msb 255 tema oversikt

Question 1

1. grei ut om Productivity, efficiency, and productivity variables

Answer 1

Productivity can be defined as the ratio of outputs, both goods and services are divided by the inputs which are resources such as labor and capital. Production is a measure of output only, and not a measure of efficiency. An easy equation to visualize productivity is Unit produced/input used. For instance, units produced/labor-hours used. To improve productivity the management can ensure that the employees get the knowledge and equipment/materials required to produce.
Efficiency can be defined as the quality of degree of being efficient. Production efficiency can be defined as the measurement that describes the conditions to produce goods at the lowest possible cost. This does not just consider the number of units produced, but also how waste is minimized in the process.
Productivity variables are three factors critical to productivity improvement
Productivity variables ensure productivity enhancement through different factors such as labor, capital and proper management. Labor mainly comprises of workforce whether skilled, or non-skilled. Productivity can be improved by improving some key areas which are related to the labor such as social overhead, effective labor force. Capital can improve productivity by installing the latest technology in manufacturing processes. Management also plays important role in improving productivity by collecting and giving knowledge efficiently. The management team uses labor force effectively and knows how to manage capital efficiently to enhance the productivity of business.

Question 2

2. grei ut om Mission, vision, and strategy

Answer 2

Mission can be defined as why the company exists and what their goals are. Vision draws the organizations picture in the future. Strategy is how the company should reach their vision and goals.

Question 3

3. The three generic strategies for competitive advantage

Answer 3

• Differentiation – Better or at least different
  o Uniqueness can go beyond both the physical characteristics
  and service attributes to encompass everything that impacts
  customer’s perception of value. For example, Walt Disney Magic Kingdom – Experience differentiation.
  o Engaging a customer with a product through imaginative use
  of the five senses, so the customer “experiences” the
  product
• Cost leadership – cheaper
  o Provide the maximum value as perceived by the customer. Does
  not imply low quality.
• Response – more responsive
  o Flexibility is matching market
  changes in design innovation
  and volumes
  – A way of life at Hewlett-
  Packard
  o Reliability is meeting schedules
  – German machine industry
  o Quickness in design,
  production, and delivery
  – Johnson Electric,
  Pizza Hut

Question 4

4. Strategic planning, core competencies, and outsourcing

Answer 4

Strategic planning is an process of how to define a strategy or direction to reach the companies goals and vision. It includes decision making, and where to prioritize resources to achive the best possible outcome when it comes to cost, environmental, marked advantages etc.
Core competencies are the defining characteristics that make a business, or an individual stand out from the competition. A successful business has identified what it can do better than anyone else, and why. Its core competencies are the “why.” Core competencies are also known as core capabilities or distinctive competencies. Core competencies lead to competitive advantage.
Outsourcing is activities that traditionally have been internal but has been transferred to external suppliers. By doing this, it releases internal capacity so that they can focus on other tasks.

Question 5

5. The phases of the product life cycle and the associated strategic priorities

Answer 5

The phase of product life cycle is devided into four. Introduction, Growth, Maturity and Decline.

Question 6

6. The new product development process and value proposition

Answer 6

To generate new products, the process is divided into 6 bullets points:
* Understanding the customer
* Economic change
* Sociological and demographic change
* Technological change
* Political and legal change
* Market practice, professional standards, suppliers, distributors.
The product development stages can further be divided into 9 stages:
S

Question 7

7. The differences between goods and services

Answer 7

Question 8

8. Quality function deployment

Answer 8

• Quality function deployment (QFD)
  – Determine what will satisfy the customer
  – Translate those customer desires into the target design
• House of quality
  – Utilize a planning matrix to relate customer wants to how the firm is going to meet those wants

Question 9

9. Strategies for product development continuum

Answer 9

• Purchasing technology by acquiring a firm
  – Speeds development
  – Issues concern the fit between the acquired organization and product and the host
• Joint Ventures
  – Both organizations learn
  – Risks are shared
• Alliances
  – Cooperative agreements between independent organizations
  – Useful when technology is developing
  – Reduces risks

Question 10

10. Service process productivity improvement techniques

Answer 10

• Make the case that focusing on customer service will improve productivity
• Understand why and how customers interact with your organization
• Identify opportunities to reduce customer effort
• Automate and simplify processes
• Engage, develop and empower employees
• Address potential barriers to improving productivity
• Set measures of productivity that your organization’s purpose; efficiency and effectiveness; customers’ perception of quality; business performance outputs

Question 11

11. Supply chain integration: Issues and opportunities

Answer 11

Issues:
* Local optimization can magnify fluctuations
* Incentives push merchandise into the supply chain for sales that have not occurred
* Large lots reduce shipping and production costs but increase inventory holding and do not reflect actual sales

