MIPC B

Cpk measures both the centering of the process as well as the spread of the process relative to the specification width. What value would be considered acceptable?

1.33 or greater. CPK is the lesser of [USL minus mean divided by 3 sigma] or [mean minus LSL divided by 3 sigma].

An organization estimates it will reduce operating expenses $25,000 per year by using a new piece of equipment. The new equipment purchase cost is $50,000. What is the payback period?

2 years.

A company planned to lower backlog at a work center from 20 to 15 units at the end of week 5. Actual input was 8 units more than expected, and the work center produced 8 units less than planned. What was the actual ending backlog in week 5?

31

If forecast accuracy is 95%, what is the forecast error?

5%.

Use the information below to figure the delivery lead time for Company A: Customer order process: 1 week, Manufacture time: 3 weeks, Final assembly: 2 weeks, Delivery: 1 week

7 Weeks. Delivery leadtime is the time from the receipt of a customer order to the delivery of the product.

If a firm has 35 days of accounts payable outstanding and 55 days invested in inventory, and its cash-to-cash cycle time is 90 days, what is the number of days of accounts receivable?

70 days

Machines = 2, Operations per shift = 3, Shifts per day = 1, Days worked per week = 5, Hours worked per shift = 10, Machine utilization = 90%, Operator efficiency = 80%

72 hours

Three key planning factors are critical when linking the various functional plans in a successful S&OP process: units of measure, product families, and the planning horizon.

A best practice is to use a unit of measure (UoM) that is consistent with the way the organization goes to market.

Item cost refers to the unit price paid to acquire an inventory item and other expenses associated with the purchase, such as transportation, insurance, and taxes or duties.

A job packet is typically used in a job shop environment

A standard set to monitor sales data for items in forecasting models. A: Demand filter B: Tracking signal

A: Demand filter. It's usually set to be tripped when the demand for a period differs from the forecast by more than some number of mean absolute deviations.

Distribution requirements planning (DRP) serves which of the following purposes in the marketplace? A: It captures demand data. B: It determines shipping quantities from central stores.

A: It captures demand data. As a process, DRP identifies channel inventory requirements by placing demand on the supplying source. But the question is concerned with the marketplace, so capturing demand data is the answer. (LS)

In which of the following types of environments is capacity control likely to be of more importance than material control? A: Job shop B: Repetitive manufacturing C: Flow shop D: Assembly line

A: Job Shop. Capacity control is more likely to be necessary where jobs take different routes through production but compete for the same resources. [LS]

Which of the following is typically a significant benefit of using bar-coded labels to identify parts and storage locations? A: Product identification errors are reduced. B: The data entered is more complete.

A: Product identification errors are reduced. Bar coding facilitates timely and accurate input of data to a computer system. (LS) This can decrease errors caused by manual entries of item numbers into systems.

Why is rough cut capacity planning (RCCP) used? A: To provide early warning of key resource availability issues. B: To maintain the validity of the master schedule.

A: To provide early warning of key resource availability issues. RCCP is used when MPS is completed at a macro level, but it does not require commitment. It is used to provide early warning of key resource availability issues. (pp)

What can be used to help ensure that demand management inputs are as insightful and timely as possible? A: Using customer relationship management software. B: Focusing on historical sales data

A: Using CRM software. CRM software can be used to secure more accurate insights into the timely needs and preferences of customers rather than relying only on historical data or projections. (LS)

For capacity planning purposes, which manufacturing environment would use machine and labor hours as the unit of measure?

ATO. In ETO, MTO, and MTS environments, the capacity constraints are engineer (design) labor hours, order backlog, and material supply, respectively. (PP)

Statistical quality control (SQC) and statistical process control (SPC) both use control charts and control limits, but SQC also uses ________ to test a small portion of a larger lot.

Acceptance sampling. (pp)

An output that identifies the need for, and the type of action to be taken to correct, a current or potential problem.

Action message. [synonym exception message]. Exceptions are issues such as equipment breakdown, quality problems, or issues with orders that needs "exception management" response.

A form of exponential smoothing in which the smoothing constant is automatically adjusted as a function of forecast error.

Adaptive smoothing. A second-order smoothing employs two previously computed averages, the singly and doubly smoothed values, to extrapolate into the future.

Information for S&OP will vary by manufacturing environment. For MTS, ATO, and MTO, product family forecast will drive the S&OP process. What additional input does MTO have?

Additional input for MTO is design specifications. Also, ETO's has additional input which is configuration options. ETO's inputs are production specifications from customer, engineering capacity, and project timeline.

Information for S&OP will vary by manufacturing environment. For MTS, ATO, and MTO, product family forecast will drive the S&OP process. What additional input does ATO have?

Additional input is configuration options. Also, MTO has additional input which is design specifications. ETO has a different set of inputs which will be addressed on another flash card.

International expansion is achieved through exporting, licensing, franchising, strategic alliances (and joint ventures), and establishing subsidiaries (acquisition or greenfield ventures). What are advantages and disadvantages of subsidiary?

Advantages are control over business and profits. Disadvantages are high investment and greater risk. Greenfield ventures will take longtime. Possible conflicts with new culture.

International expansion is achieved through exporting, licensing, franchising, strategic alliances (and joint ventures), and establishing subsidiaries (acquisition or greenfield ventures). What are advantages and disadvantages of franchising?

Advantages are less expensive than owning and revenue from franchising agreement. Disadvantages are risk to brand value and identify damage.

International expansion is achieved through exporting, licensing, franchising, strategic alliances (and joint ventures), and establishing subsidiaries (acquisition or greenfield ventures). What are advantages and disadvantages of licensing?

Advantages are royalties, minimal business risk, and no expenses other than monitoring costs. Disadvantages are loss of proprietary knowledge and enforcing and monitoring agreements.

