exam

Question 1

Define a performance metric that captures the effectiveness of a process, and give an example how this metric could be operationalised.

Answer 1

Effectiveness
Is the customer getting what they wanted?
QCD
Quality ->DPMO (Defects per million opportunities)
Cost
Delivery -> OTIF *On Time In Full , a logistics performance measurement which indicates how many deliveries are supplied on time without any article missing)

Question 2

Define a performance metric that captures the efficiency of a process, and give an example how this metric could be operationalised.

Answer 2

How well a process turns inputs into outputs
Productivity = output units/input units; in practice you would measure this by comparing number of outputs produced in a period with the number of input units used up in that period
Measure: utilization of labor, machines, materials, and energy (increasingly important).

Question 3

Briefly outline the purpose of process mapping.

Answer 3

To establish the as-is state of a process, in order to provide a baseline for understanding and improving it. Also, the mapping process makes it possible to quantify the resources [time, money, …] spend on each of the process steps. Helps to communicate the process to other

Question 4

When conducting a process mapping exercise of a work task, identify two reasons why close involvement of the people doing the work may be important.

Answer 4

The people doing the work are the most reliable source of information as to how the task is done
From experience, they know what pain points or faults exist in the process
They can reveal workarounds that may not be apparent to an observer

Question 5

Briefly define the concept of a “workaround”.

Answer 5

A workaround is an alternative process that is devised as an ad-hoc solution to a faulty process

Question 6

Outline why workarounds are problematic in the context of process improvement.

Answer 6

They hide faults in a process, by making it appear as though the process is running smoothly, thereby defeating any process improvement efforts. Additionally, workarounds reward dissent amongst actors within a process making it likely that other actors will adopt the workaround

Question 7

Briefly outline the purpose of Statistical Process Control (SPC).

Answer 7

Statistical Process Control aims to ensure high quality output by monitoring a process to detect variability, distinguishing common variation from assignable variation, in order to reduce variability in the production process. The limits set are not the “Tolerance Limits”.

Question 8

The Toyota Production System is built on two core concepts, “Jidoka” and “Just-in-time”. Briefly define each, and state which of the seven wastes are primarily avoided by implementing each of these two concepts.

Answer 8

Jidoka: Halting production as soon as a fault/defect is detected and address permanently, thereby building quality control into the production process. This prevents defect waste (muda)
JIT: Producing what is needed, when it is needed, in the amount required. This prevents inventory waste, wait time and overproduction.

Question 9

The Toyota Production System (TPS) has been widely applied across the manufacturing sector, and more recently, also to healthcare operations. Discuss some of the key challenges one is likely to face when apply TPS to a general hospital.

Answer 9

TPS was designed for line production (low variability, high volume) environments, whereas a general hospital is a high variability, low volume environment. This fundamental mismatch means that attempting to apply TPS in its entirety to a general hospital is futile. However, some principles of TPS may be applied to certain aspects of general hospital operations. Examples of challenges you might face:
Unpredictability of patient complaints presents a challenge to the principle of heijunka
Emergency cases must be prioritised regardless of patient arrival times, so waiting (waste) is often unavoidable

Question 10

Outline the three elements that need to be present for the bullwhip effect to occur in a supply chain.

Answer 10

1) Variation in input signal
(2) Delays in response (creates greater uncertainty which requires more inventory as buffer / safety stock)
(3) Tiers/multiple decision points (i.e. amplifying the impact of inaccurate forecasting based on previous tiers’ forecasts).

Question 11

Sales promotions are often seen as problematic from a supply chain management point of
view. Explain why this is the case.

Answer 11

Customers may wait to take advantage of promos/discounts causing greater variation/extremities in demand. Players in the supply chain who are unaware of the promos/discounts will experience greater uncertainty and thus increase their inventory levels (safety stock) to account for this (which is costly during demand slumps).

Question 12

Give a definition of a project.

Answer 12

project is an undertaking to be completed in a pre-defined period, to achieve a pre-defined objective, under certain constraints, e.g. budget, labour, legal, etc.
Alternative: A project is a temporary endeavour to produce a unique product, service or result, and has a set scope, resource allocation and time frame.

Question 13

Identify three risks in delivering a public sector project.

Answer 13

Cost overruns - less tight management compared to private sector projects. Shareholders are more strict in holding management to account compared with public.
Time overruns
Scope creep
Shifting objectives
Performance/impact measures not well defined
Complexity in execution of the project due to a high number of stakeholders (lack of accountability)
Change in government - can change the direction / scope or cancel the project altogether

Question 14

A wide range of technologies are being used to support operations, such as for example Materials Requirements Planning (MRP) systems in manufacturing, or electronic point of sales (EPOS) data collection in supply chain management.
Outline the general principles of how technology can be used effectively to support operations.

