Operations Management Fundamentals

Question 1

Operations Management

Answer 1

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).

Question 2

Process Flow

Answer 2

The mechanism through which products are made or services rendered.

Question 3

Flow Units

Answer 3

Inputs being transformed in to outputs.

Question 4

Buffers

Answer 4

Holding areas for inputs.

Question 5

Activities

Answer 5

Steps for transforming flow units in to outputs.

Question 6

Inventory

Answer 6

(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.

Question 7

Flow Time

Answer 7

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).

Question 8

Flow Rate

Answer 8

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).

Question 9

Demand-Constrained

Answer 9

When the flow rate is limited by customer demand for the output.

Question 10

Supply-Constrained

Answer 10

When the flow rate is too slow relative to the rate of incoming demand.

Question 11

Setting [blank] involves defining the part of the process flow that we want to analyze.

Answer 11

process boundaries

Question 12

Queue

Answer 12

The line of inventory units (e.g., customers, hamburgers, etc.) waiting for the next activity in the process flow.

Question 13

Bottleneck

Answer 13

The slowest activity in the process flow.

Question 14

Service Time

Answer 14

a.k.a. processing time): The time it takes a particular

activity (or set of activities) to process one flow unit.

Question 15

Wait Time

Answer 15

The length of the wait between different steps in the process flow.

Question 16

Process Capacity

Answer 16

The maximum number of flow units that can enter and exit a process (or a step in a process) within a given period.

Question 17

Pipeline Inventory

Answer 17

Inventory units that are in the process of being converted into outputs (finished goods, served customers) or are in transit.

Question 18

Buffer Inventory

Answer 18

Extra supply for smoothing production flows so that each activity in the process does not have to wait for an input.

Question 19

Seasonal Inventory

Answer 19

Inventory that accumulates when the production schedule is constant but the demand is low at certain times of year (and high at other times).

Question 20

Safety Inventory

Answer 20

(a.k.a. safety stock): Inventory that is held to accommodate random variability in demand.

Question 21

Cycle Inventory

Answer 21

Items still in stock when products are purchased or manufactured in batches, but sold as individual units over time.

Question 22

Inventory Management

Answer 22

The process of managing supply relative to demand.

Question 23

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.

Answer 23

inventory turn