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Prod Ops Exam 1
| Term | Definition |
|---|---|
| Operations Management | Business function responsible for planning, coordinating, controlling and leading the resources needed to produce a company's products and/or services |
| Operations | A major function that has the responsibility to coordinate human capital, equipment, technology, raw materials and information to produce a product or service effectively and efficiently, in quantity demanded, in quality required, in a timely manner, etc |
| Marketing | A major function that keeps in constant contact regarding customer desires and sell the product/service |
| Finance/Accounting | A major function that serves as record keeping and financial performance evaluation. Manage cash flow, capital investment decisions, capital allocation and pay taxes |
| What are the three major functions of business? | Operations, Marketing and Finance/Accounting |
| What are the additional activities that supplement the three major functions? | R&D, MIS, HR, and Business Law |
| What do all the functions essentially do? | Add value to the customer with an effort to provide a valuable product or service |
| What is the center and most important focus of business? | The customer |
| What do customer's have that we want? | Money |
| What is operations managements role? | Managing transformation processes to transform inputs into value-added outputs and improve the process using customer feedback and performance data |
| Examples of inputs | Human capital, buildings, processes, technologies, and raw materials |
| What are outputs? | Products and services sold |
| What is the goal of the transformation process? | Adding customer value to the transformation in order for the company to make a profit |
| What does a transformation process do? | Converts inputs into outputs with the intent of adding value to the customer and making a profit |
| What are the ways transformation occurs? | Physical, exchange, locational, information, physiological, psychological |
| What characteristics do service operations have? | Intangible products, few or no inventories, higher customer interaction, labor intensive and shorter response time to customer satisfaction |
| What characteristics do manufacturing operations have? | Physical products, inventories, lower customer contact, capital intensive, longer response time |
| Can both service and product offerings have each other's characteristics? | Yes, in today's world very few pure products or services exist |
| What are the two types of components? | Service and product |
| Strategic Decisions | Establish the broad direction of the company and are general in scope with a long-term horizon, more expensive |
| Tactical Decisions | Coordinated to facilitate the strategic decisions, are short-term in nature and more specific with operational objectives, less expensive |
| What occurred during the Industrial Revolution of the late 1700s? | Artisans are replaced by machines, labor is divided and parts are standardized |
| Who contributed to the Industrial Revolution? (1700s) | James Watt (steam engine), Adam Smith (division of labor), Eli Whitney (interchangeable parts) |
| What occurred during the Scientific Management of the early 1900s? | Planning became distinct and the manager's job was the discover the physical limits of workers |
| Who contributed to the Scientific Management? (1900s) | Frederick Taylor (Stopwatch time studies and shoveling experiment), Frank and Lillian Gilbreth (motion economy and design), Henry Ford (assembly line) |
| What occurred during the Management science of the mid 1900sS | New quantitative techniques, supported military operations during WWII, and lots of analytical techniques |
| What occurred during the Computer Age of the 1970s? | Tools provided widespread, material requirements planning (MRP) |
| What occurred during the Japanese Influence of the 1980s? | Just-in-Time, Lean Manufacturing, Total Quality Management, Business Process Reengineering |
| Flexibility | Greater variety of product/service choices on a mass scale |
| Time-Based Competition | Developing new product designs and delivering customer orders more quickly than competitors |
| Supply Chain Management | Cooperating with supplies and customers to reduce overall costs of the supply chain and increase responsiveness to customers |
| Lean Management | Continually working to reduce costs and eliminate waste |
| What two things does integrated decision making include? | Enterprise resource planning and customer resource management |
| Enterprise Resource Planning | involves large, sophisticated software programs used for coordinating company-wide resources |
| Customer Resource Management | Involves software programs used to track customer behavior and develop customer profiles |
| What three things does lean management systems include? | Lean operations, lean enterprise and lean extended enterprise |
| Lean Operations | Involves the continuing development and integration of old and new concepts to make operations more effective and efficient |
| Lean Enterprise | Involves extending the concepts of lean operations to support or staff such as HR and accounting |
| Lean Extended Enterprise | Involves extending the concepts of lean management to the entire value stream |
| Strategic Planning | Involves developing a business plan that looks into the future of the company |
| Business Strategy | Long term goals for survival and prospering |
| Core Competencies | What makes a business unique and sets them apart |
| Linkages | relationships that might occurs between environmental analysis, and core competencies |
| What are the four basic criteria that businesses compete on? | Cost, Quality, Time and Flexibility |
| Cost | Pricing below or above competitors |
| Quality | Performance/consistency (price premium) |
| Time | Faster/consistent delivery (price premium) |
| Flexibility | Product/volume flexibility (price premium) |
| How are operating efficiency and effectiveness different? | Effectiveness is doing the right thing, efficiency is doing things with the greatest output with the least input. First develop effectiveness and then reasonable efficiency |
| Order Winners | A feature that causes a customer to place an order specifically with you (high priority) |
