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Operations Management > Exam > Flashcards

Exam Flashcards

1
Q

What is Operations Management

A

Operation Management focuses on efficiently converting materials and labour into goods and services

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2
Q

What is supply chain management?

A

The Networks involved in delivering a product or service to a customer

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3
Q

What are the 5 R’s of Supply Chain Management

A

Right
- Product
- Place
- Price
- Time
- Quantity

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4
Q

Who are the main people in a Supply Chain Network

A

Raw Material Supplier
Manufacturer
Distributor
Wholesaler
Retailer
Customer

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5
Q

Suppliers have the ____ profit margin

A

Suppliers have the lowest profit margin

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6
Q

What is Production Slicing?

A

Production Slicing is identifying the best location for each stage of the process

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7
Q

What are the key challenges in operations Managment

A
  1. Choosing an Operations Mangement Strategy
  2. Managing Supply and Demand
  3. Inventory and Back-Order Fluctuations
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8
Q

What are some supply challenges?

A
  • raw materials
  • supply disruptions
  • productivity inefficiencies
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9
Q

What are some demand challenges?

A
  • sales shortfalls
  • canabalisation
  • larger than anticipated inventories
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10
Q

What is canalbalisation?

A

When the introduction of a new product reduces the sales of an older product

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11
Q

What is the bullwhip effect?

A

When small changes in demand produce larger distortions upstream

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12
Q

What are the causes of the bullwhip effect?

A
  • lack of communication
  • incorrect forecasts
  • too many discounts
  • order batching
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13
Q

What are the solutions to the bullwhip effect?

A
  • more communication
  • improve order planning
  • limit promotion
  • small but more frequent orders
  • vertical integration
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14
Q

What other uncertainties impact the supply chain?

A
  • production capacity
  • transportation times
  • component availability
  • natural disaster
  • regulation
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15
Q

What was the main reason of the KFC chicken shortage?

A

poor choice of distributor

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16
Q

What is a Customer Value Proposition?

A

Why should a customer choose our product?

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17
Q

What dimensions should be considered in the Customer Value Proposition?

A

Product Innovation Speed
Product Selection and Availability

Price
Branding
Customer Relationships
Value Added

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18
Q

Function Productions have a ______ Innovation

A

Function Productions have a SLOW Innovation

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19
Q

Innovation products have _______ Innovation

A

Innovation products have FAST Innovation

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20
Q

Function Productions have ______ product variety

A

Function Productions have LESS product variety

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21
Q

Innovative Productions have ______ product variety

A

Innovative Productions have MORE product variety

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22
Q

Function Products have ______ demand

A

Function Productions have PREDICTABLE demand

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23
Q

Innovative Products have ___________ demand

A

Innovative Products have UNPREDICTABLE demand

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24
Q

Function Products have ___________ lifecycle

A

Function Products have LONG lifecycle

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25
Q

Innovative Products have ___________ lifecycle

A

Innovative Products have SHORT lifecycle

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26
Q

________ Products make the business ________ to run

A

LESS Products make the business SIMPLER to run

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27
Q

___________ choices can make decision making ___________

A

TOO MANY choices can make decision making COMPLICATED AND FRUSTRATING

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28
Q

The Long Tail Phenomena- ___% of products make up _____% of sales

A

The Long Tail Phenomena- 20% of products make up 80% of sales

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29
Q

What are the key elements of the Operating Model Canvas

A
  • Suppliers
  • Location
  • Value Delivery Chain
  • Organisation/People
  • Information Systems
  • Management Systems
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30
Q

In a PUSH strategy production is based on ____________________

A

In a PUSH strategy production is based on ANTICIPATED FUTURE DEMAND

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31
Q

In a PULL strategy production is based on ____________________

A

In a PULL strategy production is based on PRESENT DEMAND

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32
Q

A PUSH strategy focuses on ____________________

A

A PUSH strategy focuses on EFFICIENCY AND COST REDUCTION

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33
Q

A PULL strategy focuses on ____________________

A

A PULL strategy focuses on RESPONSIVENESS

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34
Q

PUSH OR PULL - Low Uncertainity

A

PUSH

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35
Q

PUSH OR PULL - High Uncertainity

A

PULL

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36
Q

PUSH OR PULL - High Importance on EoS

A

PUSH

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37
Q

PUSH OR PULL - Low Importance on EoS

A

PULL

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38
Q

PUSH OR PULL - Long Lead Times

A

PUSH

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39
Q

PUSH OR PULL - Short Lead Times

A

PULL

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40
Q

When should you use a hybrid push/pull strategy?