Opportunities:
* Accurate “pull” data, shared information (Via POS)
* Lot size reduction, shipping, discounts for annual volume, reduced ordering costs
* Singe stage control of replenishment
* Vendor managed inventory (VMI)
* Collaborative planning, forecasting and replenishment (CPFR) throughout the supply chain
* Blanket orders againt which actual orders are released
* Standardization
* Postponement withholds modification as long as possible
* Electronic ordering and funds transfer speed transactions and reduce paperwork
* Drop shipping and special packaging bypasses the seller and reduces costs
* Blockchain aids tracking and verification

Question 12

12. Sourcing issues and six strategies

Answer 12

• Make-or-buy decisions
  -Choosing between obtaining products and services externally as opposed to
• producing them internally
• Outsourcing
• Transfer traditional internal activities and resources to outside vendors
• Efficiency in specialization
• Focus on core competencies
  1. Many suppliers
  2. Few suppliers
  3. Vertical integration
  4. Joint ventures
  5. Keiretsu networks
  6. Virtual companies

Question 13

13. The stages of building the supply base

Answer 13

Supplier evaluation
– Finding potential suppliers
– Determine likelihood of their becoming good suppliers
– Supplier certification
1) Qualification
2) Education
3) Certification

Supplier development
– Integrate the supplier into the system
o Quality requirements
o Product specifications
o Schedules and delivery
o Procurement policies
o Training
o Engineering and production help
o Information transfer procedures

Negotiation
– A significant element in purchasing
– Highly valued skills
o Cost-based price model
 Supplier opens books
o Market-based price model
 Based on published, auction, or indexed prices
o Competitive bidding
 Common policy for many purchases
 Does not generally foster long-term relationships

Contracting
– Share risks, benefits, create incentives

Centralized purchasing
– Leverage volume
– Develop specialized staff
– Develop supplier relationships
– Maintain professional control
– Devote resources to selection and negotiation
– Reduce duplication of tasks
– Promote standardization

E-Procurement
– Speeds purchasing, reduces costs, integrates supply chain
– Online catalogs and exchanges
o Standard items or industry-specific web sites
– Online auctions
o Low barriers to entry
o Reverse auctions for buyers
o Price not always the most important factor

Question 14

14. Main activities in logistics management

Answer 14

Logistics Management
* Objective is to obtain efficient operations through the integration of all material acquisition, movement, and storage activities
* Is a frequent candidate for outsourcing
* Allows competitive advantage to be gained through reduced costs and improved customer service

Main Activities:
– Shipping systems
o Trucking
o Railroads
o Airfreight
o Waterways
o Pipelines
o Multimodal
– Cost and Speed of shipments
o Faster shipping is generally more expensive than slower
o Faster methods tend to involve smaller shipment sizes, while slower involve very large shipment sizes
– Warehousing
o May be expensive, but alternative may be more expensive
o Fundamental purpose is to store goods
– Third-Party Logitics (3PL)
o Outsourcing can reduce inventory, costs and improve delivery reliability and speed

Question 15

15. Methods to measure supply chain performance

Answer 15

Methods that can be used to measure Supply Chain Performance:
* Asset committed to inventory:

Question 16

16. The bullwhip effect, causes, and their remedies

Answer 16

The bullwhip effect is a supply chain phenomenon describing how small fluctuations in demand at the retail level can cause progressively larger fluctuations in demand at the wholesale, distributor, manufacturer and raw material supplier levels.
The bullwhip effect is caused by demand forecast updating, order batching, price fluctuation, and rationing and gaming
SE BILDE

An easy explanation of the bullwhip effect can be visualized with a bullwhip, where the concept is that companies stack their inventory to meet their customers demand, when they stack it their supplier company again need to increase their own inventory to meet their customers demand again. This will create an increase in the stock inventory to the companies and make a unrealistic view of the demand further back in the supply chain.
What are the causes and remedies of bullwhip effect?
The Bullwhip Effect is a phenomenon in the supply chain and distribution channels in which forecasts reveal supply chain inefficiencies. This mostly occurs when retailers become highly reactive to consumer demand, and in turn, intensify expectations around it, causing a domino effect along the chain.