International expansion is achieved through exporting, licensing, franchising, strategic alliances (and joint ventures), and establishing subsidiaries (acquisition or greenfield ventures). What are advantages and disadvantages of strategic alliances (or joint ventures)?

Advantages can include new competencies and competitive edge from strengths and expertise of partner. Disadvantages are less control over business and profits, potential for conflicts, and loss of proprietary information.

International expansion is achieved through exporting, licensing, franchising, strategic alliances (and joint ventures), and establishing subsidiaries (acquisition or greenfield ventures). What are advantages and disadvantages of export?

Advantages include minimal investment and economy of scale. Disadvantages are shipping cost and currency value fluctuation.

Compared to cycle counting, periodic counting is very disruptive since it requires complete shutdown and is prone to human error. For these reasons many operations have turned to cycle counting.

Advantages of cycle counting are: reduction of losses by finding inaccuracies at an early stage and correcting the error and its root cause quickly, less disruptive and less errors.

What would be an effective response for an established company when faced with a threat of new competitors in an industry?

Advertising, promoting, discounting, and adding new features to an existing product line will all make it more difficult for new rivals to enter the market. (LS)

What N7 tool of quality ensures that several small teams can each focus on a category of continuous improvement projects without significant overlap between the teams?

Affinity diagram. It organizes number of brainstormed ideas. The ideas are posted, and the team determines how to group them by category. Each category could then be used as the focus area for each small team. (LS)

An estimate of sales, often time-phased, for a grouping of products or product families produced by a facility or firm. Stated in terms of units, dollars, or both, the this is used for sales and production planning (or S&OP) purposes.

Aggregate forecast. Product group forecast is similar. It is defined as a forecast for a number of similar products.

The classification of resources or item quantities that have been assigned to specific orders but have not yet been released from the stockroom to production. It is an "uncashed" stockroom requisition.

Allocation. It is also defined as a process used to distribute material in short supply.

DRP order policies include lot-for-lot, fixed-period, discrete above standard lot size, incremental above standard lot size, multiples of lots, min-max, and lot costing. Multiple of standard lot makes sense when?

Allowing only standard lots make sense when the materials-handling expense or other logistical costs of split lots are not economical.

Included in manufacturing lead time are order prep time, queue time, setup time, run time, move time, inspection time, put-away time.

As a network team forms alongside the traditional hierarchical structure, the network members will need guidance to understand how a network needs to differ from a hierarchy so that they keep that entrepreneurial spirit rather than starting to build a hierarchy within the network.

Transnational strategy aims for some standardization while customized for local preferences. What is a cost-effective manufacturing environment that this could fit well into?

Assemble-to-order. This strategy allows the decoupling point to be as close to the customer as possible (e.g., postponement). Three global strategies are global, trans-national, and multidomestic (mulitcountry).

Which of the following processes employs a finite scheduling model of a company's manufacturing system to determine when an item can be delivered? A: Available-to-promise. B: Capable-to-promise.

B: Capable-to-promise. ATP uses uncommitted inventory and planned production. CTP uses the same but also considers available capacity for committing orders.

In the implementation of lean, which of the following is the most significant change for the accounting function? A: Budgeted scrap and rework costs are reduced. B: Cellular processes no longer report every operation to accounting.

B: Cellular processes no longer report every operation to accounting. (LS)

From an operations perspective, which of the following is the best reason to improve inventory record accuracy? A: People develop increased faith in the system. B: MRP system erroneously plans without accuracy.

B: MRP system erroneously plans without accuracy (pp). MRP order policy planning factors include: Lot size, Lead time, Safety stock, and Scrap.

A high-performance tire company agrees to work with a sports car company on advertising to a specific customer segment. This is an example of A: Strategic alliance, B: strategic partnership

B: Strategic partnership. The partnering companies remain separate operating entities and are not required to share information. In a strategic alliance, companies are more collaborative and could include joint development.

Which of the following is the primary consideration in designing a forecasting system? A: The form of the data must be suitable for compilation. B: The purpose of the forecast must be adequately defined.

B: The purpose of the forecast must be adequately defined. The overriding consideration in forecast system design is ensuring that the forecast reflects the purpose that planners feel meets company requirements.

The ratio of the cumulative algebraic sum of the deviations between the forecast and actual values to the MAD. A: Demand filter. B: Tracking signal.

B: Tracking signal. Used to signal when the validity of the forecasting model might be in doubt.

Which manufacturing process type is suited to producing items with similar designs but multiple features, and processes and activities are repetitive? It can resemble work center or line processes.

Batch. Batch processing can be repetitive, producing items with similar designs. However, breaking down long production runs into smaller batches or lots allows for configuring or adding unique features. (pp)

The capacity planning using overall factors (CPOF) technique for RCCP uses historical work center performance data to determine capacity. This approach eliminates the need for engineered time standards.

Bill of labor uses engineered time standards. The resource profile approach will also use labor time standards but factors in lead-time offsets, not included in the bill of labor approach.

A type of scheduling where larger time requirements activities are scheduled first.

Block scheduling. Typically found in the service industry.

Strategic items have high profit impact and supply risk, for example E-chucks. Leverage items have high profit but low supply risk because there are many suppliers, for example assembly jigs. What are two other items?

Bottleneck items and non-critical items. Both have low profit impact. Bottleneck items have high supply risk, for example special coatings. Non-critical items have loose control. They can be something like cable ties.

ABC Corporation is implementing a website that connects clothing distributors and retailers with many different garment manufacturers from whom they can buy finished goods. This website would be an example of?

Business-to-business commerce (B2B). It is defined as business conducted over the internet between businesses.

Which of the following elements related to closing the demand/supply loop is most likely to be included within RCCP? A: Constraining operations. B: Theoretical capacity. C: Bottleneck work centers

C. RCCP is at the key or bottleneck work center level. (LS)

Which type of demand occurs if parts are sold through distributors, who then sell the same parts to retail stores? A: Distribution demand. B: Independent demand. C: Dependent demand.

