Final Flashcards Preview

Mgmt 339 > Final > Flashcards

Flashcards in Final Deck (90):
1

Any factor that limits the
performance of a system
and restricts its output

Constraint

2

A capacity constraint resource
(CCR) whose available capacity
limits the organization’s ability to
meet the product volume, product
mix, or demand fluctuations
required by the marketplace

Bottleneck

3

A systematic management approach that focuses on
actively managing those constraints that impede a firm’s
progress toward its goal

The Theory of Constraints

4

-All the money invested in a system in
purchasing things that it intends to
sell
-A decrease in I leads to an increase in
net profit, ROI, and cash flows

Inventory (I)

5

-Rate at which a system generates
money through sale
-An increase in T leads to an increase
in net profit, ROI, and cash flows

Throughput (T)

6

-All the money a system spends to turn
inventory into throughput
-A decrease in OE leads to an increase
in net profit, ROI, and cash flows

Operating
Expense (OE)

7

-The degree to which equipment,
space, or workforce is currently being
used
-An increase in U at the bottleneck
leads to an increase in net profit,
ROI, and cash flows

Utilization (U)

8

is the assignment of work to stations
in a line so as to achieve the desired output rate
with the smallest number of workstations

Line Balancing

9

Maximum time allowed for each station to meet the
demand

Cycle time (c)

10

A benchmark or goal for the smallest number of
stations possible

Theoretical Minimum (TM)

11

The total unproductive time for all stations in the
assembly of each unit

Idle time

12

The ratio of productive time to total time, expressed as
a percent

Efficiency

13

The amount by which efficiency falls short of 100
percent

Balance Delay

14

assign task with the longer processing
time first

Tiebreaker

15

- a rule that provides a shortcut to solving
difficult problems
- used when you have limited time and/or
information to make a decision
-solutions may not be optimal but quite close to
optimal
-rules differ in their performance, but for the
purpose of this class, we will work with a simple one

Heuristics

16

other tasks which can not be started unless
the focal task is completed

Followers for a task

17

Movement of product from one station to
the next as soon as the cycle time has elapsed

Pacing

18

Machine paced production
and high specialization lower job satisfaction

Behavioral factors

19

Need to consider
not only throughput rate but also variety

Number of models produced

20

Number of models produced

Cycle times

21

Operations systems that maximize the value added by each of a company’s activities by removing waste and delays from them.

Lean Systems

22

The belief that waste can be eliminated by cutting unnecessary capacity or inventory and removing non-value-added activities in operations

Just-in-time (JIT) philosophy:

23

Disruptions are caused by poor quality, equipment breakdowns, changes to the schedule, and late deliveries.

Eliminate Disruption

24

The ultimate goal of JIT is a balanced system achieving a smooth, rapid flow of materials through the system.

Goals of Lean Systems

25

Robust enough to handle a mix of products and handle changes in the level of output while still maintaining balance.
• E.g., reducing setup times and lead times.

Make the system flexible

26

Waste represents unproductive resources.
• Inventory can take up space and add cost to the system.

Eliminate waste

27

•Overproduction
• Inappropriate processing
• Waiting
• Transportation
• Motion
• Inventory
• Defect
• Underutilization of employees

8 Types of Waste

28

Inventories are buffers that tend to cover up recurring problems.
• The presence of inventory makes problems seem less serious.
• E.g.,when a machine breaks down, it won’t disrupt the system if there is sufficient inventory.

Inventory Hides Problem

29

• Inventory storage = waste
• A low inventory level reveals true problems.
• It allows to investigate the causes and eliminate them

Low Inventory Reveals Problems

30

Once the problems are eliminated, we can sail smoothly even with the lower level of inventory.
• Reduction of waste!

Low Inventory Provides Opportunity

31

1. Close supplier ties
2. Pull system
3. Kanban production system
4. Automatic detection of error (Jidoka)
5. Fail-safe method (Poka-Yoke)
6. Uniform workstation loads (Heijunka)
7. Standardized parts and work methods
8. Flexible workforce
9. 5

Key Considerations in Lean System

32

When work is finished at a workstation, the output is pushed to the next station

Push system (Traditional)

33

A workstation pulls output from the preceding station as it is needed. Output of the final operation is pulled by customer demand.

