Exam Flashcards
(119 cards)
1
Q
Definition: Production
A
is the creation of goods and services
2
Q
Operations management (OM)
A
Operations management (OM) is the set of activities that create value in the form of goods and services by transforming inputs into outputs. The science and arts of ensuring that goods and services are created and delivered successfully to customers
3
Q
Essential Organizational Functions
A
- Marketing : generates demand
- Production/operations : creates the product
- Finance/accounting : tracks how well the organization is doing, pays bills, collects the money
4
Q
What Operations Managers do
A
- Planning
- Organizing
- Staffing
- Leading
- Controlling
- The operations manager’s job is to implement an OM strategy, provide competitive advantage, and increase productivity.
5
Q
Goods characteristics (5)
A
• Tangible product • Consistent product definition • Production usually separate from consumption • Can be inventoried • Low customer interaction
Ex. Car, Computer, fast-food (half and half), hospital care
6
Q
Services characteristics (7)
A
- Intangible product
- Produced and consumed at same time
- Often unique
- High customer interaction
- Inconsistent product definition
- Often knowledge-based
- Frequently dispersed
Ex. Advertising, counselling,
Service producuing: Bank, airlines, timmies, barber
7
Q
What is productivity?
A
Productivity is the ratio of outputs (goods and services) divided by the inputs (resources such as labour and capital).
- objective is to maximize productivity
- to increase productivity: inputs must decrease or outputs must increase as the other is constant or at the same time
8
Q
Globalization strategy
A
Contributes efficiency and adds value to products and services but complicates an operations manager’s job.
9
Q
Globalization
A
Is the increasing of economic integration and interdependence of countries
10
Q
Definition: Mission
A
Mission tells an organization where it is going.
• The organization’s purpose for existence
• It answers “What do we provide society?”
• What the org will contribute to society
11
Q
Definition: Strategy
A
Strategy tells that organization how to get there.
• It represents an action plan to achieve the mission.
• Action plan to achieve mission
• exploit opportunities and strengths, neutralize threats, and avoid weaknesses
12
Q
Factors that affect mission: (5)
A
- Environment
- Philosophy and values
- customers
- profitability and growth
- public image
13
Q
Planning types
A
Strategic planning (long-term) Tactical planning (short-term) Operational planning (day-to-day)
14
Q
Stategies for competitive advantage
A
Differentiation – better, or at least different
Uniqueness can go beyond both the physical characteristics and service attributes to encompass everything that impacts customers’ perception of value.
- Hard rock cafe, walt disney magic kingdom
- innotive design, broad product line, experience
Cost – cheaper
Provide the maximum value as perceived by customer. Does not imply low quality.
- Porter airlines, Walmart
- Low overhead, effective capicity use, inventory management
Response – faster
- Flexibility is matching market changes in design innovation and volumes. - Reliability is meeting schedules. - Timeliness is quickness in design, production, and delivery (pizza hut, motorola, fedex)
15
Q
Strategy Implementation
A
- Identify key success factors
- Build and staff the organization
- Integrate OM with other activities
16
Q
Definition: project
A
A project is a temporary endeavor undertaken to create a unique product, service, or result.
17
Q
Definiton: ongoing work
A
An ongoing work (effort) is generally a repetitive process that follows an organization’s existing procedures.
18
Q
Definition: project management (PM)
A
Project Management (PM) is the application of knowledge, skills, tools, and techniques to project activities to meet the project requirements.
Techniquies: Gantt chart, critical path method (CPM), project evaluation and review technique (PERT)
19
Q
Phases of project management (3)
A
- Planning - goal setting, defining the project, team organization (objectives, resources, stakeholders)
- Scheduling - relates people, money, and supplies to specific (project activities, network, cash flows)
activities and activities to each other - Controlling - monitors resources, costs, quality, and budgets; revises plans and shifts resources to meet time and cost demands (monitor, control, revise, act)
20
Q
ES, EF, LS, LF
A
Earliest start (ES) = earliest time at which an activity can start, assuming all predecessors have been completed • Earliest finish (EF) = earliest time at which an activity can be finished • Latest start (LS) = latest time at which an activity can start so as to not delay the • Latest finish (LF) = latest time by which an activity has to be finished so as to not delay the completion time of the entire project
21
Q
CPM & PERT variability
A
CPM assumes we know a fixed time estimate for each activity and there is no variability in activity times.