C: Independent demand. Independent demand occurs when there is an absence of a higher source in the bill of materials. Either customer orders or the forecast would establish part demand in this case.

Increased output is best achieved by doing which of the following? A: Implementing flexible manufacturing systems C: Using expert systems C: Simplifying design D: Using computer-aided design

C: Simplifying design. Making the production process easier, more visible, and foolproof enables operators and production equipment to effectively increase output and quality and reduce wastes. (LS)

When allocated on the basis of historical direct labor hours, overhead will be properly absorbed if: A: total volume increases. B: total volume decreases. C: total volume remains unchanged.

C: total volume remains unchanged. If production volume remains stable, then the standard overhead that was originally calculated will also remain stable. (LS)

Planned and released orders scheduled into the future in order can be used in a ________ to predict possible capacity mismatches and help establish operations sequencing.

CRP Load profile. This is done to orders and/or capacity to avoid overloading but does not indicate priorities. (pp)

What are the three capacity strategies? What are the three production strategies?

Capacity strategies are leading, lagging, tracking. Production strategies are level, chase, hybrid.

Which manufacturing process layout is set up to easily produce similar types of products (families) and has no (very minimal) WIP?

Cellular. This layout is similar to functional layout but dedicated to specific product families. Benefits include minimal material travel, faster processing times, and no WIP inventory. Product based layout is dedicated to specific products. (pp)

What can be said about possible order changes during the period that falls between the planning time fence and the planning horizon?

Changes can be made with no questions and consequences.

Distribution performance for MTS or ATO orders can include percent of line items filled.

Commonly used for customer service, line item fill rate is the number of lines across all orders where the line or SKU was completely filled. (web)

Measuring cost variances in manufacturing is important because it indicates how production is performing against plans from a cost standpoint. Two methods for determining variances are?

Comparing actual cost to standard cost. Comparing actual cost to budgeted cost (at the beginning of the planning period). Variance can be analyzed with PDCA to improve cost performance.

The advantage a company has over its rivals. Sources of the advantages include characteristics that a competitor cannot duplicate without substantial cost and risk.

Competitive advantage.

An analysis of a competitor that includes its strategies, capabilities, prices, and costs.

Competitive analysis. When defining strategic direction for a company, it is helpful to understand competitors, for example, how and where they compete, their strengths, prices, costs, etc. (pp)

Forecast management uses two variables, ___________ and _________, to help determine the appropriate forecast method to use.

Completeness and stability. Completeness measures the level of sales data detail and casual factors. Stability measures trends, seasonality, or randomness.

In TOC, these are locations in the product structure that simplify planning, scheduling, and control. They include gating, convergent, divergent, and shipping points.

Control points. On the otherhand, count points is a tool for tracking quantities and order progress in I/O control. They are counted as being complete.

Quality cost is the overall cost associated with prevention activities and improvement of quality. It includes internal and external failure costs, appraisal costs, and prevention cost.

Cost of poor quality are costs associated with performing a task incorrectly and generating an unacceptable output.

The best strategy for leverage items is to _________________. The best strategy for bottleneck items is to ____________________.

Cost reduction for leverage items. Develop multiple sources for bottleneck items. Leverage items have high profit impact and low supply risk. Bottleneck items have high supply risk and low profit impact.

Costs related to improvement activities designed to reduce appraisal and failure costs are called prevention costs. These include quality teams, quality engineers, and statistical process control.

Costs associated with the evaluation and audit of quality are considered appraisal costs.

What is the most appropriate first step in a significant organizational change?

Create a sense of urgency. The change may be due to a change in the organization's competitive situation, market position, technological trends, financial performance, and so on.

The attributes of a product that must function properly to avoid the failure of the product.

Critical characteristics.

What is an indication that the current manufacturing lead time is longer than that used by rough-cut capacity planning to check the feasibility of the master schedule?

Customer orders are being shipped, but a high percentage are late. [LS]

What can cause the longest delay in the implementation of new technology? A: Lack of skilled personnel, B: Mismatch between products and processes. C: Lack of support or maintenance system. D: Conflict with company culture.

D: Conflict with company culture. Conflict with existing capabilities and culture will most likely cause the longest delay, because this has to do with changing the people side of the organization. (LS, reworded)

Which of the following would not be considered an operational function within a distribution environment? A: Determining safety stock levels, B: Picking customer orders, C: Setting inventory levels, D: Forecasting demand

D: Forecasting demand. Setting inventory levels is a tactical planning function that takes place during the sales and operations planning process. [LS]

Which of the following is a cause of the bullwhip effect? A: Smaller, more frequent orders. B: Using point-of-sale data. C: Everyday low price. D: Forecasting.

D: forecasting. Forecasting techniques that rely on immediate downstream partner orders rather than end customer demand tend to cause fluctuation in order amounts greater than that in the original demand amount.

[Freebie] A firm that operates in such a way as to minimize detrimental impacts on society is called an Environmentally Responsible Business.

DFE considers health, safety, and environmental aspects of a product during the design and development phase of product development.

The five stages of corporate responsibility are?

Defensive, compliance, managerial, strategic, civil. Successful green initiatives can be used as a competitive weapon.

A qualitative forecasting technique where the opinions of experts are combined in a series of iterations. The results of each are used to develop the next, so that convergence of the experts' opinions is obtained.

Delphi method. Naive forecasting techniques are used for data that exhibits no trends and include techniques such as exponential smoothing, arithmetic mean, and moving averages.

Economic order quantity (EOQ) attempts to balance ordering costs with carrying costs. Conditions that must be in place within operations for EOQ use to be accurate include?

Demand is constant and known, production is in lots (or batches), ordering and inventory costs are known, replenishment occurs all at once.

What S&OP demand information input is needed for a make-to-order manufacturing environment?

Design specifications from engineering. For ETO, products are unique and engineered to specific customer requirements. ATO works from pre-defined subassemblies that are configured to customer preferences. MTS is product family forecast driven.

