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ARE 157 > Midterm 1 > Flashcards

Midterm 1 Flashcards

1
Q

What is production?

A

The creation of goods and services from raw materials by some transformation.

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2
Q

What is Operations Management?

A

OM is the set of activities that creates value in the form of goods and services by transforming inputs into outputs.

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3
Q

What are some OM Key decision areas?

A
  1. Design of goods and services
  2. Location Strategy
  3. Layout Strategy
  4. HR and job design
  5. Inventory
  6. Maintenance
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4
Q

What is Operations Research?

A

Operations research is the application of quantitative methods to processes to optimize the objective

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5
Q

What is productivity?

A

Productivity is the ratio of outputs divided by inputs.

Ex: MPG

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6
Q

Explain the value proposition:

A

Value proposition is the link of the firm’s activities to the value produced. (LINKS PRODUCT TO CUSTOMER)

Key partners, puchasing, raw mat, then need to convert these to outputs -> Cust relationship, channels, who to provide product to.

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7
Q

What are the three dimensions (or environments)?

A
  1. Product: Goods and services delivered to customer.
  2. Process(es): The activities that transform inputs to outputs.
  3. Supply Chain: The ORDER in which the processes are performed to produce and deliver products to customers.
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8
Q

What are the three realms (or decisions)?

we make decisions based on these three things

A
  1. Time: Cycle time- the time to perform a set of tasks in a process.
  2. Cost: Cost of task. ECONOMIC cost of process..
  3. Quality: The attributes of a product of service to meet customer needs.
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9
Q

We have complications in customer satisfaction, what are they?

A

We have unknowns (quality), we have uncertainty (customer variation), and we have variability, (we know what attributes, but they vary).

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10
Q

History: What is the cost focus from 1700 - 1980?

A

Everyone’s focused on cost and efficiency. (Efficiency: Minimize cost, people came up with tools to measure COST).

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11
Q

History: What is the quality focus from 1980 - 1995?

A

Computers came around, (IT)
-Baby boomers growing up, people wanted more and better.
Ex: People want a nice experience. People have what they want, now they want a better product.

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12
Q

History: What is the customization period from 1995 - Present?

A

Able to figure out what people wanted.

Ex: Predict # suppliers needed for year. Customize product for buyer.

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13
Q

What are the differences between goods and services?

A

Services are:

  1. Intangible
  2. Consumed at time of transaction
  3. More variable in attributes
  4. Geographically distributed (production)
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14
Q

What are the factors of production?

A

Traditional Economic Factors: (LLC)
-Land, Labor, Capital
Additional Factors: Technology (robots), Management (have to manage L,L,C), Knowledge (Information)

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15
Q

In terms of strategies in OM, what is the strategy, mission and goal?

A
  1. Strategy: “ACTION PLAN” to achieve goals. (How am I going to achieve my goal?)
  2. Mission: The reason why organizations exist..
  3. Goal: Tangible measures to evaluate the success of the strategy to achieve the organization’s mission.
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16
Q

Strategy #1: Differentiation

A
  • Product, make it different from others.

- Experience - generally for services, make it different as well so it’s unique.

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17
Q

What are the types of strategies for OM?

A
  1. Differentiation
  2. Cost Leadership (Low cost leader, and total cost ownership)
  3. Response or channel support
  4. Quality
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18
Q

Strategy #2: Cost Leadership

A

A) Low cost leadership - who can make the product the cheapest
-Driven by low cost (initial cost of product)
B) Total Cost of Ownership: Includes the initial cost, installation, training, operating, maintenance, and disposal cost. (ALL OF IT)

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19
Q

Strategy #3: Response or Channel Support

A
  • How are we going to get that product to you?
  • Response time: Quick answer, good response time.
  • Customer relations management.. support services.
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20
Q

Strategy #4: Quality

A

Differentiation in terms of quality of the functions.

-Quality is huge! All features are high quality.

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21
Q

Market Segmentation:

A

Customers -> Products -> Processes -> Strategy
(The determine each other, from left to right)

-We find variation in customer preferences, so we can segment the market by customer needs. This will work back to the co’s STRATEGY.

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22
Q

Global Strategy:

A

-Special case of market segmentation.
A) Think of global strategies in terms of marketing.
B)In OM we think of a global-strategy in supply-chain terms.
Ex: Cross-border trading strategy within U.S.
C) BOTH are complicated with “cross-border” issues.
(Trade agreements, cultural or ethical issues, transfer pricing)

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23
Q

back to cross border issues, what is transfer pricing?

A

Transfer pricing is when a product’s made in Korea for $100, sold for $120, then that’s sold to Australia for $120, added $80 in cost, then sold for $250. Etc. The transfer adds price every time.