Pull System (Lean)

34

A Japanese word meaning “card” or “visible record” that refers to cards used to control the flow of production through a factory

Kanban

35

Automatically stopping the process when something is wrong and then fixing the problems on the line itself as they occur

Automatic detection of error (Jidoka)

36

Building safeguards into a process to reduce or eliminate the potential for errors during a process.

Fail-Safe Methods (Poka-yoke)

37

One-Worker, Multiple Machines (OWMM)

Flexible Workforce

38

Separate needed items from unneeded items (including tools, parts, materials, and paperwork), and discard the unneeded

Sort

39

Neatly arrange what is left, with a place for everything and everything in its place. Organize the work area so that it is easy to find what is needed.

Straighten

40

Clean and wash the work area and make it shine.

Shine

41

Establish schedules and methods of performing the cleaning and sorting. Formalize the cleanliness that results from regularly doing the first three S practices so that perpetual cleanliness and a state of readiness are maintained.

Standardization

42

Create discipline to perform the first four S practices, whereby everyone understand, obeys, and practice the rules when in the plant. Implement mechanisms to sustain the gains by involving people and recognizing them through a performance measurement.

Sustain

43

A stock of materials used to satisfy customer demand or to support
the production of services or goods

Inventory

44

Inputs, Transformation, Outputs

Accounting

45

•Cycle Inventory
• Safety Stock Inventory
• Anticipation Inventory
• Pipeline Inventory

Operational

46

Fixed costs (e.g. order cost, setup cost)
- Administrative charges, delivery charges, labor costs, costs of changing setup

Variable costs
• Holding costs
•Storage costs
•Opportunity costs
•Spoilage, Shrinkage
• Purchase costs
• Stockout costs
•Lost sales
Customer dissatisfaction

Costs of Inventory

47

• Improve customer service
• Reduce ordering cost
• Reduce setup cost
• Improve labor and equipment utilization
• Reduce transportation cost
• Reduce payments to suppliers

Pressures for Large Inventories

48

• Reduce cost of capital
• Reduce storage and handling costs
• Reduce taxes
• Reduce insurance
• Reduce shrinkage
o Pilferage
o Obsolescence
o Deterioration

Pressures for Small Inventories

49

The lot size, Q, that minimizes total annual inventory holding
and ordering costs
Five Assumptions
1. Demand rate is constant and known with certainty
2. No constraints are placed on the size of each lot
3. Price is constant regardless of the order size
4. The only two relevant costs are the inventory holding
cost and the fixed cost per lot for ordering or setup
5. Decisions for one item can be made independently of
decisions for other items
6. The lead time is constant and known with certainty

Economic Order Quantity (EOQ) Model

50

The quantity of an inventory item management either buys from a supplier or
manufactures using internal processes

Lot size

51

1. Demand known & steady
2. No restriction on lot size
5. Only one product
6. Lead time constant

EOQ Assumptions

52

A minimum amount of an item which a firm holds in
stock, such that, when stock falls to this amount, the item must be reordered.

Reorder point (ROP)

53

A system designed to track the
remaining inventory of a SKU each time a withdrawal is made
to determine whether it is time to reorder.

Continuous Review System

54

Portion of inventory prepared for the expected
demand during a cycle

Cycle Stock

55

Stock that is held in excess of expected demand
due to variable demand and/or lead time

Safety Stock

56

The desired probability of not
running out of stock in any one ordering cycle, which begins at the
time an order is placed and ends when it arrives in stock.

Service Level (Cycle Service Level)

57

Items ready to be sold or used.

Independent-demand Items

58

Components of finished products.

Dependent-demand Items

59

• A computer-based information system that translates master schedule
requirements for end items into time-phased requirements for
subassemblies, components, and raw materials.
• Requirements for end items generate requirements for low-level
components.
• Working backward from the due date to determine when and how much
to order.

Material Requirements Planning (MRP)

60

The master schedule (or master production schedule) states which
independent demand items are to be produced, when they are needed, and in
what quantities.

Master Production Schedule

61

• BOM is a listing of all of the raw materials, parts, subassemblies, and
assemblies needed to produce one unit of a finished product.
• It shows the quantity of each part needed to complete one unit of its
parent item.

Bill of Materials (BOM)

62

• The total demand derived from all parent production plans.

Gross Requirements

63

Gross Requirements
Scheduled Receipts
Projected on-hand inventory
Planned receipts
Planned order release

Inventory Records

64

• Orders that have been placed but not yet completed.
• E.g., being processed by a supplier, being transported to the purchaser, or being
inspected by the purchaser’s receiving department.

