that. eg hotels and airlines adjust prices based on when people are making purchases.
In a process flow chart a rectangle represents which of following?
tasks
the work breakdown structure is further subdivided into
tasks
Which of the following set of terms is used to describe the subdivisions when a project is broken down?
tasks and subtasks
capacity flexibility
the ability to rapidly increase or decrease product levels or the ability to shift rapidly from one product or service to another
Starving occurs when...
the activities in a stage must stop because there is no work
yield loss
the amount of defects in a product. Some of the products you produce will be consider lost due to quality issues. The greater the amount of defects with your products the greater the need for increased capacity
capacity
the amount of output that a system is capable of achieving over a specific period of time. -in services eg the number of customers that can be handled in a given period of time -in manufacturing, the number of items that can be produced during a single shift
Mean Absolute Deviation (MAD)
the average distance between each data value and the mean. The average error of the forecasts using absolute values.
service rate
the average number of customers that can be processed over the same period of time
arrival rate
the average number of customers that come to a facility during a specific period of time
Mean Absolute Percent Error (MAPE)
the average of the absolute differences between the forecast and actual values, expressed as a percent of actual values. Error relative to the demand as a percentage.
Crashing
the compression or shortening of the time to complete the project. It costs money to expedite the activity but it also costs money to sustain the project
A common approach to developing an aggregation operations plan is from:
the corporate annual plan
Critical Path
the critical path of activities in a project is the sequence of activities that form the longest chain in terms of their time to complete. If any one of the activities in the critical path is delayed then the entire project is delayed
forecast error
the difference between a forecast and the actual demand
forecast errors
the difference between the forecast value and what actually occurred (A-F) Sources of Error Bias- when a consistent mistake is made Random- errors that are not explained by the model being used Measures of Error Mean Absolute Deviation (MAD) Mean Absolute Percent Error (MAPE) Tracking Signal (Know How to Calculate)
Mean Absolute Deviation
the ideal MAD is zero which would mean there is no forecasting error The larger the MAD, the less accurate the resulting model -does not tell you whether your forecast is too high or too low
days of supply measure
the inverse of inventory turn scaled to days
Yield Management
the process of allocating the right type of capacity to the right type of customer at the right price and time to maximize revenue or yield (can make demand more predictable).
job design
the process of defining the way work will be performed and the tasks that a given job requires
In general, the longer the averaging period
the smoother the plot.
Operation time
the sum of the setup time and run time for a batch of parts that are run on a machine.
Value-added time
the time in which useful work is actually being done on the unit. Assuming that all of the activities included in the process are value-added activities, value added time should be the sum of the activity operation times in the process.
time is the sum of the setup time and run time for a batch of parts that are run on a machine.Setup Time
the time required to prepare a machine or process for production
run time
the time required to produce a batch of parts =time required to produce each unit * batch size
Process Flowcharting
the use of a diagram to present the major elements of a process. activities associated with a process often affect one another. shows tasks, flows, and storage areas. -decision points are depicted as a diamond, with different flows running from the points on the diamond -
arrival rate> service rate
there will be a wait/ delay in service--> Then youre in the zone of non service which could cause people to leave and choose a competitor
random
these are caused by chance events
autocorrelation
this denotes the persistence of occurrence. More specifically, the value expected at any point is highly related with its own past values
seasonal element
this is period by period variations in demand.
When a single time estimate of an activity completion time is not reliable, you should use
three time estimates
The time horizon for an aggregate operations plan ranges from
three to eighteen months
highly detailed and repetitive work calls for
time study and predetermined motion time data systems
historically projects have focused on the triple constraint:
time, quality, cost but this is missing one other aspect: Client Approval!
time study
timing how long it takes good workers to complete each part of their jobs
Which of the following is not one of the reasons for work measurements?
to implement long cycle time
aggregate operations plan
translates annual and quarterly business plans into broad labor and output plans for the intermediate term. The objective is to minimize the cost of resources required to meet demand over that period.
short term forecasting
under three months
throughput rate is given in
units/period of time
Which of the following is the term that describes the action of setting time standards for a job?
work measurement
In a project, which of the following has the shortest duration?
