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Operations Management > OM Test 3 > Flashcards

OM Test 3 Flashcards

1
Q

capacity

A

the capability to accomplish a purpose over a specified time period

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2
Q

capacity is determined by

A

resources (organization and efficiency)

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3
Q

Capacity can be viewed in 2 ways

A

1) as the maximum rate of output/unit of time or

2) as units of resource availability

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4
Q

key capacity issues

A

Can new goods be accommodated?
Can changing demand be kept up with?
How large should capacity be?
When should capacity changes take place?

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5
Q

short term capacity decisions

A

1) amt of overtime scheduled for the next week
2) # of emergency room nurses on call during a down town festival weekend
3) # of call center workers to staff during the holiday season

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6
Q

long-term capacity decisions

A

1) Construction of a new manufacturing plant
2) Expanding the size and number of beds in a hospital
3) # of branch banks to establish in a new market territory

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7
Q

economies of scale

A

when the average unit cost of a good or service decreases as the capacity increases

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8
Q

focused factory

A

a way to achieve economies of scale without extensive investments in facilities and capacity by focusing on a few things

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9
Q

safety capacity (capacity cushion)

A

an amount of capacity reserved for unanticipated events like demand surges

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10
Q

average safety capacity=

A

avg safety capacity= 100%-Avg resource utilization%

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11
Q

capacity required

A

c=s + (p x q)

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12
Q

complementary goods and services

A

can be produced using the same resources available to the firm, but seasonal demand patterns are out of phase with each other (use excess capacity available)

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13
Q

long term capacity expansion strategies need to consider

A

amount, timing, form of capacity changes

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14
Q

long-term capacity strategies (there are graphs)

A

1) one large increase
2) small increases that match average demand
3) small capacity increases that lead demand
4) small capacity increases that lag demand

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15
Q

adjusting short-term capacity levels

A

1) add or share equipment
2) sell unused capacity
3) change labor capacity and schedules
4) change labor skill mix
5) shift work to slack periods

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16
Q

short term demand management

A

1) vary the price of goods or services
2) provide customers with info
3) ads and promos
4) add peripheral goods or services
5) provide reservations

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17
Q

revenue management systems

A

has methods to forecast demand, allocate assets, decide when to overbook, determine price (ex. airlines)

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18
Q

theory of constraints

A

a set of principles that focuses on increasing total process througput by maxing the utilization of all bottleneck work activities and workstations.

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19
Q

throughput

A

amount of money generated per time period through actual sales

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20
Q

physical constraint

A

associated with the capacity of a resource

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21
Q

bottleneck work activity

A

one that effectively limits capacity of the entire process

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22
Q

nonbottleneck work activity

A

one in which idle capacity exists

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23
Q

nonphysical constraint

A

environmental or organizational constraint

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24
Q

nonbottleneck management principles

A

1) move jobs through nonbottleneck workstations as fast as possible until the job reaches the bottleneck workstation
2) idle time here is okay
3) use smaller order (lot /transfer batches) here to keep work flowing to bottleneck stations
4) an hour lost at a nonbottleneck station incurs no real cost

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25
Q

bottleneck management principles

A

1) only bottleneck stations are critical to achieving objectives and should be scheduled first
2) an hour lost at bottleneck station is an hour lost for the entire process
3) WIP buffer inventory should be placed in front of bottlenecks to maximize resource utilization
4) Use large order sizes at bottleneck workstations to minimize setup time
5) bottleneck workstations should work at all times

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26
Q

utilization=

A

utilization = ru/ra
or
utiliztion=DR/(SR x n servers)

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27
Q

capacity (w u)

A

c= u x (sr x n)

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28
Q

forecasting

A

the process of projecting one or more variables into the future

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29
Q

long range forecasts

A

total sales dollars- top level mgmt

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30
Q

aggregate forecasts

A

sales volume- middle mgmt

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31
Q

forecasts of individual units

A

operational level

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32
Q

planning horizon

A

length of time on which a forecast is based

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33
Q

time bucket

A

(used in sales) unit of measure for the time period used in a forecast

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34
Q

trend

A

pattern

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35
Q

seasonal patterns

A

characterized by repeatable periods of ups and downs over short periods of time

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36
Q

cyclical patterns

A

regular patterns that take place over long periods of time

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37
Q

random variation

A

noise (unexplained variation)