Causes:
* Lack of communication and disorganization
* Order batching
* Variation in pricing
Solutions:
* Improve inventory planning process
* Better communication between managers
* Collaboration between customers and suppliers
* Demand-driven supply chain management

Question 17

17. Three concepts of Sustainability

Answer 17

• Circular economy
• Life cycle assessment
• Triple bottom line
• Product design
• Industry 4.0

Question 18

18. The circular economy opportunities in design, production, logistics, and end-of-life stages

Answer 18

• Product design:
  o Design decisions affect materials, quality, cost, processes, related packaging and logistics, and how the product will be processed when discarded
  o Incorporate systems view to lower environmental impact
  o Alternative materials
• Productions process
  o Reduce the amount of resources in the production process
   Energy
   Water
   Environmental contamination
  o Reduce cost and environmental concerns
• Logistics
  o Reduce costs by achieving efficient route and delivery networks
   Getting shipments to customers promptly
   Keeping trucks busy
   Buying inexpensive fuel
  o Management analytics can help
  o Evaluate equipment alternatives
  o Life cycle ownership costs
• End-of-Life phase
  o What happens at the end-of-life stage?
  o Closed-loop supply chains or reverse logistics
  o Initial design incorporates disassembly, recycling, and reuse

Question 19

19. Description and comparison of four process strategies

Answer 19

• Process focus
  o Facilities are organized around specific activities or processes
  o General purpose equipment and skilled Personnel
  o High degree of product flexibility
  o Typically high variable costs and low equipment utilization
  o Product flows may vary considerably, making planning and scheduling a challenge
• Repetitive focus
  o Facilities often organized as assembly lines
  o Characterized by modules with parts and assemblies made previously
  o Modules may be combined for many output options
  o Less flexibility than process-focused facilities but more efficient
• Product focus
  o Facilities are organized by product
  o High volume but low variety of products
  o Long, continuous production runs enable efficient processes
  o Typically, high fixed cost but low variable cost
  o Generally, less skilled labor
• Mass customization
  o The rapid, low-cost production of goods and services to satisfy increasingly unique customer desires
  o Combines the flexibility of a process focus with the efficiency of a product focus

Question 20

20. Tools (charts/maps) for process analysis

Answer 20

• Flowchart
  – Shows the movement of materials
  – Harley-Davidson flowchart
• Time-Function Mapping
  – Shows flows and time frame

Question 21

21. Capacity, utilization, and efficiency

Answer 21

• Capacity decisions impact all 10 decisions of operations management as well as other functional areas of the organization
• Capacity decisions must be integrated into the organization’s mission and strategy
• The throughput, or the number of units a facility can hold, receive, store, or produce in a period of time
• Determines fixed costs
• Determines if demand will be satisfied
• Three time horizons
  Utilization is the percentage of design capacity actually achieved
  Utilization = Actual output/Design capacity
  Efficiency is the percentage of effective capacity actually achieved
  Efficiency = Actual output/Effective capacity

Question 22

22. Tactics to manage capacity/demand imbalance

Answer 22

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Question 23

23. Bottleneck analysis and theory of constraints

Answer 23

• Each work area can have its own unique capacity
• Capacity analysis determines the throughput capacity of workstations in a system
• A bottleneck is a limiting factor or constraint
  
  • – A bottleneck has the lowest effective capacity in a system
• The time to produce a unit or a specified batch size is the process time
  SE BILDE

Theory of constraints ( 5 steps)
1. identify the constraints
2. develop a plan for overcoming the constraints
3. focuse resources on accomplishing
4. reduce the effects of constraints by offloading work or expanding capability
5. once overcome, go back to step 1 and find new constraints

Bottleneck Management
1. Release work orders to the system at the pace set by the bottleneck’s capacity.
- - drum, buffer, rope
2. lost time at the bottleneck represents lost capacity for the Whole system
3. increasing the capacity of a nonbottleneck station is a mirage
4. increasing the capacity of a bottleneck increases the capacity of the whole system

Question 24

24. Break-Even analysis

Answer 24

-technique for evaluating process and equipment alternatives
-objective is to find the point in dollars and units at which cost equals revenue
-requires estimation of fixed costs, variable costs, and revenue.
-fixed costs are costs that continued even if no units are produced
- - depreciation, taxes, debt, mortgage payments
-variable costs are costs that very with the volume of units produced
- - Labor, materials, portion of utilities
- - contribution is the difference between selling price and variable cost
- revenue function begins at the origin and proceeds upward to the right, increasing by the selling price of each unit
- where the revenue function crosses the total cost line is the break-even point

Assumption
-cost and revenue are linear functions
- - generally not the case in the real word
-we actually know these costs
- - very difficult to verify
- time value of money is often ignored

utregning
Single product case
BEPx = brake-even point in units X= number of units produced
BEP$= brake-even point in dollar TR = total revenue = Px
Px = price per unit (after all discounts) F = fixed costs
TC = total cost per unit = F+ Vx Vx = variable cost per unit
BEPx= F/(P-V) BEP$=BEPx *P profit= TR -TC = Px – (F+Vx)
Break-even point occurs when when
TR = TC or Px =F + Vx

