MGMT 339 Exam #2
Factors in Planning Service Capacity
>There may be a need to be near customers location (capacity locations are closely tied) >The inability to store services (capacity match with timing of demand in that moment) >The degree of volatility of demand (timing of peak demand periods & time to service one customer)
Six Sigma
A business process for improving quality, reducing costs, and increasing customer satisfaction. >organizational support >resources >trainer >team leader >team member Management -> Supply -> Workers
Defining a Control Chart
A control chart is a time-ordered plot of sample statistics. It is used to distinguish between random variability and nonrandom variability.
Reading a Control Chart
A necessary condition for a process to be deemed "in control" or stable, is for all the data points to fall between the upper and lower control limits. Conversely, a data point that falls outside of either limit would be taken as evidence that the process output may be nonrandom and, therefore, not "in control."
Flowchart
A visual representation of a process. A flowchart can help investigators in identifying possible points in a process where problems occur.
Bottleneck Operation
An operation in a sequence of operations whose capacity is lower than that of the other operations. Evidence of an unbalanced system is the existence of the bottleneck operation. As a consequence, the capacity of the bottleneck operation limits the system capacity; the capacity of the system is reduced to the capacity of the bottleneck operation.
Batch
Batch processing is used when a moderate volume of goods or service is desired, and can handle a moderate variety in products or services. The equipment need not be as flexible as in job shop, but processing is still intermittent. The skill level of workers does not need to be as high as job shop. (Ex: bakeries which make cakes, cookies, etc. in batches, movie theaters, which show movies to groups of people.)
random variation
Natural variation in the output of a process, created by countless minor factors. Such variations are due to the combined influences of countless minor factors, each one so unimportant that even if it could be eliminated, the impact on process variations would be negligible.
PDSA cycle
Plan, Do, Study, Act. A personal organization tool.
Process Variability
Reflects the natural or inherent (random) variability in a process. It is measured in terms of the process standard deviation. Control limits are process variability are directly related: control limits are based on sampling variability, and sampling variability is a function of process variability.
OPEC oil embargo
The Organization of Petroleum Exporting Countries that placed an embargo on oil sold to Israel's supporters. Caused worldwide oil shortage and long lines at gas stations in the US.
Concurrent Control
The control process used while plans are being carried out, including directing, monitoring, and fine-tuning activities as they are performed. control that takes place while a work activity is in progress
Control Cycle
The four-stage process that provides the mechanisms and systems to monitor the transformation process, ensuring that outputs are produced to the desired quality, quantity, and specifications of an organization and its customers
Continuous
When a very high volume of non discrete, highly standardized output is desired, a continuous system is used. These systems have almost not variety in output and have no equipment flexibility. Worker skill requirements range low to high. (ex: air monitoring, supplying electricity to homes)
Calculating Processing Requirements
Calculating processing requirements requires reasonably accurate demand forecasts, standard processing times, and available work time. Time required vs Time available = do you have enough?
Employee Obligations
Conditions which are imposed on employee as part of the contractual relationship
Appraisal
Costs of activities designed to ensure quality or uncover defects. Inspections, testing, and other activities intended to uncover defective products or services, or to assure that there are none.
effective capacity
Design capacity minus allowances such as personal time and maintenance, delays due to scheduling problems, and changing in the mix of products.
Steps in management and control process
Directs the activities of individuals toward achievement of goal.
External failure
Failures discovered after delivery to the customer. These are defected products or poor service that go undetected by the producer.
ISO 9000
Focuses on the process, not product. A set of international standards on quality management and quality assurance, critical to international business.
Repetitive
When higher volumes of more standardized goods or services are needed, repetitive process is used. Slight flexibility is needed, skill of workers is generally low. (ex: production lines and assembly lines)
Statistical Process Control
a statistical technique that uses periodic random samples from production runs to see if quality is being maintained within a standard range of acceptability. Assures that output of process is random so that future output will be random.
Capacity utilization rate formula
capacity used/best operating level
diseconomies of scale
if the output rate is more than the optimal level, increasing the output rate results in increasing average unit costs. (If output is increased beyond the optimal level, average unit cost will become increasingly higher)
Pareto Analysis
technique for classifying problem areas according to degree of importance, and focusing on the most important.
Group technology
the grouping into part families of items with similar design or shared manufacturing resources/characteristics (low cost) Identify items with similarities in either design characteristics or manufacturing characteristics and group them into part families.
Brainstorming
the process of getting a group to think of unlimited ways to vary a product or solve a problem. -Formalized approach -Rotation -Reserve Judgement -Contribute or pass -Last pass -Group similar ideas -Group judgement
Indifference Point
the quantity that would make two alternatives equivalent. profit from every alternative is equal.
