OM Finals Flashcards
function that typically manages more employees and physical assets than does any other function in a business organization
Operations
The system that converts inputs into
outputs.
Process
4 major OM decisions
QPIC
1. process
2. quality
3. capacity
4. Inventory
are decisions that decide the physical facility used to produce and deliver the
products and/or services and the associated workforce policies and practices.
Process Decisions
are decisions that include criteria, measurement, and process for achieving quality. Includes inspection and performance training
Quality Decisions
the size of physical facilities & labor
Capacity
Business strategy alternative for mature and price-sensitive, standardized
products. e.g. Softbank phone
Product Imitator
Business strategy alternative for emerging and growing products. e.g. iPhone
Product Innovator
Something you can do, others cannot.
Distinctive Competence
4 Common Operations Objectives
Cost, Quality, Delivery, and Flexibility. +sustainability
the restatement of the mission in quantitative and measurable terms.
Operations Objectives
objectives that should
maintain at acceptable level
Order Qualifier
objectives that wins
orders from customers.
Order Winner
5 Process Types
Continuous
Assembly Line
Batch
Job shop
Project
2 Flow Layout Characteristics
Product Layout
Process Layout
Approach to fulfill customer order where forecasting is done first, produce finished goods then customers buy.
MTS (Make to Stock)
the percentage of orders filled from inventory
fill rate
the difference between recorded and actual inventory because of theft, damage etc.
shrinkage rate
=sales/average inventory
Inventory turnover
Approach to fulfill customer order where production begins with customer orders.
MTO (Made to Order)
How does a company typically grow in the product-process life cycle matrix?
Typically diagonal downward. Horizontal or diagonal leads to higher cost or higher risk
What is mass customization strategy based on?
Economies of scope (not economies of scale)
How can modularity help in mass customization?
Assembling standard modules allows to rapidly produce a variety of products
How can fast changeover help in mass customization?
Being able to switch to the next product quickly will allow for production of large variety of products (eg 3d printing, changeover using robots)
How can postponement help in mass customization?
Delaying operation activities purposefully until the customer order is received, reduces costs and improves logistics efficiency
what is T in I=TxR?
Flow time, throughput time, lead time (average amount of time production takes)
what is R in I=TxR?
Rate, flow rate, throughput rate
the maximum throughput rate of a process
capacity
what is a good inventory turnover ratio?
5-10
The resource with the smallest capacity in a process.
bottleneck
Actual Flow Rate /Capacity
Utilization
average number of times inventory is replenished in a time period
turnover
How to analyze process flow?
Type 1 questions involve overall systems perspective (5WH questions), while type 2 questions are more detailed analysis (flow, quantity, cost, etc.)
BPR principle
business process reengineering- organizing by outcomes instead of tasks. reduce bureaucracy. elliminate unnecessary steps.
pillars of TPS
Jidouka and JIT
production system where each workstation can acquire the required materials from upstream workstations precisely as needed,
JIT
Providing machines and operators the ability todetect when an abnormal situation has occurred and immediately stop work to institute countermeasures.
Jidouka or Autonomation
JIT Goals
7 0s (DOWNTIME)
0 defects
0 setups
0 handling
0 lead time
0 breakdown
0 surging
0 lot size
naze naze analysis
asking 5 whys, to know the root cause of an observed problem
the foundation of Kaizen, deceptively simple system which includes various housekeeping activities
5S
5S
Sort
Set in Order
Shine
Standardize
Sustain
a proactive approach that prevents mistakes from happening
Pokayoke
average time between the start of production of one unit and the start of production of the next unit.
Takt time
stabilizing the production schedule
Heijunka
system where a work station is allowed to produce only when conditions are satisfied to prevent build up of inventory
kanban system
The time needed to convert a line or machine from running one product to another.
Changeover time, setup time
Pros and cons of cellular layout
Cells take less space.
Enables fast feedback.
Visual control is maintained.
Less flexibility to demand changes.
Effect of Lean on workers
total involvement encourage workers problem solving and improvement suggestion
Features of integrated supplier program
Allows to take advantage of group technology
Long term relationships
Paper reduction
Elements of lean system
Small lot sizes
Kanban
Level master schedule
Quick changeover
Multifunctional workers
BPR vs Kaizen
BPR is for bigger challenges. Takes 1~2 years. When new tech appears.
Kaizen is for enhancing existing systems. Conducted all the time.
the time dimension of quality
abilities
availability
reliability
maintainability
conducting survey to customers to measure RATER
Servqual
Deming’s approach to improve quality
PDCA
Plan Do Check Act
Balridge Criteria
Leadership
Strategic Planning
Customer focus
Measurement Analysis
Workforce Focus
Process Mgt
Results
Importance of prevention
Incurring prevention costs can lead to avoiding or reducing the other three
costs
Reasons for failure in quality improvement program
Focus on short term gains
Blame the employees
Belief in tradeoffs in quality
Lack of top mgt support
Deming’s 2 stages in quality improvement
1: keep within given range
2: continuously improve, stabilize/center results and additional improvements
special causes vs common causes in random effect
special causes can be precisely identified. assignable causes
common causes are random causes that are unavoidable
process width vs specification width
1 is determined by us and 2 is determined by the customers
ability of a process to meet or exceed the technical specifications
process capability
Cp <1
Cp =1
Cp >1
Cp <1 the process is not capable and must be improved
Cp =1 the process variability just meets specifications
Cp >1 the process exceeds requirements
an evolution of the TQM approach which integrated other tools and methodologies such as the seven quality tools, Poka-Yoke, Kaizen etc.
6 sigma
6 sigma systematic method
DMAIC
Define
Measure
Analyze
Improve
Control
6 / 3 sigma quality equation
USL-mean = 6σ, mean-LSL = 6σ (Cp = 2)
USL-mean = 3σ, mean-LSL = 3σ (Cp = 1)
why we need inventory? not 0?
to protect against uncertainties (demand, schedule changes)
to allow economic production
to cover anticipated changes (before promotion/peak season)
dependent vs independent demand
1 is demand that depends on other items inside a firm
2 is market-based demand outside the firm
objective of EOQ
finding the order quantity (Q) that minimizes total cost (TC)
EOQ Formula Values
D =
S =
C =
i =
Q =
H = iC =
D = demand rate (units per year)
S = setup cost/cost per order ($ per order)
C = unit cost ($ per unit)
i = carrying rate (% per year)
Q = lot size (units)
H = iC = unit holding cost ($ per unit per year)
Q vs P system
Q = continuous review system = fixed order quantity. placing an order for EOQ
P = periodic review system = fixed order interval. Periodically raising inventory
when to use Q vs P system
O:
P: for inexpensive items, orders at specific intervals at same supplier
ABC inventory mgt principles
A items should be reduced as possible (use P system)
B intermediate level of control
C looser control, less record accuracy (use Q system and EOQR)
Replenishment philosophy
Mfg must forecast independent demand for FGI that will drive requirements for RM and WIP
Kanban Formula Values
N =
D =
T =
C =
nC =
N = # of kanbans or # of containers
D = demand rate (# of parts per time)
T = lead time
C = container capacity (# of parts per kanban)
nC = maximum inventory
