Operations Management Exam #1 Review (Chapters 1-4,6,;16) – Flashcards
Unlock all answers in this set
Unlock answersquestion
Three Functions all Organizations Have
answer
1. Marketing 2. Production/Operations 3. Finance/Accounting
question
Supply Chain
answer
A global network of organizations & activities that supplies a firm with goods & services
question
Ten Strategic OM Decisions
answer
1. Design of Goods & Services 2. Managing Quality 3. Process & Capacity Design 4. Location Strategy 5. Layout Strategy 6. Human Resources & Job Design 7. Supply-Chain Management 8. Inventory Management 9. Scheduling 10. Maintenance
question
Services
answer
Economic activities that typically produce an intangible product (such as education, entertainment, lodging, government, financial, & health services)
question
Nine Characteristics of Services
answer
1. Intangible 2. Produced & consumed simultaneously 3. Unique 4. High customer interaction 5. Inconsistent product definition 6. Often knowledge based 7. Services dispersed 8. Quality may be hard to evaluate 9. Reselling is unusual
question
Nine Characteristics of Goods
answer
1. Tangible 2. Product can usually be kept in inventory 3. Similar products produced 4. Limited customer involvement in production 5. Product standardized 6. Standard tangible product tends to make automation feasible 7. Product typically produced at a fixed facility 8. Many aspects of quality for tangible products are easy to evaluate 9. Product often has some residual value
question
Productivity
answer
The ratio of outputs (goods & services) divided by one or more inputs (such as labor, capital, or management)
question
Single-Factor Productivity
answer
Indicates the ratio of one resources (input) to the goods & services produced (outputs)
question
Single-Factor Productivity Equation
answer
Productivity = Units Produced/Input Used
question
Multi-Factor Productivity
answer
Indicates the ratio of how many or all resources (inputs) to the goods & services produced (outputs)
question
Multi-Factor Productivity Equation
answer
Production = Output/ Labor+Material+Energy+Capital+Misc.
question
Six Reasons Domestic Business Operations Decide to Change to Some Form of International Operation
answer
1. Improve the Supply Chain 2. Reduce Costs 3. Improve Operations 4. Understand Markets 5. Improve Products 6. Attract & Retain Global Talent
question
Globalization
answer
Means customers, talent, & suppliers are worldwide
question
Advantages of Globalization
answer
Globalizations increases efficiency & adds value to: 1. Quality 2. Variety 3. Customization 4. Convenience 5. Timeliness 6. Cost
question
Mission
answer
The purpose or rationale for an organization's existence
question
Strategy
answer
How an organization expects to achieve its missions ; goals
question
Competitive Advantage
answer
The creation of a unique advantage over competitors
question
Three Ways to Achieve a Competitive Advantage
answer
1. Differentiation 2. Low Cost 3. Response
question
Differentiation
answer
Distinguishing the offerings of an organization in a way that the customer perceives as adding value
question
Experience Differentiation
answer
Engaging a customer with a product through imaginative use of the five senses, so the customer "experiences" the product
question
Low-Cost Leadership
answer
Achieving maximum value, as perceived by the customer
question
Response
answer
A set of values related to rapid, flexible, ; reliable performance
question
Four Stages of a Product Life Cycle
answer
1. Introduction 2. Growth 3. Maturity 4. Decline
question
SWOT Analysis
answer
A method of determining internal strengths ; weaknesses ; external opportunities ; threats
question
Strategy Development Process (SWOT)
answer
1. Analyze the Environment 2. Determine the Corporate Mission 3. Form a Strategy
question
Outsourcing
answer
Transferring a firm's activities that have traditionally been internal to external suppliers
question
Advantages of Outsourcing
answer
Lower costs & more specialization
question
Disadvantages of Outsourcing
answer
Added complexity & risk to the supply chain
question
Three Phases of Project Management
answer
1. Planning 2. Scheduling 3. Controlling
question
Four Steps of the Planning Phase
answer
1. Set the Goals 2. Define the Project 3. Develop Work Breakdown Structure 4. Identify Team/Resources
question
Four Steps of the Scheduling Phase
answer
1. Sequence Activities 2. Assign People 3. Schedule Deliverables 4. Schedule Resources
question
Three Steps in the Controlling Phase
answer
1. Monitor resources, costs, & quality
question
Work Breakdown Structure (WBS)
answer
