Operations Management:Midterm Exam

supply chain
global network of organizations and activities involved in designing a set of goods and services and their related processes, transforming inputs into goods and services, consuming there goods and services, and disposing of these goods and services
supply chain management
the design and execution of relationships and flows that connect the parties and processes across a supply chain
core capability
a set of skills that confers competitive advantages to a firm because rival firms cannot easily duplicate them
lead time
the amount of time that passes between the beginning and ending of a set of activites
process capabilities
the specific types of outputs and levels of performance that process can generate
maximum capacity
the highest level of output that a process can achieve under ideal conditions in the short terms: design capacity

highest achievable level under ideal conditions for a limited time

effective capacity
the level of capacity or output that the process can be expected to produce under normal conditions; what management plans for under normal conditions

achievable level under normal conditions; for extended time

theory of constraints
the overall management system that strives to improve system performance by identifying, focusing on and managing constraints
an activity or resource that limits or constrains the output of a process
Little’s Law
a proven relationship that exists between flow time, inventory, and throughput

flow time is related to the inventory and throughput rate of a process

flow time
the time it takes one unit to get through a process
cycle time
the time that it takes to process one unit at an operation in the overall process
Kaizen Even
short-term approach to enhancing efficiency that focuses on improving an existing process or an activity within a process
product process matrix
categorizes processes into structures based on output volume and variety

shows 5 process structures along the diagonal based on output volume and variety including project, job shop, batch, repetitive process, and continuous process

make to order
products that have similar designs but are customized during production
fixed postion layout
the layout used when the product cannot be moved during production
functional layout
a layout that groups together similar resources like Macy’s with shoe departments, jewelry, and womens clothes
product layout
a layout where resources are arranged according to a regularly occurring sequence of activities
like an automotive assembly line

facility organized around product
design minimizes line imbalance

line balancing
used to assign tasks so that idle time and the number of workstations are minimized
takt time
the maximum allowable cycle time at each workstation
Takt= available production time per day/ output needed per day
ex: 480 minutes/200 pizzas=2.4 minutes per station
indifference analysis
a cost based quantitive decision making tool that identifies the production volume at which the total cost of two processes are equal

total cost process 1= total cost process 2
fixedcost + (variable*V)=fixed(variable*V)

total quality management (TQM)
a business management strategy aimed at embedding awareness of quality in all organizational processes`
six sigma
a management program that seeks to improve the quality of process outputs by identifying and removing the causes of defects and variation in the various processes
standard deviation
used in 6 sigma
measure of the variability or dispersion of a population, data set, or distribution
pareto analysis
a technique for separating the critical few causes of problems from the trivial many.

sets priorities for action based on the assumption that roughly 80 percent of problems typically result from 20 percent of the possible causes

identifies the most critical causes to problems so that improvements efforts can be focused where the investment of time, effort, and money will yield the largest return

process capability analysis
a tool for assessing the ability of a process to consistently meet or exceed a product’s design specifications
Just in time
stockless production, zero inventories

operations management that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise

lean systems approach
operations management that emphasizes the minimization of the amount of all the resources (including time) used in the various activities of the enterprise
values respect
pull system
activities in the operating processes are initiated by actual customer demands, and not by forecasted demands.

let the customer pull value from the producer

process produces only what customers want, when they want it, where they want it.

push scheduling
where the product is sent to the next stage of production or delivery irrespective of whether or not an actual demand for the product exists

a system in which activities are initiated and products are moved according to a schedule, irrespective of whether or not the customer demands it

mixed model scheduling
the practice of leveling quantities of different products models produced over a period of time with the goal of reducing batch sizes and lead times
characteristics of goods
tangible product
product separate from consumption
can be inventoried
low customer interaction
characteristics of services
inconsistent product definition
produced and consumed at the same time
cannot be inventoried
high customer interaction
local community
financial investors
logistics management include
transportations and traffic
Operations Strategy
competitive priorities- product related
critical customer- critical to success
value proposition- products and services that customers expect
capabilities- what do they do well
Triple bottom line
full impact of activities on profit people and planet
instead of seeking profits, managers today are developing balanced sustainable strategic visions
how much available capacity is actually used
usable output from input
rated capacity
expected output

maximum useable output given the plant’s efficiency
RC= (effective capacity)(efficiency)

Implementing product changes may be a good strategy to manage demand when:
capacity exceeds demand
design capacity
the teoretical maximum output of a system in a given period under ideal conditions
facility layout
location or arrangement of everything within and around buildings

objectives are to maximize customer satisfaction, utilization of space, equipment and people, efficient flow of information, material and people, employee morale and safety

the main objective of a functional layout is to
minimize the cost of material handling
cellular layout
consists of different machines brought together to make a product

temporary arrangement only

retail/service layout
design maximizes product exposure to customers
decision variables… store floor space
the main objective of a retail layout is to
maximize the profitability per square foot of space
warehouse layout
design balances space utilization and handling cost
similar to process layout
cross docking
transferring goods from incoming trucks at receiving docks to outgoing trucks at shipping docks

avoids placing goods into storage

layouts that address trade-offs between space and material handling are referred to as
warehouse layouts
assembly line balancing
analysis of production lines

nearly equally divides work between workstations while meeting required output

objectives are to maximize efficiency and minimize number of workstations

minimum number of workstations
sum of task times
takt time
sum of task times
(actual work stations)(takt time)
improved quality has the most impact on
importance of quality
cost and market share
companies reputations
product liability
international implications
what is the most expensive in the long run
the cost of doing things wrong
which costs of quality is hardest to quantify
external costs
total quality management
quality system involving entire organization for supplier to customer

meet or exceed customer needs through company wide continuous improvements

a graphical way of identifying the few critical items as opposed to the many less important one is a
pareto chart
a schematic technique to discover possible locations of quality problems is a
cause and effect diagram
a philosophy of continuous and forced problem solving that drives out wast is referred to as
just in time
a way to eliminate waste through a focus on exactly what the customer wants is referred to as
lean production
a concept that results in material being produced only when requested and moved to where it is needed just as it is needed is referred to as
pull system
objective of a manufacturing operation layout
employee safety and health
adequate production capacity
volume and product flexibility
reduced material handling cost
in functional layouts and fixed postion layouts, it is important to minimize the cost of
material handling
demings 14 point principles
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