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Operations Management > Operations Management > Flashcards

Operations Management Flashcards

1
Q

Services Unique Characteristics

A

Intagibility: Services cannot be seen, tasted, felt, or smelled before purchase
Inseparability: Services cannot be separated from their providers
Variability: Quality of services depends on who provides them, when, where, and how
Perishability: Services cannot be stored for later sale or use

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2
Q

Operations Processes are different in their characteristics

A

Volume of their output
Variety of their output
Variation in the demand
Degree of Visibility of the production

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3
Q

(Operations processes) Volume of their output

A

Low Volume:
* Low repetition
* Each staff member performs more of each task
* Less systemization
* High unit costs

High:
* High repeatability
* Specialization
* Capital intensive
* Low unit costs

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4
Q

(Operations processes) Variety of their output

A

Low Variety:
* Well defined
* Routine
* Standardized
* Regular
* Low unit costs

High Variety:
* Flexible
* Complex
* Match customer needs
* High unit costs

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5
Q

(Operations processes) Degree of visibility of the production

A

Low visibility:
* Time lag between production and consumption
* Standardization
* Low contact skills
* High staff utilization
* Centralization
* Low unit costs

High Visibility:
* Short waiting tolerance
* Satisfaction governed by customer perception
* Customer contact skills needed
* High unit costs

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6
Q

(Operations processes) Variation in the demand

A

Low variation:
* Stable
* Routine
* Predictable
* High utilization
* Low unit costs

High variation:
* Changing capacity
* Anticipation
* Flexibility
* In touch with demand
* High unit costs

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7
Q

Strategies for matching supply (capacity) and demand

A
  • make customer wait
  • have excess capacity

Demand side:
 Vary the service to appeal to new market segments
 Communicate with customers
 Use reservation systems
 Differentiate on price

Supply side:
 Stretch time
 Stretch labor
 Stretch facilities and equipment

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8
Q

The five operations’ performance objective (Competitive Dimensions)

A

Quality
* being right
* aspects that define quality will depend on the industry
Speed
* being fast
Dependability
* being on time
Flexibility
* being able to change
* always associated with the operation’s ability to change
Cost
* being productive

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9
Q

The five operations’ performance objective (Competitive Dimensions)

A

Quality
* being right
* aspects that define quality will depend on the industry
Speed
* being fast
Dependability
* being on time
Flexibility
* being able to change
* always associated with the operation’s ability to change
Cost
* being productive

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10
Q

Strategic Decision: Business Strategy, Operations Strategy, Design of the Operation Function

A

Business Strategy: Develops the long-term plans for the company

Operations Strategy: Develops a plan for the operations function focusing on the competitive priorities (performance objectives) to meet the long-term plan - follows a business strategy

Design of the Operation Function: Developed to focus on the identified competitive priorities, we need to build the operations capabilities that will allow us to achieve our operations strategy

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11
Q

The four perspectives on operations strategy

A

Vertical Infuence:
- Top-down (interpret higher-level strategy)
- Bottom-up (learn from day-to-day experience)

Horizontal Influence:
- Operations resources (build on operations capabilities)
- Market requirements (satisfy the organization’s market)

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12
Q

Competitive factors

A

Order-winning factors - Factors that persuade customers to choose our brand over the others
Qualifying factors - Factors which above a minimum standard need to be considered
Not competitive relevant factors - Factors that do not have an impact on competitive advantage

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13
Q

Product Design

A

Design inputs should reflect customer requirements and change accordingly
The design of the product and the design of the process have ALWAYS to be related

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14
Q

Concept generation

A

Ideas from customers
Ideas from competitor activity
Ideas from staff

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15
Q

Designing processes: Project processes

A

One-off, complex, large scale and high work content
Specially made, every process is customized
Defined start and finish - time, quality and cost objectives
Many different skills have to be coordinated

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16
Q

Designing processes. Process types (Volume/Customization)

