Terms and Definitions Set 2

Question 1

Schedule

Answer 1

Ordering of production to meet forecasted or actual customer demand.

Question 2

Vending Machine Material Control

Answer 2

Soft drink and snack suppliers to a plant replenish the previous day’s employee purchases each day. They do not forecast demand in any formal way; they stock their delivery trucks with products that have been selling plus maybe some new, more enticing snacks. Plants can use this philosophy to have many types of production material stocked. Suppliers come to the plant daily and replenish bins from which material has been used the previous day. They do not forecast nor know except from recent historical data what the usage will be. Such parts are usually standard ones such as fasteners.

Question 3

Manufacturing Engineering

Answer 3

The discipline that plans and implements production processes in an operational setting.

Question 4

Repetitive Manufacturing

Answer 4

Repetitive manufacturing refers to those operations where each product is produced more or less continuously at significant volumes usually on an assembly line. It is assumed that the products are completely engineering so that minimal design or craftwork is done on the manufacturing line. See also job shops. Several industries have characteristics of both repetitive manufacturing and job shops in their operations. Even in job shops, standardized materials, machines, and tooling and fixtures are desirable. Standard sizes, capacities, and performance are characteristic of the construction industry. Also, either industry may incur high tooling costs. Even in the construction industry, repetitive manufacturing is gaining as modular assemblies are replacing craftwork in many of the subassemblies.

Question 5

OEM

Answer 5

Original Equipment Manufacturer. The term OEM denotes a company or sector that manufacturers equipment ready for purchase by the end-use customer. The large automotive companies are referred to as OEMs. Suppliers to such companies supply to the OEMs, they are not OEMs themselves. There is an implication of a distribution entity between an OEM and the ultimate customer.

Question 6

Material Flow

Answer 6

That process that defines the flow of materials in an operation.

Question 7

Single Piece Production

Answer 7

That capability to produce a single unit of a product at the same throughput and cost as volume production. This generally requires that setup times be very small, that there is a production line, and that inventory is stored line side. It is an element of the Toyota Production System and related to JIT.

Question 8

Welding

Answer 8

The process by which two metals or materials or joined by heat or pressure most often resulting in melting of the materials

Question 9

Quality Cost

Answer 9

The sum of the preventive, measuring, internal failure, and external failure costs for a plant, division, or company. Implied in quality cost is that the least expensive way to lower quality costs is to invest in prevention rather than pay for external failures. These costs are not part of the general accounting systems and can be quite difficult to accrue.

Question 10

Overhead

Answer 10

In general denotes an allocated cost to a direct operation. It includes all manufacturing costs, other than direct material and direct labor. In addition to indirect material and indirect labor, overhead cost includes utilities, maintenance, depreciation and taxes.

Question 11

Purchasing

Answer 11

That function that defines the conditions that govern purchases within a company as well as the actual purchase of the goods and services.

Question 12

Workforce

Answer 12

The employees of a plant or company

Question 13

Reengineering

Answer 13

The process of redesigning processes or activities to reduce flow times, inventories, and increase throughput. Its primary objective is to reduce costs and increase customer response. It is generally applied to service or support activities in contrast to physical operations. Redesigning or reconfiguring physical processes is usually referred to as lean transformation. The two terms generally refer to the same process

Question 14

Molds

Answer 14

Molds are the same as tools but for plastic or chemical processing part production. A mold is the term used for the tools that shape plastic or other “soft” material parts in injection molding machines, that shape foam pads for furniture and automotive seating, and that shape baked goods. Thus, a baking pan is a mold for bread.

Question 15

Payroll

Answer 15

The employees on a payroll for a company; also the process by which employees are paid including deductions and additions for taxes, savings, benefits, payroll deductions, overtime, etc. Payroll systems can be quite complex and must be updated continually as tax and benefit policies and procedures change.

Question 16

Turns

Answer 16

Commonly thought of as inventory turns or turnover ratio, turns are defined as the ratio of throughput to average inventory. A high number of turns imply that less inventory is kept on hand and/or materials are received in smaller lots and processed quickly.

Question 17

Salaried Staff

Answer 17

That staff in a plant or operation that supports the value-added activities in the operation and are paid salaries rather than an hourly rate.