Question 25

25. Formulating Linear Programming problems and graphical solution

Answer 25

• A mathematical technique to help plan and make decisions relative to the trade-offs necessary to allocate resources.
• Will find the minimum or maximum value of the objective
• Guarantees the optimal solution to the model formulated.
  LP Applications
• Scheduling school buses to minimize total distance traveled
• Allocating police patrol units to high crime areas in order to minimize response time to 911 calls.
• Scheduling tellers at banks so that needs are met during each hour of the day while minimizing the total cost of labor.
• Selecting the product mix in a factory to make best use of machine- and labor- hours available while maximizing the firm’s profit.
• Picking blend of raw materials in feed mills to produce finished feed combinations at minimum cost.
• Determining the distribution system that will minimize total shipping cost.
• Developing a production schedule that will satisfy future demands for firm’s product and at the same time minimize total production and inventory costs.
• Allocating space for a tenant mix in a new shopping mall so as to maximize revenues to the leasing company.
  Requirements of an LP Problem
• LP problems seek to maximize or minimize some quantity (usually profit or costs) expressed as an objective function.
• The presence of restrictions, or constraints, limits the degree to which we can pursue our objective.
• There must be alternative courses of action to choose from.
• The objective and constraints in linear programming problems must be expressed in terms of linear equations or inequalities
  Formulating LP Problems
  Glickman Electronics Example.
  Two products: Glickman x-pod and Glickman BlueBerry
  Determine the mix of products that will produce maximum profit.
  Graphical Solution: can be used when there are two decision variables. (See figure below)
• Convert the constraint inequities into equations and plot the equations on a graph.
• Identify the area of feasible solutions.
• Create an iso-profit line based on the objective function, move this line outwards until the optimal point is identified.

Question 26

26. Methods of evaluating location alternatives (including transportation model)

Answer 26

The Strategic Importance of Location One of the most important decisions a firm makes:
Increasingly global in nature
Significant impact on fixed and variable costs
Decisions made relatively infrequently
Long-term decisions
Once committed to a location, many resource and cost issues are difficult to change
The objective of location strategy is to maximize the
benefit of location to the firm
Options include:
Expand existing facilities
Maintain existing and add sites
Close existing and relocating

• Globalization adds to complexity
• Drivers of globalization
  – Market economics
  – Communication
  – Rapid, reliable transportation
  – Ease of capital flow
  – Differing labor costs
• Identify key success factors (K S F s)

Key Success Factors (country)
1. Political risks, government rules, attitudes, incentives
2. Cultural and economic issues
3. Location of markets
4. Labor talent, attitudes, productivity, costs
5. Availability of supplies, communications, energy
6. Exchange rates and currency risks

Key Success Factors (region)
1. Corporate desires
2. Attractiveness of region
3. Labor availability and costs
4. Costs and availability of utilities
5. Environmental regulations
6. Government incentives and fiscal policies
7. Proximity to raw materials and customers
8. Land/construction costs

Key Success Factors (on Site)
1. Site size and cost
2. Air, rail, highway, and waterway systems
3. Zoning restrictions
4. Proximity of services/supplies needed
5. Environmental impact issues
6. Customer density and demographics

Factors that affect location decision:
- Labor Productivity
- Exchange rates and currency risks
- Costs
- Political risk, values and culture
- Procimity to markets
- Proximity to suppliers
- Proximity to competitors

Methods of evaluation location alternatives
- Factor-Rating method
- Location Cost-Volume Analysis
- Center of gravity method
- Intuitive Lowest-cost Method
- Service Location Strategy

Question 27

27. Layout types: Objectives and characteristics

Answer 27

Strategic Importance of Layout Decisions The objective of layout strategy is to develop an effective and efficient layout that will meet the firm’s competitive requirements.

Layout Design Considerations
* Higher utilization of space, equipment, and people
* Improved flow of information, materials, and people
* Improved employee morale and safer working conditions
* Improved customer/client interaction
* Flexibility

Good Layouts Consider
* Material handling equipment
* Capacity and space requirements
* Environment and aesthetics
* Flows of information
* Cost of moving between various work areas

Types of Layout
1. Office layout: Positions workers, their equipment, and spaces/offices to provide for movement of information
2. Retail layout: Allocates display space and responds to customer behavior
3. Warehouse layout: Addresses trade-offs between space and material handling
4. Fixed-position layout: Addresses the layout requirements of large, bulky projects such as ships and buildings
5. Process-oriented layout: Deals with low-volume, high-variety production (also called job shop or intermittent production)
6. Work-cell layout: Arranges machinery and equipment to focus on production of a single product or group of related products
7. Product-oriented layout: Seeks the best personnel and machine utilizations in repetitive or continuous production

