Final Exam Flashcards
Supply chains are integrated group of processes to ____, ____, and ____ .
Source - Make - Deliver (Procurement - Production - Distribution)
What is the major objective of supply chain management?
Respond to uncertainty in customer demand without creating costly excess inventory
What are two negative effects of uncertainty?
Lateness and incomplete orders
How does inventory help mitigate the negative effects of uncertainty
It’s more or less insurance against supply chain uncertainty
When does the bullwhip effect happen?
Occurs when slight demand is magnified as information moves back upstream
Explain supply chain sustainability
All parts of the value chain have an impact on the environment - most of the impact comes from suppliers and consumers, so it’s important to focus on reducing the environmental impact before it comes to the factory and after it’s sold.
What is a pull system?
Inventory is held at suppliers and customer demand pulls product to them (Dell Inc.)
What is a push system?
Inventory is held as finished goods at the retailer, being pushed through the system to the consumer, regardless of demand (General Motors)
Give examples of Make-to-Stock items
Shoes, online courses
Give examples of Assemble-to-Order items
Dell computers, travel agent services
Give an example of Make-to-Order items
Ships, surgery
What are basic forms of forecast movement?
Trend, cycle, seasonal
What are 3 types of forecasting methods?
Time series, regression methods, qualitative
What does time series forecasting consist of?
statistical techniques that use historical demand data to predict future demand
What do regression methods of forecasting consist of?
attempt to develop a mathematical relationship between demand and factors that cause its behavior
What do qualitative methods of forecasting consist of?
use management judgment, expertise, and opinion to predict future demand (Example: Delphi Method)
What is a naive forecast?
Demand in current period is used as next periods forecast
What is a simple moving average?
Uses average demand for a fixed sequence of periods
When is it beneficial to use a simple moving average?
When you have stable demand with no pronounced behavior patterns
What is a weighted moving average?
Calculated by assigning weights to most recent data
How is forecast error calculated?
It’s the difference between forecast and actual deman
What does linear regression measure?
It relates a dependent variable to an independent variable in the form of a linear equation
How would you describe correlation?
It’s a measure of the strength of the relationship between independent and dependent variables
How would you describe correlation (r)?
It’s the strength of the relationship between x and y, and varies between -1.00 and 1.00 (inclusive)
How would you describe r^2?
r^2 tells us the level to which variation in our expected value is due to a variable x
What’s the goal of having inventory?
To keep a stock of items to have on hand to meet future demand.
What are the two general purposes of inventory management?
- Knowing how much to order and 2. knowing when to order
How does inventory relate to TQM?
Customers usually perceive quality service as availability of goods when they want them, so inventory must be sufficient to provide high-quality customer service in QM
What are the 4 types of inventory?
(1) Raw materials, components, and supplies, (2) work in process, (3) finished goods, (4) repair and replacement parts
What are 3 typical KPIs in measuring inventory
(1) Inventory turnover, (2) total value of inventory, (3) days of supply
What is fill rate in inventory management?
It’s the fraction of orders filled by a distribution center within a specific time period
What are the 3 most common inventory costs?
(1) carrying cost, (2) ordering cost, (3) shortage cost
What are carrying cost?
Cost of holding an item in inventory
What are ordering costs?
Cost of replenishing inventory?
What is a shortage cost?
Temporary or permanent loss of sales when demand cannot be met
What’s the difference between a continuous inventory system and period inventory system?
Continuous has to do with having an inventory system that is based on order quantity while period system is based on a time period.
What does EOQ stand for and what’s its primary goal?
Economic Order Quantity - it’s a continuous inventory system, which gives optimal order quantity that will minimize inventory costs
What are 4 assumptions about the basic EOQ model?
(1) Demand is known and consistent over time (2) no shortages are allowed (3) lead time or the receipt of orders is constant and (4) order quantity is received all at once
What does sequencing require?
It requires when several activities must be processed using a common resource
What are three criteria used in sequencing?
- Process-focused performance
- Customer-focused due date
- Cost-based
What is makespan?
The time needed to process a given set of jobs
What is flow time?
The amount of time a job spent in the shop or factory
What is the difference in the two sequencing rules, SPT and EDD?
SPT - maximizes resource utilization and minimizes average flow time and work-in-process inventory. EDD - minimizes the maximum job tardiness and lateness
What is Walter Shewhart famous for?
He developed control charts and introduced the term “quality assurance”
What is W. Edwards Deming known for?
He developed courses during WWII to teach stats quality techniques to engineers and executives in military, and began teaching stats quality control to Japanese companies
What is Joseph M. Juran famous for?
He followed Deming to Japan and focused on strategic quality planning
What is Armand V. Feigenbaum known for?
Introduced concepts of total quality control and continuous quality improvement
What is Philip Crosby known for?
Defined absolutes of quality management, conformance to requirements, prevention, and “zero defects”
What is Kaoru Ishikawa known for?
Developed the “fishbone” diagram
What does Demin’s Wheel illustrate?