work package
What term describes the group of activities assigned to a single organizational unit?
work package
When work is infrequent or entails a long cycle time, which of the following is the tool of choice?
work sampling
job enrichment vertically
worker is involved in planning, organizing or inspecting his/her own work
job enrichment horizontally
worker performs a greater number or variety of tasks
The number of workers needed to meet production requirements is called?
workforce level
S&OP deals with
workforce levels and inventory levels
When calculating a multiplicative seasonal index, what mathematical operator is used to relate the trend and seasonal factor?
x (multiplication)
Flexible Plants have
zero changeover time (doesn't take any time to switch from producing Product A to produce Product B)
Matrix Organization
An organization in which specialists from different parts of the organization are brought together to work on specific projects but still remain part of a line-and-staff structure. Essentially there are 2 bosses: Functional boss eg operations finance engineering & then project boss Disadvantages: conflicting goals from two different bosses, hard for team members to know how to allocate time
cycle time of a process
Average time between completed units coming out of a process. Measured as time/unit
A Gantt chart is sometimes referred to as what?
Bar chart
Time series analysis
Based on the idea that data relating to past demand can be used to predict future demand.
At what point in the project planning process is the organizational structure of the project decided?
Before the project begins
Organizing the Project Team
Before the project starts, senior management must decide which of three organizational structures will be used to tie the project to the parent firm: pure project, functional project, or matrix project.
Which of the following should be considered when choosing a forecasting model?
Consequence of a bad forecast Firm's degree of flexibility
inventory holding costs
Costs associated with acquiring and retaining inventory including cost of storage space; lost, stolen, or damaged merchandise; insurance; personnel and management costs; taxes; spoilage; obsolescence; and interest.
Metrics Related to Process
Cycle Time: start/stop for process steps Throughput rate: video interviews reviewed per hour Value-Add Time: time interviewing or evaluating candidates Non-Value Add Time: points in the process where w are wasting time eg time waiting for response from hiring manager Efficiency and Productivity Ratio: Acceptance Rate % Quality: Performance Ratings (6mo/1yr), Turnover
Which of the following types of projects represents the least amount of change?
Derivative Project
Work measurement
Determining how long it should take to do a job. Direct Methods: Time Study and Work Sampling Indirect Methods: Predetermined motion-time data system, elemental data
Strategic Capacity Planning
Determining the overall capacity level of capital-intensive resources that best supports the company's long-range competitive strategy. -facilities -equipment -labor force size
flexible processes
Flexible manufacturing systems Simple, easily setup equipment Economies of scope (rapid low cost switching from one product to another)
A _________ shows in a graphic manner the amount of time involved and the sequence in which activities can be performed.
Gannt chart
CPM techniques owe their development to the ________ chart.
Gantt
Another approach is to develop the aggregate plan by simulating various master production schedules and calculating corresponding capacity requirements to see what?
If adequate labor and equipment exist at each workcenter.
Determining Capacity Requirements
In determining capacity requirements we must address the demands of production throughout the plant network. Typically, this is done according to the following steps: - Use forecasting to predict sales for individual products - Calculate labor and equipment requirements to meet forecasts - Project labor and equipment availability over the planning horizon
What is the major restriction in linear regression forecasting?
It assumes that projections will fall in a straight line
A task is a further subdivision of a project...
It is usually not longer than several months in duration and is performed by one group or organization. A subtask may be needed to further subdivide the project into more meaningful pieces.
What are Learning Curves?
Learning Curve: A Line displaying the relationship between unit production time and the cumulative number of units produces -wide range of applications -can be used to estimate time and cost -one of the trade offs of JIT Individual Learning: improvement that results when people repeat a process and gain skill or efficiency from their own experience -practice makes perfect Organizational Learning: also comes from changes in administration, equipment and product design -expect to see both simultaneously
Types of Process Maps
Level 1 Map SIPOC Value Stream Mapping RACI
Which of the following describes the following relationship: Inventory = Throughput rate x Flow time?