In service industries, capacity is often subject to scarcity, may be expensive to obtain, and is a risk once obtained because it increases fixed costs and the break-even point (the amount of revenue needed to break even).

Determining and maintaining the right level of capacity is important. It's not as straightforward as in manufacturing. Service cannot inventory output from excess capacity; they are inherently perishable.

Requiring trained staff, bullwhip effect, and inventory accuracy are disadvantages of using a pull system. (pp)

Disadvantages of using a push system include: Higher (total) inventory carrying costs, Deficiencies in information flows. (pp)

DRP order policies include lot-for-lot, fixed-period, discrete above standard lot size, incremental above standard lot size, multiples of lots, min-max, and lot costing. Discrete above standard lot size is?

Discrete above standard lot size requires minimum lot purchase avoids small orders while allowing scaling up from there at more precise levels.

Job sequencing rules are priority rules that order which jobs are sequenced at the facility due to scarce resources. Rules include due date, order slack, slack per operation, critical ratio, and shortest operation next.

Dispatching is sequencing of jobs at individual workstations. Dispatch rules include ODD, EDD, first-come-first-served, SPT, critical ratio, and slack time.

Market penetration intensity describes how many echelons deep, or levels, in the delivery network producers or intermediaries must go to deliver goods to the customer.

Distribution intensity determines the number of intermediaries, not levels. The four types are single, intensive, exclusive, and selective.

For introduction, growth, maturity, and decline, what manufacturing environments can be used on each stage?

ETO, MTO, and MTS for introduction. MTO, ATO, MTS for growth and maturity. MTO, ATO for decline.

[Freebie] One disadvantage of moving averages is that it is slow to respond to changes in trend since it would lag the trend.

Exponential smoothing is often used because of its flexibility and low cost. Organizations use this method when they want to minimize the lag that exists when trends shift, but, like all time series models, it cannot eliminate this lag.

True or false? The second level in a two-level MPS is based on the final assembly schedule (FAS).

False. It is based on a forecast to help order promising. Rather than relying only on ATP (or CTP) from the component-level master schedule, a two-level MPS system can also rely on the ATP (or CTP) from percentage-of-demand master schedules.

True or false? Advantages of SPT include lower WIP, shorter average completion times, fewer late jobs, and lower output.

False. Output will be higher. In addition, some jobs may be extremely past due. (PP)

True or false? In DRP, product is pulled by the distribution centers.

False. Product is delivered to distribution centers based on requirement input to central stores by distribution planners and customer requirements. Product is pushed to, not pulled by the distribution centers. (pp)

When a company is informed by a vendor that it will shut down for a two-week vacation, what MRP technique can be used to schedule product arrival before shutdown?

Firmed planned orders. In order to place a hold on orders before shutdown, firm planned orders are used to keep MRP from rescheduling. (pp)

First pass yield and first-article inspection are related to inspection processes. FAI inspects the first output of a process to validate compliance prior to investing in long runs and inventory.

First pass yield is the ratio of conformance to total inputs. Critical to quality characteristics, CTQ must be adhered to from customer perspective. Critical characteristics must be met to avoid product failure. (If these are minimum characteristics, the product may work, but it will still not meet the customer expectations.)

Clockspeed is the rate of technology change that influences the duration of the product lifecycle. Innovative products have high clockspeed and require compressed NPI schedules.

First-order smoothing is a weighted moving average approach applied when the data does not exhibit significant trend or seasonal patterns.

What performance objectives are important for each phases in the product lifecycle?

Flexibility is important for introduction. For growth, dependability is a order-winner. In maturity, order winners are cost and dependability. In decline, it is cost. Quality is required for all.

Freebie. Hybrid production strategy, also known as mixed-model strategy, can balance large fluctuations and smooth out seasonal demand. Risks include availability of skilled workforce and level of coordination.

Flow Control is a production control system that feeds work into production to meet the planned production rates. Priority control is the process of communicating start and finish dates.

A system that allows the user to simulate the effectiveness of numerous forecasting techniques, enabling selection of the most effective ones.

Focus forecasting. Time-series forecasting projects historical data patterns into the future. Involves the assumption that the near-term future will be like the recent past.

[freebie] One misconception of lean is that they do not require inventory. There are circumstances when buffers are needed in a lean facility at the factory floor.

For example the number of kanban cards at point-of-use depends on how much of a buffer is desired for the next step. Buffers help with mismatches in cycle time, customer lead time, process instability, and long transportation times.

Given the five process types, which generic performance objectives is of major importance for each process types?

For project, workcenter, and batch both dependability and flexibility rank very high. For line and continuous, speed and cost rank very high. Quality is important for all, but isn't factored when choosing process types.

Central point scheduling combines forward and backward scheduling. It is used to handle critical operation, such as CCR, whose dates must be set first. How is this scheduled?

For the critical operation and all operations thereafter, forward scheduling is used. For all operations before the critical operation, backward scheduling is used.

Using the following actual and forecasted demand, what is the forecast error? Forecast: 115; Actual: 100.

Forecast error is -15. The answer is negative because the forecast is short 15 units to the actual demand.

Distribution integrative intensity is the level of integration forward or horizontally in the delivery channel.

Forward integration identifies how much direct control a company seeks over downstream customer-facing (forward) delivery echelons. The more a product is customized, the more intense the control will be.

When using PDS (because capacity is expensive) for scheduling stages, one should prepare a finite capacity schedule using _____________ scheduling.

Forward scheduling. (my notes: process dominated). Next is to check projected inventory stays within min and max levels, and revise schedule if necessary.

First-order smoothing is a weighted moving average approach applied when the data does not exhibit significant trend or seasonal patterns.

Free

A a low profit margin and a predictable demand may describe a product in maturity phase. Low profit margin and predictable demand is a definition of what term?