PERT uses a probability distribution for activity times to allow for variability.
22
Q
What Is Forecasting? & its importance
A
❖Process of predicting a future event
➢ Supply-Chain Management – Good supplier relations, advantages in product innovation, cost and speed to market
➢Human Resources – Hiring, training, laying off workers
➢Capacity – Capacity shortages can result in undependable delivery, loss of customers, loss of market share
23
Q
Types of Business Forecasts (3) (not short-term, etc)
A
Economic forecasts
• address business cycle by predicting inflation rate, money supply, housing starts, exchange rates, banking laws
Technological forecasts
• are concerned with rate of technological progress, that can result in impacts development of new products
Demand forecasts
• project of product & services demands, sales of existing products and services, new geographical markets
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24
Q
Time series methods
A
- Naive Approach
- Moving Average
- Exponential Smoothing
- Trend Projection
25
Associative methods for forecasting
Regressions
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Time Series Components
Trend: directional movement of data over time, Persistent, upward, or downward.
• Changes due to population, technology, age, culture, etc.
• Typically several years duration
Cyclical: patterns occur over years
• Repeating up and down movements
• Affected by business cycle, political, and economic factors
Seasonal: pattern repeats w/n a period of a year
• Regular pattern of up and down fluctuations
• Due to weather, customs, etc.
Random: short duration and non-repeating
• Due to random variation or unforeseen events
27
Definition: Process Strategy
objective of a process strategy is to build a production process that meets customer requirements and product specifications within cost and other managerial constraints.
Has long-term effects on:
• Efficiency and production flexibility
• Costs and quality
28
4 Main Process Strategies
1. Process focus: is a low volume, high variety (allows customization) process
- depends on customer’s needs
Ex. Machine, print, hospitals and restaurants
2. Repetitive focus: is a medium volume, repetative and medium variety process. A product-oriented production process that uses modules. (Modules: parts/components of a product previously prepared,
often in a continuous process.)
Ex. Home appliances, cars
Ex. Harley-davidson
3. Product focus: is a high volume and low variety process.
Ex. Beer, glass, steel, baked goods
Ex. Frito-lay
4. Mass customization: is a high volume and high variety process. Is diff to achive but high rewards. Rapid low-cost production that caters to constantly changing unique customer desires.
Ex. Dell computer only produce the laptop until it gets an order to allow easy customization
29
Definition: flow charts
Flow Charts - Shows the movement of materials, ppl and products
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Definition: time-function mapping
Time-Function Mapping - Shows flows and time frame
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Definition: value-stream mapping
Value-Stream Mapping - Shows flows and time and value added beyond the immediate organization. Shows how to add value in the flow of materials and info
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Definition: process charts
Process Charts - Uses symbols to show key activities
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Definition: service blueprinting
Service Blueprinting - focuses on customer/provider interaction
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Definition: process redesign
Process Redesign is to rethink business processes to dramatically improve performance; Reevaluate purpose of process; Question both purpose and underlying assumptions; Reexamine basic process and its objectives; Focus on activities that cross functional lines; Any process is a candidate for redesign.
35
4 r’s in sustainability
1. Resources
2. Recycle
3. Regulations
4. Reputation
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Type of sustainability
- Social responsibility
- Financial responsibility
- Environmental responsibility
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Definition: central hub concept (location strategies)
* Enables service to more locations with fewer aircraft
* Enables matching of aircraft flights with package loads
* Reduces mishandling and delay in transit because there is total control of packages from pickup to delivery
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Location strategy objective
The objective is to maximize the benefit of location to the firm
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Definitio: intangible costs
These costs are less easily qualified. Ex. Quality of ed., public transportation facilities, quantity and quality of employees.
40
Definition: tangible costs
These costs are readily identifiable & precisely measured. Ex. Utilities, labour, material, taxes and depreciation.