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24
Q

What are Strategic Models? (two of them)

A

-Analytical and Operational models.

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25
Q

Analytical models:

-Value Chain:

A

-Organizational orientation to evaluate Supply Chain.
(Look at the support activities (organization, HR, Tech., Purchasing, and then look at the primary activities (such as inbound logistics, operations, outbound logistics, marketing and sales, service)

Make sure that ALL activities ADD VALUE to finished product.
*Support activities will not add value directly.

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26
Q

Analytical Models:

-Porter’s Five Forces

A
  • Industry orientation, model of competition.
    1. Supplier Power
    2. Buyer Power
    3. Threat of substitute products
    4. New Entrants
    5. Existing Firms
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27
Q

Operational Models:

-Product Life Cycle Position

A

See graph:
(Intro, growth, maturity, decline) The graph slopes up, maxes out and then declines)

At growth, people become aware of product.
at maturity, substitute products come in.
at decline, market is saturated with sellers.

28
Q

Operational Models:

-Supply Chain

A
  1. Raw Materials -> 2) Supplier -> 3) Manufacturing -> 4)Distribution -> 5) Customer -> 6) Consumer.
    (It’s a circle with those steps)
29
Q

Operational Models:

-Core Competencies

A

-The things you do really well! (a list of things you’re good at)

30
Q

Operational Models:

-Key Success Factors (KSS)

A

-If your KSS do well, the company does well.

Think of it as a dashboard, key things to look at to measure success

31
Q

Operational Models:

-Competitive Advantages

A
  • How am I going to compete against you? (They come from KSS)
  • Attributes of firm that are explicit to customers.
32
Q

What are projects?

A
  • They have a defined end point.

- They focus on effectiveness.

33
Q

What are processes?

A

They have a defined output

-They focus on efficiency.

34
Q

What is the efficiency-effectiveness tradeoff?

A

Efficiency is getting it done economically, yet effectiveness is getting it done correctly. The key to getting both is planning!

35
Q

Projects in OM:

What is a feasibility study?

A
  • It’s a form of analysis, very structured.
  • Looks at likelyhood of success of objective. (risk analysis)
  • Come up with a plan of action.
36
Q

Projects in OM:

A

A “process” is developed so that the project end point is the start of the process.

37
Q

What is a Gantt Chart?

A

It’s a reporting instrument, a “top down” view.

It has a list of tasks and what days they’re on

38
Q

What is the Critical Path Method? (CPM)

A

It is the planning tool of choice:
-Time dependent. DETERMINISTIC.
-Network Method, Preference, activity on the node.
-We want to know how long the project will take.
Critical Path is the LONGEST PATH of network.
Used for repeatable events. - it works because estimates are firm.

39
Q

What is PERT?

A

PERT: Planning, Evaluation, & Review Technique
-It is probablistic.
-Assumptions that drive PERT is “time to complete”.
-Deals with uncertainty.
A = Optimistic time
B = Pessimistic time
M = Most likely time.

We want to know expected time.

E(t) = (A + 4M + B)/6 with Variance ((B - A)/6)^2
(Standard deviation is square root variance)

40
Q

What does PERT do?

A

PERT tells you the way it is. You want to minimize your risk.
-PERT tells you the range you have for certain risks.
-PERT allows you to estimate the probability of a particular CPM result, given the variability in time for each node.
(add variances of activities on critical path, and square root to get project standard deviation)

41
Q

Forward Pass and Backward Pass?

A

The forward pass is the earliest pass, the backward pass is the latest pass.

42
Q

What is the Monte Carlo Simulation?

A
  • RISK MANAGEMENT.
  • KEY IS PROBABILITIES you assign it.
  • Refers to one event. -It allows you to get a better idea of what’s going on inside this one event.
  • It tests the certainty of a probability.
43
Q

What is forecasting?

A

We forecast two things: Price and Quantity.
-in OM we’re interested in quantity, it drives capacity of plant.
when we do, we can figure out people, productive capacity, and raw materials.

We can also forecast the life cycle of the product. (figure out if there’s a change in demand, new features, and factor in disposal cost.

44
Q

What types of forecasting are there?

A
  1. Economic Forecast (interest rates, money supply, etc)
  2. Technological Forecast (long term pattern of technological changes in industry).
  3. Demand (How many units do we need to ship?) This is the OM focus. DEMAND!!
45
Q

What is the difference between qualitative and quantitative forecasting?

