Chapter 6 Flashcards
What changes in costs are most conducive to implementing a JIT inventory system?
Decrease in cost per purchase order and increase in inventory unit carrying cost (more purchase orders of fewer items each)
What are appraisal costs in quality control principles and name some examples?
They discover and remove defective parts before they are shipped to the customer or the next department. Examples include Statistical quality checks, testing, inspection, and maintenance of the laboratory
What are the two types of costs associated with quality control and what are they made up of?
Conformance costs: Prevention costs and Appraisal costs
Nonconformance costs: Internal failure and External failure
What are prevention costs and list some examples
Prevention costs are incurred to prevent the production of defective units: Employee training, inspection expenses, preventative maintenance, redesign of product, redesign of processes, search for higher-quality suppliers
What are appraisal costs and list some examples
Appraisal costs and incurred to discover and remove defective parts before they are shipped to the customer or the next department: Statistical quality checks, testing, inspection, maintenance of the laboratory
What are internal failure costs and list some examples:
Internal failure costs are costs to cure a defect discovered before the product is sent to the customer: Rework costs, scrap, tooling changes, cost to dispose, cost of the lost unit, downtime
What are external failure costs and name some examples:
External failure costs are cost to cure the defect discovered after the product is sent to the customer: Warranty costs, cost of returning the good, liability claims, lost customers, reengineering an external failure
What is one benefit of JIT inventory?
A more efficient use of employees with multiple skills. (decrease the number of job classifications to just a few)
What is absolute conformance?
It is the most rigorous standard of quality because it represents a perfect, or ideal level of compliance
What is the theory of constraints?
It is concerned with maximizing throughput by identifying and alleviating constraints. It says that organizations are impeded from achieving objectives by the existence of one or more constraints. Organizations or projects must be operated in a manner that either works around or leverages the constraint (ex. bottleneck)
What is benchmarking?
A process where a company compares itself to its peers to measure and to understand where improvements can be made in its processes.
What does the scope baseline include?
It describes the project’s deliverables, the amount of time required to complete the project, and attributes that can be excluded from the project. (it doesn’t include the team members that will work on the project)
What is functional interdependence?
The failure of developed nations to fully engage emerging nations within worldwide institutions
What is country risk?
It encompasses the political risk, economic risk, transfer risk, sovereign risk, and exchange rate risk associated with engaging in business with foreign countries
What are repatriation restrictions?
It exists when a company invests money in a foreign company but is restricted from bringing that money back to its home country