Littles Law
Capacity Planning is generally viewed in three durations:
Longe Range: greater than one year. Where productive resources take a long time to acquire or dispose of, long range capacity planning requires top management participation and approval Intermediate Range: monthly or quarterly plans for the next 16 to 18 months. Here capacity may be varied by such alternatives as hiring, layoffs, new tools, minor equipment purchases
Observation Minimizing Waste: Spaghetti Chart
Looks at wasted motion in particular Power of Observation: -track the motion of employees -track the motion of a product Look for Opportunities: -colocation -supplies/inventory -documentation reduction
Which measure of error calculates the average absolute value of the actual forecast error?
MAD
MAPE
MAD/ Average Demand MAD in percentage form (they really tell you the same thing) (percentage of error on average) 1) Compute the MAD 2) Sum the sales of period 2-5 (see MAD example) 3) Divide Total Sales by number of periods 1084/4= 271.25 4) MAPE= MAD/271.25=.0369 MAPE = 3.69% (on average, my forecasting was off by 3.9%)
Tracking Signal Example
MAD= 10 RSFE= sum of all errors (not the absolute value column, just sum all of the negative and positive errors to get a negative or positive answer) RSFE/MAD
Software Tools for Process Mapping
MS Powerpoint MS Visio MS Excel MS Word
With exponential smoothing, the value for the constant is determined both by what?
Manager's sense of what constitutes a good response rate The nature of the product
Identify the three main forms of project.
Matrix project Pure project Functional project
In aggregate planning, if capacity is inadequate, additional capacity can be added using which of the following?
Overtime Extra workers Subcontracting
Organizational Structures
Pure Project Functional Project Matrix Project
Agile Project Management
Sprint 1 Sprint 2 Sprint 3 Review, Test, Build Design, Plan
Starving Example
Stage one cycle time is 60 seconds Stage Two cycle time is 45 seconds Eventually Stage Two is starved for 15 seconds *buffer of additional inventory can solve this
Expansionist Strategy
Stays ahead of demand, minimizes the chance of sales lost to insufficient capacity. Looking ahead at a forecast and saying that in x number of years I expect demand to increase by ________, so now I need to increase my capacity by ___________ in anticipation of future demand. Good for this reason but bad because, for a period of time, you're paying for unused capacity.
SIPOC
Suppliers, Inputs, Process, Outputs, Customers Where are you getting inputs from? Who is your customer?
Which of the following are advantages of the functional project organizational structure?
Technical expertise is maintained within the functional area. The functional area is a home after the project is completed. Functional-area experts creates synergistic solutions to technical problems. A team member can work on several projects.
Qualitative
Techniques that use managerial judgment.
The term capacity implies an ___________ rate of output.
attainable
Capacity Cushion
(Best operating output/ capacity used) -1
Input for a retailer
area of the store
relevant costs (cost types)
-Basic production costs -Costs associated with changes in the production rate -Inventory holding costs -Backorder costs
General Uses of Process Mapping
-Current state versus Ideal state -Training -Identify Opportunities -Prepare for new Technology
random component
-Erratic, unsystematic, 'residual' fluctuations -Due to random variation or unforeseen events -Short duration and nonrepeating
analyze separately
-activity of the product -activity of the associate -activity of the equipment -activity of the customer
IT (SDLC- Software Development Life Cycle)
Plan Analyze Design Build Test Deploy Operate
Short-range planning
Planning covering a period from one day to six months with daily or weekly time increments
intermediate range planning
Planning focusing on a period from 3 to 18 months, time increments are weekly, monthly, or quarterly
Project Management
Planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of a project.
production planning strategies
Plans for meeting demand that involve trade-offs in the number of workers employed, work hours, inventory, and shortages. 1) chase strategy 2) stable workforce-variable work hours 3) level strategy When just one strategy is used: pure strategy Two or More: Mixed Strategy
Which of the following are indirect observational methods for measuring work and setting standards?
Predetermined motion-time data Element data
Rate Fences
Pricing structures must appear logical to the customer and justify the different prices. May have a physical bias (such as a room with a view), or a non-physical bias (like unrestricted access to the internet)
Tactical forecasts
Short-term forecasts used for making day-to-day decisions related to meeting demand. (a few weeks or months)
Which of the following would be a complementary product for a lawnmower manufacturer?