Question 18

Value Added

Answer 18

Denotes the “value” added to the materials received by a plant in the plants operations. Usually a percentage of COS. Value added can be a combination of true value and the non-value added work done in manufacturing a product. Best practice requires a plant to continually assess which of its activities is true value added and eliminate or reduce the non-value added activities. This assessment can be complex, however. There is a gray area in determining what are the direct materials. There is no confusion on direct materials that are part of the bill of materials. The uncertainty is in the indirect materials some of which could be included in the bill of material. For example, adhesives and lubricants are generally bought in bulk and used as needed with the amounts not accurately specified in the bills. For most plants, these items are small compared with other costs.

Question 19

Service Level

Answer 19

Probability that customer demand will not exceed inventory for an order cycle.

Question 20

Warranty

Answer 20

A guarantee of the quality of a product or service that lasts for some period of time and has some specific product or service coverage.

Question 21

Poka Yoka

Answer 21

Error proofing seems to be a simple concept, but there are many variations on the primary theme. The basic concept is that a product is prohibited from being taken out of its fixture if it has a quality defect as a result of the machine or operator action. The defect must be corrected prior to release of the product from the fixture.

Question 22

Logistics

Answer 22

The process of managing materials for operations to meet certain objectives such as delivery speed, low inventories, and high accuracy. A new business opportunity has arisen for firms that specialize in logistics management to supply OEMs with JIT components and systems. Integrated Logistics handle a variety of unrelated components required by a customer or customers.

Question 23

Utilities

Answer 23

Services provided by utility companies–electricity, water, heating fuel, materials disposal, and communications.

Question 24

Operating Income

Answer 24

Gross profit less administrative (SG&A) and development (ER&G) expenses.

Question 25

Union Free

Answer 25

A designation that notes that an operation does not have a union.

Question 26

Union Contract

Answer 26

A formal contract between a union representing employees in a plant or firm and the company for whom the employees work. The contract covers all aspects of pay, working conditions, and strike options. Contracts usually run from 2-6 years.

Question 27

Sourcing

Answer 27

The process by which supply contracts are let by purchasing.

Question 28

T&E

Answer 28

Travel and entertainment costs

Question 29

Pooling

Answer 29

That action that combines in parallel previously independent processes to reduce the total variance compared to the variances that would occur when the processes were independent. Generally reduces the variance of the combined processes by the square root of the sum of the squares of the independent processes.

Question 30

OSHA

Answer 30

Occupational Safety and Health Administration. The federal agency that administers The Occupational Safety and Health Act was formed by an Act of Congress in 1970. Ever since, OSHA?s mission has been clear and unwavering: “to assure so far as possible every working man and women in the nation safe and healthy working conditions.” Coverage of the Act extends to all employers and their employees in the 50 states, the District of Columbia, Puerto Rico, and all other territories under Federal Government jurisdiction.

Question 31

Supply Chain

Answer 31

The supply chain denotes the process by which components are moved and produced from raw material to the ultimate consumer. It also includes the details of that process such as cost, time, transportation, packaging, etc. It may involve two or three levels of suppliers, one or more OEM plants, a distribution system, spare parts replacement parts flow, and the disposal and recycling process.

Question 32

Supermarket

Answer 32

That process where material for the next process in an operation is arranged as in a supermarket where visual control of the production is assured. The following process takes from the “supermarket” area what it requires for production in that stage and the preceding process produces exactly what has been taken. Also know as a visual Kanban.

Question 33

Make-to-Order

Answer 33

Operations that make products or deliver services only to customer order–no finished goods inventory.

Question 34

Standard Cost

Answer 34

A measure of how much one unit of product or services should cost to produce or deliver. Standard cost may be established using careful analysis of the product or service and the materials and processes used to create it. If established in this manner, standard costs may be thought of as ideal costs, and actual costs may differ from these costs because of actual price differences, errors or mistakes, or changed conditions from the ideal.

Question 35

P-K Formula

Answer 35

An approximate formula for buffer inventory as a function of activity utilization, number of activity servers, and statistical coefficients of variation for the demand and the process. Given utilization ?, c servers, and input and demand coefficients of variation, the buffer inventory is:

Question 36

Variability

Answer 36

The variations in any portion of an operation?demand, processes, activities, supplier performance, quality, etc.–See coefficients of variation.

