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C720
Operations and Supply Chain Management
| Term | Definition |
|---|---|
| ABC Analysis | has been developed to determine which inventory items should receive the highest level of control, focusing efforts where the payoff is highest. The inventory classifications are based on the annual dollar usage of each item. |
| Competitive advantage | is a capability that customers value, such as short delivery lead time or high product quality, that gives an organization an edge against its competition. |
| Demand patterns | are regular fluctuations in demand for a product or service, often caused by seasons, cycles, and trends. |
| Random demand | is unpredictable patterns that do not follow a pattern. |
| Cyclical demand | is a demand that occurs over a number of years and is generally predictable when a bigger picture of the market is taken into account. |
| Seasonal Demand | occurs as shoppers adjust their purchase velocity in line with holidays. |
| Trend demand | is a general regular uptick or downward flow trend over time. |
| Economic Order Quantity (EOQ) | Model is concerned primarily with the cost of ordering and the cost of holding inventory for purchased items and assumes inventory will arrive complete. |
| Economic Production Quantity (EPQ) | helps companies control the cost of ordering, receiving, and holding inventory, allows for incremental ordering and depletion, and is commonly used for production processes where inventory is arriving into storage and sent out into a production process. |
| Carrying (Holding) Costs | include costs paid for storage space, interest paid on borrowed money to finance the inventory, and any losses incurred due to damage or obsolescence. |
| Inputs | include people, capital, materials, and energy applied in any stage of the chain of processes that lead to value creation |
| Lead time | s when a company that orders materials from a supplier must account for (1) the time it takes that order to reach the supplier's offices, (2) the time to fill the order, and (3) the shipping time. |
| Market share | is its percentage of sales in a particular market, that is, its sales divided by total sales for all organizations competing in a particular market. |
| Order fulfillment | involves all the steps required to satisfy a customer's order, from obtaining an order and entering it into the organization's information system to delivering the order. |
| Periodic Review System | is designed to place an order only when on-hand inventory information is available and within the supplier's specific delivery intervals. |
| Perpetual Inventory System | continuously monitors inventory levels and is also called a continuous review system. |
| Process Design | is how the product, either a good or service, is produced. |
| Product Design | is the determination of the characteristics, features, and performance of the product. |
| Quantity Discounts Model (QDM) | refers to when items usually cost less per unit when purchased in bulk. Therefore, the order quantity directly influences the purchase price of an item. |
| Review Interval | is the time between inventory reviews. |
| Safety Stock | is inventory to protect against unexpected demand. |
| Service Level | is selecting a level of stock-outs that the company is willing to accept. |
| Stockout | occurs when inventory is depleted. |
| Stockout Costs | are when the demand during the lead time to replenish an inventory item is greater than planned, and a stockout can occur. |
| Strategy | consists of the organizational goals and the methods for implementing the goals, called key policies. Defines how the organization chooses to compete within the framework dictated by the external environment. |
| Sustainability | is the ethical issues an organization faces to balance financial performance while maintaining social responsibility standards and a responsible environmental profile. |
| SWOT analysis | is a simple but useful technique for analyzing an organization's strengths and weaknesses and the opportunities and threats that it faces. |
| Target Level | is the quantity ordered must increase inventory up to a level sufficient to cover anticipated demand before the next order is received. |
| Technology | is applying knowledge, usually in the form of recently developed tools, processes, and procedures, to solve problems. |
| Triple constraint factors | of time, cost, and scope, as well as the over-arching concern of quality in program and project management at the organizational level, are often used as determining factors whether to outsource or not to outsource. |
| Types of Inventories | Raw materials, Work-in-process (WIP), Finished goods, MRO supplies, Transit Inventory |
| Check sheets | are the means used to record data points in real-time at the site where the data is generated. |
| Continuous process improvement | is the philosophy of continuously seeking ways to improve a process. |
| Control charts | are graphical depictions of process output where the raw data is plotted in real-time within upper (UCL) and lower control limits (LCL). |
| Costs of Quality | is a method that allows organizations to determine the costs associated with producing and maintaining quality products. |
| Internal failure | costs are those associated with defects found before the product reaches the customer. |
| External failure | costs are incurred after a product has reached the customer |
| Appraisal costs | are the costs incurred to measure quality, assess customer satisfaction, and inspect and test products. |
| Prevention costs | result from activities designed to prevent defects from occurring. |
| Design for manufacture and assembly (DFMA) | emphasizes that products should be designed so they are simple and inexpensive to produce. |
| DMADV | process is used specifically for new products or processes, and it is also known as design for Six Sigma (DFSS) with five steps summarized as define, measure, analyze, design, and verify. |
| DMAIC | is a Six Sigma process that follows five steps: define, measure, analyze, improve, and control. |
| Define | The Six Sigma expert uses a project charter to define a problem or an improvement opportunity and can also involve the voice of the customer or VOC. |
| Measure | Measuring current or as-is process performance is accomplished with a process map of the activities performed at each step of the process. |