A

When products have HIGH DEMAND UNCERTAINTY by high importance on EoS

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41
Q

What is forecasting?

A

a prediction of future events

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42
Q

What are the 3 Golden Rules of Forecasting

A
  1. Forecasts are always wrong
  2. The Longer the Forecast the less accurate is will be
  3. Aggregate forecasts are more accurate
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43
Q

What are the qualitative methods of forecasting?

A
  • expert pannels
  • delphi method
  • sales force method
  • market research
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44
Q

What should you use when a data set has NO TREND OR SEASONALITY?

A

Moving Average
Exponential Smoothing

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45
Q

What should you use when a data set has TREND and NO SEASONALITY?

A

Holts Method

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46
Q

What should you use when a data set has SEASONALITY BUT NO TREND

A

Seasonal Decomposition

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47
Q

Level

A

an average

48
Q

Trend

A

a predictable increase over time

49
Q

seasonality

A

a pattern of predictable and reoccuring shifts in level

50
Q

random noise

A

unpredictable variations in data

51
Q

A good forecast should _____________

A

A good forecast should NOT BE TOO REACTIVE

52
Q

In a Moving Average Forcast is a LARGER N VALUE results in _____________

A

In a Moving Average Forcast is a LARGER N VALUE results in A SMOOTHER FORECAST

53
Q

In a Moving Average Forcast is a SMALLER N VALUE results in _____________

A

In a Moving Average Forcast is a SMALLER N VALUE results in A MORE RESPONSIVE FORECAST

54
Q

What is the formular for exponential smoothing?

A

alpha x previous demand + (1-alpha) x previous forecast

55
Q

In an Exponentital Forcast is a SMALLER alpha VALUE results in _____________

A

In an Exponentital Forcast is a SMALLER alpha VALUE results in SLOW LEARNING

56
Q

In an Exponentital Forcast is a LARGER alpha VALUE results in _____________

A

In an Exponentital Forcast is a LARGER alpha VALUE results in FAST LEARNING

57
Q

In an Exponentital Forcast if there is a CHANGING LEVEL use a _____ alpha

A

In an Exponentital Forcast if there is a CHANGING LEVEL use a LARGER alpha

-

larger alpha = more responsive and you want to capture the change

58
Q

In an Exponentital Forcast if there is a STABLE LEVEL use a_____________ alpha

A

In an Exponentital Forcast if there is a STABLE LEVEL use a SMALLER alpha

59
Q

What is the formular for holts method?

A

Current Forecast = previous level + previous trend

Previous Trend = alpha x previous demand + (1-alpha)x previous forecast

Previous Level = beta x difference in level + (1-beta)x previous forecast trend

60
Q

How do you find L0 and T0 in Holt’s Method

A

Sales (Intercept - x=0) = Level
Time (The Slope) = Trend

61
Q

What are the steps to complete a seasonal decomposition?

A
  1. calculate the seasonal average
  2. calaculate the overall seasonal average
  3. calculate the seasonal relative = seasonal average per season/ total average
  4. deseasonalise the data = sales data/seasonal relative
  5. complete forecasting (i.e exponential smoothing)
  6. incorporate seasonality
62
Q

MAD

A

Mean Absolute Deviation

63
Q

MSE

A

Mean Squared Errors

64
Q

MAPE

A

Mean Absolute Percentage

65
Q

What does MSE show

A

a high percentage of large errors

66
Q

When should MAPE be used?

A

when the demand range in wide

67
Q

How do you calculate the forecast error?