A hierarchical description of a project into more & more detailed components 1. Project 2. Major Tasks in the Project 3. Subtasks in Major Tasks 4. Activities (or "work packages") to be Completed
question
Project Charter
answer
Intended to keep everyone on the same page and prevent a project creep. Contains the following four things: 1. Project scope 2. Goals 3. Who is on the team 4. Roles on the team
question
Six Steps of PERT & CPM
answer
1. Define the project & prepare the work breakdown structure 2. Develop the relationships among activities. Decide which alternatives must precede & which must follow others 3. Draw the network connecting all the activities 4. Assign time and/or cost estimates to each activity 5. Compute the longest time path through the network. This is called the critical path 6. Use the network to help plan, schedule, monitor, & control the project
question
Activity-on-Node (AON) Diagram
answer
A netwrok diagram in which nodes designate activities
question
Critical Path Analysis
answer
A process that helps determine a project schedule
question
Earliest Start (ES)
answer
Earliest time at which an activity can start, assuming all predecessors have been completed
question
Earliest Finish (EF)
answer
Earliest time at which an activity can be finished
question
Latest Start (LS)
answer
Latest time at which an activity can start so as to not delay the completion time of the entire project
question
Latest Finish (LF)
answer
Latest time by which an activity has to finish so as to not delay the completion time of the entire project
question
Forward Pass
answer
A process that identifies all the early times
question
Earliest Start Time Rule
answer
Before an activity can start, all its immediate predecessors must be finished: 1. If an activity has only one immediate predecessor, its ES equals the EF of the predecessor 2. If an activity has multiple immediate predecessors, its ES is the maximum of all EF values of its predecessors.
question
Earliest Start Time Equation
answer
= MAX {EF of all immediate predecessors}
question
Earliest Finish Time Rule
answer
The earliest finish time (EF) of an activity is the sum of its earliest start time (ES) & its activity time.
question
Earliest Finish Time Equation
answer
= ES + Activity Time
question
Backward Pass
answer
An activity that finds all the late start & late finish times
question
Latest Finish Time Rule
answer
This rule is based on the fact that before an activity can start, all its immediate predecessors must be finished: 1. If an activity is an immediate predecessor for just a single activity, its LF equals the LS of the activity that immediately follows it 2. If an activity is an immediate predecessor to more than one activity, its LF is the minimum of all LS values of all activities that immediately follow it.
question
Latest Finish Time Equation
answer
= MIN{LS of all immediate following activities}
question
Latest Start Time Rule
answer
The latest start time (LS) of an activity is the difference of its latest finish time (LF) & its activity time.
question
Latest Start Time Equation
answer
= LF - Activity Time
question
Slack Time
answer
Free time for an activity. Also referred to as free float or free slack
question
Slack Time Equation
answer
= LS - ES or = LF - EF
question
Gantt Charts
answer
Planning charts used to schedule & allocate time
question
Forecasting
answer
The art & science of predicting future events
question
Three Types of Forecasts
answer
1. Economic Forecasts 2. Technological Forecasts 3. Demand Forecasts
question
Economic Forecasts
answer
Planning indicators that are valuable in helping organizations prepare medium-to long-range forecasts
question
Technological Forecasts
answer
Long-term forecasts concerned with the rates of technological progress
question
Demand Forecasts
answer
Projections of a company's sales for each time period in the planning horizon
question
Cycles
answer
Patterns in the data that occur every several years
question
Seasons
answer
Patterns in the data that occur every several week, months, or quarters
question
Moving Averages
answer
A forecasting technique that uses an average of the "n" most recent periods of data to forecast the next period
question
Moving Average Equation
answer
= SUM of Demand in Previous "n" Periods/"n"
question
Weighted Moving Average Equation
answer
= SUM((Weight for Period "n")(Demand in Period "n"))/SUM Weights
question
Three Problems of Moving Averages
answer
1. Increasing the size of n (the number of periods averaged) does smooth out fluctuations better, but it makes the method less sensitive to changes in the data 2. Moving averages cannot pick up trends very well. Because they are averages, they will always stay within past levels ; will not predict changes to either higher or lower levels. That is, they "lag" the actual values 3. Moving averages require extensive records of past data
