Module 1 – Flashcards

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Why is manufacturing important to the economy?
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It addes value to products to generate wealth
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In a traditional manufacturing environment, which of the following objectives are in conflict?
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Minimizing production costs and decreasing inventory investment
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Which of the following statements is true?
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The objectives of marketing and production can be met with higher inventories
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WHich of the following production environments (mfg strategies) produces the longest delivery lead time?
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Make-to-order
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Which of the following is a major objective of materials management?
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Provide the required level of customer service (and manage materials)
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Which of the following are primary activites of manufacturing planing and control?
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Production planning and inventory management
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Which of the following systems is the performance measure that related to daily work routines, such as cycle time and utilization?
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Operations
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Which of the following systems is unique in its focus on the reduction of defects by reducing variation?
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Six Sigma
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Which of the following statements is true about the product layout (continuous process)?
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There is little buildup of WIP
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Which of the following statements is true regarding process layout (intermittent manufacturing)?
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Each workstation must be flexible
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Value
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The worth of an item, good or service
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Make-to-stock
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A production environment where products can be and usually are finished before receipt of a customer order
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Voice of the customer
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Actual customer descriptions in words for the functions and features customer desire for goods and services
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Tactical Plan
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The set of functional plans (production plan, sales plan, marketing plan) synchronizing activities across functions that specify production levels, capacity levels, staffing levels, funding levels, and so on, for achieving the intermediate goals and objectives to support the organization's strategic plan
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Mass customization
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The creation of high-volume product with large variety so that a customer may specify an exact model out of a large volume of possible end items, while manufacturing cost is low due to large volume.
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Layout
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Physical arrangement of resources or centers of economic activity (machines, groups of people, workstations, storage areas, aisles) within a facility
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Engineer-to-order
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Products whose customer specifications require unique engineering design, significant customization, or new purchased materials
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Assemble-to-order
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A production environment where a good or service can be assembled after receipt of a customer's order
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Gross profit
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Earnings from an ongoing business after direct costs of goods sold have been deducted from sales revenue for a given period (gross)
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Make-to-order
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A production environment where a good or service can be made after recipt of a customer's order
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Supply Chain
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The global network used to delivery products and services from raw materials to end customers thru an engineered flow of information, physical distribution, and cash.
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Enterprise Resource Planning
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Framework for organizing, defining, and standardizing the business processes necssary to effectively plan and control an organization so the organization can use its internal knowledge to seek external advantage
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What is the primary goal of manufacturing?
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To create value for producers and customers. In this way, wealth is created for society as a whole.
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What is CRM (Customer Relationship Management)?
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The philosophy based on putting the customer first. It involves the collection and analysis of information to support customers
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What are the 3 major factors affecting organizations today?
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Global competition, regulatory influences, and customer expectations
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Order Qualifiers
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Those competitive characteristics that a firm's products must exhibit to be viable competitors
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Order Winners
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Those competitive characteristics that cause a firm's customer to choose that firm's goods and services over those of its competitors
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What influences the chioce of production environment (ETO, MTO, MTS, ATO)?
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Lead time expectations, product design input from customers, product volume and variety, product life cycle
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What are the phases of the product life cycle?
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Introduction, Growth, Maturity, Decline, Phase-out
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What are the 3 choices of processes and layouts?
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Intermittent, Flow, and Project
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What are two types Flow manufacturing?
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Repetitive/Line & Continuous Flow
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What are the advantages of Flow manufacturing?
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Low WIP, Short throughput and mfg lead times, Low unit costs
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Supply Chain Management
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The design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a cmpetitive infrastructure, leveraging world-wide logistics, synchronizing supply with demand, and measuring performance globally
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Basic elements of Supply Chain Management
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Suppliers > Producers/Manufacturers > Distributors > Retailers > Consumers > Flow of information, cash, goods, and services
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3 types of performance measures
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Strategic, Tactical, Operational
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Strategic performance measures
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Relate to the long-term goals of a business. Examples include profitability, market share, growth, and productivity
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Tractical performance measures
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Relate to intermediate-term goals and objectives to support the organization's strategic plan. Examples include adherence to production plans and budgets, percentage on-time delivery, and inventory turns
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Operational performance measures
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Relate to daily work routines. Examples include work center cycle times, utilization, and efficiency
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What is the function of the Balance Scorecard?
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to assess performance against KPIs for a certain time period
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What is the role of Materials Management?