| Analyze | Charts and diagrams, such as scatterplots, Pareto charts, histograms, and run charts, visualize measurements and problem frequencies to identify root causes of process variations leading to defects. |
| Improve | The current process is changed by addressing the root causes identified in the analysis stage to improve process performance through a control plan to document the requirements to reduce process variation. |
| Control | Maintaining and standardizing the improved performance is the final step of the DMAIC methodology. |
| Documentation | is the act of putting a standardized procedure into writing. |
| Flow Chart | is a diagram depicting a process, a system, or a computer algorithm. Provides a breakdown of the essential steps to solving the problem. |
| Histogram | will demonstrate the frequency of data observations within a preset range of values. |
| Pareto chart | represents data values in descending order to visualize the most frequent occurrences. |
| Plan-Do-Check-Act Cycle | embodies the philosophy of continuous improvement as the cycle is repeated over and over without end. |
| Product quality | is the extent to which the product successfully serves the purposes of the user during usage |
| Scatter plot | displays data as a relationship between two variables. |
| Six Sigma | is a collection of ideas and programs intended to improve the quality of a service or a good by using tools that identify the root cause of the defects to produce error-free products., specifically 3.4 defects per 1 million units. |
| Total quality management (TQM) | is an approach to quality management that originated in Japan and was adopted successfully by many companies throughout the world. |
| Agile Supply Chain | It involves using responsiveness, competency, flexibility, and speed to manage daily supply chain operations and assess customer needs to deliver customized products that meet expectations. |
| Backward Vertical Integration | is when a company owns the supplier or supply process in the supply chain. |
| Bottleneck | is the most limiting constraint on the system. It occurs at the point in the process that requires the longest time or has the slowest rate. |
| Forward Logistics | is the forward flow where a good (or goods) are pushed to the customer. |
| Forward Vertical Integration | is when a company can own the distribution systems and retail outlets that sell its products. |
| Insourcing | is when those goods and services are provided by the organization itself, they are in-sourced. |
| Lean Supply Chain | focuses on producing high volume at low cost with the goal of adding value for customers by reducing the cost of goods and lowering waste or non-value-added activities. |
| Logistics | involves managing the internal movement of materials, components, and information from point to point in the supply chain. |
| Outsourcing | is defined as the procurement of products or services from sources that are external to the organization. |
| Reverse Logistics | is the backward flow of goods from the customer to the manufacturer for return or recycling. |
| Supply Chain | encompasses all activities associated with the flow and transfer of goods and services, from raw material extraction through use by the final consumer. |
| Types of bottlenecks | Regulatory, labor, technology, decision-making(admin), physical, process, financial. |
| Vendor Managed Inventory | The supplier coordinates production with inventory replenishment, reducing costs and improving delivery by using daily POS data and accessing the retailer's inventory files. |
| Vertical Integration | is owning multiple assets in a supply chain |
| Assembly line | is used to describe the assembly of low-variety, high-volume discrete products. Product layout has relatively high fixed costs and relatively low variable costs. Example: washing machine assembly. |
| Batch flow | is a term used to describe a production process that aggregates similar products together to generate sufficient volume for efficient use in a facility. |
| Capacity | is a measure of an organization's ability to sustainably provide customers with the demanded services or goods in the amount requested and in a timely manner, given current resources. |
| Capacity planning | is very important because significant capital is usually required to build facilities and purchase the equipment to build capacity. |
| Constraint | is any resource, including processes, resources, and market demand, whose capacity is less than or equal to demand for that resource |
| Continuous flow process | does not usually identify individual units but rather a mixed product that flows in a continuous stream with low variety and high volume. |
| Economies of scale | is the ability to produce more goods at a lower cost by utilizing the same equipment and production process. |
| Economies of Scope | an be expressed as building the necessary volume, as in economies of scale, by producing a variety of products in combination using the same process and equipment. |
| Job shop | production, the facility is general and flexible enough to meet a variety of needs. To achieve this flexibility, job shops generally have a much higher unit cost than line flow or batch processes for the same product. |
| Lag strategy | entails adding capacity only after an organization is running at full capacity or is beyond due to an increase in demand. |
| Lead strategy | adds capacity with the anticipation of an increase in demand, reducing the amount of lead time and improving service levels to meet all demands during high growth periods. |
| Match strategy | moderate strategy that adds or decreases capacity in small amounts. |
| Process Layout | is when similar equipment is grouped into a work center or department, as it might be in a job shop. |
| Process selection | is determining the most appropriate method of completing a task. It is a series of decisions that include technical or engineering issues and volume or scale issues. |
| Product Layout | is when the equipment that processes the products should be arranged around the product so material handling and transportation costs are not excessive. |
| Theory of Constraints (TOC) | is a five-step process to optimize throughput by identifying system bottlenecks, aligning operations with their capacity, and finding ways to overcome them. |
| The steps of the TOC | Identify the system's constraint. Exploit the system's constraint. Subordinate everything else to the decision. Elevate the system's constraint. Repeat the process. |
