Important Terms Flashcards
14 points for quality
improvement by Dr
Deming
Total Quality Management (TQM) process was
developed to stress management’s responsibility for
quality
A chase aggregate plan
Aggregate plan is preferable when a company produces
custom or special purpose equipment, one-of-a-kind
items, or highly perishable products
o Produce what is needed for each week, month,
and/or year
o used for products with large production
requirements
o Disadvantages: can be expensive; constantly
changing short term capacity
o Example, how you are going to schedule
labor? Think about scheduling
employees in a restaurant busy weekends
verses non-busy middle of the week.
o Produces exactly what is needed each period
o Sets labor/equipment capacity to satisfy period
demands
o Good for make-to-order products
o Uses Capacity-Based Options
A company manufactures
and distributes its own
products. When should the
company consider
outsourcing its
distribution?
When the company determines that distribution is no
longer a core function
o You don’t want to tie up your resources (like
money or people) performing non-core
functions.
A company suddenly finds
demand has increased to
140% of its previous
capacity. It has been able to
hire only a fraction of the
employees previously laid
off, and a warehouse fire
destroyed 80% of its
inventory.
Which two options does the
company have to rapidly
meet the new demand?
Hire temporary workers
o Subcontract a portion of production capacity
A hybrid aggregate plan
Combination of the above two strategies
o Take the best of the two
Once you know which strategy
you going to use, you must know
your production rate.
▪ You don’t want back orders
o Adjust your plan
▪ Look at your inventory and labor
to make sure everything is
adequate
▪ Consider the type of service are
you giving to customers
▪ Are the people working for you?
▪ Can you offer them real jobs?
▪ Is your labor work stable or are
you utilizing temporary workers?
A level aggregate plan
Constant plan
o The average of the product is figured out
and used for stock products
▪ Example, items you would
purchase at Target Stores
o Disadvantage: you are forecasting
demand, but demand cannot be averages;
demand can change each week
o Maintains a constant workforce
o Sets capacity to accommodate average demand
o Often used for make-to-stock products like
appliances
o Disadvantage- builds inventory and/or
uses back orders. Remember extra
inventory is tying up money that can be
used for other purposes.
Actual output/standard
output
Example, a fast-food restaurant performing at, above, or
below its benchmark
o Indicates how many burgers are being made and
what the standard is for that restaurant
Assignable causes of
variation
Causes that can be identified and resolved
• Examples: employees additional training,
machine need to be repaired, poor material
quality
• Out-of-control signals were found in the
process. These causes (process defects) are
identified and corrected
• Resolution: Eliminate the cause; for
example, train poor performing employee,
repair the machine
Backward scheduling
Scheduling method that determines when the job must
be started to be done on the due date
Batch process
Process used to produce a small quantity of products in
groups (batches) based on customer orders or
specifications. (Think of making a batch of cookies).
Block plan
Schematic (graph or chart) showing the placement of
resources in a facility
o Space requirements met
o Determine if more space is needed
Bottleneck in a flowchart
The longest task in the process
o Remember, bottleneck represents anything in a
process that takes a long time
o For example, in manufacturing cars, painting the
car will generally take a long time. This would
be considered the bottleneck
Budget projections
Element of a financial plan
o A component from accounting
By reducing waste
Just-in-time (JIT) and lean systems add value.
o Waste could be additional inventory or
something setting around waiting for something
else. The concept of waste is if you are not using
it now it’s waste because it can’t be used
immediately; therefore, there is no immediate
value.
C pk measure
Measures how close one is to a target and how
consistent one is with the average performance
Capacity focus
Facilities that are small, specialized, and focused on a
narrow set of objectives
Capacity measurement at
the best operating level
When the average unit cost is minimized
Capacity planning
Helps an organization identify and plan the
actions necessary to meet current and future
customer demands
• An example of capacity planning: hospital is
adding beds. They don’t usually add one or two
beds. This is usually done in bulks.
