Final Flashcards
Continuous Production (Product Flow)
Output is made in continuous fashion. Tends to be highly automated, operate at capacity and minimize inventories and distribution costs to reduce the total cost of manufacturing (sugar, oil, etc.)
Assembly-Line (Product Flow)
Characterized by a linear sequence of operations. Step by step. (automobiles, computers, etc.)
Batch Flow (Product Flow)
Production in batches or lots. Each batch of the product travels together from one operation or work center to another. Offers flexibility.
Job Shops (Product Flow)
Make products to customer order by using a process layout. Special case of the batch process.
Project (Product Flow)
Used for unique and creative products. Each unit is made individually and is unique. (construction of buildings, etc)
Throughput Ratio
Measures the efficiency of a process
TR = (Total processing time for the job) / (Total time in operations) × 100%
Make To Order vs. Make To Stock
Product
Product Producer-specified……Customer-specified
Low variety…………..High variety
Inexpensive……….Expensive
Objectives
Balance inventory, capacity, and service……….Manage delivery lead times and capacity
Main Operations Problems
Forecasting……………Delivery promises
Planning production…………….Delivery times
Control of inventory………………
Mass Customization
A strategy to provide products in lot sizes of one in high volume.
Depends on economies of scope - high variety of products from a single process.
Three types: Modular production (assemble to order, ex: Dell computers), Fast changeover (ex: Motorola pager), Postponement (ex: ship standard units and customize at last minute)
Customer Contact Matrix
Service Profit Chain
Little’s Law
States that the average number of items in a system (I or Inventory) is the product of the average arrival rate to the the system (R) and the average length of time any item stays in the system (T).
I = T x R
Capacity
The maximum rate of output from a transformation process or the maximum flow rate that can be sustained over a period of time
Bottleneck
The capacity of the most constraining (the smallest capacity) resource.
Process Flow Charting
Refers to the creation of a visual diagram to describe a transformational process
Business Process Engineering
BPR is used for radical redesign of business processes. BPR is cross-functional in nature and requires a complete overhaul of work methods, flows, and information systems.
1) Organize around outcomes, not tasks
2) Have the people who do the work process their own information
3) Put the decision point where the work is performed, and build control into the process
4) Eliminate unnecessary steps in the process
Lean Production
Defined as systematically eliminating waste in all production processes by providing exactly what the customer needs and no more.
Lean Thinking Tenets
1) Specify precisely what it is about a product or service that creates value from the customer’s perspective
2) Identify, study, and improve the value stream of the process for each product or service
3) Ensure that flow within a process is simple, smooth, and error-free, thereby avoiding waste
4) Produce only what is pulled by the customer
5) Strive for perfection
MUDA
(Lean)
Japanes term for waste
GEMBA
(Lean)
DIrect observations taken where work is performed so that opportunities can be identified as GEMBA
5 WHYs
(Lean)
Problem-solving technique where the question “why” is asked at least five times. Used to deliver insights into the root cause of an observed problem so that proper corrective action can be taken to prevent the root cause from re-creating the observed problem.
5 Ss
(Lean)
Seiri (to sort): Decide what things should be kept so only essential things remain
Seiton (to straighten or set in order): Arrange essential things in a manner that supports an efficient flow of work
Seiso (to shine, sweep, or clean): Assure cleanliness by returning things to their storage locations and removing things that do not belong
Seiketsu (to standardize): Standardize work and adopt seiri-seiton-seiso throughout so that all employees know responsibilities
Shitsuke (to sustain): Maintain seiri-seiton-seiso-seikutsu as a habit of work and a way to operate
KANBAN System
(Lean)
Simple and visual “parts withdrawal system” involving cards and containers to pull parts from on work center to the next just in time.
Purpose is to signal the need for more parts and ensure that those parts are produced just in time to support subsequent fabrication or assembly.
Number of containers needed:
n = DT/C
D = demand rate of the using work center
C = container size in number of parts, usually less than 10% of daily demand
T = time for a container to complete an entire circuit: filled, wait, moved, used, and returned to b filled again (also called lead time)
Reducing Setup and Lot Sizes
(Lean)
Reducing setup time increases available capacity, increases flexibility to meet schedule changes, and reduces inventory.
