Operations Mgmt Final Exam

Sales and Operations Planning (S&OP)

getting marketing and operations together to set benchmarks and make decisions

Job Shop

high customization, lumpy demand

Calling Population

how many people can wait; finite or infinite?

FCFS (First Come First Served)

orders are run in the order they arrive in the department; forward scheduling; does not do especially well (or poorly) on any criteria, but is perceived as fair by customers

Lot-4-lot lot-sizing

orders just what is required for production based on net requirement -may not always be feasible - if setup costs are high, can be expensive

Master Production Schedule (MPS)

orders made, necessary production

Controlling Supply of Labor

part time employees variable work schedules shift work to slack periods increase customer participation

One-bin System

periodic check; order enough to refill bin

Supply Chain Management (SCM)

the coordination of all supply chain activities from raw materials to the satisfied customer

Two-bin System

1 bin full, 1 bin empty; order one bin of inventory when one is empty

7 wastes

1. overproduction 2. inventory 3. waiting 4. motion 5. transportation 6. rework 7. over processing

Net Requirement

= gross requirement - on hand inventory (amount needed to order)

Twenty Foot Equivalent Unit (TEU)

A standard shipping container

Water and Rocks Analogy

Boat needs to flow constantly—inventory will not just make the boat keep going; you have to actually address the issue instead of trying to cover it. 'Problems' are 'areas of opportunity' Lower the water level because inventory is a waste

Building a Supply Base

Centralized or Decentralized Purchasing -purchasing power, duplication, location Finding Suppliers -qualifications, certifications, capabilities, negotiating terms

Queue Discipline

First come, first serve Shortest processing time (quick, self-check) Reservations first (restaurants) Emergencies first (ER) Limited needs Repeat customers (amusement park)

Queue Configurations

Hospitality (multiple lines)- McDonald's, Bank, etc. Serpentine (snake line)- Wendy's, Rollercoaster, some stores Take a Number- Deli, DMV

Sourcing Issues

Make or Buy decision (setup costs or ordering costs) Many suppliers (risk mitigation, competitive pricing) Few suppliers (sole sourcing, partnerships) Vertical Integration vs. Horizontal Integration (insource vs. outsource) Keiretsu Networks (groups of many small companies) Virtual Companies (licensing) Joint Ventures

3 things needed for MRP Report

Master Production Schedule Bill of Material Master Inventory File

Aggregate Operations Plan (rough cut capacity planning--shifters)

Production Rate Changes -overtime, undertime, subcontracting (union issues) Workforce Changes -hiring/firing, training, learning curve, unemployment, COBRA, outplacement, severance, lawsuits Inventory Holding/Shortages -backorders, carrying costs, lost sales Demand Shifting -pricing strategies, promotions

Waiting Line Propositions

Prop 1: Unoccupied time feels longer than occupied time Prop 2: Preprocess Wait feels longer than in-process wait Prop 3: Anxiety makes the wait seem longer Prop 4: Uncertain waits are longer than Known, finite waits Prop 5: Unexplained Waits are longer than Explained waits Prop 6: Unfair Waits are longer than equitable waits Prop 7: The more valuable the service, the longer the customer will wait Prop 8: Solo waits feel longer than group waits

Shipping Methods

Rail- 14 Truck- 10 (fastest, most reliable) Water- 18 Pipeline- 17 Air- 16 (fast, but not reliable) Intermodal- combo of shipping methods

RFQ/RFB

Request for Quote, Request for Bid RFQ--used when deliverables are commodities for which there are clear specifications and when price will be the primary determining factor. Unlike an RFB, this solicited price quote is used for comparison purposes and is not a formal bid for work RFB--used when deliverables are commodities for which there are clear specifications and when price will be the primary determining factor

Reverse Logistics

Sending returned products back up the supply chain for resale, repair, reuse, remanufacture, recycling, or disposal

Waiting Line Models

Single Channel, Single Phase (ex: one-person barber shop) Single Channel, Multiphase (ex: car wash) Multichannel, Single Phase (ex: bank tellers) Multichannel, Multiphase (ex: hospital)

The 5 Ss

Sort/segregate- when in doubt, throw it out Simplify/straighten- methods analysis tools Shine/sweep- clean daily Standardize- remove variations Sustain/self-discipline- review work and recognize progress [2 additional Ss: Safety (built in good practices) and Support/maintenance (reduce variability and unplanned downtime)]

Toyota Production System (TPS)

Two Main Pillars: 1. JIT- most visible and highly publicized characteristic 2. Jidoka- never letting a defect pass to the next station; freeing people from machines Base: 1. Heijunka- leveling out production schedule for both volume and variety 2. Kaizen- change for better = continuous improvement 3. Standard Work- manpower, equipment, and materials used in the most efficient combination

Horizontal Integration

acquisition of a competitor

Vertical Integration

acquisition of a supplier

Lean Production

activities designed to achieve high-volume production using minimal inventories (just-in-time) -elimination of waste in production effort -value chain (each step should create value) -timing of production resources -pull, not push; (push is always going, all about production; pull is acting when needed)