Question 28

28. Assembly-line balancing

Answer 28

• Objective is to minimize the imbalance between machines or personnel while meeting required output
• Starts with the precedence relationships
  – Determine cycle time
  – Calculate theoretical minimum number of workstations
  – Balance the line by assigning specific tasks to workstations

Question 29

29. Job specialization, expansion, and self-direction

Answer 29

Labor Specialization
* The division of labor into unique tasks
* First suggested by Adam Smith in 1776
1. Development of dexterity
2. Less loss of time
3. Development of specialized tools
* Later Charles Babbage (1832) added another consideration
4. Paying exactly the wage needed for the particular skill required
Job Expansion
* Adding more variety to jobs
* Intended to reduce boredom associated with
labor specialization
– Job enlargement
– Job rotation
– Job enrichment
– Employee empowerment
Self-Directed Teams
* Group of empowered individuals working together to reach a common goal
* May be organized for long-term or short-term objectives
* Effective because
– Provide employee empowerment
– Ensure core job characteristics
– Meet individual psychological needs
To maximize effectiveness, managers should
– Ensure those who have legitimate contributions are on the team
– Provide management support
– Ensure the necessary training
– Endorse clear objectives and goals
– Employ financial and non-financial rewards
– Reduce supervisory control

Question 30

30. Developing labor standards

Answer 30

Labor Standards
* Effective manpower planning is dependent on a knowledge of the labor required
* Labor standards are the amount of time required to perform a job or part of a job
* Accurate labor standards help determine labor requirements, costs, and fair work
* Started early in the 20th century
* Important to both manufacturing and service organizations
* Necessary for determining staffing requirements
* Important to labor incentive systems

Question 31

31. Learning curves and their applications in service and manufacturing

Answer 31

What Is a Learning Curve
* Based on the premise that people and organizations become better at their tasks as the tasks are repeated
* Time to produce a unit decreases as more units are produced
* Learning curves typically follow a negative exponential distribution
* Time savings per unit decreases over time
* Different organizations have different learning curves
* Any change in process, product, or personnel disrupts the learning curve
Doubling approach
– Simplest approach
– Labor cost declines at a constant rate, the learning curve rate, as production doubles
– Does not work for other production quantities
Limitations of Learning Curves
* Learning curves differ from company to company as well as industry to industry so estimates should be developed for each organization
* Learning curves are often based on time estimates, which must be accurate and should be reevaluated when appropriate
* Any changes in personnel, design, or procedure can be expected to alter the learning curve
* Learning curves do not always apply to indirect labor or material
* The culture of the workplace, resource availability, and changes in the process may alter the learning curve

Question 32

32. Forecasting approaches

Answer 32

Qualitative Methods
* Used when situation is vague and little data exist
– New products
– New technology
* Involves intuition, experience
– e.g., forecasting sales on Internet
Quantitative Methods
* Used when situation is ‘stable’ and historical data exist
– Existing products
– Current technology
* Involves mathematical techniques
– e.g., forecasting sales of color televisions

Question 33

33. The time-series components

Answer 33

• Trend
• Cyclical
• Seasonal
• Random

Trend Component (see first grap)
- Persistent, overall upward or downward pattern
- Changes due to population, technology, age, culture, etc.
- Typically several years duration

Cyclical Component (see
second graph below)
- Repeating up and down movements
- Affected by business cycle, political, and economic factors
- Multiple years duration
- Often casual or associative relationships

Seasonal Component (see
last graph bellow)
- Regular patter of up and down fluctuations
- Due to weather, customs etc.
- Occurs within a single year.

Random Component
- Erratic, unsystematic, “residual” fluctuations
- Due to random variation or unforeseen events
- Short duration and nonrepeating

Question 34

34. Inventory cost and Economic Order Quantity model

Answer 34

The objective of inventory management is to strike a balance between inventory investment and customer service. One of the most expensive assets of many companies representing as much as 50% of total invested capital. Less inventory lowers costs but increases chances of shortages which might stop processes or result in dissatisfied customers. More inventory raises costs but improves the likelihood of meeting process and customer demands.
* Independent demand - the demand for item is independent of the demand for any other item in inventory
* Dependent demand - the demand for item is dependent upon the demand for some other item in the inventory
Holding costs - the costs of holding or “carrying” inventory over time
Ordering cost - the costs of placing an order and receiving goods
Setup cost - cost to prepare a machine or process for manufacturing an order. May be highly correlated with setup time
Basic EOQ Model
1. Demand is known, constant, and independent
2. Lead time is known and constant
3. Receipt of inventory is instantaneous and complete
4. Quantity discounts are not possible
5. Only variable costs are setup (or ordering) and holding
6. Stockouts can be completely avoided