As setup time approaches zero, the ideal lot size of one unit can be reached.
Conformance
(Quality)
Quality of conformance means producing a product to meet specifications. When the product conforms to specifications, operations considers it a quality product regardless of the quality of the design specifications.
Availability
(Quality)
Defines the continuity of service to the customer. A product is available if it is in an operational state and not down for repairs or maintenance.
Availability = Uptime / Uptime + Downtime
Availability is also a combination of reliability and maintainability. The relationship can also be stated:
Availability = MTBF / MTBF + MTTR
Reliability
(Quality)
Refers to the length of time a product can be used before it fails. It is the probability that a product will function for a specified period of time without failure.
Related to Mean Time Between Failure (MTFB) - the longer the MTFB, the more reliable the product.
Maintainability
(Quality)
Refers to the restoration of a product or service once it has failed.
Measured by the Meant Time To Repair (MTTR) - the lower, the better
Variables Measurement
(Quality)
Utilizes a continuous scale for factors such as length, height and weight.
Ex: measures the dimensions of parts, the viscosity of liquids
Attribute Measurement
(Quality)
Uses a discreet scale by counting the number of defective items or the number of defects per unit.
Continuous Improvement
(Quality)
If the process capability is not adequate to meet present or future needs, continuous improvement can be undertaken. Those with strategic importance and low process capability should be the first ones selected for improvement.
7 Tools of Quality Control
(Quality)
Flowchart: Understanding the process and identifying possible problem areas
Check Sheets: Tabulating data on the problem area
Histograms: Illustrating the frequency of occurrence of measures
Pareto Diagrams: Identifying the most important problems
Cause-and-Effect Diagrams: Showing possible causes and effects
Scatter Diagrams: Investigating causes and effects
Control Charts: Holding the gains from process improvement
Six SIgma
(Quality)
A systematic approach to process improvment that often uses the five steps defined by the acronym DMAIC:
Define: Process selected for improvement, and project charter is specified
Measure: Quality variable valued by the customer are measured, and goals are set for improvement
Analyze: Root causes of the current defect levels are identified, and alternatives are considered for process changes
Improve: The process is changed and checked for improvement
Control: This step ensures that the process improvment is not lost over time
Supply Chain Measurement
(Capacity)
There are many metrics for measuring supply chain performance, but they generally correspond to delivery, quality, flexibility and cost measures.
Examples:
Delivery: On-time delivery (percentage of order delivered complete and on date requested), fill rate (percentage of order filled completely from inventory) and replenishment lead time (time it takes from when order is taken to delivery)
Quality: Measured in a number of ways, including performance of a product, conformance to specifications and customer satisfaction.
Flexibility: Volume flexibility (time it takes to increase or decrease output by a fixed amount - ex: time to increase volume by 120%), Mix flexibility (time it takes to change the mix of products or services delivered
Time: Total supply chain throughput time (sum of the throughput time or cylce times), Cash-to-cash cycle time (how quickly a firm is paid by its customers relative to how quickly it has to pay its suppliers)
Cost: Generally refers to the unit cost of the product or service
Bullwhip Effect
(Capacity)
Upstream entities in the supply chain (e.g., warehouses and the factory) react to inflated orders from downstream entities that are closer to the market by placing even larger orders upstream and carrying inventory. These inflated orders distort the true demand information (quantity change, timing of change, etc.) observed in the market.
Process SImplification
(Capacity)
Used to improve supply chains when the processes are so complex or out of date that a major change is required.
Qualitative Forecasting Methods
(Capacity)
Rely on managerial judgment and do not use specific models.
Useful when there is a lack of data or when past data are not reliable predictors of the future. Human decisions.
pg 246
Moving Average
(Capacity)
Simplest method of time-series forecasting.
For this method, it is assumed that the time series has only a level component plus a random component. No seasonal pattern, trend or cycle components are assumed to be present in the demand data.
pg 248
Weighted Moving Average
(Capacity)
Allows the moving average to respond more rapidly to changes in demand by place relatively more weight on recent demands than earlier ones. Any desired weights can be applied as long as they add up to 1.
pg 250
Exponential Smoothing
(Capacity)
Based on the very simple idea that a new average can be computed from an old average and the most recent demand.
pg 250
Forecast Errors
(Capacity)
When smoothing is used, an estimate of forecast error should be computed.