Snowblowers Leaf blowers Snowmobiles
Design as One
Solutions integrate the elements
Overlay Key Metrics
Some Examples: Cycle Time: In a repetitive process: Average time between completions of successive units Lead Time: time needed to respond to a customer order. Also: time between issue of a replenishment order and the receipt of stock Utilization: ratio of the time a resource is actually activated relative to the time it is available for use Throughput Rate: Output rate that the process is expected to produce over a period of time
basic production costs
The fixed and variable costs incurred in producing a given product type in a given time period
best operating level
The level of capacity for which the process was designed and the volume of output at which average unit cost is minimized.
Executive Sponsor
The person or group who provides the financial resources for the project. They are the champion for the project and can help knock down barriers.
Decomposition of a Time Series
The process of identifying and separating time series data into fundamental components such as trend and seasonality.
What is a statement of work
The statement of work is a written description of the objectives to be achieved, with a brief statement of the work to be done and a specified schedule of start and completion dates. It also contains performance measures in terms of budget and completion steps and the written reports to be supplied.
total average value of inventory
The total average investment in raw material, work-in-process, and finished goods inventory.
Budgeted Cost of Work Performed (BCWP)
The total budgeted cost of all work completed on a project to date. Also known as earned value (EV).
Aggregate operations plan
concerned with setting production rates by product group or other broad categories for the intermediate term (3 to 18 months)
forecasting is the basis of
corporate planning and control
Project Indirect Costs
costs associated with sustaining the project
time series analysis
data relating to past demand can be used to predict future demand
Which of the following is an example of a qualitative forecasting technique?
market research panel consensus historical analogy
Less predictable demand requires a lower capacity for
services
The ultimate in plant flexibility is...
the zero-changeover-time plant.
The crash-cost per day (or other time unit) is calculated using which of the following formulas?
(CC - NC) / (NT - CT)
In general, the best operating point for services is nearly 70% of
capacity
disadvantages of matrix structure
-Many managers across all project teams mean high wage and salary costs -Duplication of resources, such as administration staff, can occur -Staff can be confused as to who to report to as they have two managers -doomed for failure unless PM has high negotiation skills -hoarding of resources by project managers for their own projects
Some Short Term Capacity Options
-lease extra space temporarily -authorize overtime -staff second or third shift with temporary workers -add weekend shifts -alternate routings, using different work stations that may have excess capacity -schedule longer runs to minimize capacity losses
Maintaining System Balance
-Want similar capacities at each operation -Deal with bottlenecks -output from stage one creates the exact input requirements for stage two -in practice achieving this is nearly impossible and also undesirable; best operating levels at each stage differ
level strategy
-better for manufacturing, make-to stock firms
examples of qualitative methods
-executive judgement -delphi method (all employees opinions held anonymous so lower level employees opinions have as much weight as executives or managers) -sales force composite -consumer market survey
How could COVID 19 impact our U.S Hospital System? How can hospitals increase capacity where it is most needed?
-hospitals can increase capacity through having employees on call, having back-up rooms for overflow patients, working on demand planning by surveying current COVID/Flu case rate, and having managers make constant reports of their capacity rate and any threats/excessive flow of patients
What is the significance of Little's law
-it can help determine the WIP in a process -It describes the relationship between inventory, throughput and flow time
Key Tools for Project Managers
-project charter -project schedule -project budget -stakeholder analysis -project update
Gather Existing Information
1) Are there existing process maps out there (use as a starting point) 2) Metrics (KPIs)--what does management currently value 3) Stakeholders (who are the key groups in the organization I'm going to be working with) 4) Inputs/Outputs--what do customers expect
Delphi method steps
1) Choose the experts to participate 2) Through a questionnaire, obtain forecasts (and any premises or qualifications for the forecasts) from all participants 3) summarize the results and redistribute them to the participants along with appropriate new questions 4) summarize again, refining forecasts and conditions and again develop new questions 5) Repeat Step 4 if necessary. Distribute the final results to all participants.
