MGMT 4010 EXAM 2
just-in-time (JIT)
- "pull" system of production scheduling including supply management (production only when signaled) - allows reduced inventory levels (inventory costs money and hides process and material problems) - encourages improved process and product quality
process analysis tools (4)
- *flowchart*: quick way to see the big picture, makes sense of the entire processes system - *time function mapping*: shows flows and time frame of each process, adds rigor and a time element - *value-stream mapping (VSM)*: where value is added in the production process, extends from the customer back to the suppliers, very detailed - *service blueprinting*: focuses on the customer and provider interaction
what is the concept of the break-even analysis?
- a technique to evaluate process & equipment alternatives. - objective is to find the point (in $ and in units) where total cost=revenue - requires estimation of *revenue*, *fixed costs* (depreciation, taxes, debt, mortgage), and *variable costs* (labor, material, utilities... contribution=selling price-variable cost) - line graph shows intersection
locational cost-volume analysis
- an economic comparison of location alternatives steps: 1. determine fixed and variable costs for each location 2. plot cost for each 3. select location with lowest total cost for expected production volume *total cost=fixed + (variable*volume)*
characteristics of a waiting-line system
- arrival characteristics - waiting-line characteristics - service characteristics
variety of queuing models: *model C*
- constant-service (M/D/1) ...automated carwash
taguchi concepts...
- engineering and experimental design methods to improve product and process design (identify key component and process variables affecting product variation) - taguchi concepts (quality robustness, target-oriented quality, quality loss function)
inspection (role and goal)
- examining items to see if an item is good or defective (not corrected, it's expensive) - issues: where to inspect, worker fatigue, measurement error, process variability - cannot inspect quality into a product - better solutions: robust design, empowered employees, and sound processes
more on "repetitive focus"
- facilities are assembly lines - characterized by modules with parts & assemblies made previously - modules may be combined for many output options - less flexibility than process-focused facilities, but more efficient raw materials & module inputs, few modules in between, and many different output options (different combos of Harleys)
more on "process focus"
- facilities are organized around specific activities or processes (job shops) - general purpose equipment and skilled personnel - high degree of product flexibility - typically high cost, low equipment utilization - product flows may vary considerably making planning and scheduling a challenge many inputs, many departments & routings in between, many different outputs (hospital)
more on "product focus"
- facilities are organized by product - high volume, low variety of products - long, continuous production runs enable efficient processes - typically high fixed cost, but low variable cost - generally less-skilled labor few inputs, outputs vary in size/shape/packaging (different chip bags at Frito Lay)
center-of-gravity method
- finds location of distribution center that minimizes distribution costs - considers location of markets, volume of goods shipped to those, and shipping cost/distance steps: 1. place existing locations on a coordinate grid (grid origin and scale are arbitrary. maintain relative distances) 2. calculate x and y coordinates for 'center of gravity' (assumes cost is directly proportional to distance & volume shipped)
employee empowerment...
- getting employees involved in product and process improvements (85% of quality problems are due to materials and process) - techniques: 1. build communication networks that include employees 2. develop open, supportive supervisors 3. move responsibility to employees 4. build a high-morale organization 5. create formal team structures
how does quality improve profitability?
- helps firms increase sales and reduce costs - it improves *sales gains* therefore: improved response, flexible pricing, improved reputation - it improves *reduced costs* therefore: increased productivity, lower rework and scrap costs, lower warranty costs
globalization factors in location decision
- market economics - communication - rapid, reliable transportation - ease of capital flow - differing labor costs
continuous improvement...
