Exam 2

Question 1

Prevention cost

Answer 1

Cost associated with preventing defects before they happen

Question 2

Appraisal cost

Answer 2

Costs incurred when the firm assesses the performance level of its processes

Question 3

Internal failure costs

Answer 3

Costs resulting from defects that are discovered during the production of a service or product

Question 4

External failure costs

Answer 4

Costs that arise when a defect is discovered after the customer recieves the service or product

Question 5

Six sigma

Answer 5

Process on target with low variability

Question 6

Process average ok with too much variation

Answer 6

Reduce spread

Question 7

Process variability ok with process off target

Answer 7

Center process

Question 8

Statistical process control: common cause

Answer 8

The purely random unidentifiable sources of variation that are unavoidable with the current process

Question 9

Statistical process control: assignable cause

Answer 9

Any variation causing factors that can be identified and eliminated

Question 10

Control charts

Answer 10

Two control limits, upper and lower, with an average for certain processes. What you make needs to be within the two limits

Question 11

Control charts: run

Answer 11

Variation keeps getting lower, take action

Question 12

Control charts: sudden change

Answer 12

Monitor

Question 13

Control charts: exceeds control limits

Answer 13

Below or above control limits, take action

Question 14

Type 1 error

Answer 14

An error that occurs when the employee concludes that the process is out of control based on a sample result that falls outside the control limits, when in fact it was due to pure randomness

Question 15

Type 2 error

Answer 15

An error that occurs when the employee concludes that the process is in control and only randomness is present, when actually the process is out of statistical control

Question 16

Process capability

Answer 16

The ability of the process to medt the deisgn soecification for a service or product

Question 17

Nominal value

Answer 17

A target for design specifications

Question 18

Tolerance

Answer 18

An allowance above or below the nominal value

Question 19

Short range forcast

Answer 19

Up to a year. Purchasing, job scheduling, workforce levels, job assignments, production levels

Question 20

Medium range forcast

Answer 20

3 months-3 years, sales and production planning, budgeting

Question 21

Long range forecast

Answer 21

3+ years. New product planning, facility location, research and development

Question 22

Forecasting approaches: qualitative methods

Answer 22

Used when situation is vague and little data exist (new products/technology) involves intutuion and experience (forecasting sales on internet)

Question 23

Forecasting approaches: quanitative methods

Answer 23

Used when situation is stable and historical data exisit(existing products and current tech). Involves math

Question 24

Quantitative approaches

Answer 24

Naive approach, moving average, expinential smoothing, trend projection, linear regression

Question 25

Time series components

Answer 25

Trend, cyclical, seasonal, random

Question 26

Exponential smoothing

Answer 26

Form of weighted moving average (most recent data weighted most) requires smoothing constant, involves record keeping of past data

Question 27

Smoothing constant

Answer 27

ranges from 0-1 and subjectivly chosen

Question 28

Effects of smoothing constants

Answer 28

Generally between .05-.50 and as alpha increases the older values become less significant

Question 29

Trend

Answer 29

Gradual upward or downward movement of the data over time

Question 30

Seasonality

Answer 30

Is a data patten that repeats itself after a period of days weeks months or quarters

Question 31

Cylces

Answer 31

Are patterns in data that occur every several years

Question 32

Random

Answer 32

Are blips in data caused by chance and unusual situations

Question 33

Naive approach

Answer 33

Assumes demand in next period is the same as demand in most recent period

Question 34

Moving averages

Answer 34

Uses an average of the n most recent periods of data to forecast the next period

Question 35

Total quality management

Answer 35

A philosophy that stresses three principals for acheiving high levels of process performance and qaility: customer satisfaction, employee involvement, and continuous improvement in performance

Question 36

Deckers video

Answer 36

Forecasting. Uses historical data. Bottom up-planning each individuallu
Carryover item-use past for future
Tops down-item by category to adjust dollars to each