question
Three Benefits of Improving Quality
answer
1. Company Reputation 2. Product Liability 3. Global Implications
question
Four Cost of Quality Categories
answer
1. Prevention Costs 2. Appraisal Costs 3. Internal Failure Costs 4. External Failure Costs
question
Prevention Costs
answer
Costs associated with reducing the potential for defective parts or services
question
Appraisal Costs
answer
Costs related to evaluating products, processes, parts, ; services
question
Internal Failure Costs
answer
Costs that results from defective parts or services before delivery to customers
question
External Failure Costs
answer
Costs that occur after delivery of defective parts or services
question
Cost of Quality (COQ)
answer
The cost of doing things wrong- that is, the price of nonconformance
question
Total Quality Management (TQM)
answer
Management of an entire organization so that it excels in all aspects of products ; services that are important to the customer
question
PDCA
answer
A continuous improvement model of plan, do, check, ; act
question
DMAIC
answer
A five step process improvement model: 1. Defines- the project's purpose, scope, & outputs & then identifies the required process information, keeping in mind the customer's definition of quality 2. Measures- the process ; collects data 3. Analyzes- the data, ensuring repeatability ; reproducibility 4. Improves- by modifying or redesigning, existing process ; procedures 5. Controls- the new process to make sure performance levels are maintained
question
Six Sigma
answer
A program to save time, improve quality, ; lower costs
question
+/- Six Sigma
answer
The variance of defects in production
question
Employee Empowerment
answer
Enlarging employee jobs so that the added responsibility ; authority is moved to the lowest level possible in the organization
question
Benchmarking
answer
Selecting a demonstrated standard of performance that represents the very best performance for a process or an activity
question
Five Steps for Developing Benchmarks
answer
1. Determine what to benchmark 2. Form a benchmark team 3. Identify benchmarking partners 4. Collect ; analyze benchmarking information 5. Take action to match or exceed the benchmark
question
Just-in-Time (JIT)
answer
Aims at continuing improvement ; enforced problem solving. Is a system designed to produce or deliver goods just as they are needed
question
Three Benefits of JIT on Quality
answer
1. Cuts the cost of quality 2. Improves quality 3. Better quality means less inventory ; a better, easier-to-employ JIT system
question
Seven Quality Tools
answer
1. Check Sheet 2. Scatter Diagram 3. Cause-and-Effect Diagram 4. Pareto Chart 5. Flowchart (Process Diagram) 6. Histogram 7. Statistical Process Control Chart
question
Check Sheet
answer
An organized method of recording data. Examples would be recording tallies of the areas where defects are occurring or a sheet showing the type of customer complaints
question
Scatter Diagram
answer
A graph of the value of one variable vs. another variable. An example would be a graph showing the relationship between length of a service call and the number of trips a repair person makes back to the truck for parts
question
Cause-and-Effect Diagram
answer
A schematic technique used to discover possible locations of quality problems. They provide a good checklist for initial analysis
question
Pareto Charts
answer
A graphic way of classifying problems by their level of importance, often referred to as the 80-20 rule. Used to help focus on problem solving efforts
question
Flowcharts
answer
Block diagrams that graphically describe a process or system. Used to make sense of or explain a process
question
Histograms
answer
A distribution that shows the frequency of occurrences of a variable. They may also provide insight as to the cause of variations
question
Statistical Process Control (SPC)
answer
A process used to monitor standards, make measurements, ; take corrective action as a product or service is being produced
question
Lean
answer
The use of continuous improvement tools to eliminate waste in a business. This is done by identifying and reducing non-value added activity in a business.
question
Three Fundamentals of Lean
answer
1. Improve Throughput 2. Eliminate Waste 3. Remove Variability
question
Takt Time
answer
The idea of Takt time is to set the rhythm or beat of the production flow. It represents how often a part must be produced to exactly match customer demand.