| Order Qualifiers | A feature that at least gets you considered as a possible purchase candidate (low priority) |
| Productivity | Measure of output for a given level of input |
| What is the ideal productivity ratio? | Increase output, decrease input |
| What productivity ratio increases efficiency? | Same outputs, decrease inputs |
| What are partial measures? | A ratio of outputs to only one input (per cost object) |
| What are multifactor measures? | A ratio of outputs to several, but not all inputs (per cost) |
| What are total productivity measures? | A ratio of outputs to all inputs (per total cost) |
| What can the productivity growth rate be used for? | To compare process productivity at a given time to the same process productivity at an earlier time |
| Why is forecasting a critical business activity? | Business decisions would be suspect and lose the ability to deliver value and profit without it |
| What are the three basic forecasting principles? | Rarely perfect, more of a scientific guess, grouped forecasts are more accurate than individual items, forecast accuracy is higher for shorter time horizons |
| What are the 5 steps of the forecasting process? | 1. Decide what to forecast, 2. evaluate and analyze appropriate data, 3. select and test the forecasting model, 4. generate the forecast, 5. monitor forecast activity over time |
| Qualitative Methods | Forecasts are generated subjectively by the forecaster |
| Quantitative Methods | Forecasts are generated through mathematical modeling |
| Times Series Models | Assumes the future will follow same patterns as the past |
| Casual Models | Explores cause and effect relationships, often using leading indicators to predict the future (indetifiable relationships) |
| Data | Historic pattern and random variation |
| Historic Patterns | Level/Horizontal, Trend, Seasonality, Cycle |
| Naive | Smoothing technique -- forecast is equal to the actual value observed during the last period, useful when historical data is very stable/there is no historical data, conservative choice |
| Simple Mean | Smoothing technique -- forecast is the average of all available data, relatively conservative choice |
| Moving Average | Smoothing technique -- Forecast is the average value over a set time period, where each new forecast drops the oldest data point and adds the most recent observation, appropriate choice when shifts in data occur and puts equal emphasis on time periods |
| Weighted Moving Average | Smoothing technique -- Similar to moving average except that now each time period can have a different weight, allowing emphasis of one time period over others |
| Exponential Smoothing | Smooth technique -- adjust the next forecast by some proportion of the previous forecast error, highly dependent on the selection of alpha |
| What are the effects of low alpha? | Generate more stable forecasts, responding slowly to changes in data |
| What are the effects of high alpha? | Create forecasts that respond quickly to data changes |
| Linear Regression | y = a + bx, independent variable that predicts the dependent variable |
| Trend Projection | Where linear regression can be used with time series data (x = time) |
| What does simple linear regression quantify? | The nature and strength of the relationship |
| Correlation Coefficient (r) | Measures the general strength and direction of the relationship between the dependent and independent variables, positive = direct relationship, negative = inverse relationship |
| Coefficient of Determination | Measures the proportion of variation in the dependent variable that is explained by variation in the independent variable |
| What needs to be considered when selecting a forecasting model? | Amount and type of data available, degree of accuracy required, length of forecast horizon, and presence of data patterns |
| What is the goal of a forecastor? | To make a reasonably accurate forecsat, not perfection |
| Overforecasting | Negative Errors |
| Underforecasting | Positive Errors |
| Errors of Magnitude | Measure forecast errors without regard to the direction of the forecast errors (over/under are irrelevant, only size matters) |
| Mean Absolute Deviation | Average of the absolute values of the forecast errors (good measure of the actual error in a forecast) |
| Mean Square Error | Analogous to the variance of the forecast (good measure when large errors are critically bad) |
| Errors of Direction | Measures the aggregate direction of the forecast errors, measuring bias towards over or under forecasting, or if there is a balance (no bias) |
| What is the exception to the rule of using either MAD or MSE in combination with bias? | Regression, as it mathematically results in a bias of 0 |
| What may change how well a forecasting model is performing? | Changes in the market |
| What does a TS expose? | Errors of magnitude and direction over time |
| What does an out-of-control signal indicate? | That either the magnitude or direction of the forecasting errors is to high (no longer accurate) |
| Product and Service Design | Process of deciding the characteristics of a company's product/service offerings |
| What do products provide? | Tangible offerings |
| What do services provide | Intangible offerings |
| What are the 4 steps of developing a product or service? | (1) Idea Development Procedures and Method, (2) Product Screening for Selecting a Potential Product or Service, (3) Preliminary Design and Testing, (4) Final Design |
| Brainstorming | Soliciting many ideas without prejudice hoping for synergy of ides (success rate is low) |
| Benchmarking | Study "best-in-class" companies and compare practices and performances |
| Reverse Engineering | Disassembling/analyzing a competitor's product/service for design ideas |
| What fuctional areas does product screening include? | Marketing, Operations and Finance |
| Of a 100 patents granted by the US patent office, how many make it to the development stage? | 10% |
| How many products actually result in profits for an individual? | 1 in 10 |
| How many new product ideas are successfully introduced to the marketplace? | 1 out of every 100 |
| What should be constant considerations during the protype and design stage? | Design for manufacture and value engineering, which emphasize simpler, fewer parts with greater customer value |