| Aggregate planning | s the combining of individual end items into product groups or product families for planning purposes. It is a medium-range (6–18 months) statement of planned output by product groups on a monthly basis. |
| Bill of materials (BOM) | lists the materials needed and the quantities of each to produce the finished product. Identifies how many of each part goes into making one unit of a finished product. |
| Capacity requirements planning (CRP) | is the method used after MRP to calculate the required workload or total production time for a department based on the time required to process all the orders on the required equipment within the specified time period. |
| Cycle Time | controls the flow of product along the assembly line and determines the assembly's capacity. |
| Exponential smoothing | is another form of a weighted moving average. It is a procedure used for continually revising an estimate to include more recent data. The method is based on averaging (or smoothing) past values |
| Forecast error | s the difference between what actually happens and what is predicted |
| Manufacturing Resource Planning (MRP II) | is a planning system that integrates data from the shop floor, distribution management systems, and the systems for finance, human resources, and engineering. |
| Master production schedule (MPS) (also called the master schedule) | disaggregates the aggregate plan because it is a specific statement of exactly what will be produced and a specific date for production. |
| Master Schedule | output of the MPS process and details how much needs to be produced within a certain period, usually a two- to three-month planning horizon. |
| Material requirements planning (MRP) | generates the plan for ordering all the components and raw materials required to meet the MPS demand. |
| Mean absolute deviation (MAD) | is similar to MSE, to estimate forecasting error. MAD is calculated by adding together the differences between the actual and forecasted value once the negative and positive signs are removed. |
| Mean squared error (MSE) | s the average of all the squared errors. The differences are squared and added together, and then that total is divided by the number of observations. |
| Planning time fence (PTF) | is the period when the master scheduler can adjust the MPS as needed without disrupting production operations. |
| Purchase order | is a planned order release generated by MRP that is an authorization for a vendor to supply parts or materials. |
| Pyramid Forecasting (qualitative) | This element involves rolling up sales forecasts from the lowest to highest levels for aggregation. Management then disaggregates the forecast, distributing it back down to all levels to ensure alignment. |
| Qualitative forecast methods | are based on subjective interpretation of historical data and observations. |
| Quantitative forecast methods | are based on numerical data using previous forecasts. |
| Survey method (qualitative) | is a systematic effort to elicit information from specific groups and is usually conducted via a written questionnaire, a phone interview, or the Internet. |
| Test market (qualitative) | is where the forecaster arranges for the placement of a new or redesigned product in a city believed to be representative of the organization’s overall market. |
| Weighted moving average (quantitative) | assigns different weights to each period. If there is an up or down trend in the data, a weighted moving average can adjust more quickly than a simple moving average. |
| Lean Layout | is the primary design concern to reduce wasted movements of workers or customers, reduce WIP inventories, and increase the smooth flow of product or people through the operation. |
| Heijunka or mixed-model sequencing | is a level assembly schedule that requires the smallest reasonable number of units of each end product should be produced at a time. |
| Jidoka | provides operators with the means to check quality at their workstation; they can also be provided to authority to stop a process when they are unable to resolve the issue with corrective action procedures. |
| Just-in-time | is defined as a philosophy of operation that seeks to maximize efficiency and eliminate waste in any form by aligning raw-material orders from suppliers directly with production schedules |
| Kaizen (or "good change") | is an event to implement rapid process improvement opportunities using ideas from the people who are directly involved in the processes. |
| Kanban | is a Japanese word that can refer to a sign or a marker and means "visible record." Most often associated either with the movement of a container of parts or with the production of parts to fill an empty container. |
| Lean systems | are a business approach that emphasizes continuous improvement and waste elimination to maximize customer value. |
| Non-value-added | represents activities that are considered waste, and the customer is not willing to pay for. |
| Poka-yoke | refers to designs and devices that provide foolproof methods of preventing a defective part from continuing in the process, thus supporting quality at the source. |
| Process Mapping | is used in lean systems to identify the value-added and non-value-added tasks in a process to aid organizations in understanding, analyzing, and optimizing their operations. |
| Pull system | moves materials through a system to work-stations as they are needed. Daily builds are scheduled only when there are orders for the products. |
| Push system | moves materials through the processing operations based on a schedule. Uses a master schedule to plan builds out in time, and parts (raw materials, subassemblies, etc.) are ordered based on this build plan. |
| Takt time | is the pace at which production should operate to meet customer demand. |
| Value-added | represents activities that the customer is willing to pay for. |
| Value stream mapping | is a technique used to analyze the flow of materials, ideas, and information to understand how processes function. Each activity in the process is defined as value-added or non-value-added. |
| 8 Types of Wastes: | Defects/Rework, Overproduction, Waiting, Not Utilizing employee ideas, transportation, inventory, motion/movement, excess processing |
Created by:
mschelle816
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