Operations Management Fundamentals Flashcards
Operations Management
The discipline of designing, maintaining, and improving the processes by which businesses produce and deliver goods and services to customers. It aims to optimize the use of resources (e.g. labor) and inputs (e.g. raw materials), to produce outputs (e.g. finished goods, served customers).
Process Flow
The mechanism through which products are made or services rendered.
Flow Units
Inputs being transformed in to outputs.
Buffers
Holding areas for inputs.
Activities
Steps for transforming flow units in to outputs.
Inventory
(a.k.a. work in progress [WIP]) The total number of flow units in the production line. It does not include inputs yet to be processed or outputs that have existed the process.
Flow Time
The time it takes a flow unit to go through an entire process (e.g., the time it takes a car to drive from Madrid to Paris).
Flow Rate
The number of flow units that complete the flow process within a given time frame (e.g., the number of cars that have driven from Madrid to Paris in the past hour).
Demand-Constrained
When the flow rate is limited by customer demand for the output.
Supply-Constrained
When the flow rate is too slow relative to the rate of incoming demand.
Setting [blank] involves defining the part of the process flow that we want to analyze.
process boundaries
Queue
The line of inventory units (e.g., customers, hamburgers, etc.) waiting for the next activity in the process flow.
Bottleneck
The slowest activity in the process flow.
Service Time
a.k.a. processing time): The time it takes a particular
activity (or set of activities) to process one flow unit.
Wait Time
The length of the wait between different steps in the process flow.
Process Capacity
The maximum number of flow units that can enter and exit a process (or a step in a process) within a given period.
Pipeline Inventory
Inventory units that are in the process of being converted into outputs (finished goods, served customers) or are in transit.
Buffer Inventory
Extra supply for smoothing production flows so that each activity in the process does not have to wait for an input.
Seasonal Inventory
Inventory that accumulates when the production schedule is constant but the demand is low at certain times of year (and high at other times).
Safety Inventory
(a.k.a. safety stock): Inventory that is held to accommodate random variability in demand.
Cycle Inventory
Items still in stock when products are purchased or manufactured in batches, but sold as individual units over time.
Inventory Management
The process of managing supply relative to demand.
A common measure of inventory management efficiency is an [blank], the number of times every unit that was in stock on a certain date is sold in a given time period. It can also refer to earning revenues equal to the total value of the goods in stock (COGS) on a certain date.
inventory turn