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38
Q

irregular variation

A

one-time unexplained variation

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39
Q

MSE=

A

MSE=∑(A-F)^2/T

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40
Q

MSE is influenced more by

A

large forecast errors than small ones

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41
Q

Statistical forecastingq

A

based on the assumption that the future will be same as past

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42
Q

Judgmental forecasting

A

relies on opinions and expertise of people in developing forecasts

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43
Q

moving average forecast (run rate)

A

average of most recent observations in a time series (k)

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44
Q

single exponential smoothing

A

F= aA+(1-a)F
or
F+a(A-F)

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45
Q

regression analysis

A

a method for building a statistical model that defines a relationship between a single dependent variable and one or more independent variables

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46
Q

simple of linear regression finds the best values of a and b using

A

the method of least squares

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47
Q

y=

A

y=a+bt

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48
Q

multiple linear regression

A

more than one independent variable

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49
Q

grass roots forecasting

A

asking salespeople whats gonna happen

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50
Q

delphi method

A

forecasting by expert opinion

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51
Q

raw materials, component parts, subassemblies and supplies

A

inputs to manufacturing and service-delivery processes

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52
Q

WIP inventory

A

need further processing

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53
Q

finished goods inventory

A

completed products ready for distribution or sale to customers

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54
Q

safety stock inventory

A

(not on balance sheet) additional inventory kept over and above the avg amount

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55
Q

two main inventory management questions

A

when and how much to order?

56
Q

four categories of inventory costs

A

1) ordering/set up
2) inventory-holding costs
3) shortage costs
4) unit cost of stock-keeping units (SKUs)

57
Q

ordering/set up costs

A

amortized in cost of product

58
Q

inventory-holding costs

A

expenses associated with keeping it on-hand

59
Q

shortage (stockout) coss

A

when an SKU is unavailable to meet demand (opportunity cost)

60
Q

unit cost

A

price paid for purchased goods or the internal cost of producing them.

61
Q

SKU

A

a unique identfier (like a textbook ISBN number or a drum of oil.)

62
Q

independent demand

A

unrelated to the demand for other goods and must be forecast

63
Q

dependent demand

A

related to the demand of other goods and can be calculated without a forecast

64
Q

static demand

A

stable

65
Q

dynamic demand

A

varies over time

66
Q

lead time

A

time between placement of an order and its receipt

67
Q

stockout

A

inability to satisfy the demand for an item

68
Q

backorder

A

when a customer is willing to wait for an item

69
Q

lost sale

A

unwilling to wait

70
Q

ABC inventory analysis

A

categorizes SKUs into 3 groups according to their total annual dollar usage

71
Q

ABC letter by letter

A

A- account for large dollar value but small percentage of total items
C-items accounting for small dollar value but a large percentage of total items
B- in Between

72
Q

fixed quantity system

A

when the order quantity or lot size is fixed and the same Q is ordered all da time

73
Q

Inventory position

A

IP=OH+SR-BO

74
Q

r

A

=reorder point (IP that triggers a new order)

75
Q

Ordering decision rule

A

a new order is triggered whenever the inventory position for the item drops to or past the reorder point.

76
Q

Economic Order Quantity model

A

a classic economic model developed in the early 1900s that minimizes total cost (inventory holding+ordering costs)

77
Q

assumptions of EOQ

A
  • only 1 SKU considered
  • Q arrives all at once
  • only order/setup and holding costs are relevent
  • no stockout allowed
  • demand is continuous
  • lead time is constant
78
Q

cycle inventory (or order inventory)

A

inventory that results from purchasing or producing in larger lots than are needed for immediate sale

79
Q

Average cycle inventory

A

ACI= Q/2

80
Q

Inventory holding cost=

A

Ch=I x C

81
Q

Annual inventory holding cost=

A

ACh= 1/2 QxCh

82
Q

Annual ordering cost=

A

AOc = D/Q(C0)

83
Q

total annual cost

A

TC=1/2 QCh + D/Q Co

84
Q

EOQ

A

Order quntity that minimizes total annual cost

Q*=√2DC0/Ch

85
Q

reorder point

A

r= demand rate x lead time

86
Q

EOQ when demand is uncertain

A

will result in a high probability of stockout

87
Q

service level

A

the desired probability of not having a stockout during a lead-time period

88
Q

reorder point when there is uncertain demand in a fixed order quantity system

A

r = µL + zσL

89
Q

fixed period system

A

(periodic review system) when the inventory position is checked at fixed intervals of time rather than continuously

