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MGT 3501-Ops > Final Exam > Flashcards

Final Exam Flashcards

1
Q

the three competitive strategies

A

cost leadership, differentiation, and combination

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2
Q

the holy grail of operations

A

short lead time/on time, low cost, high performance/quality

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3
Q

order qualifiers

A

minimum level of service to be considered by the consumer; base level of features and functions

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4
Q

order winners

A

criteria that is most important to customers at the time of purchase (may vary at different times and from customer to customer); the features that win you a customer

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5
Q

order losers

A

failure to deliver the expected level of criteria can result in a customer being lost forever (dependability, personalization, and speed are particularly vulnerable)

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6
Q

the goal directed actions a firm intends to take in its quest to gain and sustain a competitive advantage

A

strategy

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7
Q

cost leader

A

supply product or service for the cheapest; emphasis on using tech to drive down operational costs; simple and standard product designs

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8
Q

differentiation

A

offer product that has functions and features no one else has (deliver quicker or keep your promises); unique product that allows a firm to charge a premium price

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9
Q

combination

A

a combination between cost leader and differentiation; will not last; stuck and difficult to grow

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10
Q

markets to compete in

A

broad or narrow

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11
Q

broad market

A

everyone is a potential customer

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12
Q

narrow market

A

small segment of the population

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13
Q

why not always choose a broad market

A

limited resources of time, money, and people; want to be efficient in our marketing

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14
Q

productivity

A

ratio of outputs to inputs in a production process; ship more products out the door using less materials and less manpower

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15
Q

what is operations management

A

turning sales into profit; creating profit

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16
Q

what makes operations difficult

A

lots of gray areas in decision making; IT DEPENDS

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17
Q

to be successful the firm must ____, ____, ____

A
  1. decide on a competitive strategy 2. understand order qualifier and order winner criterion 3. position themselves to be better than their competitors
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18
Q

four growth strategies

A

concentration, vertical integration, horizontal integration, and diversification

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19
Q

concentration

A

focus on the firm’s core business and increase the number of products or services served

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20
Q

vertical integration

A

buy out suppliers or distributors

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21
Q

horizontal integration

A

buy out competitors

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22
Q

diversification

A

grow by getting into different industries (reduces risk)

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23
Q

why vertical integration?

A

total control over costs and quality and supplies, profits in house

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24
Q

why horizontal integration?

A

instantly gaining market share, increase economies of scale, reduce competition

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25
Q

what is the big thing to remember about productivity

A

productivity measures are RELATIVE so they have to be compared to something else

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26
Q

productivity=`

A

total output/total input

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27
Q

how can you compare the productivity of two very different size companies

A

look at costs as a % of revenue

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28
Q

product development

A

the process beginning with the perception of a market opportunity and ending with the production, sale, and delivery of the product

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29
Q

successful product development determines ______ in the future

A

competitive positioning

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30
Q

without ______ the firm will not survive

A

innovating products and processes

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31
Q

changes over time

A

customer expectations (phone example)

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32
Q

innovation involves _______ with periods of _____

A

incremental improvements; radical innovation

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33
Q

radical innovation

A

disruption

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34
Q

incremental improvements

A

evolution

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35
Q

Why do a lot of product designs fail?

A

quality, inability to scale, timing, marketing message

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36
Q

apple vs. rio

A

rio did not have the infrastructure to legally get mp3s

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37
Q

how important is VoC or voice of the customer in product design

A

customers give great ideas for incremental improvements but not radical innovation

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38
Q

comcast example

A

customer service was terrible so listened to customers and fixed it; could possibly be out of business if they didn’t do this; but focusing too much on the customer made them miss the disruption of streaming

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39
Q

product design hits that people didn’t think would work

A

ring doorbell and post it notes

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40
Q

product misses

A

hershey could have bought mars candy; coke had three chances to buy a bankrupt Pepsi; Netflix tried to sell themselves to blockbuster

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41
Q

5 things to think about when prioritizing which product designs should move forward

A

urgency, market size, profit potential, cost, timing

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42
Q

most common financial tool to estimate the profit potential and cost requirements