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Balance conflicting objectives of marketing, production, and finance by managing the flow of materials. Balancing resources of the company with demand
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Lean/JIT focus?
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- identifying and eliminating non-valued-added activities and resources, which are considered waste - creating continuous flow in manufacturing as a result of pull by the customer - empowering employees - continuous improvement
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TQM (Total Quality Management) key principles?
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- Customer focus - Identifying costs of quality - Taking actions to solve problems - Continous improvement
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Six Sigma important elements?
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- variation causes defects - goals is to have no more than 3.4 defects per million opportunities (six sigma level performance) - continuous improvement and problem solving to reduce variation and defects
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Theory of Constraints
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A holistic management philosophy based on teh principle that systems have constraints that limit their ability to meet the system's goals. It's objective is to achieve throughput goals by identifying and managing a few leverage points
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Which of the following is a characteristic of demand?
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Seasonal variation
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Product A is made from components B and C. Component B is made from parts D and E. Which items should be forecast?
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Only A (end item)
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Which of the following is the best statement about the general principles of forecasting?
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Every forecast should include an estimate of error
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What important assumption is made about quantitative forecasting methods?
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The past is a valid indicator of the future
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Which forecasting technique takes the average demand for some past number of periods?
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Moving average
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Why is it important to monitor the forecast?
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To improve our forecasting methods
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Which of the following statements is most accurate?
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The seasonal index is an estimate of how much the demand during the season will be above or below the average demand
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Which of the following causes forecast error?
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Random variation from the average demand
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Which of the following statements is most accurate?
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Independent demand items should be forecast
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Which of the following statements is most accurate?
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The circumstances relating to demand data should be recorded
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Order Qualifiers
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Those competitive characteristics that a firm must exhibit to be a viable competitor in the marketplace
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Random Variation
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A fluctuation in data that is casued by uncertain or random occurrences
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Moving Average
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An arithmetic average of a certain number (n) of the most recent observations. As each new observation is added, the oldest observation is dropped.
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MAD - Mean Absolute Deviation
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The average of these absolute values of the deviation of observed values from some expected value
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Dependent
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Demand that is driectly related to or derived from the bill of material structure from other items or end products
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Trend
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Methods for forecasting sales data when a definite upward or downward patter exists
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Seasonal
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Inventory built up to smooth production in anticipation of peak seasonal demand
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Forecast
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An estimate of future demand
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Intrinsic
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A forecast based on internal factors, such as an average of past sales. Ant. Extrinsic Forecast
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Exponential Smoothing
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A type of moving average forecasting technique in which planners can choose the relative weighting of the latest period's actual demand and its forecast in developing the forecast for the next period
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Qualitative
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An approach to forecasting that is based on intruitive or judgemental evaluation
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Order Winners
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Those competitive characteristics that cause a firm's customers to choose that firm's goods and services over thsoe of it competitors
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Independent
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The demand for an item that is unrelated to the demand for other items
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Bias
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A consistent deviation from the mean in one direction (high or low)
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Quantitative
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An approach to forecasting where historical demand data is used to project future demand
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Extrinsic
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A forecast method on a correlated leading indicator, such as estimating furniture sales based on housing starts
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Demand
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A need for a particular product or component
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225 Units
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Beginning Inventory = 100 Ending Inventory = 100 Sales Forecast: Month 1 2 3 4 5 Qty 150 175 200 300 300 What is the required monthly production to achieve level production?
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8
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Periods 1 2 3 4 5 Forecast 30 30 30 30 25 Actual Demand 22 18 25 20 20 What is the MAD for the data given?
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104
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Month 1 2 3 4 5 6 Projection 100 100 100 100 100 100 Demand 95 102 105 105 104 103 The project for the 7th month using a three-month moving average is?
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1,200,000
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Revenue 2,500,000 Direct Labor 300,000 Direct Material 500,000 Overhead 400,000 G&A Expenses 150,000 What is total Cost of Goods Sold (COGS)?
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1,300,000
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Revenue 2,500,000 Direct Labor 300,000 Direct Material 500,000 Overhead 400,000 G&A Expenses 150,000 What is total Gross Income?
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1,150,000
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Revenue 2,500,000 Direct Labor 300,000 Direct Material 500,000 Overhead 400,000 G&A Expenses 150,000 What is total Net Income?
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What important assumption is made about quantitative forecasting methods?
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The past is a valid indicator of the future
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Which of the following causes forecast error?
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Random variation from the average demand
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Under which of the following circumstances will firms generaly make-to-stock?