How to Develop a Process Map
1) Determine purpose of the process map 2) Gather existing information 3) Observe the Process 4) Interview Stakeholders
Exponential Smoothing Techniques have become accepted for six major reasons:
1) Exponential models are increasingly accurate 2) Formulating an exponential model is relatively easy 3) The user can understand how the model works 4) Little computation is required to use the model 5) Computer storage requirements are small because of the limited use of historical data 6) tests for accuracy as to how well the model is performing are easy to compute
forecasting is a vital function and impacts every significant management decision
1) Finance and Accounting- budget and cost control 2) Marketing- new product planning 3) HR- personal compensation, hiring, training, laying off 4) Production- select suppliers, determine capacity requirements, and drive decisions about purchasing
List the steps, from first to last, required to determine capacity requirement.
1) Forecast to predict sales 2) Calculate equipment and labor requirements 3) Project labor and equipment availabilities
Hoosier Manufacturing operates a production shop that is designed to have the lowest unit production cost at an output rate of 185 units per hour. In the month of July, the company operated the production line for a total of 345 hours and produced 42,400 units of output.
42400/(345*185)
Weighted Moving Average and simple exponential smoothing + exponential smoothing with trend
5-10 observations needed to start
If changes are being made to a product, process, etc. during a project these changes are categorized in three ways:
1) derivative change (incremental changes such as new packaging) 2) platform (fundamental improvements to existing products) 3) breakthrough (major changes that create entirely new markets)
the volatility of demand on a service delivery system is much higher than on a manufacturing production system for three reasons:
1) services cannot be stored 2) consumers interact directly with the production system 3) directly affected by consumer behavior
What is the MAD value given the forecast values in the table: Month. Sales. Forecast. 1 220 n/a 2 250 255 3 210 205 4 300 320 5 325 315
1) subtract (sales-forecast) 2 -5 3 5 4 -20 5 10 2) find the absolute error 2 5 3 5 4 20 5 10 3) Sum and divide by the number of time periods 5+5+20+10= 40/4= 10 MAD=10 (how many units you are off by on average)
long range planning activities are done in two major areas
1) the design of service and manufacturing products that produce the products of the firm 2) the design of logistics activities that deliver products to the customer
CPFR steps
1. Creation of a front-end partnership agreement 2. Joint business planning 3. Development of demand forecasts 4. Sharing forecasts 5. Inventory replenishment
Yield Management is most effective when:
1. Demand can be segmented by customer 2. Fixed costs are high and variable costs are low 3. Inventory is perishable 4. Product can be sold in advance 5. Demand is highly variable Hotels and Airlines exhibit these characteristics.
External Sources of Capacity
1. Outsourcing 2. Sharing capacity
Process Flow Time Reductions
1. Perform activities in parallel 2. Change the sequence of activities 3. Reduce interruptions
Learning Curve Assumptions
1. The amount of time required to complete a given task or unit of a product will be less each time the task is undertaken 2. The unit time will decrease at a decreasing rate 3. The reduction in time will follow a predictable pattern
Considerations in changing capacity
1. maintaining system balance 2. frequency of capacity additions and reductions 3. use of external capacity
Three Assumptions of Learning Curve Theory
1. time required to complete a given task will be less each time the task is undertaken 2. unit time will decrease at a decreasing rate 3. reduction in time will follow a predictable pattern
why work measurements are necessary
1. to schedule work and allocate capacity 2. to provide an objective basis for motivating the workforce and measuring workers' performance 3. to bid for new contracts and to evaluate the performance on existing ones 4. to provide benchmarks for improvement
consider a two stage process where the first stage has a cycle time of thirty seconds and the second a cycle time of 45 seconds. If this process needs to produce 100 units, then for each unit produced, the first stage would be blocked for
15 seconds
If a firm produced a product where they were expecting growth, what alpha value would you expect them to use?
15-30
trend and seasonal models
2 to 3 observations per season
medium term forecasting
3 months to 2 years
When calculating the expected completion time for an activity using the formula based on the beta statistical distribution, the most likely time is weighted ______ times more than the optimistic and pessimistic times.