A

net present value

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43
Q

positive net present value indicates

A

the projected earnings generated exceed the anticipated costs so move forward with the project

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44
Q

a _______ shows an optimistic, pessimistic, and most likely scenario

A

sensitivity analysis

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45
Q

most successful businesses that last understand what

A

what business they are truly in

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46
Q

BIG NO NO

A

do not let your product define your business (transatlantic steamers disrupted by planes because they were in the transatlantic shipping business not the people and good moving business)

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47
Q

its important to ______ fast in product design

A

fail

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48
Q

product development is a ______ process

A

iterative (two steps forward, one step back)

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49
Q

planning is great but you must be

A

flexible

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50
Q

scenario planning

A

what are all the possible scenarios and let me come up with a plan for each

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51
Q

first mover advantage is

A

a little bit of a myth

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52
Q

second mover advantage

A

look at everyone else’s mistakes and do it better (apply not first ipod)

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53
Q

process

A

a series of independent tasks that transform an input into an output that is of higher value to the org

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54
Q

why do we need to analyze processes

A
  1. to identify inefficient tasks 2. to identify ineffective tasks 3. to understand where value can be added
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55
Q

what do you do with inefficient tasks

A

fix them

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56
Q

what do you do with ineffective tasks

A

scrap them

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57
Q

______ can provide enormous value to a company

A

process improvements

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58
Q

what is more important? 1 million in sales or half a million in savings

A

the savings because it happens every time you do a process and it goes straight to your bottom line; a dollar of savings is a dollar of profit

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59
Q

cycle time

A

time required to complete a function, job, or task form start to finish (time from a unit starting production to it being finished)

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60
Q

utilization

A

the proportion of available time that a piece of equipment or system is operating (want this high but not 100%)

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61
Q

the use of a diagram to present the major elements of a process

A

process flowcharting

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62
Q

what is the first step in analyzing a process

A

flow chart it! or draw it out

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63
Q

WIP

A

work in process; material that has been removed from inventory, put into the production process, but not yet finished or shipped

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64
Q

finished goods inventory

A

material that has been removed from inventory, finished the production process, but not yet shipped

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65
Q

buffer

A

a storage area between stages where the output of one stage is placed prior to being used in a downstream stage

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66
Q

starving

A

occurs when the activities in a stage must stop because there is no material to work on

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67
Q

bottleneck

A

stage in the process that limits the performance or capacity of the entire system

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68
Q

what do you fix first

A

THE BOTTLENECK

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69
Q

throughput rate

A

the number of units going through a process per unit time

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70
Q

what does flowcharting allow you to do

A

visually allows you to analyze a process, identify bottlenecks, redundant tasks, series/parallel tasks, and determine system capacity

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71
Q

good for cross functional processes

A

swim lane flow charts

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72
Q

good for analyzing process statistics

A

flow diagram

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73
Q

the entire process can never go faster than the

A

bottleneck

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74
Q

steps for analyzing a process

A
  1. map out the process step by step 2. gather the facts from all perspectives 3. determined the designed output of each step 4. compare designed output vs. actual output 5. identify the bottleneck in the process 6. calculate the financial impact of the bottleneck 7. remedy the bottleneck, reevaluate, and find new bottleneck
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75
Q

ways to implement a new process

A
  1. create the urgency 2. form a coalition 3. answer “why do we need to change?” 4. answer what’s in it for me 5. communicate 6. remove obstacles 7. create small wins 8. reevaluate and improve 9. anchor it in place
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76
Q

successful companies tend to focus on

A

gaining more customers to gain more profit

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77
Q

failing companies tend to focus on

A

improving processes to cut costs

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78
Q

make to order vs. make to stock

A

important distinction (make to stock-order at end) (make to order-order at beg)

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79
Q

cycle time =

A

[set up time + (batch size * time per unit)]/batch size; minutes per unit

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80
Q

as batch size goes up the cycle time goes ____

A

down; why? because fixed set up time is spread out over more units

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81
Q

operations loves big ___

A

batch sizes

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82
Q

throughput rate =

A

1/cycle time (units per minute)

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83
Q

capacity equals the

A

throughput rate which is units per amount of time

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84
Q

the bottleneck equals the

A

total process capacity (no ADDING)