| Design for Manufacture | The Lean KISS (Keep It Simple Stupid), simplify and standardize |
| Value Engineering | Each decision/component should add value or reduce fixed or unit variable costs |
| Benefits of DFM and Value Engineering | Lower costs, higher quality, improved functional performance, quality robust design |
| Concurrent Engineering | Multifunctional teams simultaneously design the product and process to reduce design time by considering cost/design trade-offs and reduce design changes |
| Remanufacturing | Involves reusing of old components and developing them into new products |
| What are the implications of process selection? | Determine equipment/technology needs and determine the mix of fixed and unit variable costs |
| Break Even Point/Indifference Point | Where does profit and cost break even at a given demand level? |
| What are the benefits/cons of automated equipment? | Increase consistency and efficiency at increased fixed cost and loss of flexibility |
| Intermittent Processes | Processes that are capable of producing a larger variety of product designs in relatively low volumes (advantage of flexibility) |
| Continuous Processes | Processes that are capable of producing one (or a few) standardized designs in very high volumes (advantages of high efficiency) |
| Project Processes | Involve one-at-a-time products made exactly to customer specifications |
| Batch Processes | Involve processes that make small batches of product with a high level of customization |
| Line Processes | Used for relatively high volumes with little customization |
| Continuous Processes | Used for very high volume, standardized products |
| Standard Operating Procedures | Procedures developed that define a step-by-step process in detail and help visualize the flow of work and information |
| Lean Management | Deals with the elimination and reduction of many types of non-value-added activities, often referred to as waste |
| Types of Waste | Overproduction, waiting, material handling, processing, inventory, motion, defects and human potential |
| What is the first principle of lean manufacturing? | Accurately specify value from the customer's perspective for both products and services |
| What is the second principle of lean manufacturing? | Identify the value stream for products and services and remove non-value-added waste along the value stream |
| What is the third principle of lean manufacturing? | Make the products and services flow without interruption across the value stream |
| What is the fourth principle of lean manufacturing? | Authorize production of products and services based on the pull by the customer |
| What is the fifth principle of lean manufacturing? | Strive for perfection by constantly removing layers of waste |
| Capacity Increase | 20% |
| Inventory Turns Increase | 33% |
| Throughput Time Decrease | 50% |
| Order Lead Time Decrease | 50% |
| What are production concepts not consistent with lean management? | Push Systems, Material Requirements Planning, End Product Inspection/Acceptance Sampling |
| Concept 1 - Eliminate Waste | Remove waste (anything that doesn't add value for the customer |
| Concept 2 - Simplicity | Keep it simple stupid, reduces opportunity for mistakes |
| Concept 3 - Broad View of Operations | Encourages a teamwork based workplace |
| Concept 4 - Continuous Improvement | If its not perfect make it better |
| Concept 5 - Visibility | Waste can only be eliminated after it is discovered, 5S workplaces |
| Concept 6 - Flexibility | Allows volume changes and switching from one product to another without long changeover times |
| Three Elements of Lean Management Implementation | Lean Manufacturing, Total Quality Management and Respect for People |
| What does total quality management ensure? | That the product and services delivered are defect free (preventing waste and inefficiency) |
| What does a kanban system do? | Insures that production is inly begun in a given lost size when a direct demand need arrives at the production station (synchronizing production with demand) (pulled inventory) |
| What is the signal in a kanban system? | An empty container |
| What happens to kanbans with an increase in demand? | More are added |
| What happens to kanbans with a decrease in demand | Kanbans are removed |
| What is set-up time? | The time required to change the production process from one product to another |
| What are the two categories in the Single Minute Exchange of Dies system? | Internal Setup Time and External Set Up Time |
| Internal Setup | Must be done while machine is not running |
| External Setup | Activities that can be done while the machine is running |
| What were traditional production systems based on? | The push inventory system that accepted long set-up times |
| What are flexible resources? | General purpose equipment/resources that allow variety in goods and services produced to meet demand (providing more benefit than efficient-specialized equipment) |
| Extensive Training | Cross-training to provide a variety of tasks |
| Efficient Facility Layouts | Reduce waste by placing workstations in close physical proximity to reduce non-value added transport and movement while streamlining material flow |
| What do U-Shaped lines do? | Allow material handlers to quickly drop of materials and pick up finished work |
| Job Shop Layout | Historically placed work centers that allow the ability to justify specialized equipment and highly skilled workers in one center |
| Cellular Layout | Rearranges multiple machines in each work center with more flexible equipment and cross-trained workers |
| Jidoka | Authority to stop the production line so that defects aren't pushed forward |
| Poka-Yoke | Fool-proofing the process that involves incorporating a variety of mechanical and electric sensors to ensure that 100% of the production is good |
| Total Productive Maintenance | Ensures that machinery is inspected daily and that regular servicing and potential repairs are noted and corrected during scheduled downtime periods |
| What are benefits of lean system implementation? | Smaller inventories, reduced space requirements, improved quality, shorter lead times, lower production costs, increased machine utilization, greater flexibility |
Created by:
Erika.Meakins
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