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Required delivery timers are shorter than the time needed to make the product
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Which of the following statements is most accurate about the MPS?
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If it is poorly done, we can expect past-due schedules and unreliable delivery promises
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Which of the following statements is true about the product layout (continuous process)?
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There is little buildup of work-in-process inventory
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What is the name of the set of priority planning techniques for planning component items below the end-item level?
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Material requirements planning
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Which of the following is a major input to an MRP system?
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The master production schedule
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Wha tis hte term for the ability to relate the demand for a item shown on an MRP record back to the parent causing the demand?
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Pegging
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Which statement is correct?
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Planned order receipts show when the order is released
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58 hours
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A work center consists of 2 machines working 8 hours a day and 5 days a week. Historically, utilization has been 80%, and efficiency has been 90%. To the nearest hour, what is the rated capacity?
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What term indicates the percentage of time the work center is active compared to the available time?
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Utilization
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Which of the following company objectives are in conflict?
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Maximum customer service and low-cost plant operation
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Which of the following are considered ordering costs?
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Production control costs
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Which of the following costs is relevant to inventory management decisions?
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Storage costs
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What term is used for the ratio of standard hours or work produced to hours actually worked?
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Efficiency
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Which of the following statements is most accuarte?
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A bottleneck will control the throughput of all products processed by it (5,10)
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8
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Level 0 1 2 2 1 1 Part A B C E C G Qty 2 2 2 4 4 How many units of part C are required to produce one unit of part A?
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A & B only
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Level 0 1 2 2 1 1 Part A B C E C G Qty 2 2 2 4 4 Which of the items in the BOM are parents?
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Total = $11,500 Average = $11.50 per unit
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To make a particular component requires an overhead [fixed] cost of $6000 and a variable unit cost of $5.50 per unit. What is the total cost and the average cost of producing a lot of 1000?
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40 days
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A company has 7000 units on hand and the annual usage is 42,000 units. There are 240 working days in the year. What is the days of supply?
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week 1
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Complete the table: Week 1 2 3 4 5 6 Gross Requirements 10 10 10 10 10 10 Projected Available 20 Net Requirements Planned Order Receipts Planned Order Release __What week is the first that requires action?
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Planning Horizon
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The amount of time a plan extends into the future. It is normally set to cover a minimum of cumulative lead time plus time for lot sizing low-level components and for capacity changes of primary work centers
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Capacity Available
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The capability of a system or resource to produce a quantity of output in a particular time period. Capacity available is based on the following: Available time, Utilization, and Efficiency
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Available Time
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No. of machines (or workers) x hrs/day x days/wk
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Utilization %
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hrs actuall worked / hrs of available time x 100%
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Efficiency %
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std hours actually worked / hours of work produced x 100%
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Rated Capacity (std hrs)
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available time x utilization x efficiency
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Demonstrated Capacity (std hrs)
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sum of std hrs for N past periods / N past periods
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Operation Time
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Setup time plus run time
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Critical Ratio
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Time remaining / Work remaining
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Capacity
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Measured in terms of output per time period
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Inventory Turnover
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Annual COGS / Avg inventory in dollars
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Annual Ordering Costs
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No. of orders per year x cost per order ($)
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Quality
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Conformance to requirements or fitness for use
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Sales & Ops Planning, Master Scheduling
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Master Planning
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Production Plan
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What is the output of the Sales & Ops Plan?
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Families
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What types of products are forecasted at the Sales & Ops level?
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End-Items
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What types of products are forecasted at the Master Scheduling level?
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Components & Subassembly
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What types of products are forecasted at the Material Requirements Planning level?
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Master Production Schedule
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What is the output of Master Scheduling?
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Sales & Ops Planning, Master Scheduling, Materials Requirements Planning
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What does Priority Planning consist of?
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Tactical Plan
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What type of plan is the Sales & Ops plan?
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Production Plan
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What type of plan is the Master Schedule?
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Resource Planning
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What type of capacity planning does Sales & Ops Planning utilize?
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Rough-Cut Capacity Planning
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What type of capacity planning does Master Scheduling utilize?
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Capacity Requirements Planning
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What type of capacity planning does Material Requirements Planning utilize?
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Input/Output Control, Operation Sequencing
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What are the major outputs of Production Activity Control (PAC)?