90
Q

two decisions of FPS

A

T- time interval

M- replenishment level

91
Q

Economic time interval

A

T=Q/D

92
Q

optimal replenishment level without safety stock

A

M=d(T+L)

93
Q

managing fixed period inventory systems with uncertain demand

A

compute safety stock over the period as T+L then calculate new replenishment level M

94
Q

single period inventory model

A

when one big order is places to anticipate future uncertain demand

  • ex: newspapers
  • at the end, it’s either sold out of there is salvage
95
Q

single period inventory model is solved using

A

marginal economic analysis

96
Q

resource planning involves

A

aggregate planning, dis-aggregation, execution

97
Q

aggregate planning

A

defines output levels for over a planning horizon of one to two years and focuses on product families

98
Q

Aggregate planning things that can change

A

demand management, production-rate changes, workforce, inventory, facilities, equipment, transportation

99
Q

level production strategy

A

plans for the same production rate in each time period

100
Q

chase demand strategy

A

sets the production rate equal to the demand in the last time period (alternative to level)

101
Q

disaggregation

A

aggregate plans into short-term operational plans

102
Q

tecniques for disaggregation in manufacturing

A

MPS, MRP, CRP

103
Q

MPS

A

Master Production Schedule: how many finished items are to be produced and when

104
Q

Final assembly schedule

A

quantity and timing for assembling subassemblies and component parts into a final finished good

105
Q

Materials Requirements Planning

A

Forward-looking, demand -based approach for planning the production of goods and ordering materials
-minimizes unnecessary inventories and reduces costs

106
Q

MRP system produces

A

time-phased report that gives:

  • materials schedule,
  • manufacturing schedule
  • production info
107
Q

Bill of materials

A

show relationship between items

108
Q

end items

A

finished goods schedules in the MPS that must be forecasted

109
Q

parent item

A

made up of 1 or more component

110
Q

subassembly

A

made of at least one immediate parent and one immediate component

111
Q

MRP explosion

A

process of using the logic of dependent demand to calculate the quantity and timing of orders

112
Q

time buckets

A

one week

113
Q

gross requirements

A

total demand for an item derived from all of its parents

114
Q

scheduled or planned receipts

A

orders that are due

115
Q

planned order receipt

A

specifies the quantity and time an order is to be recieved

116
Q

planned order release

A

specifies the planned quantity and time an order is to be released

117
Q

projected on-hand inventory

A

expected amt of inventory on hand at the beginning of the time period

118
Q

lot sizing

A

the process of determining the appropriate amount and timing of ordering to reduce costs

119
Q

lot-for-lot

A

ordering the gross requirements for each week

120
Q

fixed order quantity

A

uses a fixed order size for every order

121
Q

periodic order quantity

A

orders a quantity equal to GR-POH

122
Q

CRP

A

Capacity Requirements Planning: determining the amount of labor and machine resources required

123
Q

Capacity required=

A

C=S+(P x Q)

124
Q

scheduling

A

assignment of start and completion times to particular jobs, people or equipment

125
Q

sequencing

A

required when several activities must be processed using a common resource

126
Q

criteria for sequencing

A

process-focused, customer-focused, cost-based

127
Q

flow time

A

F=C-R

128
Q

Makespan

A

time needed to process a given set of jobs

M=C-S

129
Q

sequencing rules for prioritizing jobs

A
  • shortest processing time (max u, min F and WIP)

- earliest due date (min tardiness and lateness)

130
Q

SPT sequencing

A

finds a minimal average flow time sequence

131
Q

FCFS sequest

A

first come-first served

-works well when processing times are relatively equal

132
Q

fno sequensing

A

fewest number of operations remaining

133
Q

lwr sequencing

A

least work remaining (all processing times for operations not yet performed)

134
Q

lwnq sequencing

A

least amount of work at the next process queue: amt of work awaiting the next process in a job’s sequence

135
Q

two resource sequencing problem

A
  • list jobs and processing times on resources 1 and 2

- find job with shortest processing time

Operations Management (4 decks)

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