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85
Q

what is a service

A

anything sold that cannot be dropped on your foot; cannot be inventoried, intangible, and time perishable

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86
Q

what does time perishable mean

A

today’s capacity cannot be used to meet tomorrow’s demand

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87
Q

what is the fastest growing service sector globally

A

healthcare

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88
Q

what is the purpose of providing good service

A

customer retention, grow the business (positive reviews, word of mouth, etc), good service equals more money

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89
Q

a _____% increase in customer loyalty can increase profits ____-____%

A

5
25
85

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90
Q

is it better to meet customer expectations or exceed them?

A

short term - exceed them

long term - meet them

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91
Q

how are starbucks and waho both so successful in customer satisfaction even though they are so different in how they treat them

A

they set customer expectations and meet them

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92
Q

How do you set customer expectations

A

reputation and marketing; keep their promise by meeting those expectations

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93
Q

how do you measure customer satisfaction

A

surveys, retention rate, net promoter score

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94
Q

how many positive reviews does it take to cancel out one negative review

A

12

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95
Q

when customer expectations are in line with expectations set by the firm, satisfaction is ____

A

high

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96
Q

most conflict comes from

A

a misunderstanding of expectations

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97
Q

customer ____ drives customer satisfaction

A

compatibility

the fit between the needs of the individual customer and the firm’s ability to meet those needs is important

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98
Q

in a service environment what is the reality about variability

A

it cannot be eliminated
customers measure quality of service by how their variability is accommodated
customers introduce variability but complain about inconsistency

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99
Q

five types of customer variability

A

arrival, request, capability, effort, and subjective preference variability

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100
Q

arrival variability

A

customers arrive at times when there are not enough service providers

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101
Q

request variability

A

travelers request a room with a view; don’t know what they will request when they get here

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102
Q

capability variability

A

a patient being unable to explain symptoms to a doctor; how helpful are customers in helping us serve them

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103
Q

effort variability

A

shoppers leaving carts in the parking lot; not putting forth the effort

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104
Q

subjective preference variability

A

interpreting service action differently; the most difficult to overcome

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105
Q

what is our choice when facing variability

A

accommodate it or reduce it

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106
Q

customers that rely on good customer experiences tend to

A

accommodate the variability

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107
Q

companies that rely on operational simplicity tend to

A

try to reduce variability

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108
Q

four strategies for dealing with variability

A

classic reduction, classic accommodation, uncompromised reduction, low cost accommodation

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109
Q

classic reduction

A

ex. restaurant menu; companies that use this tend to attract customers who are willing to trade-off an excellent service for low price

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110
Q

classic accommodation

A

involves experienced/more employees to compensate for variations among customers; costs more and forces company to bear brunt of variability; success of strategy hinges on company’s ability to persuade customer to pay more

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111
Q

uncompromised reduction

A

uses knowledge of the customer to develop procedures that enable good service, while minimizing variability; try to reduce variability in a way that customers don’t really notice; ex. college chooses students with test scores in a narrow range so the school does not have to support more than one curriculum

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112
Q

low cost accommodation

A

companies persuade customers to serve themselves; experience varies with customer’s capability and effort; effective for high arrival or request variability; customer has to feel compensated so lower prices

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113
Q

what is behavioral science/economics

A

the study of why people act and make decisions the way they do

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114
Q

why is behavioral science important

A

if you understand the dynamics of decision making, you can influence it in your favor

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115
Q

rational decision making

A
  1. consider the options, then pick the one that maximizes profit or experience 2. assess pros and cons objectively without prejudice
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116
Q

irrational decision making

A

allows irrelevant biases, emotions, and environment to influence our decisions

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117
Q

predictably irrational

A

susceptible to the same influences over and over

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118
Q

we as humans are

A

predictably irrational

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119
Q

how to influence behavior in service operations

A

not all parts of an encounter are equal
finish strong
always leave them wanting more

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120
Q

recovery paradox

A

customers after a service failure and appropriate recovery have higher repurchase intention and loyalty than customers who are satisfied at the very beginning; recovery must be “appropriate” in the eyes of customer and some failure is not recoverable (safety related or repeated failure)