Functional product. To remain profitable in maturity phase, operations must become more efficient and/or more innovative.

When choosing a strategic focus an organization can choose a general focus, a value chain focus, or a strategic impact focus for its sustainability strategy.

General focus involves issues to society but not directly influenced by the organization. Value chain has direct influence such as purchasing sustainable raw materials. Strategic focus makes products from renewable sources.

The basic elements of the master schedule grid include: Forecast, Customer orders, Projected available balance (PAB), Available-to-promise (ATP), Master production schedule (MPS)

Goals of purchasing are obtain goods in correct quantity and quality, secure best possible price, receive desired service level, maintain reputation as a good customer, obtain product with sustainability in mind.

Some supplier relationships can be at the arm's-length end of the spectrum; others need to be more collaborative. Rank the following on the spectrum: strategic alliance, vendor, certified supplier, partnership.

Going from least to most in terms of value-added relationships, vendor, certified supplier, partnership, and finally strategic alliance.

The 3 fundamental principles of logistics network design are 1) Physical proximity, 2) Transportation mode, and 3) Tracking capabilities.

Heijunka is similar to takt time but takes the extra step of leveling the production instead of just matching it to customer demand.

In resource planning, a bill of resources is based on one unit of a typical product

Horizontal integration expands market share. With vertical integration, the organization owns more of the supply chain. Forward and backward integration are subsets of vertical integration.

The 4 areas of the United Nations Global Compact are?

Human rights, labor, environment, anti-corruption

[Freebie] In MTO, the high-level capacity constraint is the existing order backlog.

In MTO environment, product offerings are more standardized and built to material specifications for actual customer orders. If there are many existing orders, capacity will be lower. (pp)

Total inventory equals productive inventory plus protective inventory plus excess inventory. As time passes, excess inventory becomes what?

Inactive inventory. It was not used or sold. It has very little chance of generating profit and continues accumulating costs.

While an objective of a kanban system is to minimize inventory, storage is still used near the point of use for ease of access (retrieval) and for staging for future subsequent operations. What are the names of these storage areas?

Inbound stockpoints and outbound stockpoints. Using a supermarket in a Kanban pull system keeps inventory closer to the users (work centers) and is generally easier to access by those employees.

A model of how the organization operates regarding information. It considers organizational functions; communication requirements; data modeling; and management and control.

Information system architecture. The operations strategy must be aligned with the organization's overall business strategy and with the organization's information system architecture.

Information for S&OP will vary by manufacturing environment. For MTS, ATO, and MTO, product family forecast will drive the S&OP process. Each also have their unique inputs. What are the inputs from ETO?

Inputs from ETO are production specifications from customer, engineering capacity, and project timeline. Master scheduling supports forecasting of requirements.

Scheduling for the stages within a process is done with processor- or material-dominated scheduling. A process train (including all the stages) can be reverse flow scheduling, forward flow, or mixed-flow scheduling.

Inventories decouple the scheduling of sequential stages within a process train. This allows each stage to be run independently of the other stages to accommodate different levels of efficiency or lot sizes.

Activity ratios show the efficiency with which the organization has used its assets to produce value. What is an example of this?

Inventory turnover. Liquidity ratios measure how quickly an organization can convert assets into cash. Leverage ratios measure how much debt an organization is using to finance the business.

In addition to FIFO, LIFO, and average cost, actual and standard costs are types of inventory valuation. Standard cost is based on a predetermined target value that also includes overhead. It is also used for what?

It is compared to actual cost to measure variances. Specific Identification is another inventory valuation method that uses serial numbers. It is used for very expensive items.

Flexible automation, also called flexible manufacturing solutions FMS, is a lean tool that provides what?

It provides short setup times. Fast changeovers provide ability to switch from one product to another.

Inventory cost includes carrying cost, ordering cost, and these two others. What is included in carrying cost and ordering cost.

Item cost and stockout cost. Carrying cost includes storage, capital, and risk cost. Ordering cost includes administrative, receiving & handling, and setup costs.

A process of gathering (by observation, interview, or recording systems) significant task-oriented activities and requirements about work required of employees.

Job analysis. Before the organization can enlarge or enrich a job, it is important to understand exactly what is done in a job. This is accomplished through a job analysis.

APICS defines business strategy as "a plan for choosing how to compete." Three generic business strategies are low-cost provider, differentiation, and focus.

Key outputs of business planning include operating and capital budgets subsequently translated into functional plans through the sales and operations planning process.

A partial productivity measure in which the rate of output of a worker or group of workers per unit of time is compared to an established standard or rate of output.

Labor productivity

The quantity of worker minutes necessary to finish a product or process.

Labor standard.

In the managerial stage, the organization realizes that sustainable activities can produce cost advantages. It will apply ___________ costing to its use of hazardous materials.

Life cycle costing. It considers all costs - acquisition, operation and disposal incurred over life of ownership. The five stages of CR are defensive, compliance, managerial, strategic, and civil.

The set of measurements relating to a resource, operation, process, or part and usually has low correlation to a global (strategic) organization measure."

Local measures. Global measurements judge the performance of the system as a whole.

[Freebie] Low-level coding helps avoid replanning when items appear in multiple levels of a bill of material.

Low-level coding assigns code numbers to items according to where they are used in assembly of all of the BOMs being processed.

Design for manufacturability is simplification of parts, products, and processes to improve quality and reduce manufacturing costs. DFMA is a product development approach that involves _________________.

Manufacturing function. They're involved in the initial stages of product design to ensure ease of manufacturing and assembly.

In a make-to-order environment, the period of time from the manufacturing order release until shipment to the customer is referred to as the ________ lead time.

Manufacturing lead time. In a make-to-stock company, it is the time from order entry to finished goods.

The difference between the planned and standard requirements for materials to produce a given item and the actual quantity used for a particular instance of manufacture.

Material usage variance.

