Quiz 2 Flashcards
APP
(Aggregate Production Plan) a long-range production; it sets the aggregate output rate, workforce size, utilization, inventory and backlog levels for a plant.
MRP
(Material Requirements Planning) a software application that has been available since the 1970s; it performs an analysis of the firm’s existing internal conditions and reports back what the production and purchase requirements are for a given finished product manufacturing schedule.
MPS
(Master Production Schedule) A medium range production that is more detailed then the APP.
Explosion
Process of converting a parent item’s planned order releases into component gross requirements.
Implosion
a look upward, to see a component and all the parents that is makes. Used by buyers & planners when they want to look into possibly changing a part, so they know what it is used on.
Planning factors and levels
1 Planning factor: Number of components needed to produce a unit of the parent item.
2 Low-level coding: assigns the lowest level on BOM to all common components to avoid duplicate MRP computations.
ERP
(Enterprise Resource Planning Systems) information system connecting all functional areas & operations of an organization &, in some cases, suppliers and customers via common software infrastructure and database.
3 Basic Production Strategies. Mixed, Level , Chase
1 Chase Strategy - Adjusts capacity to match demand. Firm hires & lays off workers to match demand. Finished goods inventory remains constant. Works well for make-to-order firms.
2 Level Strategy - Relies on a constant output rate while varying inventory & backlog according to fluctuating demand. Firm relies on fluctuating finished goods & backlogs to meet demand. Works well for make-to-stock firms.
3 Mixed Production Strategy - Maintains stable core workforce while using other short-term means, such as overtime, subcontracting & part time helpers to manage short-term demand.
Dependent vs. Independent demand
1 Dependent Demand - internal demand for parts is based on the demand of the final product in which the parts are used (e.g., subassemblies). Direct relationship
2 Independent Demand - demand for final products affected by trends, seasonal patterns, & general market conditions.
Types of costs- Direct, Indirect, Variable, Fixed
1 Direct costs- directly traceable to unit produced (e.g., labor, material )
2 Indirect costs- cannot be traced directly to the unit produced (e.g., overhead, electric to run the line, supervision of the factory line)
3 Fixed costs- independent of the output quantity (e.g, buildings, equipment, & plant security)
4 Variable costs- vary with output level (e.g., labor, materials) Direct Variable
• Inventory- ABC, EOQ, Physical vs. Cycle count, turns
1 ABC Analysis (Inventory Control System) Same as Pareto concept or 80/20 rule
• Determines which inventories should be counted & managed more closely than others. Groups inventory as A, B, & C Items
• A items are given the highest priority with smaller stocks. A items, which account for approximately 20 % of the total items, are approx. 80 % of the total inventory cost
• B & C account for approx. the other 80% of total items & only 20% of costs. The B items require closer management than C items, since they are relatively more expensive (per unit), require more effort to purchase/make, & may be more prone to obsolescence
• C items have the lowest priority (larger stocks because you don’t want to run out and it’s not so expensive)
2 Economic order quantity (EOQ) is that size of the order which gives maximum economy in purchasing any material and ultimately contributes towards maintaining the materials at the optimum level and at the minimum cost.
3 Physical inventory stops operation at a facility while all items are counted at one time.
4 A cycle count is an inventory management procedure where a small subset of inventory is counted on any given day.
• . Cycle counts contrast with traditional physical inventory in that physical inventory stops operation at a facility while all items are counted at one time. Cycle counts are less disruptive to daily operations, provide an ongoing measure of inventory accuracy and procedure execution, and can be tailored to focus on items with higher value, higher movement volume, or that are critical to business processes.
5 Inventory turnover or turnover ratio- how many times inventory “turns” in an accounting period. Faster / more turns are better!
• The number of times a firm’s inventory is utilized and replaced over an accounting period, such as one year.
Lean
an operating philosophy of waste reduction & value enhancement.
1 Organizing work and analyzing the level of waste existing in operating machinery, warehouses and systems to fit a lean process flow. The goals are to reduce production throughout times, increase quality and improve customer responsiveness with fewer people and other assets.
JIT- what are the key points
Originally associated with Toyota mangers like Taiichi Ohno and his kanban system, JIT encompasses continuous problem solving to eliminate waste. Today it is also referred to as lean or lean thinking.
1 JIT purchasing includes delivering smaller quantities, at right time, delivered to the right location, in the right quantities.
Six Sigma - what is it and the steps
1 Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes.
2 Six Steps: Define, Measure, Analyze, Improve, & Control.
FOB origin vs. destination
1 FOB Origin - Buyer controls or directs shipment. Buyer assumes title and risk of loss at seller’s shipping point- once give to carrier.
• Seller has following UCC responsibilities- Put goods in possession of carrier, Make a proper contract for transportation, Obtain and deliver documents to buyer, Promptly notify buyer of shipment.
2 FOB Destination -Seller assumes title to goods and risk of loss until satisfactory delivery to buyer’s facility. Seller is required at own risk and expense to transport goods- UCC legal default, but other terms can be negotiated.