A

Project Processes
Jobbing Processes
Batch Processes
Mass (line) processes
Continuous processes

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17
Q

Designing Services (Level of Contact)

A

Professional Service
Service shops
Mass Service

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18
Q

Designing processes: Batch processes

A
  • higher volumes and lower variety than for jobbing
  • standard products, repeating demand - specials can be made
  • specialized, narrower skills
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19
Q

Designing processes: Mass (line) processes

A
  • higher volumes than batch
  • standard, repeat products
  • low or narrow skills
  • repetitive and predictable activities - less human labour, less specialization
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20
Q

Designing processes: Continuous processes processes

A
  • extremely high volumes and low variety - often single product
  • standard, repeat products
  • highly capital-intensive with predictable flow
  • difficult and expensive to start and stop the process
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21
Q

Different Types of layouts

A

Fixed-position layout
Function (process) layout
Cell layout
Line (product) layout

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22
Q

Fixed-position Layout

A

Advantages:
* very high mix and product flexibility
* product or customer not moved or disturbed
* high variety of tasks for staff

Disadvantages:
* very high unit costs
* scheduling of space and activities can be difficult
* can mean much movement of equipment and staff

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23
Q

Functional Layout

A

Advantages:
* high mix and product flexibility
* relative robust in the case of disruptions
* relatively easy supervision of transforming resources

Disadvantages:
* low facilities utilization
* can have very high work-in-progress or customer queuing
* complex flow can be difficult to control

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24
Q

Cell Layout

A

Advantages:
* gives a compromise between cost and flexibility for relatively high-variety operations
* fast throughput
* potential good staff motivation

Disadvantages:
* can be costly to rearrange existing layout
* can require more equipment
* can give lower equipment utilization

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25
Q

Line Layout

A

Advantages:
* low unit costs for high volume
* gives opportunities for specialization of equipment
* materials or customer movement is convenient

Disadvantages:
* can have low mix flexibility
* not very robust if there is disruption
* work can be very repetitive

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26
Q

Types of Planning

A

Long-range Planning (annually)
Intermidiate-range Planning (weekly, monthly or quarterly)
Short-range Planning (daily or weekly)

Strategic Planning (long-range, defines the major goals for the company)
Tactical Planning (intermediate-range, develops from the corporate goals of the company) - AGGREGATE PLANNING
Operational Planning (Short-range, implements the tactical goals at an operational level from <6 months - describes the MPS in detail) - SCHEDULING AND CONTROL

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27
Q

Sales and Operations planning is a process that helps the firm to

A
  • provide better customer service
  • have lower inventory
  • shorten customer lead times
  • stabilize production rates
  • give top management a handle on the business
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28
Q

Production Planning Strategies - Plans for meeting demand

A

Chase Strategy
- Match the order rate by hiring and laying off employees
- Must have a pool of easily trained applicants to draw on

Stable workforce – variable work hours
- Vary the number of hours worked through flexible work schedules or overtime

Level strategy
- Demand strategies are absorbed by fluctuating inventory levels, order backlogs and lost sales

  • Subcontract some portion of production
  • similar to chase strategy, but hiring and laying off are translated into subcontracting
  • some level of subcontracting can be desirable to accommodate demand fluctuations
  • unless the relationship with the supplier is strong, a manufacturer can lose some control over schedule and quality

Pure Strategy
- When just one of the approaches is used to absorb demand fluctuations

Mixed Strategy
- When two or more approaches are used

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29
Q

Three levels of inventory

A

Raw-materials
Work-in-progress
Finished products

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30
Q

What’s Inventory Control’s Goal?

A

Minimize costs while satisfying customers

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31
Q

Inventory Costs

A
  • Ordering Costs
  • Storage (holding) costs
  • Shortage (stock out) costs
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32
Q

Pareto law or 80/20 rule

A

80% of outcomes (or outputs) result from 20% of all causes (or inputs) for any given event.