The error estimate might be used for several purposes:
1) To monitor erratic demand observations or outliers, which should be carefully evaluated and perhaps rejected from data
2) To determine when the forecasting method is no longer tracking actual demand and needs to be reset
3) To determine the parameter values that provide the forecast with the least error
4) To set safety stocks or safety capacity and thereby ensure a desired level of protection against stockout
Facilities Strategy
(Capacity)
Considers the amount of capacity, size of facilities, the timing of capacity changes, facilities locations, and the types of facilities needed for the long run.
Pg 278-279
Aggregate Planning - S&OP
(Capacity)
The activity of matching supply of output with demand over the medium time range.
The time frame is between 6 months and 2 years (avg of about a year)
Level Strategy - Aggregate planning
(Capacity)
The size of the workforce and the rate of regular time output are constant. Any variations in demand must be absorbed by using inventories, overtime, temp workers, subcontracting, etc.
Pg 289-295
Chase Strategy - Aggregate Planning
(Capacity)
The size of the workforce is changed to meet, or chase, demand. Generally results in a fair amount of hiring and laying off of workers as demand is chased.
Gantt Charting - Scheduling Operations
(Capacity)
A table with time across the top and a scarce resource along the side.
Makespan
(Capacity)
The time it takes to complete all work.
Bottleneck
(Capacity)
A work center whose capacity is less than the demand placed on it and less thatn the capacities of all other resources.
Will constrain the capacity of the entire factory/operation.
Theory of Constraints (ToC)
(Capacity)
The process in which the most important constraint, either sales or the production bottleneck, is being relieved in order to increase throughput.
Pg 320
Critical Ratio
(Capacity)
CR = (remaining time until due date) / (remaining processing time)
The job with the minimum value of CR is scheduled first, and so on. Calculates the ratio of demand time to supply time.
When ratio is less than 1, the job will be late unless something changes
When ratio is greater than 1, there is sufficient time available to complete the job
Work Breakdown Schedule (WBS)
(Capacity)
A hierarchical listing of all the tasks needed to complete a project. It is constructed by organizing the project into activities and subactivities.
Pg 336
Constant Time Networks
(Capacity)
The time for each activity is assumed to be constant.
Critical Path Method (CPM)
(Capacity)
Developed as a way to schedule the start-up and shutdown of major plants.
Uses a time-cost function
Pg 348-350
Program Evaluation Review Technique (PERT)
(Capacity)
Requires three time estimates for each activity:
1) an optimistic time estimate 2) a most likely time estimate 3) a pessimistic time estimate
These three estimates recognize the uncertainty in activity time. Also assumes that the actual activity times are distributed according to the beta probability distribution.
Dealing with uncertainty or randomness of individual time estimates is the essence of the PERT network.
Pg 344 - 348
Technologies for Managing Inventory
(Inventory)
Bar Coding
Point of Sale Data
Radio Frequency Identification (RFID)
Economic Order Quantity (EOQ)
(Inventory)
A simple but powerful calculation for estimating the best order size while balancing ordering and holding costs. It includes assumptions of constant demand rate, constant lead time, fixed setup time, no stockouts, lot ordering, no discounts, and a single independent product.
pg 369 - 376
Continuous Review (Q) System
(Inventory)
Provides one way to handle random demand. When the stock position drops to reorder point R, a fixed quantity Q is ordered. The time between orders varies depending on actual demand.
The value of Q is set equal to the EOQ. The value of R is based on the service level desired.
Pg 372 - 376
Periodic Review (P) System
(Inventory)
Provides a way to handle random demand. The stock position is reviewed at fixed intervals P, and an amount is ordered equal to target inventory T minus the stock position.
The amount ordered at each review period varies depending on actual demand. The value of P is determined using EOQ, and the value of T is based on the service level desired.
Pg 377-379
ABC Inventory Management
(Inventory)
Based on the significant few and the insignificant many. The concept should be used to control the costs of A items carefully and expend less effort and cost on B and C items
Pg 382-383