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Definition: clustering
Refers to the location of competing companies near e/o often bc of a critical mass of info, talent, venture capital, or natural resources.
42
What is the transportation model used for?
To determine the best pattern of shipments from several points of supply (sources) to several points of demand (destination) to minimize total production & transportation costs.
43
Definition: Geographic Information Systems (GIS)
❖ A system that stores and displays information linked to a geographic location
❖Important tool to help in location analysis
❖ Enables more complex demographic analysis
Used by timmies, arby’s, home depot
44
3 dining area types
Flexible Zone - geared for family and larger groups, with movable tables and chairs.
Grab & Go Zone- has tall counters with bar stools for customers who eat alone. Flat-screen TVs keep them company.
Linger Zone - Cozy booths, plus Wi-Fi connections, make these areas attractive to those who want to hang out and socialize.
45
Definition: cross-docking
Materials are moved directly from receiving to shipping and are not placed in storage in the warehouse.
46
Types of product-oriented layouts (2)
Fabrication line
▪ Builds components on a series of machines
▪ Machine-paced
▪ Require mechanical or engineering changes to balance
Assembly line
▪ Puts fabricated parts together at a series of workstations
▪ Paced by work tasks
▪ Balanced by moving tasks
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Objective: assembly line balancing
Objective is to minimize the imbalance between machines or personnel while meeting required output
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What Is a Supply Chain?
All parties involved, directly or indirectly, in fulfilling a customer request
Includes manufacturers, suppliers, transporters, warehouses, retailers, and customers.
includes all functions involved in receiving and fulfilling a customer request (new product development, marketing, operations, distribution, finance, customer service)
Customer is an integral part of the supply chain
Includes movement of products from suppliers to manufacturers to distributors and information, funds, and products in both directions
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supply chain stages: (6)
```
customers
retailers
wholesalers
distributors
manufacturers
suppliers
```
50
Definition: supply-chain management
Supply chain management is the integration of the activities that procure materials and services, transform them into intermediate goods and final products, and deliver them through a distribution system.
51
Objective: supply-chain management (SCM)
is to structure the supply chain to maximize its competitive advantage and benefits to the ultimate consumer.
Maximize net value generated
52
Definition: make-or-buy sourcing decision
A choice between producing a component or service in-house or purchasing it from an outside source.
1. Production (Internal Procurement)
2. Purchasing (External Procurement)(outsourcing)
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Definition: outsourcing sourcing decision
Transferring a firm’s activity that has traditionally been internal, to external suppliers.
✓Efficiency in specialization
✓Focus on core competencies
54
Sourcing strategies (6)
* Negotiating with many suppliers
* Long-term partnering with few suppliers
* Vertical integration
* Joint ventures
* Keiretsu networks
* Virtual companies that use suppliers on an as needed basis
55
Definition: bullwhip effect
stable demand becomes lumpy orders through the supply chain.
The tendency for larger order size fluctuations as orders are relayed through the supply chain
Creates unstable production schedules, expensive capacity change costs, longer lead times, obsolescence
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Definition: e-procurement
❖Uses the internet to facilitate purchasing
| ❖Speeds purchasing, reduces costs, integrates supply chain
57
Definition: Electronic ordering and funds transfer
Electronic ordering and funds transfer (speed transactions and reduce paperwork)
58
Definition: Online catalogs
provide current information about products in electronic form
59
Definition: Online auctions
can be maintained by sellers, buyers, or intermediaries
60
Definition: Online Request For Quotes (RFQs)
reduce the time spent preparing RFQs
61
Definition: Real-time inventory tracking
provide economical inventory tracking
62
Definition: Logistics Management
Is an approach that seeks efficicency of operations through the integration of all material acquisition, movement and storage activities.
It allows competitive advantage to be gained through reduced costs and improved customer service.
63
What activites form a logistic system?