4
Four Blocker Report
4 sections -(recent) completed deliverables and tasks -deliverables (in progress) stays report -key risks, mitigation and dependencies -upcoming activities
Forecasting Method: Simple Moving Average
6-12 months; weekly data often used
What is the major assumption when determining the cost per unit of time to expedite each activity.
A linear relationship between time and cost
tracking signal
A measure that indicates whether the forecast average is keeping pace with any genuine upward or downward changes in demand.
Matrix Project
A structure that blends the functional and pure project structures. Each project uses people from different functional areas. A dedicated project manager decides what tasks need to be performed and when, but the functional managers control which people to use.
Functional Project
A structure where team members are assigned from the functional units of the organization. The team members remain a part of their functional units and typically are not dedicated to the project. Advantages: a team member can work on several projects, technical expertise is maintained within the functional area even if individuals leave the project or organization. The functional area is a home once the project is completed: Functional specialists can advance vertically, a critical mass of specialized functional-area experts creates synergistic solutions to the projects technical problems Disadvantages: aspects of the project that are not directly related to the functional area get shortchanged, motivation of team members if often weak, needs of the client are secondary and are responded to slowly
Gantt Chart
A time and activity bar chart that is used for planning, managing, and controlling major programs that have a distinct beginning and end. Helpful when you have a lot of different stakeholders. This simplifies the stages of each of the projects.
Flexible Workers
Ability to switch from one kind of task to another quickly Multiple skills (cross training)
Lean Six Sigma
Define, Measure, Analyze, Improve, Control
Sales and operations planning typically requires an integrated effort and cooperation from the following organizations:
Distribution and logistics Product development Operations Sales Finance
With weighted moving averages, how are the weights selected?
Experience Trial and error
Time-cost models
Extension of the critical path models that considers the trade-off between the time required to complete an activity and the cost. This is often referred to as "crashing" the project.
The larger the capacity cushion, the better.
FALSE This is false for the firm whose competitive advantage is low cost or price. For a firm competing on speed of delivery or innovative ability, for example, a larger capacity cushion will allow more flexibility and enable an appropriate response to unplanned orders.
There are relatively few project management software options for practitioners....
False
External Sources of Operations and Supply Capacity
In some cases it may be cheaper to not add capacity at all but rather to use some existing external source of capacity.
PMI Methodology
Initiate Plan Execute Monitor and control Close
Which of the following are reasons for the volatility of demand on a service delivery system?
Intangibility Customer interaction
Trend Component
Persistent, overall upward or downward pattern Changes due to population, technology, age, culture, etc. Typically several years duration
A big competitor to Microsoft Project is:
Primavera Project Planner.
Process Versus Project
Process: Ongoing Repeat process or product People are homogenous Greater certainty Part line organization Established practices Project: One-shot limited life New process or product More Heterogeneous Greater Uncertainty Outside of line organization Violates established practice
Seasonal Component
Regular pattern of up and down fluctuations Due to weather, customs, etc. Occurs within a single year eg spike in lawn care services, people purchasing turkeys, etc.
Tracking Signal
Running Sum of Forecast Errors / MAD
inventory turn
The cost of goods sold divided by the total average value of inventory
The smoothing constant values depend on which of the following?
The variation in the demand How steady the trend factor is
Cyclical elements
These are more difficult to determine because the time span may be unknown or the cause of the cycle may not be considered.
simulation
These models allow the forecaster to run through a range of assumptions about the condition of the forecast.
Average Demand
This is the sum of the demand values divided by the sample size.
inventory on hand
Unused inventory carried from a previous period.
Flexible Plants
Using movable equipment, knockdown walls, and easily accessible and reroutable utilities, such a plant can quickly adapt to change. This is called a zero changeover time plant.
backordering costs
Usually these are very hard to measure and include costs of expediting, loss of customer goodwill, and loss of sales revenues resulting from backordering.