Value Chain
the series of internal departments that carry out value-creating activities to design, produce, market, deliver, and support a firm's products
Defining Quality
the totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs. The ability of a product or service to consistently meet or exceed customer experiences. Determined by: >Design >How well the product or service conforms to the design >Ease of use >Service after delivery
Assembly Line
Standardized layout arranged according to a fixed sequence of assembly tasks. (Production Line)
Fishbone diagram
(Also known as cause and effect diagram or Ishikawa diagram) Offers a structured approach to the search for the possible causes of a problem.
Assignable Variation
(Non random variation) A variation whose cause can be identified and eliminated.
Capacity
1. An upper limit or ceiling on the load that an operating unit can handle. Might be in terms of the number of physical units produced or the number of service performed. Operating unit might be a plant, department, machine, store, or worker. Capacity needs include equipment, space, and employee skills.
Do It In House or Outsource (Make/Buy)
1. Available Capacity (sub contract, 'make to order' business [not outsourcing]) 2. Core Competency (do not contract a business to make what your business is known for) 3. Quality Supplier 4. Nature or Demand (irregular) 5. Cost 6. Risk (loss of control?) 'Make to order' buy from someone else rather than pay someone to make the product for you. If there is excess capacity, fill it with work.
Strategy Formulation: Leading
1. Design flexibility into systems (ex: one machine to make more than one thing). 2. Stage of product life cycle (where is demand going? look at the curve). 3. "Big Picture" system approach (look at system/optimize as a whole) 4. Prepare to deal with capacity 'chunks' (can't change slope of capacity, binary) 5. Smooth out capacity requirements.. 6. Identify optimal operating level.
Employee Empowerment
Giving workers the responsibility for improvements and the authority to make changes to accomplish them provides strong motivation for employees. This puts the decision making into the hands of those who are closest to the job and have considerable insight into problems and solutions.
Exception Reporting
Identifying data that is not within "normal limits" so that managers can follow up and take corrective action. Exception reporting is used in operating and cash budgets to keep company profits and cash flow in line with management's plans. Call to attention on major discrepancies such as late and overdue orders, excessive scrap rates, reporting errors, and requirements for nonexistent parts.
Cellular Production
Layout in which workstations are grouped into a cell that can process items that have similar processing requirements. Groupings are determined by the operations needed to perform work for a set of similar items, or part families, that require similar processing.
Product Layout
Layout that uses standardized processing operations to achieve smooth, rapid, high-volume flow. This is made possible by highly standardized goods or services that allow highly standardized, repetitive processing.
Process Layout
Layouts that can handle varied processing requirements. (Functional Layouts) the variety of jobs that are processed requires frequent adjustment to equipment. This causes discontinuous work flow, which is referred to as intermittent processing.
Cycle time
The maximum time allowed at each work-station to complete its set of tasks on unit. (ex: if the cycle time is to minutes, units will come off the end of the line at the rate of one every two minutes.)
Line Balancing
The process of assigning tasks to work-stations in such a way that the workstations have approximately equal time requirements. The goal of line balancing is to obtain task groupings that represent approximately equal time requirements.
Purpose of control chart
The purpose of a control chart is to monitor process output to see if it is random.
Break-Even Point
The volume of output at which total cost and total revenue are equal. BE= Fixed cost/(revenue per unit-variable cost per unit) When volume is less than the break-even point, there is a loss; when volume is greater than the break-even point, there is a profit.
Upper and Lower Control Limits
They reflect the maximum and minimum values allowed. There may be penalties associated with exceeding the specification limits. A sample statistic that falls between these two limits suggests randomness, while a value outside or on either limit suggests non randomness.
Precedence Diagram
Tool used in line balancing to display elemental tasks and sequence requirements.
Job Shop
Usually operates on a relatively small scale. IT is used when a volume of high-variety goods or services will be needed. Processing is intermittent; work includes small jobs, each with somewhat different processing requirements. (Manufacturing example: one-of-a-king tool shop. Service example: vet office able to process a variety of animals and a variety of injuries and diseases).
Constraint
something that limits the performance of a process or system in achieving its goals. 7 Categories of constraint: 1. Market (Insufficient demand) 2. Resource (Too little of one or more resources [e.g, workers, equipment, and space]) 3. Material (Too little of one or more materials.) 4. Financial: (Insufficient funds.) 5. Supplier: (Unreliable, long lead time, substandard quality.) 6. Knowledge or competency: (Needed knowledge or skills missing or incomplete.) 7. Policy: (Laws or regulations interfere)
Prevention
taking steps to keep something from happening or getting worse. Costs related to reducing the potential for quality problems.