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121
Q

framing expectations

A

expectations change the way we perceive experiences (ex. blind taste test the same bottles were equal but when given different price tags people said higher price wine was better)

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122
Q

we inherently expect higher priced items to be ______ quality and this extends to brand name, packaging, presentation…

A

quality

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123
Q

why does framing expectations work

A

confirmation bias; we don’t want to admit that we were wrong so we convince ourselves that the higher priced thing was better

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124
Q

the lesson from framing expectations

A

start with a higher price to frame expectations then offer a discount to get down to market price (college tuition)

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125
Q

decoy effect

A

want you to purchase the bundle so when facing two options for the same price but one has more stuff, you choose that one cause you think you are getting a deal

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126
Q

free effect

A

people have an emotional response to “free” and there is pain associated with spending money (so even if it is more profitable to spend money to get the higher gift card, people will still choose the free option)

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127
Q

what is the number one characteristic employees want from managers

A

to show that they care about their career and well being (do that by understanding what motivates them and how they perceive different events)

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128
Q

what is the most important part of any company

A

employees

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129
Q

behavioral management theory

A

people have different wants and needs that motivate them; people react differently to every situation; turn management into leadership

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130
Q

pitfalls of having subject matter experts as managers

A

they have a harder time relating and understanding especially when the employees are not on the same level as them; pros also know what to do so easily that they have trouble communicating it and hard to teach (not a lot of time spent in conscious brain)

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131
Q

what is the most valuable commodity in the world

A

data

132
Q

data analytics

A

process of inspecting, cleaning, and modeling data with the goal of discovering useful information to support decision making

133
Q

why is data analytics important

A

support decision making to take action; to make predictions about the possibility of a future event; helps you focus (or target) specific customers or problems

134
Q

data dilemma

A

convenience of personalization vs. invasion of privacy

135
Q

4 types of data analytics

A

descriptive, diagnostic, predictive, and prescriptive

136
Q

descriptive analytics

A

answers the question what happened?; gives valuable insight into the past; signals something is wrong/right without explaining why

137
Q

diagnostic analytics

A

answers why something happened; measure data against other data to find relationships and dependencies

138
Q

predictive analytics

A

answers what is likely to happen; uses the finding of diagnostic analytics to detect tendencies, clusters and exceptions, and to predict future trends

139
Q

prescriptive analytics

A

answers what action to take; takes the predicted options and suggests a range of prescribed actions and the potential outcomes of each action (self driving cars and AI)

140
Q

what field of business has data analytics transformed

A

marketing

141
Q

no need for expensive and ineffective shotgun approach; now use

A

targeted marketing to send targeted advertisements to the right people, at the right time, with the right message

142
Q

data analytics is also super helpful in operations with

A

forecasting (manpower planning)

143
Q

how many data points does google collect on you

A

5,000

144
Q

examples of data analytics in operations

A

optimization models (how can we maximize calories while minimizing cost); credit acceptance (cluster a prospective customer into a group); route optimization

145
Q

predictive maitenance

A

condition based monitoring; maintenance should be done at the right time on the right part; ideally want to fix/maintain a part before it fails; use sensors to monitor conditions of parts at all times

146
Q

IOT

A

internet of things

147
Q

what real world events can cause production variability

A

machine downtime, human attendance, human emotions, quality defect rate, raw material supply issues

148
Q

what does having a buffer between stations do to throughput

A

reduces the impact of variability

changes the output of dice reduced the variability directly

149
Q

which is better buffer or reducing variability

A

increasing WIP inventory costs money and reducing variability is difficult to do but better (have to attack the root cause of variability

150
Q

why is waiting line management important

A

no one likes to wait in lines even when waiting at home; time is valuable, perception that the business is poorly run; smart phones have greatly softened the negative experience

151
Q

one thing that disney does to handle lines

A

virtual queues

152
Q

what times of variability contribute to waiting times

A

arrival, request, effort, and capability

153
Q

what are techniques to reduce or eliminate waiting

A

online troubleshooting; automation (self check out and ATMs); be transparent; segregate customers (disney fastpass and I85 toll lanes); distract them

