Operations Management (Collier/Evans) Chs.12,15,16,17 – Terms – Flashcards
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Chapter 12
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Chapter 12
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Inventory
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any asset held for future use or sale
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Inventory Management
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Involves planning, coordinating, and controlling the acquisition, storage, handling, movement, distribution, and possible sale of raw materials, component parts and sub assemblies, supplies and tools, replacement parts, and other assets that are needed to meet customer wants and needs.
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Raw materials, component parts, sub assemblies, and supplies
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inputs to manufacturing and service-delivery processes
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Work-in-progress (WIP) inventory
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consists of partially finished products in various stages of completion that are awaiting further processsing
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Finished-goods inventory
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Completed products ready for distribution or sale to customers
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Safety stock inventory
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an additional amount of inventory that is kept over and above the amount required to meet demand
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Environmentally Preferable Purchasing (EPP), or Green Purchasing
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affirmative selection and acquisition of products and services that most effectively minimize negative environmental impacts over their life cycle of manufacturing, transportation, use, and recycling or disposal
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Ordering Costs or Setup Costs
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are incurred as a result of the work involved in placing orders with suppliers or configuring tools, equipment, and machines within a factory to produce an item
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Inventory-holding or Inventory-carrying costs
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are the expenses associated with carrying inventory
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Shortage or Stockout Costs
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are costs associated with inventory being unavailable when needed to meet demand
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Unit Cost
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the price paid for purchased goods or the internal cost of producing them
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Stock-keeping unit (SKU)
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a single item or asset store in a particular location
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Independent Demand
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demand for an SKU that is unrelated to the demand for other SKU's and needs to be forecasted
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Dependent Demand
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SKU's when their demand is directly related to the demand of other SKU's and can be calculated without needing to be forecasted
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Static Demand
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Demand that is stable
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Dynamic Demand
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Demand that varies over time
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Stockout
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inability to satisfy the demand for an item
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Backorder
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occurs when a customer is willing to wait for an item
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Lost Sale
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occurs when a customer is unwilling to wait and purchase the item elsewhere
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Fixed-quantity system (FQS)
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the order quantity or lot size is fixed; that is, the same amount, Q, is ordered every time
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Inventory Position (IP)
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described as the on-hand quantity (OH) plus any orders placed that has not arrived (called scheduled receipts, SR), minus any backorders (BO)
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Reorder Point
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the value of the inventory position that triggers an new order
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Economic Order Quantity (EOQ) model
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classic economic model developed in the early 1900's that minimizes the total cost, which is the sum of the inventory-holding cost and the ordering cost
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Cycle Inventory; Order; Lot size inventory
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is inventory that results from purchasing or producing in larger lots than are needed for immediate consumption or sale
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Safety stock
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additional planned on-hand inventory that acts as a buffer to reduce the risk of a stockout
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Service Level
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the desired probability of not having a stockout during a lead-time period
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Fixed-Period System (FPS)
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sometimes called a periodic review system-is one in which the inventory position is checked on at fixed intervals of time, T, rather than on a continuous basis
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Chapter 15
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Chapter 15
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Quality Management
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refers to systematic policies, methods, and procedures used to ensure that goods and services are produced with appropriate levels of quality to meet the needs of customers
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Fitness for use
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the ability of a good or service to meet customer needs
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Quality of conformance
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the extent to which a process is able to deliver output that conforms to the design specifications
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Specifications
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are targets and tolerances determined by designers of goods and services
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Service Quality
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is consistently meeting or exceeding customer expectations (external focus) and service-delivery system performance criteria (internal focus) during all service encounters
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Six Sigma
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a business improvement approach that seeks to find and eliminate causes of defects and errors in manufacturing and service processes by focusing on outputs that are critical to customers, resulting in a clear financial return for the organization
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Defect
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is any mistake or error that is passed on the customer
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Unit of Work
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is the output of a process or an individual process step
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Cost of quality
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refers specifically to the costs associated with avoiding poor quality or those incurred as a result of poor quality
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Prevention Costs
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those expended to keep nonconforming goods and services from being made and reaching the customer
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Appraisal Costs
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those expended on ascertaining quality levels through measurement and analysis of data to detect and correct problems
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Internal Failure Costs
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costs incurred as a result of unsatisfactory quality that is found before the delivery of a good or service to the customer
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External Failure Costs
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costs incurred after poor-quality goods or services reach the customer
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Kaizen
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focuses on small, gradual, and frequent improvements over the long term with minimum financial investment and with participation by everyone in the orgnaization
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Kaizen blitz
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an intense and rapid improvement process in which a team or a department throws all its resources into an improvement project over a short time period, as opposed to traditional kaizen applications, which are performed on a part-time basis
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Poka-yoke
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an approach for mistake-proofing processes using automatic devices or methods to avoid simple human error
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Chapter 16
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Chapter 16
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Quality Control
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a task to ensure that a good and service conforms to specifications and meets customer requirements by monitoring and measuring processes and making any necessary adjustments to maintain a specified level or perfromance
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Quality at the Source
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means the people responsible for the work control the quality of their processes by identifying and correcting any defects or errors when they first are recognized or occur
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Statistical Process Control (SPC)
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a methodology for monitoring the quality of manufacturing and service-delivery processes to help identify and eliminate unwanted causes of variation
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Common Cause Variation
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the result of complex interactions of variations in materials, tools, machines, information, workers, and the environment
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Special (or assignable) Cause Variation
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arises from external sources that are not inherent in the process, appear sporadically, and disrupt the random pattern of common causes
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In Control Process
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a process if no special causes affect the output of it
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Out of Control Process
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a process in which special causes are present
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Continuous Metric
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one that is calculated from data that are measure as the degree of conformance to a specification on some continuous scale of measurement
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Discrete Metric
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one that is calculated from data that are counted
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Process Capability
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refers to the natural variation in a process that results from common causes
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Process Capability Study
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a carefully planned study designed to yield specific information about the performance of a process under specified operating conditions
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Process Capability Index (a quantified measure)
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the relationship between the natural variation and specifications
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Chapter 17
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Chapter 17
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Lean Thinking
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refers to approaches that focus on the elimination of waste in all forms, and smooth, efficient flow of materials and information throughout the value chain to obtain faster customer response, higher quality, and lower costs
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Lean Operating Systems
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manufacturing and service operations that apply the principles of lean enterprise
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The 5 S's
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derived from Japanese terms: seiri (sort), seiton (set in order), seiso (shine), seiketsu (standardize), and shitsuke (sustain)
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Visual Controls
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indicators for operating activities that are placed in plain sight of all employees so that everyone can quickly and easily understand the status and performance of the work system
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Single Minute Exchange of Dies (SMED)
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refers to the quick setup or changeover of tooling and fixtures in processes so that multiple products in smaller batches can be run on the same equipment
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Batching
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the process of producing large quantities of items as a group before they are transferred to the next operation
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Single-Piece Flow
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the concept of ideally using batch sizes of one
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Total Productive Maintenance (TPM)
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is focused on ensuring that operating systems will perform their intended function reliably
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Push System
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produces finished-goods inventory in advance of customer demand using a forecast of sales
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Pull System
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one in which employees at a given operation go to the source of required parts, such as machining or subassembly, and withdraw the units as they need them
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Kanban
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a flag or piece of paper that contains all relevant information for an order: part number, description, process area used, time of delivery, quantity available, quantity delivered, production quantity, and so on