- never-ending process of continuous improvement - covers people, equipment, suppliers, materials, procedures - every operation can be improved - *kaizen* describes the ongoing process of unending improvement (same with TQM and zero defects)
factor-rating method
- popular because a wide variety of factors can be included steps: 1. develop a list of key success factors 2. assign a weight to each factor 3. develop a scale for each 4. score each location for each 5. multiple score by weights for each, total score for each location 6. make recommendation based on highest point score *score=weight*score from step 4*
more on "mass customization"
- rapid, low cost production to satisfy increasingly unique customer desires - combines *flexibility of process focus* with *efficiency of product focus* - imaginative product design, flexible process design, tightly controlled inventory mgmt/schedules, responsive partners in supply chain many parts & component inputs, many modules, many output versions (custom Dell PCs and notebooks)
variety of queuing models: *model A*
- single-server system (M/M/1) ...info counter at department store 1. arrivals are served on a FIFO basis. 2. the average number of arrivals doesn't change over time. 3. arrivals show a Poisson probability distribution, coming from an infinite population. 4. service times vary, but their average rate is known 5. service times occur according to the exponential distribution 6. service rate is faster than the arrival rate
common queuing situations...
- supermarket - highway toll booth - doctor's office - computer system - telephone company - bank - machine maintenance - harbor
more on SPC
- variability is in every process (natural or common causes, special or assignable causes) - quickens appropriate actions to eliminate assignable causes
3 capacity measurements
1. *design capacity* - the maximum theoretical output of a system. ideal conditions (expressed as a rate) 2. *effective capacity* - the capacity a firm expects to achieve given current operating constraints (often lower than design capacity) = design capacity - lost output because of planned resource unavailability (employee breaks) 3. *actual output* = effective capacity - lost output during unplanned resource unavailability (machine breakdowns)
costs of quality are... (4)
1. *prevention costs* (reducing potential for defects) 2. *appraisal costs* (evaluating products, parts, services) 3. *internal failure* costs (producing defective parts or service before delivery) 4. *external failure* costs (defects discovered after delivery)
measuring queue performance (5 measures)
1. average time that each customer spends in the *queue* 2. average number of customers in the *queue* 3. average time each customer spends in the *system* 4. average number of customers in the *system* 6. probability of a specific number of customers in the system
implications of quality (3)
1. company reputation (perception of new products) 2. product liability (reduce risk) 3. global implications (improved ability to compete)
7 concepts of TQM
1. continuous improvement 2. six sigma 3. employee empowerment 4. benchmarking 5. just-in-time (JIT) 6. taguchi concepts 7. knowledge of TQM tools
2 waiting-line characteristics
1. limited vs unlimited (queue length) 2. queue discipline (first in, first out FIFO is most common)
3 arrival characteristics
1. population size (unlimited or finite) 2. behavior of arrivals (wait in the queue and not switching lines, no balking or reneging) 3. statistical distribution of arrivals (pattern of arrivals in a time period... typically have Poisson distribution. distinction from inter-arrival time)
4 subsections of process strategies
1. process focus - projects, job shops machine, print, hospitals, restaurants (Arnold Palmer Hotel) 2. repetitive - autos, motorcycles, home appliances (Harley Davidson) 3. product focus - commercial baked goods, steel, glass, beer (Frito Lay) 4. mass customization - difficult to achieve, huge rewards (Dell Computer)
2 service characteristics
1. service design (single- or multiple-server system, single- or multi-phase system) 2. service time distribution (constant or random...exponential or normal distribution)
the 3 methods of evaluating location alternatives
1. the factor-rating method 2. locational cost-volume analysis 3. center-of-gravity method
what probability distribution describes *service rates* for M/M/1 & M/D/1?
M/M/1: negative exponential M/D/1: service rate is constant
what probability distribution describes *arrival rates* for M/M/1 & M/D/1?