All activities related to procurement, shipping, inventory & warehousing form a logisitic system
64
Distribution systems: (6) Transportation
❖Trucking
➢ Moves the vast majority of manufactured goods
➢ Chief advantage is flexibility
❖Railroads
➢ Capable of carrying large loads
➢ Little flexibility though containers
❖ Airfreight
➢ Fast and flexible for light loads
➢ May be expensive
❖Waterways
➢ Typically used for bulky, low-value cargo
➢ Used when shipping cost is more important than speed
❖ Pipelines
➢ Used for transporting oil, gas, and other chemical products
❖ Multimodal
➢ Use of more than one transportation mode to move a shipment
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Objective: inventory management
The objective of inventory management is to strike a balance between inventory investment and customer service.
66
Types of inventory (4)
```
Raw materials
- purchased but not processed
Work-in-progress (WIP)
- undergoing changes but not complete
Maintenance/repair/operating (MRO)
- inventory devoted/needed to keep machinery and processes productive
Finished goods
- completed product awating shipment
```
67
Definition: ABC analysis
Divides inventory into three classes based on annual dollar volume.
used to establish policies that focus on the few critical parts and not the many trivial ones.
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Types of Demand (2)
Independent demand
| Dependent demand
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Definition: Indepedent demand
The demand for item is independent of the demand for any other item in inventory
Ex. Demand for fridge is indep. From the demand for toaster ovens
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Definition: depedent demand
the demand for item is dependent upon the demand for some other item in the inventory.
Ex. Demand for toaster oven components is dependent on the demand for toaster ovens
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Definition: holding costs
the costs of holding or “carrying” inventory over time.
Ex. Taxes, insurance, depreciation, storage space
72
Definition: ordering costs
the costs of placing an order and receiving goods. Have regardless of the # of units produced.
Ex. Supplies, forms, order processing, packing
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Definition: setup costs
cost to prepare a machine or process for manufacturing an order.
Ex. Time and labour to clean & change tools
74
Definition: reorder points
Tells us when to order
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Definition: EOQ
Tells us how much to order
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When is the Production Order Quantity Model used?
❖ Used when inventory builds up over a period of time after an order is placed
❖ Used when units are produced and sold simultaneously
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Definition: quantity discount models
Reduced prices are often available when larger quantities are purchased
78
Definition: intermediate plans
are designed to be consistent with top management’s long- range plans and strategy, and work within the resource constraints determined by earlier strategic decisions. Intermediate plans are the job of the operations manager, working with other functional areas of the firm.
79
Definition: long-range forecasts are the responsability of..
the responsibility of top management, provide data for a firm’s multi-year plans.
80
Definition: short-range plans
usually for less than 3 months. These plans are also the responsibility of operations personnel. Operations managers work with supervisors and foremen to translate the intermediate plan into short-term plans consisting of weekly, daily, and hourly schedules.
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Objective: aggregate planning
is to meet forecasted demand while minimizing cost over the planning period, by adjusting: production rates, labour levels, inventory levels, overtime work, subcontracting rates, and other controllable variables.
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Definition: disaggregation
breaks the plan down into greater detail. results in a master production schedule
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What’s a master production schedule?
A timetable that specifies what is to be made and when. It provides input to Material Requirements Planning (MRP)
84
Objective: short-term scheduling
objective of scheduling is to allocate and prioritize demand (generated by either forecasts or customer orders) to available facilities.
Effective and efficient scheduling can be a competitive advantage.
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Definition: sequencing jobs
Specifies the order in which jobs should be performed at work centers
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Sequencing jobs: FCFS
First come, first served.
does not do especially well (or poorly) on any criteria but is perceived as fair by customers
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Sequencing jobs: SPT
Shortest processing time
does well on minimizing flow time and number of jobs in the system
▪ But SPT moves long jobs to the end which may result in dissatisfied customers
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Sequencing jobs: EDD
Earliest due date.
minimizes maximum lateness
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Sequencing jobs: LPT
Longest processing time
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Definition: flow time
the time between the release of a job to a work center until the job is finished
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An operations manager’s objective when regarding quality and strategy is?
is to build a total quality management system (TQM) that identifies and satisfies customer needs.
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Definition: quality
Ability of a product or service to meet custormer needs
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Quality user-based view:
better performance, more features.
Quality lies in the eyes of the beholder.