question
Takt Time Equation
answer
= Net Available Work Time/Customer Demand
question
Three Defining Steps in a Process
answer
1. Value Added 2. Non-Value Added but Required 3. Non-Value Added
question
Eight Wastes of Downtown
answer
1. Defects-scrap, returns, warranties 2. Overproduction-producing more than the customer needs 3. Waiting, downtime, storage, idle time, setup time 4. Not Using Peoples Talents-not using everyone's knowledge 5. Transportation-moving materials internally or externally 6. Inventory-raw, WIP and Finished goods 7. Motion-movement of equipment or people at their workstation 8. Excessive Processing-orienting parts, excessive packaging time
question
Value Stream Analysis (VSA)
answer
Systematic methodology of finding and implementing ways to incrementally improve a process. Can be done in weekly sessions or sometimes done in multiple day events.
question
Seven Steps to a VSA
answer
1. Identify Scope of Process 2. Map Current State Map 3. Identify Waste 4. Create Ideal State of Process 5. Develop Guiding Principles 6. Create Future State Map 7. Develop Action Plan
question
Current State Map
answer
There are 3 versions to every process 1.What it is supposed to be 2.What people think it is 3.What it ACTUALLY is
question
Ideal State
answer
How would you design the process if money, space, time and resources were not to be considered? What is the perfect way to do the process?
question
Future State Map
answer
The future state of the process which incorporates as many elements of guiding principles as possible and eliminates or minimizes the identified wastes. Team should reach CONSENSUS on the design of the future state. New process should be piloted to test methods before full scale implementation.
question
Guiding Principles
answer
What makes an ideal state ideal?
question
Kaizen/Rapid Improvement Event (RIE)
answer
Duration: Can last from several hours to several days. Team: Includes members of all departments and/or workstations that will be impacted by the changes to the process. Structure: Utilize tools such as line balance, cellular manufacturing and standard work to implement process changes needed.
question
5s
answer
A systematic method to simplify, organize and setup work and storage areas to remove clutter and reduce space utilization and waste.
question
The Five S's
answer
1.Sort 2.Set in Order 3.Shine 4.Standardize 5.Sustain
question
Kanban
answer
Method to establish a pull system of materials and resources in an operation. Utilizes some visual signaling method to trigger a supply/production event. Traditional Kanban systems utilize a card to signal when materials should be ordered or produced.
question
Poka-Yoke (Error Proofing)
answer
Utilizes methods that prevent an error from being made or makes it obvious when one is made.
question
Standard Work
answer
1.Developing a standard way to do a task such that different operators get the same result. 2.Create a work instruction that can be followed by an untrained individual with no guidance other than the work instruction itself. 3.Establish method to track results and update work methods as improvements are developed
question
Four Goals of Standard Work
answer
1.Provide everyone that does a task a visual tool to ensure proper execution. 2.Improve the reproducibility of a process and minimize the opportunities for error. 3.Ensure stable work flow through a process. 4.Make training easy and effective.
question
What is the Goal?
answer
To make the company money Alex: Increase net profit while simultaneously increasing both ROI and Cash Flow Jonah: Increase Throughput while simultaneously lowering inventory and operational expense.
question
Three Key Variables in the Goal
answer
1. Throughput 2. Inventory 3. Operational Expense (OE)
question
Throughput
answer
The rate at which the system generates money through sales.
question
Inventory
answer
All the money the system has invested in purchasing things it is going to sell
question
Operational Expense (OE)
answer
All the money the system has invested in converting inventory into Throughput
question
Work in Process (WIP)
answer
1.Anything not in its raw received form. 2.This is a form of inventory 3.Goal is to minimize or eliminate WIP
question
Efficiency Equation
answer
= Time Used/ Time Available
question
Two Things That Impact Balancing a Plant
answer
1. Dependent Variable 2. Statistical Fluctuations
question
Boy Scout Example
answer
The ability to speed up is dependent on what is going on downstream. Fluctuations don't average out, they accumulate. Dependency limits the impact of positive fluctuations. To make up gaps, everyone must move faster than the set pace at the same time (except the leader).
question
Jonah's #1 Rule
answer
Balance production to market demand
question
Jonah's #1 Rule
answer
Balance production to market demand
question
Jonah's #1 Rule
answer
Balance production to market demand
