Exam 3 Flashcards
should suppliers be treated as vendors or partners
partners share the risk and are more invested in the success of your business
how do we measure and monitor quality
statistical process control
how can me monitor quality
by observing variation in output
what is statistical process control
it is used to keep processes stable, consistent and predictable; monitors quality while the product is being produced, every output measure has a target value and a level of acceptable variation
the smaller the standard deviation the
more the process is under control (less variation there is in the output)
control charts
show how process output varies over time
x bar =
average or mean
sigma =
standard deviation
range of variation that a process is able to maintain
process control limits
range of variation that is considered acceptable by the designer or customer
specification limits
if PCL > SL
process is incapable because the process can produce outside the spec limits
if SL > PCL
process is capable because it will only produce within the spec limits
a process is ____ if its standard deviation is small
consistent
a process is _____ if its average performance is close to the target
accurate
shows how well the parts being produced fit into the range specified by the design specifications
process capability index (Cpk)
if the Cpk is larger than 1 it indicates that the process is
capable
_____ is related to standard deviation and you fix this first
consistency
getting more accurate but less consistent means a _____ capable process
less
if our process is not capable what can we do about it
accept more defects, reduce the variation (smaller standard deviation), re evaluate the spec limits
used when a product or service is either good or bad
p charts or process control chart
when doing p charts, the bigger the confidence level the ______ the spec limits
bigger
narrower spec limits
the process is more under control but you are less confident about not having defects
performed on goods that already exists to determine what percentage of the products conform to specifications; executed through a sampling plan
acceptance sampling
advantages of acceptance sampling
economies, fewer inspections/inspectors, applicability to destructive testing
disadvantages of acceptance sampling
risk of accepting “bad” lots and rejecting “good” lots, paperwork of lot sizes; less information than 100% inspection
process of making prediction on future based on past and present data (done by analyzing trends)
forecasting
_____ and ____ are absolutely linked
inventory and forecasting
is it better to under or over estimate forecasts
almost always better to over estimate than under; would rather risk having excess than going through a stock out of inventory
what is the foundation of any successful ops team
forecasting
if a forecast is not accurate the _____ are put under great stress
supply chain and inventory
forecasts are more accurate for _____ periods of time
shorter
every forecast should
be a range and include a confidence level
relies on subjective opinions from one or more experts
qualitative
relies on data and analytical techniques
quantitative
examples of qualitative research
market research, expert analysis, historical analogy
examples of quantitative forecasting
time series, causal relationships, simulation
models that predict future demand based on past data
time series
models that use statistical techniques to establish relationships between various items and demand
causal relationships
models that incorporate some randomness and non-linear effects
simulation
assumes the most accurate forecast of future demand is a simple (linear) combination of past demand
moving average (time series)
when do you use moving average
typically when there is no seasonality or trend
two types of moving average
simple moving average and weighted moving average
taking average of previous demand to forecast future demand
simple moving average
taking average of previous demand to forecast future demand but gives more importance to some of the data
weighted moving average
identifies the relationship between two or more variables
least squares method: linear regression
___ is the indicator of best fit for linear regression
r2
how do you validate your forecast
test it against historical data to validate accuracy; track forecast vs actual; make corrections as necessary
how do you choose the right model
it can be a hybrid; have a lot of flexibility in creating forecasts; don’t just rely on the data but use your intelligence to make adjustments; always keep improving!
incorporates real time data to update forecasts; no longer relying on solely historical data for analysis
demand forecasts (ex. point of sale data)
_____ is different from demand forecasting in that the company is influencing what the future demand will be
demand shaping
2 main types of forecasting errors or variation
quantity demanded and product specifications
how do you handle errors in quantity forecasted
inventory and robust supply chain that can handle variation
how do you handle errors in product specifications
flexible manufacture
3 components of demand
randomness, trends, and seasonality
weighted moving average model with sophistication; prediction of the future depends mostly on the most recent observation and the error from the latest forecast
exponential smoothing
exponential smoothing with trend
double exponential smoothing
exponential smoothing with trend and seasonality
triple exponential smoothing
the raw material, components, work in process, or finished goods that are held at a location in the supply chain
inventory
the set of policies and controls that monitor levels of inventory
inventory management system
why is inventory mgt necessary
maintain independence of operations; meet variation in demand; allow flexibility in production scheduling; provide a safeguard for variation in raw material delivery; take advantage of economic purchase order size
what is usually the largest corporate asset
inventory
effective inventory mgt occurs from an accurate _____ and reliable ____
forecast
supply chain
costs of inventory
holding (carrying) cots, ordering costs, opportunity costs, cash flow
costs for rend, handling, insurance, utilities, etc.; spoilage and obsolescence
holding or carrying costs
inability to purchase additional inventory
cash flow cost of inventory
costs of placing an order
ordering costs
cost of stock out; foregone investment earnings
opportunity costs
managing inventory takes ____ and ____
time and money
80/20 rule
Pareto; 80% of the inventory is concentrated in 20% of the skus
ABC method
allows us to focus on the most important inventory items; A (high dollar volume, B (moderate dollar volume) C (low dollar volume)
other inventory models
single period, multi period fixed order quantity, multi period fixed time period
used when we are making a one time purchase of an item; seeks to balance the costs of inventory overstock and under stock
single period
used when we want to maintain an item in stock and when we restock a certain number of units must be ordered
multi period fixed order quantity
item is ordered at certain intervals of time
multi period fixed time period
event triggers the reordering of inventory
multi period fixed quantity (event is usually inventory falling below certain level)
time triggers the reordering of inventory
multi period fixed time
fixed order quantity assumptions
demand is constant and uniform; lead time, cost per unit, and ordering cost are constant
the amount of inventory carried in addition to expected demand
safety stock
common safety stock approach
to keep a certain number of led times of supply