Process Mapping
Visual Representation of a process Illustrates sequence of actions/decisions Establishes boundaries
littles law
WIP= Flow Time * Throughput Rate
When deciding which forecasting model to use, a firm should consider
accuracy required time horizon forecasting budget
Cost per unit decreases with the number of times you perform an
activity (learning curve)
The costs associated with expediting activities are termed
activity direct costs (and add to the project direct costs)
make to order process activated only in response to the
actual order -inventory is minimized
utilization measures the actual activation of the resource. For example, what is the percentage of time that an expensive machine is
actually running
The two types of seasonal variation discussed are
additive and multiplicative
In operations management, the sales and operations planning process traditionally was called
aggregate planning
companies use the cut and try charting and graphic methods to develop
aggregate plans
The main disadvantage of the moving average is that
all individual data elements must be carried as data.
With exponential smoothing, which smoothing constant controls the speed of reaction to differences between forecasts and actual demand?
alpha
Strategic Capacity Planning
an approach for determining the overall capacity level of capital intensive resources, including facilities, equipment, and overall labor force size- that best supports the company's long term competitive strategy.
Shigeo Shingo Model
analyze separately, design as one -analyze the process through a few different lenses eg through the eyes of the product's, through the eyes of the associate working on the manufacturing line,
Activities are defined within the work breakdown structure and
are pieces of work that consume time
a widely used forecasting method plots data and then searches for the curve pattern. The advantage to this method is that
because the mathematics of the curve are known, solving for values in future time periods is easy
sales and operations planning is a process that helps firms provide
better customer service, lower inventory, shorter customer lead times. The process is designed to keep demand and supply in balance over time.
The term that describes when activities in the process stage must stop because there is no place to deposit an item is known as which of the following?
blocking
When two stages in a process are directly linked the two problems that can occur are
blocking and starving
The project manager needs to have
both technical skills and people skills
Which of the following describes a resource that limits the capacity or maximum output of a process?
bottleneck
The operation that moves at the slowest pace is where the
bottleneck in the system is
Which of the following types of projects represents the most amount of change?
breakthrough projects
a multistage process may be
buffered internally
relevant costs
four costs are relevant to the aggregate production plan: basic production costs, costs associated with changes in the production rate, inventory holding costs, backordering costs
Level 2 Process Map
gets into much more detail than a Level One Map Intended to: -document detailed steps of a specific part, phase, or stage of the process Best to utilize a mapping software such as Microsoft Visio
long term forecasting
greater than two years
Multi-stage process
has multiple groups of activities that are linked through flows
if capacity is too high the firm will
have to cut costs or underutilize its capacity
Pacing
having a fixed time for the movement of items through the process
the optimal utilization rate is very context specific. Low rates are appropriate when both the degree of uncertainty and the stakes are
high. -eg hospitals, fire departments
When choosing weights for a weighted moving average, the general rule states that the most recent periods should get the ______ weighting.
highest
bottleneck occurs where the cycle time is the
highest
Which of the following qualitative techniques of forecasting forecasts demand for a new product using an existing or a generic product as a model?
historical analogy
With services, cycles are more often measured in
hours
Activities that need to be completed before an activity are referred to as
immediate predecessors
metrics tell a firm if progress is being made towards
improvement
flow time
includes the time the unit spends actually being worked on, together with the time spent waiting in queue
The costs associated with sustaining a project are referred to as
indirect costs
productivity is the ratio of output to
input
Industries whose product mix is very uncertain measure capacity in terms of
inputs
while many industries measure capacity in terms of inputs, some whose product mix is very uncertain measure capacity in terms of
inputs
Top management considers an aggregate operations plan a(n)
intermediate term planning tool
Which of the following is likely a rate fence at a hotel?
internet mountain view free breakfast
Which of the following are internal factors that influence a production plan?
inventory levels
The capacity level has a critical effect on the firm's response rate, cost structure and
inventory policies, and its management and staff support requirements
Cut-and-try approach
involves costing out various production planning alternatives and selecting the one that is best
Causual Relationship Forecasting
involves using independent variables other than time to predict future demand. To be of value for the purpose of forecasting, any independent variable must be a leading indicator.
Specialization of Labor
is a double edged sword of job design. On the one hand, specialization has made possible high-speed, low-cost production and from a materialistic standpoint, it has greatly enhanced our standard of living. On the other hand, extreme specialization has serious adverse effect on workers which in turn are passed on to management.