154
Q

waiting line management is very important for what types of companies

A

airlines, amusement parks, fast food chains (chick fil a)

155
Q

what are some decisions disney or GDOT have to make when segregating customers

A

it is based on value

156
Q

what can be used to help calculate optimal number of workers, queues, lines, etc for the manager to evaluate

A

simulation software

157
Q

do we want to eliminate waiting altogether

A

probably not; impulse buying in grocery stores; waiting a little longer can increase sales

158
Q

why is quality important

A

everything we buy we expect a certain level of quality (order qualifier/order winner); also penalty for poor quality is much greater than the benefit of good quality

159
Q

what is the most important part on any product

A

the one that fails

160
Q

one example of poor quality management

A

challenger; did not keep track of the manufacturer recommendation so used the o ring in much colder temp; part design was fine but NASA’s application of how they used it was wrong

161
Q

name a few companies that have suffered for quality issues

A

chipoltle (e coli); samsung exploding phones, boeing

162
Q

what is the definition of quality

A

hard to pin down but you know it when you see it

163
Q

quality is not the same as

A

luxury

164
Q

how can you recover from poor quality

A

be honest and up front; if you have built up a good reputation you can recover; does not need to be a pattern of behavior

165
Q

types of quality

A

product, process, and decision quality

166
Q

product quality

A

characteristics that meet customers acceptability

167
Q

process quality

A

consistent results within a specified range

168
Q

decision quality

A

ethical or moral? like Volkswagon turning off the car emissions during the tests

169
Q

costs of quality

A

appraisal, prevention, internal failure, external failure, and opportunity costs

170
Q

appraisal costs

A

inspecting, auditing, testings

171
Q

prevention costs

A

efforts to keep defects from occurring

172
Q

internal failure costs

A

caught internally and either scrapped or corrected

173
Q

external failure costs

A

defect seen by the customer

174
Q

opportunity costs

A

loss of future business due to quality issues (hard to quantify but very large)

175
Q

total quality management (TQM)

A

manage the entire organization to excel in all dimensions of products and services that are important to customers

176
Q

two operational goals of total quality management

A
  1. careful design of the product or service 2. ensure the organization’s systems can consistently produce the design
177
Q

six sigma

A

a philosophy and set of methods to eliminate defects in products and processes; seeks to reduce variation in the processes that lead to defects; (goal is no more than 3.4 defects per million opportunities)

178
Q

what is the overall focus of the six sigma methodology

A

to understand and achieve what the customer wants

179
Q

Six Sigma DMAIC

A

define, measure, analyze, improve, control

180
Q

define

A

identify customers and their priorities

181
Q

measure

A

determine how to measure the process and how it is performing

182
Q

analyze

A

determine the most likely causes of defects

183
Q

improve

A

identify means to remove the causes of defects

184
Q

control

A

determine how to maintain improvements

185
Q

who implemented lean manufacturing

A

toyota

186
Q

lean manufacturing

A

activities designed to achieve high-volume production using minimal inventory and work; identify and eliminate waste, improve timing of production resources (just in time), remove anything that does not add value in the eyes of customer

187
Q

lean is based on the logic that

A

nothing will be produced until it is needed

188
Q

who gets to define what a defect is

A

the customer

189
Q

push manufacturing

A

workers maximize output of their workstations regardless of customer demand; efficiency of each station is the goal and focuses on keeping individuals busy; high WIP inventory and bottlenecks; make same amount of items regardless of sales (downside lots of defects)

190
Q

pull manufacturing

A

production line is controlled by the last operation (sales); efficiency of entire process is goal; want material busy and not just people; operators only work when there is a need; controls/eliminates WIP and bottlenecks; no buffer in system if problem arises

191
Q

two lean concepts

A

quality at the source and just-in-time production

192
Q

quality at the source

A

do it right the first time and if something goes wrong stop the process immediately (workers are personally responsible and become empowered)

193
Q

just-in-time production

A

producing what is needed, when it is needed and nothing more; anything over the minimum is waste; typically applied to repetitive manufacturing; exposes problems otherwise hidden by inventory; vendors deliver several times a day