DRP order policies include lot-for-lot, fixed-period, discrete above standard lot size, incremental above standard lot size, multiples of lots, min-max, and lot costing. Min-max makes sense when?

Min-max method is useful when the priority is on carefully maintaining inventory at stocking locations and lead times are short. For lot costing models, optimizing lot sizes works well when demand has low variability.

Modular BOM is a type of planning BOM that is arranged in _______________.

Modules or options (def). A modular planning BOM lists the common parts BOM and the number of options by component part. It helps improve planning of ATO products.

Actual demand minus the forecast is a measure of forecast deviation. The plus or minus sign shows the direction of the deviation.

More distribution centers will increase transportation costs because there will be more less-than-truckload (LTL) miles.

Which master schedule approach uses independent and dependent demand sources to enable scheduling of parent items and subcomponents?

Multilevel master schedule. (pp) It's a scheduling technique that allows any level in an end item's B.O.M to be master scheduled. MPS items must receive requirements from independent and dependent demand sources.

A master scheduling technique that allows any level in an end item's bill of material to be master scheduled. To accomplish this, MPS items must receive requirements from independent and dependent demand sources.

Multilevel master schedule. Overstated MPS is schedule that includes either past due quantities or quantities that are greater than the ability to produce, given current capacity and material availability.

[Freebie] MRP can be entirely regenerated after a change, or a net change method can refresh just the parts that changed. Net change is simpler and reduces system nervousness.

Net change MRP systems will replan only the orders recently changed and ignore all others. Regenerative systems will replan all orders regardless of change history. It considers the whole system.

This is a form of brainstorming, where team members create a list of ideas independently then share their best idea with the team.

Nominal group technique. Problem-solving storyboard and A3 problem solving are techniques, associated with PDCA, used to define and easily present a problem, root causes, and/or solutions.

A company has started a total quality management (TQM) program. As waste and redundancies are removed from processes, one of the outcomes is that work-in-process inventory will most likely decrease. (LS)

One major focus of CRM is to identify profitable customers, retain them for customer lifetime value CLV.

This is a concept of gradually lowering lot sizes and associated inventory levels to expose inefficiencies that may have been covered up by excess inventory.

One-less-at-a-time. Once exposed, work can begin to eliminate the inefficiencies.

Job costing assigns costs to specific jobs, using actual or standard costs in producing distinguishable units or lots/batches.

Operation costing is used for products with both common and distinguished features, like suits. Products are identified and costed by batches, based on variations.

Set of short-range plans and schedules detailing specific actions.

Operational plan. It is more detailed than strategic and tactical plans and cover shorter time horizon. It will translate the strategy into specifics on how to carry out everyday work.

The 4 steps of customer order management are 1) customer inquiry and order 2) order entry 3) shipping and delivery 4) Invoicing. Inventory allocation occurs at which step?

Order entry.

Control points from a TOC perspective are points where detailed scheduling is done. They include gating, convergent, divergent, constraint, and shipping points. Other workcenters are instructed to do what?

Other work centers are instructed to "work if they have work; otherwise, be prepared for work." In this manner, materials flow rapidly through the facility without detailed work center scheduling and control.

Transportation costs typically go down when DC's are added to a network due to the more cost-efficient bulk loads into the DCs and quicker, cheaper, and shorter delivery routes from the DCs to customers.

Overhead, capital, and inventory costs will all increase by adding DCs. (pp)

In lean, scheduling or takt time is set at this resource.

Pacemaker. It sets the pace for all other processes. Often the pacemaker is where the flow begins, but it could be any point. A large buffer is provided so that it can maintain smooth operations.

A product cost is recognized or accrued in the same reporting period in which it is sold as COGS rather than the period in which it was made or purchased. What about period costs?

Period costs must be expensed at the time the purchase is made. They are not included in the cost of goods sold. They include all selling and administrative expenses.

A bill-of-material coding and structural technique used primarily for transient (non-stocked) subassemblies. For the transient item, lead time is set to zero and the order quantity to lot-for-lot.

Phantom BOM.

Mass customization creates large volume in wide variety while keeping costs low. It utilizes _______________.

Postponement.

Causes of the bullwhip effect include: Forecasting immediate downstream partner, Order batching, Price fluctuations, and Rationing and gaming.

Potential solutions include: Forecasts based on point-of-sale data, Smaller, more frequent ordering (breaking order batching), sharing information (supplier relationship), constant price, restricting returns, VMI

This S&OP step makes decisions on demand and supply balance, resolves problems, identifies issues needing resolution, and develops and reviews what will be presented in the executive S&OP meeting.

Pre-S&OP meeting. Along with financial and executive meeting, it is part of step 4, which is the decision making step. Step 1 reviews prior month's performance.

This workcenter is the preferred work center for a process when alternative work centers are available for the routing.

Primary workcenter. An operation that has no alternatives and might constrain flow is a limiting operation. An alternate operation is a replacement for the primary work center.

Capacity-constrained resources may become bottlenecks and require ________ management.

Proactive. A post test question mentions that one should consider all constraints simultaneously when establishing schedules.

The design in the manufacturing system, including operators and machinery, that allows quick changeovers to respond to changes in product volume and mix.

Process flexibility. Very important to lean and Just-in-time.

Bill of resources is a listing of the required capacity and key resources needed to manufacture one unit of a selected item or family. RCCP uses these to calculate capacity.

Product load profile is similar to bill of resources.

APICS defines this term as the marketing effort involved in placing a product in a market to serve a particular niche or function.

Product positioning

This can be used to examine the degree of alignment between the needs of a company's markets and the characteristics of its existing manufacturing process and infrastructure investments.

Product profiling. It determines the fit between a manufacturing process and the order-winning criteria of its products. Different product life cycle phases will tend to feature different order qualifiers and order winners.

An organization analyzes its existing manufacturing capabilities to deliver a market acceptable product best describes what?