In business, a goal of the 80-20 rule is to identify inputs that are potentially the most productive and make them the priority - once managers identify factors that are critical to their company’s success, they should focus on those factors

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33
Q

Models for Inventory Management

A
  • Single period model (one time purchase)
  • Multi-period model (Fixed-order quantity model - Q-model; Fixed-time period model - P-model)
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34
Q

Q-model assumptions

A

 Demand for the product is constant and uniform throughout the period
* no safety stock is required
 Lead time (time from ordering to receipt) is constant
 Price per unit of product is constant
 Inventory holding cost is based on the average inventory
 Ordering or setup costs are constant
 All demands for the product will be satisfied
* no shortages or back orders

35
Q

Master Production Schedule (MPS)

A

Time-phased plan specifying how many and when the firm plans to build each end item

36
Q

Materials Requirements Planning (MRP)

A
  • Approach to calculate how many parts of materials of particular types are required and at what times they are required
  • Provides time scheduling information specifying when each of the materials, parts and components should be ordered or produced
  • Planning and deciding about the volume (quantity) and timing of the materials needed - ensures no shortages either of parts and components for production or of finished products for customers
37
Q

Bill of Materials (BOM)

A

Diagram that describes the existing relationship between the different materials - processes and quantities

38
Q

Capacity Planning. What is it?

A

In the static, physical sense means the scale of an operation
* how much we can produce
It may not reflect the operation’s processing capability
* we must incorporate a time dimension appropriate to the use of assets

39
Q

What are capacity lags and capacity leads?

A

Capacity Lags: When we do not have capacity that demand requires, customers will not all get the product - We might lose sales and our competitive advantage

Capacity leads: If we have too much capacity, probably we will have idle times and costs in excess on the machines and staff

! We should try to smooth out the lags and the leads with inventories strategies

40
Q

What are capacity lags and capacity leads?

A

Capacity Lags: When we do not have capacity that demand requires, customers will not all get the product - We might lose sales and our competitive advantage

Capacity leads: If we have too much capacity, probably we will have idle times and costs in excess on the machines and staff

! We should try to smooth out the lags and the leads with inventories strategies

41
Q

The objectives of Capacity Management

A

To provide an “appropriate” amount of capacity at any point in time.
That can be juged by its effect on:
* costs
* revenue
* working capital
* service level (quality, speed, dependability, flexibility)

42
Q

Capacity Level Process of Decision Making

A

Design Capacity = Planned loss + Effective Capacity
Effective capacity = Actual output + unplanned loss

43
Q

Theory of Constraints (TOC)

A

The Theory of Constraints is a methodology for identifying the most important limiting factor (i.e., constraint) that stands in the way of achieving a goal and then systematically improving that constraint until it is no longer the limiting factor.

Typical constraints:
- Physical
- Market
- Managerial

44
Q

Bottlenech

A
  • Any resource whose capacity is less than the demand placed upon it
  • Maximum speed of the process is the speed of the slowest operation
  • Any improvements will be wasted unless the bottleneck is relieved
45
Q

The main goals of Theory of Constraints

A

The main goals of the theory are:
* deliberate process for identifying and overcoming constraints
* optimize scheduling by maximizing the utilization of bottlenecks in the process
* focus not only on the efficiency of individual processes but also on the bottlenecks that constraint the system as a whole

46
Q

5 Steps of Theory of Constraint

A

Step 1: Identify the Bottleneck/constraint
Step 2: Exploit the bottleneck
Step 3: Subordinate everything else to the bottleneck
Step 4: Elevate the bottleneck
Step 5: Evaluate the whether solving the current bottleneck created other bottlenecks

47
Q

(Theory of Constraints) What’s a Drum

A

The pace setting resource - constraint

48
Q

(Theory of Constraint) - What’s a Buffer

A

The amount of protection in front of the resource

49
Q

(Theory of Constraint) - What’s a Rope

A

The scheduled release of material to be in line with the Drum’s schedule.

