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Flashcards in Exam 2 Deck (36)
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1

Prevention cost

Cost associated with preventing defects before they happen

2

Appraisal cost

Costs incurred when the firm assesses the performance level of its processes

3

Internal failure costs

Costs resulting from defects that are discovered during the production of a service or product

4

External failure costs

Costs that arise when a defect is discovered after the customer recieves the service or product

5

Six sigma

Process on target with low variability

6

Process average ok with too much variation

Reduce spread

7

Process variability ok with process off target

Center process

8

Statistical process control: common cause

The purely random unidentifiable sources of variation that are unavoidable with the current process

9

Statistical process control: assignable cause

Any variation causing factors that can be identified and eliminated

10

Control charts

Two control limits, upper and lower, with an average for certain processes. What you make needs to be within the two limits

11

Control charts: run

Variation keeps getting lower, take action

12

Control charts: sudden change

Monitor

13

Control charts: exceeds control limits

Below or above control limits, take action

14

Type 1 error

An error that occurs when the employee concludes that the process is out of control based on a sample result that falls outside the control limits, when in fact it was due to pure randomness

15

Type 2 error

An error that occurs when the employee concludes that the process is in control and only randomness is present, when actually the process is out of statistical control

16

Process capability

The ability of the process to medt the deisgn soecification for a service or product

17

Nominal value

A target for design specifications

18

Tolerance

An allowance above or below the nominal value

19

Short range forcast

Up to a year. Purchasing, job scheduling, workforce levels, job assignments, production levels

20

Medium range forcast

3 months-3 years, sales and production planning, budgeting

21

Long range forecast

3+ years. New product planning, facility location, research and development

22

Forecasting approaches: qualitative methods

Used when situation is vague and little data exist (new products/technology) involves intutuion and experience (forecasting sales on internet)

23

Forecasting approaches: quanitative methods

Used when situation is stable and historical data exisit(existing products and current tech). Involves math

24

Quantitative approaches

Naive approach, moving average, expinential smoothing, trend projection, linear regression

25

Time series components

Trend, cyclical, seasonal, random

26

Exponential smoothing

Form of weighted moving average (most recent data weighted most) requires smoothing constant, involves record keeping of past data

27

Smoothing constant

ranges from 0-1 and subjectivly chosen

28

Effects of smoothing constants

Generally between .05-.50 and as alpha increases the older values become less significant

29

Trend

Gradual upward or downward movement of the data over time

30

Seasonality

Is a data patten that repeats itself after a period of days weeks months or quarters