Product profiling. It's a graphical device used by organizations to assess the gap between what the market is demanding and what their capabilities are to profitably deliver order-winning products.

Profitability index is a capital budgeting tool to assess investments. How is this calculated?

Profitability index equals the net present value divided by the investment in the project. A value greater than 1 is preferable.

Common customer segmentation categories include _______________, ________________, and ___________________.

Profitability, special customer needs, and strategic importance.

Freebie. Quantitative supplier metrics can include certifications, product quality, delivery, cost, technical capabilities, and data quality.

Qualitative metrics can include willingness to share information and collaborate.

Decomposition is a time series analysis that displays patterns in historical demand data. Patterns include trends, seasonal, and cyclical. Data without these characteristics are called what?

Random.

This is a risk mitigation approach that uses backup capability to reduce the effects of a breakdown.

Redundancy. Resiliency is the ability to return to a position of equilibrium after experiencing an event that causes operational results to deviate from expectations.

A statistical technique for determining the best mathematical expression describing the functional relationship between one response and one or more independent variables.

Regression analysis. Least-squares method is a method of curve fitting that selects a line of best fit that minimize the sum of squares of the deviations of the given points from the line.

Agility is a order delivery SCOR metric that evaluates the ability of a supply chain to deal reliably with demand variation in the near and long term.

Reliability measures percentage of perfect order fulfillment and responsiveness measures delivery delivery time.

Perfect order fulfillment is a typical measure for which SCOR metric?

Reliability. For generic performance metrics, perfect order fulfillment can be both dependability and speed. Overall equipment effectiveness of 100% is "perfect production." It is a TPM initiative.

ATO and MTS are examples of ____________ manufacturing. It minimizes setups, inventory, and manufacturing lead times by using production lines, assembly lines, or cells.

Repetitive manufacturing.

Order point method assumes the following: Past demand is an accurate indicator of future demand. Demand is continuous and fairly level. [Flip card]

Replenishment lead time is constant and predictable, and replenishment happens all at once. Order lot sizes will be consistent.

What are the 5 categories of SCOR metrics?

Responsiveness, reliability, agility, cost, asset management. Reliability measures perfect order fulfillment. Responsiveness measures order fulfillment cycle time. Asset management measures inventory, cash-to-cash cycletime.

A report that has summary information on qualitative risk analysis, quantitative risk analysis, and risk response planning. This contains all identified risks and associated details.

Risk register. Governance (e.g., board of directors and senior management) should consider the amount of risk the firm is exposed to, the level it can tolerate, and how to manage it. Operations strategy needs to be aligned within this tolerance level.

Portor's five forces are?

Rivalry with existing competitors, threat of new entrants, Substitute products, Bargaining power of suppliers, Bargaining power of customers.

[freebie] Hedge inventory is inventory that is purchased to guard against an event that may or may not happen. Anticipation inventory is purchased in advance with a good certainty an event will occur. (pp)

S&OP helps a company engage senior management in the overall planning process. Key outputs of the S&OP process are a sales plan and a production plan that are aligned with the business plan, marketing plan, and financial plans. (pp)

Hotel rooms have attributes associated with perishability. For example, if a room is not used by night the room's profit potential is lost for the day. Which term best describes this concept? A: Shelf life. B: Distressed C: Obsolete

Shelf life. The amount of time an item may be held in inventory before it becomes unusable.

To identify the relative location of machines, tools, and equipment in a work cell that minimizes motion during production is descriptive of which 5 S's?

Simplify. Sort would be placing tags on items not needed and removed.

Distribution intensity is concerned with deciding on the number of intermediaries (not levels) to use at each level within the channel. Briefly describe the four strategies: single, intensive, exclusive, and selective.

Single has full control over all aspects. Intensive has the broadest network. Exclusive limits number of intermediaries using exclusive rights. Selective is looser than exclusive with multiple intermediaries and some control.

The planning time fence covers the ___________ zone.

Slushy (pp)

This zone is the time fence period where changes can be made to production due to enough time to plan and order necessary materials.

Slushy zone. The frozen zone provides stability in the final stages of the manufacturing process. The liquid zone is where changes will have no impact on production. (pp)

This type of supplier is the only source of supply as a result of having a unique technology, distribution arrangement, or government regulation.

Sole-source supplier. There is enough risk in this type of sourcing to encourage buyers to invest in or acquire new suppliers.

In terms of the risk versus profit matrix, this procurement approach is used when risk is high but the material's profit impact is low or moderate—bottleneck items.

Sourcing management. The goals are to secure materials as reliably as possible at the best total cost of ownership.

Product-based layout can be similar to cellular but is dedicated to ________ products or lines with workstations in a sequential flow.

Specific. Cellular produces family of parts. Cellular manufacturing is made more cost effective by job enlargement

Tolerance is the allowable departure from a nominal value. Tolerance limits are also described by ___________ limits.

Specification limits (LSL, USL). Control limits (LCL, UCL) are statistically determined. If a value occurs outside this limit, the process is deemed to be out of control. (pp)

Supply chain performance objectives can change by stage in the product life cycle. Which generic performance objective is associated with the growth phase?

Speed.

A work process that is always carried out exactly the same way, preferably using the current best known way under which the output can be achieved.

Standardized work. Critical to lean, it standardizes to takt time, work sequence, and work-in-process levels. Standardized work should be changed for continuous improvement.

These are factors that influence business unit and manufacturing strategies. For example a new entrant enters the market with lower prices.

Strategic drivers. In a market with strong rivalry (porter's 5 forces), there is generally a low threat of new entrants given low industry attractiveness.

Influencing demand includes marketing and sales activities with customers. It also includes influencing product management and the supply to recognize and support actual customer expectations and requirements.

Succeeding requires not only generating and executing marketing and sales initiatives but also determining if the plans are working as intended. It needs feedback and a course correction process.

[Freebie] The two groups used in channel design are supply and distribution. Each has factors that influence a company's distribution network.