Blockchain

aids tracking and verification; list of records with past data (AI)

Bill of Material

all materials needed

Planned Receipt

amount expected to come in

Planned Release

amount expected to send out

Anticipation

anticipates known future needs; produced before season of selling (ex: Christmas lights)

Finished Goods Inventory

antipation, pipeline, buffer or safety stock

Alter the Demand of Labor

appointments differential pricing

Third Party Logistics (3PL)

asset based and non-asset based; outsourcing with another party

Finite Loading schedule

capacity is considered

Infinite Loading schedule

capacity is not considered

ABC Inventory management system

catergorizing of inventory into 3 types A- large $ value, small $ volume (ex: ink cartidges) C- small $ value, large $ volume (ex: pens, paperclips) B- everything in between

Enterprise Resource Planning (ERP)

computer system integrates application programs across functions in a company (shared database) -SAP- German firm; leader in ERP software known as R3

Setup Costs

costs for arranging specific equipment setups, scrap, setup labor

Holding (carrying) Costs

costs for storage, handling, insurance, obsolescence, damage, pilferage, inventory gains and shrinkage

Shortage Costs

costs of cancelling an order, lost sales, loss of goodwill, backordering, rescheduling

Ordering Costs

costs of someone placing an order, postage, material handling, accounts receivable/payable departments, etc.

Renege

customer leaves the queue (ex: customer abandons place because the wait is too long)

Balk

customer never joins the queue (ex: driving past drivethru because line is too long)

Work in Progress (WIP) Inventory

decoupling, buffer or safety stock

Independent Demand

demand for the final end product or demand not related to other items

Dependent Demand

derived demand items for component parts, subassemblies, raw materials, etc.

Pipeline

distribution inventory; solid connection ready for distribution

EDD (Earliest Due Date)

earliest due date jobs are assigned first; backward scheduling; minimizes maximum lateness; uses CR

Supply Chain Ethics

ethical composure of every section of the supply chain

EOQ lot-sizing

expects a known constant demand -MRP systems often deal with unknown and variable demand

Supply Chain

includes suppliers, manufacturers/service providers, distributors, wholesalers, retailers, and final customers

Decoupling

increases operational flexibility; doing things ahead of time to improve cycles

Cycle Counting

inventory management system for continuous physical inventory throughout the year, usually tied to ABC classification; A's counted for frequently than C's

Critical Ratio (CR)

jobs with low critical ratios are scheduled ahead of jobs with higher critical ratios

LPT (Longest Processing Time)

jobs with the longest processing time are assigned first

SPT (Shortest Processing Time)

jobs with the shortest processing time are assigned first; does well on minimizing flow time and number of jobs in the system moves long jobs to the end which may result in dissatisfied customers

STR (Slack Time Remaining)

jobs with the shortest slack time remaining go first

Blanket Orders

large orders to just cover all needs

Master Inventory File

lead times, inventory data, purchasing data

Backward Scheduling

looks at the order due date and works backward

Raw Material Inventory

lot size inventory, buffer or safety stock

Poke Yoke

mistake-proofing methods aimed at designing fail-safe systems that minimize human error (ex: hole in sink)

MRO (maintenance, repair, and operating)

necessary to keep machinery and processes productive; not actually a part of final product

Level Production Strategy

production is set at a constant -inventory and shortages -assembly line

Chase Production Strategy

production matches demand -no inventory; exactly enough -job shop

Buffer (or safety) Stock

protection against uncertainties; uses a probability to predict; expensive and costly (so make sure it's necessary)

Gross Requirement

quantity demanded

On Hand

quantity in inventory

Electronic Funds Transfer (EFT)

quick easy money transfer

Steady Demand

regular; assembly line

Periodic Review

reviewed at fixed or equal time intervals and at each review an order may be placed; regular interval, different quantity (ex: milk every friday) note: in these problems, you're solving for the quantity to order "how many"

Johnson's Rule

scheduling a two-machine process (job shop); If the shortest processing time is on the: first machine- schedule as early as possible second machine- schedule as late as possible

Lot Size

takes advantage of quantity discounts; stuff you'll use later, sell in bulk

Forward Scheduling

takes an order and schedules it first come, first serve; pays no attention to due dates

Vendor Managed Inventories (VMI)

the company you buy from is in charge of what's in your inventory

Economic Order Quantity (EOQ)

the optimal order size to minimize the sum of ordering, carrying, and stockout costs where cost of ordering = cost of holding note: always round up

Flow time

the time between the release of a job to a work center until the job is finished

Lumpy Demand

unpredicted; job shop

Kanban System

visual signal to indicate need to order more inventory

Andon System

visual things in a factory that provide info on what's going on (ex: red light, green light)

MUDA

waste, anything other than that which adds value to product or service

Reorder Point

whenever the inventory reaches a certain, predetermined level, a fixed quantity is ordered; unequal intervals between orders (ex: toothpaste) note: in these problems, you're solving for when you need to place the order "when"