A

Forecast - Actual Demand

68
Q

MAD Formula

A

Sum of Absolute Errors/ Number of Forecasts

69
Q

MSE Formula

A

Sum of squared errors/number of forecasts

70
Q

MAPE Formula

A

sum of (absolute error/real demand)/number of forecast x 100

71
Q

MFE

A

Mean Forcast Error

72
Q

RSFE

A

Running Sum of Forecast Error

73
Q

TS

A

Tracking Signal

74
Q

MFE Formula

A

Sum of Forecast Error/Number of Errors

75
Q

RSFE

A

Sum of Forecast Errors

76
Q

TS Formula

77
Q

Break Even Point in Units

A

Fixed Cost/Unit Contribution Margin

78
Q

Breakeven Point $

A

Fixed Cost/ (1- (variable cost/sales)

79
Q

Profit/Loss = Revenue - Cost or

A

Profit/Loss = (Selling Price per unit x Units Sold) - (Fixed Costs + (Variable Costs x Units Sold)

80
Q

What is Price Elasticity

A

The degree to which demand responds to change

81
Q

What is an inelastic demand?

A

Some sensitivity to price but people still buy stuff

82
Q

What are some of the factors that influence price elasticity?

A

Necessity of the product
Quality
Brand Loyalty
Availability of Substitutes
Cost of Switching Suppliers

83
Q

What are some considerations when setting a price?

A

Target Audience needs and expectations
Branding
Revenue Goals
Market Trends

84
Q

What is a competitions based pricing? Why use it?

A

Its the competitors prices as the benchmark. It good for entering highly saturated markets. But it doesn’t account for the cost of production or consumer demand

85
Q

What is a cost plus pricing strategy?

A

Cost of Producing + Mark up on the cost

  • often used by retailers that sell physical products
86
Q

High Low Pricing?

A

Start Selling the product high and reduce it as it the product drops in relevance

  • i.e black Friday sales
87
Q

Skimming Pricing?

A

Charge the highest possible price and lower it over time as the product gets less popular as a gradual decrease

  • technology
88
Q

Dynamic Pricing

A

Fluctuates based on customer demand

  • hotels, flights, uber
89
Q

Freemium Pricing

A

offers a basic version for free and encourages the user to upgrade because of free trials, limited features of adds

90
Q

Hourly Pricing

A

Trades time for Money
- cost per hour + mark up

often used by consultants and contractors
penalises the workers efficiency

91
Q

Project Based Pricing

A

Charges a flat fee per project based on the value of the deliverable / time required to complete the project

92
Q

Penetration Pricing

A

Entering the market at a low price to create customer loyalty and slowly increase the price

  • netflix
93
Q

Premium Pricing

A

Focus on the percieved value/brand of the product rather than the cost to produce the product

  • luxury goods
94
Q

Bundle Pricing

A

When you offer two or more complementary products and sell them for a single price

95
Q

Geographic Pricing

A

Price is varied by location- compensates wages across regions

96
Q

Price Anchoring

A

Establish a price point that customers subconsciously refer too when making their decision - a more expensive product, everything else seems cheaper (i.e wine bottles in a restaurant)

97
Q

Time Limits

A

Creates a sense of urgency and increases purchase likihood

98
Q

The decoy effect

A

Introducing a less attractive option to make the others more appealing
- the economic print only option

99
Q

The 9 Digit Effect

A

20 –> 19.99

100
Q

Payment in Installments/Pennies a day

A

Reframes a large expense as a smaller cost and reduces the perceived cost

101
Q

What pricing strategy did starbucks use?

A

The Compromise Effect: when we have a set of choices people avoid the extremes

  • more people buying grandes when the short was removed
102
Q

What were Zara’s success factors

A
  • responsiveness to customer demand
  • -speed to market
  • local decision making responsibility
    -batch sizes small
  • production variety and scarcity
103
Q

How much inventory did Zara have committed 6 months before?

104
Q

How much inventory did Zara have committed at the start of the season?

105
Q

At the start of the season how much of the collection was available?

106
Q

What are the benefits for Outsourcing?

A
  • Cost efficiency
  • competitiveness
  • scalability
  • focus more on core competency
  • increased flexibility
  • increase knowledge gained
107
Q

What is the risk of Outsourcing?

A
  • open up opportunties for competitors
  • delivery time may be longer
108
Q

What are the types of outsourcing?

A
  • Dependency on Capacity
  • Dependency on Knowledge
109
Q

Make or Buy - High Customer Importance

110
Q

Make or Buy - High Innovation Speed

111
Q

Make or Buy - High Competitive Position

112
Q

Make or Buy - Lots of Capable Suppliers

113
Q

Make or Buy - Modular Products

114
Q

Make or Buy - Integral Products

Operations Management (2 decks)

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