COB 300C - Operations - Exam 2

Fixed-order-interval (FOI) model

Orders are placed at fixed time intervals

Continuous improvement

Philosophy that seeks to make never-ending improvements to the process of converting inputs into outputs

Periodic system

Physical count of items in inventory made at periodic intervals (weekly, monthly)

Quantity discounts

Price reductions for larger orders

Deming Prize

Prize established by the Japanese and awarded annually to firms that distinguish themselves with quality management programs

Service level

Probability that demand will not exceed supply during lead time

Poka-yokes

Procedures that prevent mistakes from becoming defects. They are commonly found in manufacturing but also can be used in service processes

Benchmarking

Process of measuring performance against the best in the same or another industry

Inventory turnover

Ratio of average cost of goods sold to average inventory investment

Point-of-sale (POS) systems

Record items at time of sale

Run

Sequence of observations with a certain characteristic

Statistical process control (SPC)

Statistical evaluation of the output of a process

Perpetual inventory system

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

Pareto analysis

Technique for classifying problem areas according to degree of importance, and focusing on the most important

Brainstorming

Technique for generating a free flow of ideas in a group of people

Quality

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

Reliability

The ability of a service, part, or system to perform its intended function under a prescribed set of conditions

Cycle stock

The amount of inventory needed to meet expected demand

Purchase cost

The amount paid to buy the inventory

Little's Law

The average amount of inventory in a system is equal to the product of the average demand rate and the average time a unit is in the system

Mean time between failures (MTBF)

The average length of time between failures of a product or component

Setup costs

The costs involved in preparing equipment for a job

Quality of conformance

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

Central limit theorem

The distribution of sample averages tends to be normal regardless of the shape of the the process distribution

Control limits

The dividing lines between random and nonrandom deviations from the mean of the distribution

Service blueprint

The flowchart of a service process, emphasizing what is visible and what is not visible to the customer

Availability

The fraction of time a piece of equipment is expected to be available for operation

Process capability

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

Economic order quantity (EOQ)

The order size that minimizes total annual cost

Fill rate

The percentage of demand filled by the stock on hand

Quality at the source

The philosophy of making each worker responsible for the quality of his or her work

High and low degrees of customer contact

The physical presence of the customer in the system and the percentage of time the customer must be in the system relative to the total time it takes to perform the service

Two-bin system

Two containers of inventory; reorder when the first is empty

Projects

Unique, one-time operations designed to accomplish a specific set of objectives in a limited time frame

Capability index

Used to access the ability of a process to meet specifications

Reorder point (ROP)

When the quantity on hand of an item drops to this amount, the item is reordered

Plan-do-study-act cycle (PDSA)

a framework for problem solving and improvement activities

Service Package

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

Six sigma

A business process for improving quality, reducing costs, and increasing customer satisfaction

Histogram

A chart of an empirical frequency distribution

Flowchart

A diagram of the steps in a process

Cause-and-effect diagram

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

Scatter diagram

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

Project champion

A person who promotes and supports a project

Total quality management (TQM)

A philosophy that involves everyone in a n organization in a continual effort to improve quality and achieve customer satisfaction

Cycle counting

A physical count of items in inventory

Quality control

A process that evaluates output relative to a standard an takes corrective action when output doesn't meet standards

Quality of confromance

A product or service conforms to specifications

Service Guarantees

A promise of service satisfaction backed up by a set of actions that must be taken to fulfill the promise

Specications

A range of acceptable values established by engineering design or customer requirements

ISO 14000

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

ISO 9000

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

ISO 24700

A set of international standards that pertains to the quality and performance of office equipment that contains reused components

DMAIC

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

Control chart

A statistical chart of time-ordered values of a sample statistic, used to distinguish between random and nonrandom variability

Inventory

A stock or store of goods

Process improvement

A systematic approach to improving a process

Run test

A test for patterns in a sequence

Sampling distribution

A theoretical distribution of sample statistics

Check sheet

A tool for recording and organizing data to identify a problem

Return on quality (ROQ)

An approach that evaluates the financial return of investments in quality

Lean/six sigma

An approach to continuous improvement that integrates ____ _____ principles and ___ ______ techniques

Baldrige Award

Annual award given by the U.S. government to recognize quality achievements of U.S. companies

Inspection

Appraisal of goods or services

W. Edwards Deming

Assisted the Japanese after WWII in improving quality and productivity

European Quality Award

Award for organizational excellence

Universal product code (UPC)

Bar code printed on a label that has information about the item to which it is attached

A-B-C approach

Classifying inventory according to some measure of importance, and allocating control efforts accordingly

Type II error

Concluding a process is in control when it is not

Type I error

Concluding a process is not in control when it actually is

c-chart

Control chart for attributes, used to monitor the number of defects per unit

p-chart

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

Range control chart

Control chart used to monitor process dispersion

Mean control chart

Control chart used to monitor the central tendency of a process

Holding (carrying) cost

Cost to carry an time in inventory for a length of time, usually a year

Failure costs

Costs caused by defective parts or products or by faulty service

Appraisal costs

Costs of activities designed to ensure quality or uncover defects

Ordering costs

Costs of ordering and receiving inventory

Prevention costs

Costs of preventing defects from occuring

Shortage costs

Costs resulting when demand exceeds the supply of inventory; often unrealized profit per unit

Excess cost

Difference between purchase cost and salvage value of items left over at the end of a period

Independent events

Events whose occurrence or nonoccurrence does not influence each other

Safety stock

Extra inventory carried to reduce the probability of a stockout due to demand and/or lead time variability

External failures

Failures discovered after delivery to the customer

Internal failures

Failures discovered during production

Shortage cost

Generally, the unrealized profit per unit

Attributes

Generate data that are counted

Variables

Generate data that are measured

Walter Shewhart

Genuine pioneer in the field of quality control and is know as the "father of statistical quality control"

Quality circles

Groups of workers who meet to discuss ways of improving products or processes

Assignable variation

In process output, a variation whose cause can be identified. A non-random variation

Fail-safing

Incorporating design elements that prevent incorrect procedures

Quality of design

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

Kaizen

Japanese term for continuous improvement

Single-period model

Model for ordering of perishables and other items with limited useful lives

Process variability

Natural or inherent variability in a process

Random variation

Natural variation in the output of a process, created by countless minor factors

Redundancy

The use of backup components to increase reliability

Lead time

Time interval between ordering and receiving the order

Run chart

Tool for tracking results over a period of time