194
Q

six sigma tools

A

flowchart, run chart, pareto chart, checksheet, cause and effect diagram, opportunity flow diagram, process control chart

195
Q

flow chart

A

a diagram of the sequence of operations

196
Q

run chart

A

depict trends in data over time; time is always the x axis

197
Q

checksheet

A

basic form to standardize data collection

198
Q

fish bone diagram

A

shows what the possible causes of a problem are in a standardized way; helpful in defining root causes (equipment, personnel, procedures, material, customers, information, other)

199
Q

process control chart

A

used to assure that processes are in statistical control; monitor process in real time; upper and lower limit

200
Q

project

A

a series of tasks that need to be completed in order to reach a specific outcome

201
Q

project management

A

planning, directing, and controlling resources to meet the technical, cost and time constraints of the project

202
Q

success is defined as

A

being on time, on budget and on scope; key resource is people’s time

203
Q

project management constraint theory

A

the triangle; scope, cost, and time

204
Q

types of project organization

A

pure project, functional project, and matrix project

205
Q

pure project

A

self contained team works full time on a project; PM is manager of employee; one project at a time

206
Q

functional project

A

may work on multiple projects within your function; needs of project may coincide with daily job

207
Q

matrix project

A

blends functional and pure; uses people from different functional areas to work on project under PM; employees have two bosses; PM must be able to negotiate

208
Q

most important part of the success/failure of a project

A

statement of work

209
Q

statement of work

A

written description of the objectives to be achieved, with a brief statement of the work to be done and a proposed high level schedule; must be clear; sets expectations, prevents scope creep

210
Q

critical path method

A

activities in a project that form the longest chain in terms of their time to complete; if any task on the CP are delayed the entire project is delayed

211
Q

immediate predecessor

A

activity that needs to be completed before another activity can begin

212
Q

popular tool to visualize tasks and their relationships

A

Gantt charts

213
Q

burndown chart

A

track actual progress against planned progress

214
Q

pitfall of burndown

A

how do you measure actual progress

215
Q

earned value management (EVM)

A

combined measurement of scope, schedule, and cost in a project (adding cost as a metric helps identify discrepancies in work accomplished to date)

216
Q

one major factor these systems don’t take into account

A

the quality

217
Q

how to measure quality

A

pull in experts to evaluate at milestones

218
Q

should suppliers be treated as vendors or partners

A

partners share the risk and are more invested in the success of your business

219
Q

how do we measure and monitor quality

A

statistical process control

220
Q

how can we monitor quality

A

by observing variation in output

221
Q

what is statistical process control

A

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

222
Q

the smaller the standard deviation the

A

more the process is under control (less variation there is in the output)

223
Q

control charts

A

show how process output varies over time

224
Q

x bar =

A

average or mean

225
Q

sigma =

A

standard deviation

226
Q

range of variation that a process is able to maintain

A

process control limits

227
Q

range of variation that is considered acceptable by the designer or customer

A

specification limits

228
Q

if PCL > SL

A

process is incapable because the process can produce outside the spec limits

229
Q

if SL > PCL

A

process is capable because it will only produce within the spec limits

230
Q

a process is ____ if its standard deviation is small

A

consistent

231
Q

a process is _____ if its average performance is close to the target

A

accurate

232
Q

shows how well the parts being produced fit into the range specified by the design specifications

A

process capability index (Cpk)

233
Q

if the Cpk is larger than 1 it indicates that the process is

A

capable

234
Q

_____ is related to standard deviation and you fix this first

A

consistency

235
Q

getting more accurate but less consistent means a _____ capable process

A

less

236
Q

if our process is not capable what can we do about it

A

accept more defects, reduce the variation (smaller standard deviation), re evaluate the spec limits

237
Q

used when a product or service is either good or bad

A

p charts or process control charts

238
Q

when doing p charts, the bigger the confidence level the ______ the spec limits

A

bigger

239
Q

narrower spec limits

A

the process is more under control but you are less confident about not having defects

240
Q

performed on goods that already exists to determine what percentage of the products conform to specifications; executed through a sampling plan