50
Q

(Planning and Control) Scheduling

A

When to do things?

Forward Schedunling: Starts processing when a job is received
Backward Scheduling: Begin scheduling the job’s last activity so that the job is finished on due date

51
Q

Main objectives of Backward Scheduling

A

The main objectives are:
* meet due dates
* minimize lead times
* minimize setup times
* minimize WIP inventory
* maximize machine and labour utilization

52
Q

(Planning and Control) Loading

A

How much to do?

Finite Loading
- Considers the actual amount of each resource that will be available

Infinitive Loading
- Ignores capacity limitations when developing the schedule

53
Q

(Planning and Control) Sequencing

A

In what order to do things?

Priority Rules: Decision rules to allocate the relative priority of jobs at a work centre

Common rules
- FIFO – First in, First Out
- LIFO – Last in, First Out
- DD – Due Date
- SOT – Shortest operating (Processing) time
- STR – Slack time remaining: Due Time-Processing Time

54
Q

Main objectives of Sequencing

A
  • meeting due dates (dependability)
  • minimizing the time the jobs spend in the process – flow time (speed)
  • minimizing WIP inventory
  • minimizing idle time of resources (cost)
55
Q

(Planning and Control) Monitoring and Control

A

Are activities going according to the plan?

Identify and correct deviation from the plan - degree between planning and control depends on the degree of uncertainty in demand

56
Q

Lean MANUFACTURING - What is it?

A

Making a product in the most efficient and effective way, while looking for ways to continuously improve
- eliminating all forms of waste in the process
- is all about continuous improvement

Developing an operation that is faster, more dependable, produces higher quality products and services and, above all, operates at low cost

57
Q

How to define value?

A

Willigness to pay

58
Q

The lean philosophy of operations: main takeaways

A
  1. Eliminate waste
  2. Involve everyone
  3. Continuous improvement
59
Q

THINK lean

A

Specify value
* can only be defined by the ultimate customer

Identify the value stream
* exposes the enormous amount of waste

Create flow
* reduce batch size and WIP

Let the customer pull product through the value stream
* make only what the customers has ordered

Seek perfection
* continuously improve quality and eliminate waste

60
Q

What’s the goal of Lean PRODUCTION

A

Goal: achieving high-volume production with minimal inventories

61
Q

7 Types of waste in Kaizen (Lean)

A
  • Overprocessing
  • Overproduction
  • People waiting
  • Material waiting
  • Material Transportation
  • People motion
  • Errors
62
Q

Just-In-Time (JIT)

A
  • Powerful strategy for improving operations
  • Materials arrive where they are needed only when they are needed
  • Requires a meaningful buyer-supplier relationship

Pull System: Make what’s needed when we need it instead of making all we can, just in case.
* the customer starts the process, pulling an inventory item from Final Assembly
* sub-assembly work is pulled forward by that demand
* the process continues throughout the entire production process and supply chain

63
Q

Objectives of JIT

A
  • produces only the products the customer wants
  • produces products only at the rate that the customer wants them
  • produce with perfect quality
  • produce with minimum lead time
  • supplies and components are pulled through system to arrive where they are needed when they are needed
64
Q

Implementation Issues of JIT

A
  • reduce sources of variability
  • supplier management: conflict vs. cooperation, how to share the pains and gains
  • physical distances between plants and workstations
  • cooperative efforts among manufacturing, marketing, purchasing and engineering
65
Q

Supplier Partnerships: 4 goals

A

Four goals of supplier partnerships:
* removal of unnecessary activities
* removal of in-plant inventory
* removal of in-transit inventory
* improved quality and reliability

66
Q

How to eliminate waste?