Poisson
what is a bottleneck?
a limiting factor or constraint. it has the lowest effective capacity in a system
process capability definition
a measure of the relationship between the natural variation of the process and the design specifications
attributes vs. variables
attributes: items are either good or bad... does not address degree of failure variables: measure dimensions such as weight, speed, height, or strength... falls within an acceptable range
user-based quality
better performance, more features
chapter 7s
capacity & constraint management
control charts from variables (x bar chart and R chart)
characteristics that can take any real value, may be in *whole or in fractional numbers* x: tracks changes in the central tendency R: indicates a gain or loss of dispersion these two charts must be used together
manufacturing based quality
conformance to standards, making it right the first time
control charts purpose
constructed from historical data, the purpose is to help distinguish between natural and assignable variations
total quality management (TQM) definition
encompasses entire organization from supplier to customer. stresses a commitment by management to have a continuing companywide drive toward excellence in all aspects of products and services that are important to the customer
purpose of the transportation model?
finds amount to be shipped from several points of supply to several points of demand. - solution will minimize total production & shipping costs - a special class of linear programming problems
what is the purpose of location strategy?
for industrial locations to minimize costs, and for retail & service locations to maximize revenue. ultimate goal is to maximize the benefit of location to the firm. - options include: 1. expanding existing facilities 2. maintain existing + add sites 3. closing existing, relocating - extremely important decision for a firm. increasingly global in nature. significant impact on costs. infrequent, long-term decisions. many resources are difficult to change once committed to a location.
control charts for attributes (p-chart)
for variables that are categorical (defective/non, good/bad, yes/no, acceptable/un) - measurement is typically counting defectives - measure *percent* defective (p-chart)
what is process strategy?
how to produce a product or service that meets customer requirements and cost/managerial goals. has long term effects on efficiency/production flexibility, and costs/quality.
distinction between arrival rates and inter-arrival times
if the average arrival rate is 10/hour, then inter-arrival time is 6 minutes. ALWAYS USE RATES, EVEN IF TIMES ARE GIVEN... for example if someone arrives every 20 minutes, the rate is 3/hour.
"in control" vs. "out of control"
in control: in statistical control, capable of producing within control limits (humps are all equal size & height, all tall) out of control: humps are unevenly spread out, different heights and sizes
region/community decision... #2
key success factors: 1. corporate desires 2. attractiveness of region 3. labor availability/costs 4. costs & availability of utilities 5. environmental regulations 6. gov incentives & fiscal policies 7. proximity to raw materials & customers 8. land/construction costs
country decision... #1
key success factors: 1. political risks, gov rules, attitudes, & incentives 2. cultural/economic issues 3. location of markets 4. labor talent, attitudes, productivity, & costs 5. supplies, communications, and energy availabilities 6. exchange rates and currency risks
site decision... #3
key success factors: 1. site size & cost 2. air, rail, highway, waterway systems 3. zoning restrictions 4. proximity of services/supplies needed 5. environmental impact issues 6. customer density and demographics
chapter 8
location strategies
chapter 6
managing quality
service process matrix
mass service & professional service (top 2 quads): - labor involvement is high - focus on human resources - selection and training are highly important - personalized services service factory and service shop (bottom 2 quads): - automation of standardized services - restricted offerings - low labor intensity responds well to process technology and scheduling - tight control required to maintain standards classified by degree of customization & degree of labor (both high vs low)
natural variations vs. assignable variations
natural: - also called common causes, affect all production processes - expected amount of variation (output measures follow a probability distribution) - for an distribution there is a measure of central tendency and dispersion - if the distribution of outputs falls within acceptable limits, the process is said to be "in control" assignable: - also called special causes of variation (general this is a change in the process) - variations that can be traced to a specific reason - the objective is to discover when assignable causes are present
patterns in control charts
one plot out above or below the upper or lower control limit. investigate for cause. process is "out of control" trends in either direction. 5 plots. investigate for cause two plots very near lower or upper control. investigate for cause run of 5 above or below the central line. investigate for cause completely erratic behavior. investigate for cause
service recovery strategies
operations manager must recognize: - the tangible component of services is important - the service process is important - the service is judged against the customer's expectations - exceptions will occur
purpose of a p-chart
population is a binomial distribution... applying the central limit theorem allows us to assume a normal distribution for the sample statistics
Theory of Constraints (5 steps)
process for recognizing and managing limitations... 1. identify constraints 2. develop a plan to overcome them 3. focus resources on accomplishing step 2 4. reduce effects by offloading work or expanding capability 5. once overcome, go back to step 1 and find new ones
chapter 7
process strategy
Central Limit Theorem
regardless of the population's distribution, the "distribution of a sample means" drawn from the population will tend to follow a normal curve. 1. the mean of the sampling will be the same as the population mean... x bar = m 2. the stdev of the sampling distribution will equal the population stdev/sqrt of sample size... ox = o/^n
process capability ratio vs. process capability index (similarities and differences)
same: - must have Cp/Cpk of 1.0+ different: - ratio doesn't look at how well the process is centered in the specification range... index falls within the specification limit at both extremes (not always centered though) ratio: - often a target value of Cp=1.33 for off-center processes - six sigma requires Cp=2.0
benchmarking...