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Marketing Mix
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Product, Price, Promotion, Place
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Independent & Dependent
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2 types of demand
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Forecast, Customer Orders, Replenishment Orders, Interplant Transfers, Other (promos, prototypes, etc)
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5 sources of demand
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Trend, Seasonal, Random, Cyclical
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4 basic demand patterns
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Stable Demand
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Demand that retains general shape over time, are easier to forecast, and remain consistently within predetermined or expected upper and lower limits allowing for random variation
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Dynamic Demand
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Demand that is less predictable, harder to forecast and make forecasting prone to error. Over the long run, dynamic demand has a random pattern (typically).
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Business, Sales & Ops, Master Scheduling
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Demand forecasts support planning at what 3 levels?
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Marketing Management's role
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To develop and implement marketing plans for products with order winning and qualifying characteristics
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Demand Management
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A process that influences and shapes demand though marketing and sales activities, and recognizes demand through forecasting and customer orders.
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Marketing Management, Customer Relationship Management, Demand Planning
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3 processes that related to demand
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Qualitative & Quantitative
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2 categories of forecasting techniques
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Extrinsic & Intrinsic
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2 types of quanititative forecasting
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Moving Average & Exponential Smoothing
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2 types of Intrinsic Forecasting
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Exponetial Smoothing Formula
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(a)(latest or actual demand) + (1-a)(previous or "old" forecast)
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Seasonal Forecast
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Deseasonalized Demand x each Seasonal Index Deseasonalized Demand = total forecast for a year / number of periods Seasonal Index = period average demand / avg demand for all periods
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Bias & Random Variation
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2 forms of forecasting error
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Why is MAD important?
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Indicates the relative cost of different levels of customer service
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Level Schedule
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A production schedule that generates material and labor requirements that are as evenly spread over time as possible
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Planning Horizon
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The amount of time a plan extends into the future
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Hybrid
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A production strategy that combines the aspects of both the chase and level production strategies
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Production Planning
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A process to devlop tractical plans based on setting the overall level of manufacturing putput to best satisfy the current planned levels of sales
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Resource
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Anything that adds value to a good or service in its creation, production, or delivery
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Due date
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The date when purchased material or production material is due to be available for use
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Master Production
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A type of schedule; a line on the master grid that reflects the anticipated build scheduel for those items assigned to the master scheduler
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Scheduled Receipt
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An open order that has an assigned due date.
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Resource Planning
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Capacity planning conducted at the business plan level. The process of establishing, measuring, and adjusting limits or levels of long-range capacity
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Master Planning
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A group of business processes taht includes the following activities: demand management, production adn resource planning; and master scheduling
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Rough-Cut
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A type of capacity planning; the process of converting the master production schedule into requirements for key resources, often including lable, machinery, warehouse space, supplier's capabilities, and, in some cases, money.
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Chase
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A production strategy that maintains a stable inventory level while carying production to meet demand
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Level Production Strategy
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Which basic production planning strategy wil build inventory and aboid the costs of exces capacity?
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Similiarity of manufacturing process
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For the purposes of production planning, product families should be established on the basis of...
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600 units
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If the opening inventory is 100 units, sales are 500 units, and the ending inventory is 200 units, what will manufacturing produce?
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Required delivery times are shorter than the time needed to make the product
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Under which of the following circumstance will firms generally make-to-stock
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The forecast of individual end items
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The information needed to develop a master schedule will come from which of the following?
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It is an agreed-upon plan between production and marketing/sales
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Which of the folling is a characteristic of MPS?
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To maintain the desired level of customer service
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Which of the follwing is an objective of MPS?
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If it is poorly done, we can expect past-due schedules and unreliable delivery promises
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Which of the following statements is most accurate about the MPS?
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Available-to-promise
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What is the portion of inventory or production that is not committed to customer orders called?
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Changes far out in the planning horizon can be made with little or no cost to manufacturing
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Which of the following is true about time fences in a master schedule system?
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Priority Planning
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The function of determining what material is needed and when. master scheduline gna material erquirements planning are the elements used for planning and replanning process to maintain proper due dates on required materials
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The quantities demanded of each product family or product line in each period; Disired inventory level; The resources of equipment, labor, and material needed in each period; The availability of needed resources
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What are the concerns of production planning?
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Chase, level, subcontractin, hybrid
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Four basic production strategies
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Chase Production Strategy
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Production schedule matches the quantity demanded by period
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Level Production Strategy
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Production level is equal to the average demand
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Subcontracting Production Strategy
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Production level is equal to the level of the minimum demand, and the rest is fulfilled through subcontracting
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Hybrid Production Strategy
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Used to balance customer srevice, inventory, and stable labor objectives
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