Answer 14

Technology: Broadly speaking, the goal of operations management is to maximise process efficiency and effectiveness. Technology can be used to support these two goals in many ways; for example:
Automation reduces cycle time and variability, improving both efficiency and effectiveness
MRP systems facilitate production planning and scheduling, improving effectiveness
EPOS enables more accurate demand forecasting, improving effectiveness and efficiency
Statistical process control tools reduce variability, improving process effectiveness
Design Support Systems help management with decision making, improving effectiveness

Question 15

What is the Product process matrix

Answer 15

Finer distinctions can be made in the process structure as follows: Project - Example: building construction; Job shop - Example: print shop; Batch process - Example: bakery; Assembly line - Example: automobile production line; Continuous flow - Example: oil

Question 16

What causes dynamic distortions in supply chain?

Answer 16

Bullwhip effect is observed from the provided demand patterns in the supply chain. In general, there are 5 causes which are interrelated:
Demand signalling and forecasting: Players at each stage try to adjust stock against demand fluctuation. A ripple effect then takes place and causing more safety stock up the supply chain. Three elements are relevant: 1. variation in trigger, 2. tiers/multiple decision points, 3. delays
Lead time: Safety stocks and order quantities are calculated from lead time and variability.
Batching: Orders being placed in batches periodically.
Price fluctuation: Retailers may exploit discount rate or quantity discounts, causing in demand slump later.
Rationing game: also known as “Flywheel” effect. This results from supply chain players trying to anticipate demand and cause oversupply or shortage.

Question 17

What actions might firms take to diminish these distortions?

Answer 17

Vendor Managed Inventory (VMI) could be deployed to merge decision points.
Information sharing amongst supply chain players could be enhanced via Electronic Point of Sale (EPOS) and Collaborative Forecasting (CF).
Collaborative Planning, Forecasting and Replenishment (CPFR) effectively merges VMI and collaborative planning elements to form a model of close supply chain collaboration.

Question 18

Describe two ways inventory management affects financial performance?

Answer 18

If you decide to hold safety stock, you overstock, your storage costs go up, and liquidity falls, leading to worse financial performance.
If you understock, you have stock outs and lost sales, leading to lower financial performance.
If you manage your inventories well, you have better financial performance by avoiding these issues.
Use VMI or CPFR to help manage these situations.

Question 19

Explain Jidoka and give examples of implementation

Answer 19

idoka: to stop a process when a defect is encountered. This helps highlight the cause of problems when they happen.
Implement with andon cord.

Question 20

It’s been said that in additive manufacturing 3D printing challenges the fundamental economics of manufacturing . Explain what this statement means by referring to the Product Process matrix

Answer 20

The fundamental economics of manufacturing assumes that there must be a trade-off between variability and volume, as represented by the product-process matrix. Current manufacturing technologies lie somewhere along the spectrum of high variability, low volume on one end (i.e. project-based production) and low variability, high volume on the other end (i.e. continuous line production). 3D-printing challenges this view by offering a manufacturing process where you can produce highly customised products (high variability) at high volume, thus eliminating the trade-off.

Question 21

What does it mean when a process is capable? How do you measure it?

Answer 21

Capable: A process is capable when it consistently meets customer specifications. It is measured using process capability ratio or process capability index. The ratio compares the customer specification range with process variability. The index is used when the process mean is not centred between the customer specification limits, and measures the distance between the process mean and the nearest specification limit.

Question 22

What does it mean when a process is in control? How do you measure it?

Answer 22

Control: A process that is in control is stable, i.e. it exhibits only common cause variation. This is measured using mean charts and range charts. Mean charts monitor the sample mean to detect when it goes outside the upper and lower control limits. Range charts monitor variability in dispersion around the sample mean.

Question 23

What is an MRP System? What are the advantages and disadvantages of an MRP system?

Answer 23

“Materials Requirements Planning”
A computerized system for scheduling production and procurement which requirements from the Master Production Schedule and the Bills-of-Materials to calculate what will be needed when, netting off against all the materials already in the system.
Master Production Schedule specifies ‘planning’ items
specifies time period relies on forecasts to a differing extent depending on time period interfaces with marketing, distribution, production planning
ubiquitous, but exact form determined by type of environment
Disadvantages of MRP system:
MRP systems work on fixed batches and lead times; combined, these two aspects tend to lengthen lead-times, and increase WIP levels. MRP systems tend to hold more WIP inventory than JIT systems
MRP systems plan on end item level and do not synchronize between items that may be sharing parts; this has been found to cause uneven orders for suppliers, and can trigger dynamic distortions in the supply chain (ie bullwhip effect)
To summarize - MRP systems are actually weakest at their core function: production scheduling. JIT systems consistently outperform MRP in high-volume repetitive scheduling environments

Question 24

Explain the differences between push and pull system in production control

Answer 24

Pull
Production scheduling is determined by customer demand
Production is triggered by a replenishment signal from the customer
Final stage of the process sees the new customer order first

Push
Production scheduling is driven by demand forecasting
Production is triggered by signals from a central schedule
Longest lead time stage of the process sees the new customer order first

Question 25

Safety check in an airport. What generic factors lead to queues.

Answer 25

The demand arrival rate exceeds the service rate. A bottleneck is created where the number of operators at the check point and time they spend is less than the rate at which people are coming into the area to be checked and thus a queue forms.
Queue Formation is based on the Kingman Formula.