Exam 2 Flashcards
(36 cards)
Prevention cost
Cost associated with preventing defects before they happen
Appraisal cost
Costs incurred when the firm assesses the performance level of its processes
Internal failure costs
Costs resulting from defects that are discovered during the production of a service or product
External failure costs
Costs that arise when a defect is discovered after the customer recieves the service or product
Six sigma
Process on target with low variability
Process average ok with too much variation
Reduce spread
Process variability ok with process off target
Center process
Statistical process control: common cause
The purely random unidentifiable sources of variation that are unavoidable with the current process
Statistical process control: assignable cause
Any variation causing factors that can be identified and eliminated
Control charts
Two control limits, upper and lower, with an average for certain processes. What you make needs to be within the two limits
Control charts: run
Variation keeps getting lower, take action
Control charts: sudden change
Monitor
Control charts: exceeds control limits
Below or above control limits, take action
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
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
Process capability
The ability of the process to medt the deisgn soecification for a service or product
Nominal value
A target for design specifications
Tolerance
An allowance above or below the nominal value
Short range forcast
Up to a year. Purchasing, job scheduling, workforce levels, job assignments, production levels
Medium range forcast
3 months-3 years, sales and production planning, budgeting
Long range forecast
3+ years. New product planning, facility location, research and development
Forecasting approaches: qualitative methods
Used when situation is vague and little data exist (new products/technology) involves intutuion and experience (forecasting sales on internet)
Forecasting approaches: quanitative methods
Used when situation is stable and historical data exisit(existing products and current tech). Involves math
Quantitative approaches
Naive approach, moving average, expinential smoothing, trend projection, linear regression