Question 35

35. Single-period inventory model

Answer 35

• Only one order is placed for a product
• Units have little or no value at the end of the sales period

Question 36

36. Aggregate planning strategies

Answer 36

The objective of aggregate planning is usually to meet forecast demand while minimizing cost over the planning period.
* Combines appropriate resources into general terms
* Part of a larger production planning system
* Disaggregation breaks the plan down into greater detail
* Disaggregation results in a master production schedule

Capacity Options:
- Changing inventory levels
o Increase inventory in low demand periods to meet high demand in the future
o Increases costs associated with storage, insurance, handling, obsolescence, pilferage and capital investment
o Shortages may mean lost sales due to long lead times and poor customer service.
- Varying workforce size hiring or layoffs
o Match production rate to demand
o Training and separation costs for hiring and laying off workers
o New workers may have lower productivity
o Laying off workers may lower morale and productivity.
- Varying product rates through overtime or idle time
o Allows constant workforce
o May be difficult to meet large increases in demand
o Overtime can be costly and may drive down productivity
o Absorbing idle time may be difficult
- Subcontracting
o Temporary measure during periods of peak demand
o May be costly
o Assuring quality and timely delivery may be difficult
o Exposes your customers to a possible competitor
- Using part time workers
o Useful for filling unskilled or low skilled positions, especially in services

Demand Options
- Influencing demand
o Use advertising, promotion, selling, or price cuts to increase demand in low periods
o Attempt to shift demand to slow periods
o May not be sufficient to balance demand and capacity
- Backordering during high-demand periods
o Requires customers to wait for an order without loss of goodwill or the order
o Most effective when there are few if any substitutes for the product or service
o Often results in lost sales
- Counter-seasonal product and service mixing
o Develop a product mix of counter-seasonal items
o May lead to products or services outside the company’s areas of expertise

Question 37

37. Structure of MRP (Material Requirement Planning)

Answer 37

Question 38

38. MRP lot-sizing techniques

Answer 38

Lot-for-lot technique orders just what is required for production based on net requirements
- May not always be feasible
- If setup costs are high, lot-to-lot can be expensive

Economic order quantity (EOQ)
- EOQ expects a known constant demand and MRP systems often deal with unknown and variable demand

Periodic order quantity (POQ) orders quantity needed for a predetermined time period
- Interval = EOQ / average demand per period
- Order quantity set to cover the interval
- Order quantity recalculated at the time of the order release
- No extra inventory

Dynamic lot sizing techniques
- Balance lot size and setup costs
- Part period balancing (least total cost)
- Least unit cost
- Least period cost (silver-Meal)

Dynamic programming approach
- Wagner-Within

Question 39

39. Scheduling: Job loading

Answer 39

• Assign jobs so that costs, idle time, or completion time are minimized
• Two forms of loading
  o Capacity oriented
  o Assigning specific jobs to work centers

Question 40

40. Scheduling: Job Sequencing priority rules and performance criteria

Answer 40

• Specifies the order in which jobs should be performed at work centers
• Priority rules are used to dispatch or sequence jobs
  o FCFS: first come, first served
  o SPT: Shortest processing time
  o EDD: Earliest due date
  o LPT: Longest processing time
  Performance Criteria
• Flow time – the time between the release and a job to a work center until the job is finished. For calculation se picture

Comparison of sequencing rule
No one sequencing rule excels on all criteria
1. SPT does well on minimizing flow time and number of jobs in the system, but SPT moves long jobs to the end which may result in dissatisfied customers
2. FCFS does not do especially well (or poorly) on any criteria but is perceived as fair by customers
3. EDD minimizes maximum lateness

Question 41

41. The principles of lean manufacturing

Answer 41

The five principals of lean manufacturing are value, value streams, flow, pull and perfection. They guide organizations on how to create the most amount of value for their customers while maximizing efficiency at the same time

Question 42

42. Major attributes of lean operations: Waste, variability, throughput.

Answer 42

• Lean operations supply the customer with exactly what the customer wants when the customer wants it, without waste, through continuous improvement.
  Eliminate Waste
• Waste is anything that does not add value from the customer point of view
• Storage, inspection, delay, waiting in queues, and defective products do not add value and are 100% waste
  Ohno’s Seven Wastes
• Overproduction
• Queues
• Transportation
• Inventory
• Motion
• Overprocessing
• Defective products
  Remove Variability
• Variability is any deviation from the optimum process
• Lean systems require managers to reduce variability caused by both internal and external factors
• Inventory hides variability
• Less variability results in less waste
  Sources of Variability
• Poor processes resulting in improper quantities, late, or non-conforming units
• Inadequate maintenance
• Unknown and changing customer demands
• Incomplete or inaccurate drawings, specifications, or bills of material
  Improve Throughput
• The rate at which units move through a process
• Each wasted minute products are in the process, costs accumulate and
  competitive advantage is lost
• A pull system increases throughput
• By pulling material in small lots, inventory cushions are removed, exposing problems and emphasizing continual improvement
• Manufacturing cycle time is reduced
• Push systems dump orders on the downstream stations regardless of the need

Question 43

43. Tools to achieve lean production

Answer 43

Kaizen, 5S, Kanban, Value Stream Mapping, and Focus PDCA are among the most useful lean tools.