Scheduled Receipts

65

• An estimate of the amount of inventory available each week after gross
requirements have been satisfied.

Projected on-hand inventory

66

• Orders that are not yet released to the shop or the supplier.
• Still at the planning stage and can still change.

Planned receipts

67

• An indication of when an order for a specific quantity of an item is to be issues.

Planned order release

68

A process that converts the requirements of
various final products into a material requirements plan that
specifies the replenishment schedules of all the
subassemblies, components, and raw materials needed to
produce final products

MRP Explosion

69

• Low levels of in-process inventories
• Ability to track material requirements
• Ability to evaluate capacity requirements
• Means of allocating production time
• Ability to easily determine inventory usage by MRP Explosion

Benefits of MRP

70

Expanded MRP
with emphasis placed on integration
o A system that ties the basic MRP system to the company’s
financial system and to other core and supporting processes

Manufacturing Resource Planning (MRP II)

71

Next step in the evolution
that began with MRP and evolved into MRPII
o Large, integrated information systems that support many
enterprise processes and data storage needs
o Expanded effort to integrate standardized record keeping
that will permit “information sharing” among different areas
of an organization.

Enterprise Resource Planning (ERP)

72

Data Analysis
•Product costing
•Job costs

Sales and Marketing
•Sales orders
•Pricing system

Customer Service
•Field service
•Quality

Supply-Chain Management
•Forecasting
•Purchasing
•Distribution

Human
Resources
•Benefits
•Payroll

Manufacturing
•Material
requirements
planning
•Scheduling

Accounting and Finance
•Accounts payable
and receivable
•General ledgers
•Asset management

Enterprise Resource Planning (ERP System)

73

an interrelated set of projects that have a common strategic
purpose

Program

74

• Unique, one-time operations designed to accomplish a specific set of
objectives in a limited time frame
• An interrelated set of activities with a definite starting and ending point,
which results in a unique outcome for a specific allocation of resources

Projects

75

• A systemized, phased approach to defining, organizing, planning,
monitoring, and controlling projects

Three Main Goals:
• Complete the project on time or earlier
• Do not exceed the budget
• Meet the specifications to satisfaction of the customers

Project Management

76

• A statement of all work that has to be completed
• A hierarchical listing of what must be done during a project
• Establishes a logical framework for identifying the required activities for
the project

Work Breakdown Structure (WBS)

77

– A network planning method
designed to depict the relationships
between activities
– Consist of nodes (circles) and arcs
(arrows)

Network Diagram

78

– A relationship that determines a
sequence for undertaking activities;
it specifies that one activity cannot
start until a preceding activity has
been completed.

Precedence relationship

79

- Project steps that consume resources and time
- Smallest unit of work effort that the project manager can schedule/control

Activity

80

- A sequence of activities that leads from the starting node to the finishing node

Path

81

- The path that takes longest completion time
- Determines expected project duration

Critical Path

82

- Activities on the critical path

Critical Activity

83

- Path that are shorter than the critical path can experience some delays and still
not affect the overall project completion time
- The difference between the length of a path and the length of the critical path

Activity Slack

84

widely used techniques for planning and
coordinating large-scale projects. These are two different names for
essentially the same technique.

• Program Evaluation and Review Technique (PERT)
• Critical Path Method (CPM)

85

Shortening (or expediting) some activities within a project to reduce
overall project completion time and total project costs

Project Crashing

86

1. Determine the project’s critical path(s).
2. Find the activity or activities on the critical path(s) with the lowest
cost of crashing per week
3. Reduce the time for this activity until it cannot be further reduced
or another path becomes critical
4. Repeat this procedure until the increase in direct costs is larger
than the savings generated by shortening the project

Minimum-Cost Schedule

87

a. Concept – at which point the organization recognizes the need for
a project or responds to a request for a proposal.
b. Feasibility Analysis – which examines the expected costs, benefits,
and risks of undertaking the project.

Definition and organization

88

• Spelling out the details of the work and providing estimates of the
necessary human resources, time, and cost.

Planning

89

• During which the project itself is done. This phase often accounts
for the majority of time and resources consumed by a project.

Execution

90

• During which closure is achieved – writing final reports, completing
remaining deliverables, reassigning personnel, dealing with leftover
materials, equipment, etc.

Close-out