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Quality manufacturing-based view:
Quality means conformance to standards, making it right the first time
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Quality product-based view:
Views quality as a specific and measurable attributes of the product
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Definition: cost of quality (COQ)
Is the cost of doing things wrong – that is, the price of non- conformance.
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Definition: prevention costs
Resp. For reducing the potential for defects
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Definition: appraisal costs
Costs relating to evaluating products, parts, and services
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Definition: internal failure
Costs that result from producing defective parts or service before delivery
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Definition: external costs
Costs that occur for defects discovered after delivery
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(Concept of Total Quality Management (TQM)): continuous improvement
* All organizational processes
* All operations and work centers
* All partners from suppliers and customers
* All recourses [People, Equipment, and Materials]
* A race with no finish line [Celebrate, take a break, and then keep going further]
102
(Concept of TQM): 6 sigma
A program designed to reduce defects, lower costs, and improve customer satisfaction.
Statistical definition of a process that is 99.9997% capable, 3.4 defects per million opportunities (DPMO)
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(Concept of TQM): employee empowerment
Involves employees in e/ step of the production process
104
(Concept of TQM): benchmarking
Involves selecting best practices to use as a standard for performance
105
Definition: internal benchmarking
When an organization is large enough to have many divisions or business units, a natural approach is the internal benchmarking. In this case, data is much more accessible than outside firms.
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(Concept of TQM): JIT
Relationship to quality:
• JIT cuts the cost of quality (COQ)
• JIT improves quality
• Better quality means less inventory and better, easier-to-employ JIT system
➢ ‘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
107
What is kanban?
Japanese word meaning “card” or “visible record” that refers to cards used to control the flow of production through a factory
108
Definition: Statistical Quality Control (SQC)
is the term used to describe the set of statistical tools used by quality professionals.
A process used to monitor standards by taking measurements and corrective action as a product or service is being produced.
❖Provides a statistical signal when assignable causes are present
❖Detect and eliminate assignable causes of variation
109
Types of variability (2)
- Natural or common causes
| - Special or assignable causes
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Definition: Natural Variations
* random & unsystematic
* Also called common causes
* Affect virtually all production processes
* Expected amount of variation
* Output measures follow a probability distribution
* For any distribution, there is a measure of central tendency and dispersion
111
Definition: Assignable Variations
• Also called special causes of variation
• Generally this is some change in the process
• Variations that can be traced to a specific reason
• The objective is to discover when assignable causes are present
➢Eliminate the bad causes
➢Incorporate the good causes
112
Definition: control charts
Constructed from historical data, the purpose of control charts is to help distinguish between natural variations and variations due to assignable causes
113
Definition: waiting lines
One or more “customers” waiting for service.
➢ Waiting Lines form due to a temporary imbalance between the demand for service and the capacity of the system to provide the service.
114
Characteristics of waiting line systems: (3)
1. Arrivals or inputs to the system
➢Population size, behavior, statistical distribution
2.Queue discipline, or the waiting line itself
➢Limited or unlimited in length, discipline of people or items in it
3. The service facility
➢Design, statistical distribution of service times
115
Arrival Characteristics
1. Size of the arrival population
• Unlimited (infinite) or limited (finite)
2. Pattern of arrivals
• Scheduled or random, often a Poisson distribution
3. Behavior of arrivals
• Wait in the queue and do not switch lines • No balking or reneging
116
Waiting-Line Characteristics
➢Limited or unlimited queue length
| - queue something (FIFO is common)
117
Service Characteristics
1. Queuing system designs
• Single-server system, multiple-server system
• Single-phase system, multiphase system
2. Service time distribution
• Constant service time
• Random service times, usually a negative exponential distribution
118
Definition: Transportation Modeling
➢An iterative procedure that finds the least costly means of moving products from a series of sources to a series of destinations
➢Can be used to help resolve distribution and location decisions
119
Why Use Linear Programming?
Linear Programming (LP) is a mathematical technique to help plan and make decisions relative to the trade-offs necessary to allocate resources.
❖Will find the minimum or maximum value of the objective
❖Guarantees the optimal solution to the model formulated