A

acceptance sampling

241
Q

advantages of acceptance sampling

A

economies, fewer inspections/inspectors, applicability to destructive testing

242
Q

disadvantages of acceptance sampling

A

risk of accepting “bad” lots and rejecting “good” lots, paperwork of lot sizes; less information than 100% inspection

243
Q

process of making prediction on future based on past and present data (done by analyzing trends)

A

forecasting

244
Q

_____ and ____ are absolutely linked

A

inventory and forecasting

245
Q

is it better to under or over estimate forecasts

A

almost always better to over estimate than under; would rather risk having excess than going through a stock out of inventory

246
Q

what is the foundation of any successful ops team

A

forecasting

247
Q

if a forecast is not accurate the _____ are put under great stress

A

supply chain and inventory

248
Q

forecasts are more accurate for _____ periods of time

A

shorter

249
Q

every forecast should

A

be a range and include a confidence level

250
Q

relies on subjective opinions from one or more experts

A

qualitative

251
Q

relies on data and analytical techniques

A

quantitative

252
Q

examples of qualitative research/forecasting

A

market research, expert analysis, historical analogy

253
Q

example of quantitative forecasting

A

time series, causal relationships, simulation

254
Q

models that predict future demand based on past data

A

time series

255
Q

models that use statistical techniques to establish relationships between various items and demand

A

causal relationships

256
Q

models that incorporate some randomness and non-linear effects

A

simulation

257
Q

assumes the most accurate forecast of future demand is a simple (linear) combination of past demand

A

moving average (time series)

258
Q

when do you use moving average

A

typically when there is no seasonality or trend

259
Q

two types of moving average

A

simple moving average and weighted moving average

260
Q

taking average of previous demand to forecast future demand

A

simple moving average

261
Q

taking average of previous demand to forecast future demand but gives more importance to some of the data

A

weighted moving average

262
Q

identifies the relationship between two or more variables

A

least squares method: linear regression

263
Q

___ is the indicator of best fit for linear regression

A

r2

264
Q

how do you validate your forecast

A

test it against historical data to validate accuracy; track forecast vs actual; make corrections as necessary

265
Q

how do you choose the right model

A

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!

266
Q

incorporates real time data to update forecasts; no longer relying on solely historical data for analysis

A

demand forecasts (ex. point of sale data)

267
Q

_____ is different from demand forecasting in that the company is influencing what the future demand will be

A

demand shaping

268
Q

2 main types of forecasting errors or variation

A

quantity demanded or product specifications

269
Q

how do you handle errors in quantity forecasted

A

inventory and robust supply chain that can handle variation

270
Q

how do you handle errors in product specifications

A

flexible manufacture

271
Q

three components of demand

A

randomness, trends, and seasonality

272
Q

weighted moving average model with sophistication; prediction of the future depends mostly on the most recent observation and the error from the latest forecast

A

exponential smoothing

273
Q

exponential smoothing with trend

A

double exponential smoothing

274
Q

exponential smoothing with trend and seasonality

A

triple exponential smoothing

275
Q

the raw material, components, work in process, or finished goods that are held at a location in the supply chain

A

inventory

276
Q

the set of policies and controls that monitor levels of inventory

A

inventory management system

277
Q

why is inventory management necessary

A

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

278
Q

what is usually the largest corporate asset

A

inventory

279
Q

effective inventory mgt occurs from an accurate _____ and reliable ____

A

forecast

supply chain

280
Q

cost of inventory

A

holding (carrying) costs, ordering costs, opportunity costs, cash flow

281
Q

costs for rend, handling, insurance, utilities, etc.; spoilage and obsolescence

A

holding or carrying costs

282
Q

inability to purchase additional inventory

A

cash flow cost of inventory

283
Q

costs of placing an order

A

ordering costs

284
Q

cost of stock out; foregone investment earnings

A

opportunity costs

285
Q

managing inventory takes ____ and ____

A

time and money

286
Q

80/20 rule

A

Pareto; 80% of the inventory is concentrated in 20% of the skus

287
Q

ABC method

A

allows us to focus on the most important inventory items; A (high dollar volume, B (moderate dollar volume) C (low dollar volume)