Question 44

44. Concepts of lean inventory and lean scheduling

Answer 44

Lean inventory: Inventory is at the minimum level necessary to keep operations running.

LEAN inventory tactics
-> use a pull system to move inventory -> reduce lot size-> Develop just-in-time delivery systems with suppliers-> Deliver directly to point of use-> Perform to schedule -> Reduce set up time -> use group technology

Lean Scheduling:
- Scheduling must be communicated inside and outside the organization
- Level schedules
o Process frequent small batches
o Freezing the schedule helps stability
- Kanban
o Signals used in a pull system

Lean scheduling tactics: better scheduling improves performance
Make level schedules –> use kanbans –> communicate schedules to suppliers –> Freeze part of the schedule –> perform to schedule –> seek one-piece-make and one-piece-move –> eliminate waste –> produce in small lots –> make each operation produce a perfect part

Question 45

45. Components of the Toyota Production System

Answer 45

Continuous improvement
– Build an organizational culture and value system that stresses improvement of all processes, kaizen
– Part of everyone’s job

Respect for people
– People are treated as knowledge workers
– Engage mental and physical capabilities
– Empower employees

Processes and standard work practice
– Work shall be completely specified as to content, sequence, timing, and outcome
– Internal and external customer-supplier connections are direct
– Material and service flows must be simple and directly linked to the people or machinery involved
– Process improvement must be made in accordance with the scientific method at the lowest possible level of the organization

Processes and standard work practice
– Stopping production because of a defect is called jidoka
– Dual focus
o Education and training of employees
o Responsiveness of the system to problems
Result is continuous improvement

Question 46

46. Quality definitions and cost of quality approach

Answer 46

Managing quality supports differentiation, low cost, and response strategies. Quality helps firms increase sales and reduce costs. Building a quality organization is a demanding task. An operations manager’s objective is to build a total quality management system that identifies and satisfies customer needs. The totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs.
Costs of Quality
* Prevention costs - reducing the potential for defects
* Appraisal costs - evaluating products, parts, and services
* Internal failure costs - producing defective parts or service before delivery
* External failure costs - defects discovered after delivery

Question 47

47. Concepts of TQM (Total Quality Management)

Answer 47

• Encompasses entire organization from supplier to customer
• Stresses a commitment by management to have a continuing companywide drive toward excellence in all aspects of products and services that are important to the customer

Question 48

48. The seven tools of Total Quality Management

Answer 48

1) Continuous improvement
2) Six Sigma
3) Employee empowerment
4) Benchmarking
5) Just-in-time (J I T)
6) Taguchi concepts
7) Knowledge of T Q M tools

Question 49

49. Role of inspection in quality

Answer 49

• Involves examining items to see if an item is good or defective
• Detect a defective product
  – Does not correct deficiencies in process or product
  – It is expensive
• Issues
  – When to inspect
  – Where in process to inspect
• Many problems
  – Worker fatigue
  – Measurement error
  – Process variability
• Cannot inspect quality into a product
• Robust design, empowered employees, and sound processes are better solutions

When and Where to Inspect
1. At the supplier’s plant while the supplier is producing
2. At your facility upon receipt of goods from your supplier
3. Before costly or irreversible processes
4. During the step-by-step production process
5. When production or service is complete
6. Before delivery to your customer
7. At the point of customer contact

Question 50

50. The determinants of service quality

Answer 50

Reliability (involves consistency of performance and dependability)

Responsiveness (concerns the willingness or readiness of employees to provide service)

Competence (means possession of the required skills and knowledge to perform the service)

Access (involves approachability and ease of contact)

Courtesy (involves politeness, respect, consideration, and friendliness)

Communication (means keeping customers informed and listening to them)

Credibility (involves trustworthiness, believability, and honesty)

Security (is the freedom from danger, risk, or doubt)

Understanding/knowing the customer (involves making the effort to understand the customer’s needs)

Tangibles (include the physical evidence of the service)

Question 51

51. Statistical Process Control and control charts

Answer 51

The objective of a process control system is to provide a statistical signal when assignable causes of variation are present.