A

Qualitative forecasting, used for new products. (No data to use, think marketing)

Quantitative forecasting, used for existing products. (Use existing data, think econometrics)

46
Q

Qualitative methods:

turn qualitative data and turn it into quantitative data

A
  1. Jury of executive opinion: Talk to people in the business. (used least)
  2. Delphi Method: less expertise than experts. BEST METHOD. (like a focus group)
  3. Sales Force Composite: Expectation management. least useful..
  4. Consumer Marketing Survey: just surveys, don’t address demand for your product.
47
Q

Quantitative Methods:

A
  1. Time Series: y=f(x) units sold in period t is function of units sold in period (t-1)…

Past is a predictor of present/future.

  1. Moving average: Same thing, just using more periods to calculate. ((t-1)+(t-2)+(t-3)/3)
  2. Seasonal Variation: It makes adjustments in trend-line forecasts.
    (First, calculate without the trend, apply trend to model, etc. See pg. 122 in book)
48
Q

Give example of a STRATEGY:

A

Strategy is an approach to a goal. (Low cost, differentiation, etc)
-VP links product (Q) to customer (P) and the supply chain links processes together. Keeping in mind constraints (time, cost and quality).

49
Q

Design of new products and services:

-What is creativity?

A

Creativity is something new.

50
Q

What is Innovation?

A

Innovation is making something that exists better.

-There’s already a market for the good. (Demand driven)

51
Q

What is the difference between being production driven and demand driven?

A

Production Driven: You sell what you make. (Push product through system) “INNOVATION PUSH”
Demand Driven: We make what we sell. (We make what sells, so we will pull through the system with customer demand).
“DEMAND PULL”

52
Q

Demand Pull?

A

Find a market and fill the need. (Supply-side approach)

53
Q

Innovation Push?

A

Find a product/service and create a need for it. (Demand side approach) (create the demand for it. That’s hard to do!)

54
Q

House of quality:

A

Customer Requirements -> Design Characteristics
Design Characteristics -> Specific Components
Specific Components -> Production Process
Production Process -> Quality Plan

55
Q

What is quality?

A

The ability of a product or service to meet the customer’s expectations and needs.

56
Q

What are two types of quality?

A
  • Quality of design: How well is it designed?

- Quality of conformance: How well does it meet design specifications?

57
Q

What are the attributes of quality?

A
  1. High mean: On the average, score high.
  2. Low variance: not a lot of variability.
  3. Number of options
58
Q

Cost of quality: What are the four costs of quality?

A
  1. Prevention costs: cost you incur to prevent a mistake
  2. Appraisal costs: detective costs, make sure everything’s good.
  3. Internal failure costs: when something bad happens..
    (Appraisal at front, internal failure at back of process)
  4. External failure costs: deals with customer. (warranties, etc)
59
Q

What is the red bead experiment?

A

Edward Deming, Quality movement, meant to show that the system has to be changed, not the workers. (the paddle showed number of mistakes with red beads)

60
Q

Quality Standards: What are the five quality standards?

A
  1. Industry Standards
  2. Regulatory Standards
  3. Warranty Standards
  4. Contractual Standards (It has to be ____)
  5. ISO Standards (International Standards Organization)
61
Q

What are international standards?

A

ISO:
ISO 9000 and ISO 9001, quality standards, general standards.
ISO 14000: Environmental management.

62
Q

Applications of Quality Management:

What are six applications?

A
  1. TQM (Total Quality Management) - quality management everywhere
  2. Continuous Improvement Model: -Always try to improve system
  3. PDCA “Plan-Do-Check-Act” - This is how to institute quality management into a system. (Check to see if do matches plan, then act on it). Ex: Run 500 cases. Do it, check if it meets plan, then act..
  4. Inspect what you expect: Make sure it’s all good. MUST INSPECT.
  5. Benchmarking - Standards that must be met.
  6. Six-sigma: The quality must be with in six sigmas of mean.
63
Q

What are quality tools?

A
  1. Quality circle
  2. Visual tools (graphs, etc)
  3. Cause and effect diagrams
  4. Paredo Charts
  5. Statistical Process Control
  6. Polka Yolks (they dispense properly every time)
64
Q

What is Statistical Process Control (SPC)?

A

It’s a way to figure out what’s acceptable.
-You’ve got upper and lower control limits, (+- 3 sigmas from mean)

-(Special) Assignable causes of variation: Things we can’t fix. - Falls outside of the six sigmas. Bad
-(Chance) Common causes of variation: Things we can fix. - (we can deal with that)
CONTROL PROCESS SO OUTCOME IS OKAY.

65
Q

What is an R chart?

A

-Looking for dispersion within acceptable range. (measures variation)

66
Q

What is a P Chart?

A

-Measures attributes, qualitative measures.. what portion of items not conforming.. (P for Portion)

67
Q

What is Process Capability?

A
  • 1.33 = capability index.

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