selecting best practices to use as a standard for performance - determine what to benchmark - identify benchmarking partners - collect and analyze benchmarking info - take action to match/exceed the benchmark internal: (when the org is large enough, data is more accessible, can and should be established in a variety of areas)
quality management in services
service quality is more difficult to measure than of goods. perceptions depend on: 1. intangible differences between products 2. intangible expectations of customers
product based quality
specific and measurable attributes of the product
chapter 6s
statistical process control
break-even analysis assumptions?
that costs and revenue are linear functions (generally not the case in the real world), and that we actually know our costs (often difficult to verify)
definition of capacity
the *throughput*, or the number of units a facility can hold, receive, store, or produce in a period of time. - determines fixed costs & if demand will be satisfied - three time horizons (long- intermediate- and short-range)
what is process redesign?
the fundamental rethinking of business processes to bring about dramatic improvements in performance. - relies on reevaluating the purpose of the process/ questioning the purpose & underlying assumptions - requires reexamination of basic process/ its objectives - focuses on cross-functional line activities - any process is a candidate for redesign
utilization is...
the percent of design capacity actually achieved. = actual output/design capacity
efficiency is...
the percent of effective capacity actually achieved = actual output/effective capacity
what is throughput time?
the time it takes a unit to go through production from start to finish (with no waiting)
what is bottleneck time?
the time of the slowest workstation in a production system (the one that takes the longest)
what is the process time?
the time to produce a unit or specified batch size
quality (definition and idea)
the totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs
statistical process control (SPC) purpose
to provide a statistical signal when assignable causes of variation are present
TQM tools...
tools for generating ideas: - check sheet (organized method to record data) - scatter diagram (scatter graph) - cause and effect diagram (sideways tree chart to the effect) tools to organize the data: - pareto chart (bar chart in descending order of frequency) - flowchart (process diagram) tools for identifying problems: - histogram (bar chart to show "bell curve" frequency distribution) - statistical process control chart (line chart with time on the horizontal axis)
six sigma...
two meanings: - statistical definition of a process that is 99.9997% capable, 3.4 defects per million opportunities (DPMO) - a program designed to reduce defects, lower costs, save time, improve customer satisfaction a comprehensive system for achieving and sustaining business success
queuing costs and trade-offs
visual on slides
advantages & disadvantages of lead/lag capacity expansion over time
visual on slides (4 scenarios)
crossover chart (purpose)
volume point to visually see where the total cost of the process changes. uses fixed and variable costs to compare ex: evaluate 3 accounting software products - calculate crossover points between A and B, and B and C
classification of process strategies along two dimensions (volume and variety)
volume: - starts with *low volume* on the left, then *repetitive process*, then *high volume* variety AKA flexibility: - starts with *high variety* on top (one or few units per run, allows customization) - then *changes in modules* (modest runs, standardized modules) - then changes *changes in attributes* (long runs only. "attributes" include grade, quality, size, thickness) - to the right of attributes, *poor strategy* (both fixed and variable costs are high)
module D
waiting-line models
