Chapter 17 Operating for Success

Question 1

*** Just in Time (JIT) Manufacturing

Answer 1

• Excess inventory creates multi-million-dollar losses each year.
• JIT does not waste materials, labor, shipping, or warehousing on products that might not be sold.
• JIT focuses on making the smallest amount of product needed, quickly and efficiently.

Question 2

***ISO 9000

Answer 2

a requirement in Europe, needs to be in accordance to ISO 9000 standards so you can sale international

Question 3

***Six Sigma

Answer 3

Bell Curve, Uses statistical methods to eliminate defects with a 99.9997% success rate

Question 4

***Total Quality Management (TQM)

Answer 4

Based on concept of continuous improvement: ongoing effort to identify and implement changes throughout the organization.

-Involves constant monitoring and improvement of processes through measures of quality, such as:

• Complying with product specifications and operating standards
• Volume of production
• On-time delivery
• Repeat rates

-Requires commitment of all employees to be successful

Question 5

SCM

Answer 5

Supply Chain Management

• Management of sourcing, procurement, production, and logistics across multiple intermediate steps in order to go from raw materials to end consumers
• Creates and maintains efficient supply flows by addressing models and relations
• Partners work together to use tools and techniques for increased efficiency.

Question 6

ROP

Answer 6

ROP: Reorder point

-level at which materials need reordered

Question 7

Economic order quantity (EOQ)

Answer 7

amount of inventory that will equal the minimum total ordering and holding costs
EOQ = √ 2DO/C

The square root of:
(2 x annual demand in units x ordering cost per order) ÷ carrying cost per unit

Question 8

Manufacturing:

Answer 8

Makes tangible products, and sells in bulk to wholesaler

Question 9

Wholesale:

Answer 9

Buys products from manufacturers in bulk then

Sells smaller quantities to retailers

Question 10

Retailers

Answer 10

Buys products from wholesalers and

Sells individual items to consumers

Question 11

Service

Answer 11

• Sells time, skills, or expertise

- Serves other businesses and/or consumers

Question 12

Visual control:

Answer 12

inspect inventory on hand; reorder stock when levels appear low

Question 13

Safety stock:

Answer 13

amounts of inventory, raw materials, or work-in-progress kept in order to meet customer demand

Question 14

A Purchasing Plan Includes:

Answer 14

• When orders should be placed to have products as promised
• An estimate of when the product will reach its peak to know when replacement orders need to be in place
• When to stop ordering a product and drop it from production
• The end date for stocking particular inventory

Question 15

Job shops (“jobbers”):

Answer 15

suppliers or subcontractors for other manufacturers

Question 16

Drawings and specifications:

Answer 16

diagrams explaining how to make the product

Question 17

Parts and materials lists:

Answer 17

materials needed and where to get them

Question 18

Prototype:

Answer 18

working sample of the product

Question 19

Tooling:

Answer 19

making/adapting equipment to produce the product

Question 20

Setup:

Answer 20

setting up equipment, workers, etc. each time a “lot” (batch) of product is made

Question 21

***Benchmarking:

Answer 21

Comparison of your company’s performance against:

• Other companies in your industry
• Best practices, standards, or certification criteria