288
Q

other inventory models

A

single period, multi period fixed order quantity, multi period fixed time period

289
Q

used when we are making a one time purchase of an item; seeks to balance the costs of inventory overstock and under stock

A

single period

290
Q

used when we want to maintain an item in stock and when we restock a certain number of units must be ordered

A

multi period fixed order quantity

291
Q

item is ordered at certain intervals of time

A

multi period fixed time period

292
Q

event triggers the reordering of inventory

A

multi period fixed quantity (event is usually inventory falling below certain level)

293
Q

time triggers the reordering of inventory

A

multi period fixed time

294
Q

fixed order quantity assumptions

A

demand is constant and uniform; lead time, cost per unit, and ordering cost are constant

295
Q

the amount of inventory carried in addition to expected demand

A

safety stock

296
Q

common safety stock approach

A

to keep a certain number of lead times of supply

297
Q

The process of optimizing the shipment of
goods and services from supplier to
customer

A

supply chain management

298
Q

goals of supply chain management (SCM)

A

optimize production, decrease manufacturing time,
minimize inventory, streamline order
fulfillment, and reduce cost.

299
Q

ULTIMATE goal of supply chain management

A

match supply and demand

300
Q

what can we do to influence demand

A

pricing, promotion, placement, and product (change it)

301
Q

what can we do to influence supply

A

capacity, inventory, and service level

302
Q

disadvantage of vertical integration

A

a company cannot be the best at everything

303
Q

developments that enabled companies to create global supply chains

A

real time communication technology, large scale shipping, and logistics technology

304
Q

why is supply chain management so difficult

A

uncertainty in demand/supply
changing customer requirements
decreasing product life cycles
conflicting objectives in supply chain/inside the firm

305
Q

the further away from the customer you get, the bigger the safety margin and the bigger the inventory swing that the raw material supplier has to have

A

bullwhip effect (inventory requirements vary much more); additional safety is added in every step and there is a time lag in information

306
Q

how to mitigate the bullwhip effect

A

all steps have access to the same info
coordinated response to sales
faster response rate for orders and deliveries
vertically integrate

307
Q

why go global if it is so difficult to manage

A

it is more complex but the cost savings are probably worth it

308
Q

when not to outsource

A

when it involves: intellectual property, proprietary info/processes, core competencies, or difficult to coordinate

309
Q

requires an integrated effort between sales, product development,
manufacturing, supply chain, logistics, quality control, finance, etc.

A

operations planning

310
Q

operations planning starts with

A

a forecast from sales

311
Q

decisions can be made through either

A

intuition, reason, or combo

312
Q

not just gut feel
combines past experiences and personal values
not always based on reality, only your perceptions

A

intuition

313
Q

uses available facts and figures

ignores issues form past

A

reason

314
Q

best way to make decisions

A

a combination of intuition and reason

start with reason and let intuition take it from there

315
Q

revenue management

A

how do we maxiize profit

316
Q

price can be optimally set for various customer groups because different groups value it differently

A

price segmentation

317
Q

one of the most important decisions that operations has to make is how to

A

handle variation in demand

318
Q

three operations planning strategies

A

chase strategy, stable workforce, and level strategy

319
Q

match demand by hiring and laying off employees as necessary; no inventory buildup and no overtime; requires access to large pool of available resources who require little training; difficult to maintain motivated employees

A

chase strategy

320
Q

match demand by varying work hours of employees; no inventory buildup, no hiring, no termination, still may have difficulty motivating employees

A

stable workforce (overtime)

321
Q

keep production level throughout year and use inventory to match demand; no hiring, no termination, no overtime, may result in periods of hight inventory or lost sales

A

level strategy

322
Q

Fixed and variable costs incurred in the production of a product

A

basic production costs

323
Q

Hiring, Training, Laying off personnel; start/stop costs

A

production rate changes

324
Q

costs of holding inventory

A

inventory holding costs

325
Q

costs associated with expediting, satisfaction, cancellation

A

shortage costs

326
Q

four types of operations planning costs

A

basic production costs, production rate changes, inventory holding costs, and shortage costs

MGT 3501-Ops (4 decks)

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