• There is no really cut and dry way to measure
capacity, but it can be used to measure output.
• For example, a pizza shop may not be able to
measure how many pizzas it can make today but
it can know how many pizzas it didn’t make
today.
• Remember for example, your capacity in the
hospital environment is your beds but your
output is your patients.
You have one patient for 2 days or one
for 3 days that’s output
o You consider how many patients you
have dealt with; not how many beds you
have.
o Another example, look at how many
people that are making pizzas and how
many go out of the door (are sold)
capacity requirements
planning (CRP)
Method used to calculate the production capacity
availability
o Need to look at how much capacity is available
o Uses planned order releases from the MRP
output to calculate the workload. (Think about
how much capacity do you need to make 100
cakes per day; Can you do this in your home
oven?)
Capacity utilization
Measures how much of the available capacity
(%) is actually being used
• Responds to the questions: Are you using less or
more? Are you using more workers? What are
your resources?
• Measures effectiveness
• Use either effective or design capacity in
denomination
Center-of-gravity approach
Consider the following: A manufacturing company
decides to open a new distribution center location in
order to minimize distribution costs to warehouses or
stores. What tool should the manufacturing company
use to determine where the new distribution center
should be located?
• Breakeven analysis - determines the units
needed to manufacture in order to breakeven
• Includes fixed costs (FC) and Variable cost (VC)
or changing costs, Transportation cost
• Center of gravity means placing yourself in the
middle.
o For example, take all the people with
whom business you do the business and
put yourself in the middle (center) of it
• Below distance model tells how far the facility
location from other stores
• Location in the middle and circle around it
Checklist
A list of common defects and the number of observed
occurrences of these defects.
Common causes or random
Causes that cannot identified
• These causes are unavoidable
• They are caused by slight differences in
processes
Compute Process Velocity
Throughput time/value-added time
o Determines speed of process (how fast we are
going)
Conception
The first stage of the project life cycle
o Identifies the need for a project
▪ Example, A company decides to enter
into a new market.
Conducting a location
analysis
- Proximity to sources of supply
- Site consideration
Control chart
Graph that shows whether a sample of data falls within
the common or normal range of variation.
Design Capacity
Maximum output rate attainable under ideal
conditions
• Example, a bakery can make 30 custom cakes
per day when pushed at holiday time
Difference between the
Push and Pull processes
Push moves the product forward in anticipation
for demand
o Pull eliminates excessive inventory (remember
that because you only take what you can process
not what is being forced or pushed to you.
Duration of the change
Duration represents length of stay
o How long does the change last or stay?
Effective capacity
A permanent measure used to achieve design
capacity
• Lower than design capacity
• Maximum output rate under normal (realistic)
conditions; usually lower than design capacity
• Example, on average a bakery can make 20
custom cakes per day
ERP (enterprise resource
planning)
An information system designed to integrate internal
and external members of the supply chain
o Software used to organize and manage processes
through information sharing
o Management control
o Decisions can be made quickly
Systems can be replaced and eliminated
resulting in save money
o Reduction in inventory
o Reduction in number of staffs
o Increased production
o Better order management
o Reduce purchasing costs
o Better cash flow
o Reduction logistics and transportation
costs
o Customers are happier due to on-time
deliveries
Execution
The fourth stage of the project life cycle
o Carrying out the activities that make up the
project
▪ For example, consider the wedding
anniversary party above: this would
entail booking the facility, arranging the
music, conducting seating arrangements,
finalizing the menu, arranging the
limousine pickup, and so on.
▪ In business, the execution of the project
entails completing the product design,
obtaining the materials and equipment
needed, setting up the process, writing
job instructions, and making the product
▪ For a political candidate, execution
would include specific fund-raising
activities, making public appearances,
and showcasing the political message
(advertising)
External distributors
The role third-party logistics providers play in the
supply chain
o Outside the company
o Could include: another company,
transportations, suppliers