A
  1. Visual Managing (self-explaining, self-ordering and self-improving workplace)
  2. 5S (Sort, Straighten, Shine, Standardize, Sustain)
  3. Kanbans
  4. Levelled scheduling (process frequent small batches rather than a few large batches)
  5. Layouts Lean (U-shaped, for example)
  6. Kaizen (gradual, orderly, and continuous improvement)
67
Q

Barriers to Lean

A
  • Implementing Lean can be difficult because it is counterintuitive from a Traditional Paradigm
  • There is no step-by-step procedure
  • Company culture plays a big part in the how to
68
Q

Quality Management: What is quality (Consumer and producers)

A

Consumer: Quality is the degree to which the product meets the needs by which it was acquired
* quality subjectively assessed by the consumer
* quality perception differs in space and time

Producer: Need to objectively measure the quality of their offerings (desired quality vs. actual quality)
* guarantee of specifications and tolerances

69
Q

What’s Cost of Quality

A

Cost of not corresponding to customer’s requirements.
Cost of Quality = Control costs + Failure costs

Control costs: Prevention costs + Appraisal costs
Failure Costs: Internal failure costs + External failure costs

70
Q

Total Quality Management (TQM) - Key characteristics:

A
  • customer focus
  • teamwork with employee involvement and empoerment
  • continuous process improvement
  • strategically-based obsession with quality
  • scientific approach and long-term commitment
71
Q

Quality planning and control:
Conformance to specifications (6 steps)

A
  • Step 1: Define the quality characteristics (what to mesure)
  • Step 2: Decide how to measure each quality
    characteristic (variables or attributes)
  • Step 3: Set quality standards for each quality
    characteristic (What are acceptable limitis on this measure?)
  • Step 4: Control quality against those standards (%Conformity or nonconformity (defective))
  • Step 5: Find and correct causes of poor quality
  • Step 6: Continue to make improvements
72
Q

Statistical Process Control - Variation Causes

A

Common causes
 Fluctuates innatural/expected/stable pattern of chance, small variation
 The process is in a “state of statistical control”
 Just continue to monitor the quality

Assignable causes
 When variation is large in magnitude, beyond expected/natural
 The process in a “satet of out of control”
 Identify and correct these special causes, preventing the occurrence of defectives

73
Q

Central Limit Theorem

A

A process “in control” follows a Normal Distribution, characterized by the average (center) and the standard deviation (spread).

One proces is “in control” when it is within the upper and lower limit

74
Q

Control Charts

A

Variable Charts:
- R-chart
- x-chart

Attributes Charts:
- p-chart
- np-chart

75
Q

P-chart

A

A single chart that tracks the percentage of nonconforming items in each sample
* sample sizes are large, usually 100 pieces or more

76
Q

np charts

A

 Tracks the number of nonconforming items in each sample
 Easier to use than the p chart because the percentage of defective items does not have to be calculated
 All the samples must be the same size

77
Q

Supply Chain

A

A term that describes how organizations (suppliers, manufacturers, distrbutors, and customers) are linked together

78
Q

Supply Chain Management

A

The management of the interconnection of organizations that realate to each other through upstream and downstream linkages
* between processes that produce value to the ultimate consumers in the form of products and services

79
Q

Lean and Agile Supply Chains

A

Lean supply networks ⇒ Efficiency
* functional products require lean supply management

Agile supply networks ⇒ Responsiveness and Flexibility
* Innovative products require agile supply management

80
Q

When deciding on the structure of operation, you should try to balace the risk and criticality of the product

A

Risk
* number of alternative suppliers
* switching costs
* exit barriers
* cost of making products in-house

Criticality
* volume purchased
* % of the total purchase cost
* Impact on business growth

81
Q

Logistics

A

Deals with the forward and reverse flow and storage o goods and services between the point of origin and the point of consumption to meet customers’ requirements

82
Q

Reverse Logistics

A

Everything that concerns returns, maintenance, remanufacturing and packaging issues, or unsold goods

83
Q

Bullwhip Effect

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

84
Q

Red Queen Effect

A

Refers to the increased pressure to adapt faster just to survive
* which is driven by an increase in the evolutionary pace of rival technology solutions

Operations Management (1 decks)

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