• Variability is inherent in every process
  – Natural or common causes
  – Special or assignable causes
• Provides a statistical signal when assignable causes are present
• Quickens appropriate actions to eliminate assignable causes
  Control Charts
  Constructed from historical data, the purpose of control charts is to help distinguish between natural variations and variations due to assignable causes

Question 52

52. Difference between process stability and capability

Answer 52

Process stability has to be pre-requisite for all processes, though stable process does not mean process is capable and vice versa also is true. But capability of process is the state at any point of time, whereas stability is the state of process over period of time.

Process Stability
Process Stability - refers to the consistency of the process to stay within the Control Limits. If the process distribution remains consistent over time, i.e. the outputs fall within the range (Process Width), then the process is said to be stable or in control. If the Outputs are spread across outside the limits, then the process is Unstable or Out of Control.

Process Capability
Process Capability - is a measure of the ability of the process to meet customer specifications. The measure tells how good each individual output is. An estimation of the ppm (defective parts per million) is a method to measure process capability. Capability analysis uses measures like Cp, Cpk, Pp, Ppk to determine the process capability.

Process Capability
* The natural variation of a process should be small enough to produce products that meet the standards required
* A process in statistical control does not necessarily meet the design specifications
* Process capability is a measure of the relationship between the natural variation of the process and the design specifications

Process Capability Ratio
* A capable process must have a Cp of at least 1.0
* Does not look at how well the process is centered in the specification range
* Often a target value of Cp = 1.33 is used to allow for off-center processes
* Six Sigma quality requires a Cp = 2.0

Question 53

53. System reliability and maintenance strategies

Answer 53

• Maintenance is all activities involved in maintaining the capability of the system
• Reliability is the probability that a system (machine part or product) will function properly for a specified time
  under stated conditions

Strategic Importance of Maintenance and Reliability
(The objective of maintenance and reliability is to maintain the capability of system )
Failure has far-reaching

effects on firm’s
- Operation
- Reputation
- Idle time reduction efforts
- Ability to protect investment in plant and equipment
- Ability to provide a safe workplace and impact the environment responsibly

Profitability

Customer satisfaction

Matinen
Tradition two types of maintenance
Preventive maintenance - monitoring equipment and facilities and preforming rutine inspection and service to keep equipment and facilities reliable

Breakdown maintenance - emergency or priority repairs on failed equipment

advanced technologies hav enabled new approaches
Predictive maintenace – uses advanced technologies to monitor and predict equipment feilure.

Question 54

54. Industry 4.0 design principles and enasblers (technologies

Answer 54

Question 55

55. Characteristics of waiting-line systems and performance measures

Answer 55

1. Arrivals or inputs to the system
   ▶ Population size, behavior, statistical distribution
2. Queue discipline, or the waiting line itself
   ▶ Limited or unlimited in length, discipline of people or items in it
3. The service facility
   ▶ Design, statistical distribution of service times
   * Limited or unlimited queue length
   * Queue discipline - first-in, first-out (FIFO) is most common
   * Other priority rules may be used in special circumstances

Measuring Queue Performance
1. Average time that each customer or object spends in the queue
2. Average queue length
3. Average time each customer spends in the system
4. Average number of customers in the system
5. Probability that the service facility will be idle
6. Utilization factor for the system
7. Probability of a specific number of customers in the system

Question 56

56. Simulation: The process, application, advantages, and disadvantages

Answer 56

• An attempt to duplicate the features, appearance, and characteristics of a real system
  
  • – To imitate a real-world situation mathematically
  • – To study its properties and operating characteristics
  • – To draw conclusions and make action decisions based on the results of the simulation

Simulation Application:
ambulance location and dispatching, bus scheduling, assembly-line balancing, design of library operations, parking lot and harbor, sales forecasting, inventory planning and control, labor/hiring decisions, etc every thing!

To Use Simulation
1. Define the problem
2. Introduce the important variables associated with the problem
3. Construct a numerical model
4. Set up possible courses of action for testing by specifying values of variables
5. Run the experiment
6. Consider the results (possibly modifying the model or changing data inputs)
7. Decide what course of action to take

se bilde!
Advantages of Simulation
1. Can be used to analyze large and complex real-world situations that cannot be solved by conventional models
2. Real-world complications can be included that most OM models cannot permit
3. “Time compression” is possible
4. Allows “what-if” types of questions; different policy decisions can be quickly evaluated
5. Does not interfere with real-world systems
Disadvantages of Simulation
1. Can take a long time to develop
2. It is a repetitive approach that may produce different solutions in repeated runs
3. Managers must generate all of the conditions and constraints for solutions they want to
examine
4. Each simulation model is unique