Supply factors: Supply channel complexity, Supply integrative intensity, Supplier intensity. Distribution factors: Market penetration intensity, Distribution integrative intensity, Distribution intensity.

A company invests in equipment with high throughput potential, cross-training employees, financial reserves for overtime. What is the company planning for?

Surge capacity. Surge capacity is the ability to meet sudden, unexpected increases in demand by expanding production with existing personnel and equipment.

[Freebie] Heijunka is the leveling of production and product mix.

Takt time is the rate at which each operation needs to be completed in order to meet customer demand. Takt time does not attempt to level load schedule as heijunka does. (pp)

[Freebie] In order for MRP system to be successful, it requires a realistic MPS, accurate inventory records, and complete bill of materials.

The MRP system does not evaluate the available capacity, as it actually completes such calculations under the assumption of infinite capacity availability. (pp)

MRP uses the master production schedule, bills of material, planning factors, and inventory data inputs to calculate if/when orders must be started. (pp)

The advantage of MRP over reorder point is that MRP uses time phasing to balances demand against supply. The reorder point replenishes inventory based on a projection of demand. (LS)

Inventory turns is a measurement used to determine how quickly cash invested in inventory is being converted to revenue.

The cash-to-cash cycle is used to track how quickly an investment made in inventory will return to the company in the form of profit. It indicates how efficiently a company is managing assets. (Cash-to-cash cycle = days inventory + days account receivable - days account payable) (pp)

[Freebie] Engineering change notice is the engineering control activity used in identifying changes and maintaining data integrity.

The engineering change notice can include: Reasons for change, Cost impacts, Effective dates, Old and new part numbers, and Where-used data

Fixed order quantity can be based on the economic order quantity, packaging constraints, storage space, etc. Order intervals can vary. What about fixed order safety stock? When is this used?

The fixed order safety stock approach is used to plan safety stock quantities for parts being transitioned into or out of use; for example, new parts with no demand history or old parts being phased out.

By firming planned orders, the planner can moderate fluctuations in the MRP system that might otherwise occur if the planning software kept making changes.

The impact of constant MRP changes on material planning can be disruptive, and this is called system nervousness.

During CRP, a load profile is produced by simulating load at workcenters. If there are imbalances, the planner must take action to resolve it.

The planner can employ load balancing techniques. The outputs of the CRP process are a schedule and a plan.

What creates a work center overload?

The total hours of work to be performed exceeds the work center's capacity.

How is tracking signal calculated?

The tracking signal is calculated when the sum of the forecast deviations is divided by the mean absolute deviation.

When using MDS (because material is expensive) for scheduling stages, a time-phased record of material balanced is used, and lots are added if it falls below minimum levels.

Then a load profile is compiled. Reconcile if capacity not in balance. Revise schedule if it cannot be reconciled.

Freebie. The capacity planning using overall factors (CPOF) technique for RCCP uses historical work center performance data to determine capacity.

This approach eliminates the need for engineered time standards, which are typically required in a bill of labor. Resource profile uses standard hours of load by time period to account for lead-time offsets.

DRP order policies include lot-for-lot, fixed-period, discrete above standard lot size, incremental above standard lot size, multiples of lots, min-max, and lot costing. Incremental above standard lot makes sense when?

This makes sense if additional increments can be in logistics-friendly quantities such as a pallet or a row on a pallet. It will help avoid overstocks such as for expensive inventory.

What are the three tests: industry attractiveness, cost of entry, and better-off test used for?

To assess diversification opportunities. A key objective of a diversification strategy is to spread the company's risk over several product lines.

Current ratio is current assets divided by current liabilities. What about debt ratio?

Total liabilities divided by total assets. Ability to pay off loans is higher if debt ratio is lower .

The tracking signal provides the direction of any bias, which the MAD and MSE cannot. If the forecast was 10, 10 and actual was 7 and 9, what is the tracking signal?

Tracking signal is -2. The numerator is the sum of forecast deviations. Forecast deviation is actual minus forecast. Forecast error is calculated the same way (from PP quiz).

This describes any organization external to the firm that plays an integral role within the supply chain community and whose business fortune depends on the success of the supply chain community.

Trading partner.

The four responses to risk are accept, mitigate, transfer, and avoid. If a firm decides to purchase insurance policy to protect the company what type of response is this?

Transfer.

Disassembly and the extent of repair needed can vary substantially for returned item. This term describe requirements that are unknown until remanufacturing teardown and inspection.

Unplanned repairs. Unplanned repairs for remanufactured products are not evident until the product is broken-down and inspected. This creates uncertainty in capacity planning.

A discrete measurement of the amount of time it takes a supply chain to respond to an unplanned 20 percent increase in demand without service or cost penalty.

Upside supply chain flexibility.

An examination of all links a company uses to product and deliver its products and services, starting from the origination point and continuing through delivery to the final customer.

Value chain analysis. A value chain are functions within a company that add value to the goods or service that the organization sells to customers and for which it receives payment.

A goal of lean production is to reduce WIP inventory. Which of the following lean tools visualizes the flow of materials across the supply chain from supplier (raw materials) to the customer (finished goods)?

Value stream mapping. In general, benefits of pull-based systems include shorter lead times, lower work in process (WIP), and work completed quickly.

DRP order policies include lot-for-lot, fixed-period, discrete above standard lot size, incremental above standard lot size, multiples of lots, min-max, and lot costing. Fixed-period is best when?

When a regular delivery or milk run will be made.

DRP order policies include lot-for-lot, fixed-period, discrete above standard lot size, incremental above standard lot size, multiples of lots, min-max, and lot costing. Discrete or lot-for-lot is best when?

When multiple assortments can be shipped together.

In quality management, actions that management can take are creating a quality vision, building a quality culture, championing change, modeling leadership, recruiting quality-minded people, and promoting worker ______ control.

Worker self control. Leaders also serving as change agents.