PDCA Cycle - Plan, Do, Study/Check, Act
Which quality tool focuses on location of problem in a process?
Flow Chart
Which quality tool shows different categories of the problem?
Cause-and-Effect Diagram (fishbone)
Which quality tool is considered a good root cause analysis tool?
5 Why
Which quality tool tallies the number of defects from a list of causes?
Check Sheet
Which quality tool is a frequency diagram of data for quality problems?
Histogram
Which quality tool is best for identifying the typical causes for common quality problems?
Pareto Analysis
Which quality tool allows us to see the relationship one variable has on another, and create a pattern to determine what the relationship looks like?
Scatter Diagram
Which quality tool assumes process control with upper and lower limits?
Control Chart
What is the point of ISO 9000:2000
It provides confidence to organizations and customers that quality requirements are fulfilled. It is international recognized and is a list of specific basic principles for initiating quality management systems.
What’s Six Sigma’s goal?
To give managers a process for developing and delivering virtually perfect products or services
Six Sigma is a measure of how much a process deviates from ________ .
Perfection
What’s the defects rate goal of Six Sigma?
3.4 per million opportunities
What would we consider a defect?
Any mistake or error that is passed on to the customer
What would we consider a unit of work?
Output of a process or an individual process step
How would you calculate defects per unit?
Divide the number of defects discovered by the number of units produced
In manufacturing, we use the term ‘defects’ per million opportunities, but what term do we use in service industries?
‘errors’ per million opportunities
What is DFSS (Design for Six Sigma)?
A systematic approach to designing products and processes that will achieve Six Sigma
What is it sometimes more beneficial to use Design for Six Sigma?
It’s a more effective and less expensive way to achieve Six Sigma
What does cost of quality refer to?
The costs associated with avoiding poor quality or those incurred as a result of poor quality.
What are the 4 cost of quality measurements?
- Prevention costs
- Appraisal Costs
- Internal-failure costs
- External-failure costs
What are prevention costs? What’s and example?
Costs that help prevent nonconforming goods and services to be sold to a customer (example: training costs)
What are appraisal costs? What’s an example?
Costs that are made on figuring out the quality levels through measurement and analysis of data to detect and correct problems (example: test and inspection for incoming materials)
What are examples of internal- and external-failure costs?
Internal = scrap/rework and external = product liability
Which two types of costs fall under costs of conformance?
Prevention and appraisal, because they are all about making sure products are to quality before they’re made
Which two types of costs fall under costs of nonconformance?
Internal and external failure costs because they happen after a product is made
What is the aim of Poka-Yoke
to design the process so that mistakes can be detected and corrected immediately, eliminating defects at the source
What was Poka-Yoke first applied by?
Shigeo Shingo in the 1960s
What does Statistical Process Control (SPC) do?
monitors production process to detect and prevent poor quality
How do control charts help us in SPC?
They show us where statistical control limits are
What is random process variability generally due to?
Generally, natural occurances: It’s inherent in a process and depends on equipment/machinery/operator
What is non-random process variability generally due to?
Special cases: We can identify and correct them, includes equipment out of adjustment, defective materials, changes in parts, broken machinery, etc.
What’s the difference between attribute and variable quality measures?
Attribute: evaluated with discrete response (good/bad, yes/no). Variable: Is continuous (weight, length)
What are the best places to implement control charts?
Before production, before a costly/irreversible point, after assembly, before leaving factory
What are lean operating systems?
Manufacturing and service operations that apply the principles of lean enterprise
What is Muda?
It means waste in Japanese, and helps companies eliminate it by looking for non-value added waste
Lean vs. Six Sigma
Lean focuses on hidden waste reduction (the elimination of non-value added steps), Six Sigma focuses on the elimination of process variance through data driven decisions
What is value stream mapping?
a lean-management method for analyzing the current state and designing a future state for the series of events that take a product or service from its beginning through to the customer
What is the goal of VSM?
to identify and reduce waste in the process
What is a key metric associated with value stream mapping?
Lead time
What does OEE Stand for and what does it mean?
Overall Equipment Effectiveness - it’s a good lean indicator and metric for productivity and relates to the Six Big Losses
What are the Six Big Losses?
A. Downtime (breakdowns and set-up and adjustment B. Speed Losses (idling and reduced speed C. Defect (scrap/quality and reduced yield)
How do you calculate OEE?
Availability (downtime) x performance (speed) x quality
What is Kaizen?
Focuses on continuous improvement, instead of making leaps every now and then it is better to have smaller improvements along the way
What are the 5’s?
Sort, set in order, shine, standardize, sustain
What is Kanban?
self-regulating scheduling system for Lean/JIT Production
Who was Kanban originally developed by?
Taiichi Ohno at Toyota in 1947
What does TPM stand for and what is it?
Total Productive Maintenance - it is an overall approach to continuous improvement (zero accidents, zero defects, zero breakdowns)
What is SMED?
Single-Minute Exchange of Dies - to cut time spent idling machines