Question 37

Variable Manufacturing Cost

Answer 37

Those operational costs that vary with the production volume in contrast to fixed costs that are independent of production volume.

Question 38

Push System for Material Control

Answer 38

The push system denotes a system whereby material is released for production and movement by a central or local scheduling algorithm and based on forecasted or anticipated needs for that material. See also pull system. Traditionally, the Push system had been used in plants for production scheduling. The push system is simply when the demand for a product is forecasted and a production schedule is made up according to the forecast of demand through a centralized system. However, the main problem with this system is the variations between the forecasted and the actual demand that may cause excess inventory of finished goods or a backorder in production. In order to avoid problems that are caused due to forecasting errors, companies that use a push system may either: i. Keep finished goods on inventory (safety stock) ii. Have an excess lead-time on delivery to give enough time to produce enough The main disadvantage of the system comes in when the plants have to keep excess inventory or have long lead times for the customers. Inventory costs money and long lead times cause dissatisfied customers. At the same time, companies have spent millions of dollars in the past just to get good MRP software that would be able to help planners plan the production effectively.

Question 39

Scrap

Answer 39

Components or goods to be discarded usually because of poor quality or no demand.

Question 40

NPD

Answer 40

New product development

Question 41

ROE

Answer 41

Return on equity- net income divided by average equity over a period.

Question 42

Pull System for Material Control

Answer 42

Equivalent to JIT but most often internal to operations. The pull system means that the “release” for moving material within the plant or from suppliers is signaled by the next process in line that needs the material. The material is moved by the demand from the succeeding process in the production chain or routings not by a central schedule or general release. See also Kanban and push system. The idea is to produce what the customer requires. The main challenge in implementing this system comes in when looking at the supply side of raw materials as well as the efficiency of the plants. A company that produces JIT, need to have suppliers that can supply raw materials in a short notice and are therefore located close by in order to receive raw materials in a timely fashion for production. At the same time, manufacturing JIT requires more than just good plants. See the seven zeros. The implementation of this system took Toyota over 30 years to be perfected. However the trend seems to be going towards this system in the United States. The biggest advantage of this system is the reduction in cost of the goods as well as the flexibility in production that help companies be more dynamic and competitive in the industry.

Question 43

Newsvendor

Answer 43

Name of traditional problem and solution in operations management dealing with single order quantity optimization such as newspaper and other spoilable goods.

Question 44

Overtime

Answer 44

Work beyond the federally mandated work period usually a day or a week. Overtime pay regulations are quite specific.

Question 45

MRO

Answer 45

Those components and parts not associated with the direct material for a product. Tools, gloves, lubricants, machine maintenance parts are part of MRO.

Question 46

RONA

Answer 46

Return on average assets- this measure is usually applied to plant or divisional operations to compare returns without considering debt.

Question 47

TQC

Answer 47

Total quality control- a process by which a firm deploys it quality program throughout all functions of the company.

Question 48

Shop Rate

Answer 48

Shop rate is the direct labor cost plus the manufacturing overhead divided by the total direct labor hours in the yearly budget for the plant. It can range from $20-100 per hour. It is used to estimate the cost for bidding for new business.

Question 49

Postponement

Answer 49

That action that delays complexity to later stages in an operation so that product differentiation occurs later in the production cycle. Examples: 1. are different model cars using the same drive trains, suspensions, and mechanical components; differentiation coming with plastic and sheet metal ornamentation, 2. Chinese food that takes a few basic ingredients and develops a complex menu that can be prepared quickly.

Question 50

Work Teams

Answer 50

Teams of employees formed to shepherd a particular work area or function.

Question 51

Parts File Folder

Answer 51

There are many names for a parts file folder. The concept is simple, however. A parts file folder contains all the required information about a part including cost, lead times for production, approved suppliers, tooling requirements and cost, drawings of the part, its tooling, and fixturing, computer data if it has been programmed for production on a computer-controlled machine, quality specifications, key characteristics, etc.

Question 52

Service Operation

Answer 52

Operations in a service industry or business. Such businesses are generally characterized by direct service to consumers rather than in the supply of manufactured products. As traditional manufacturing businesses have become more customer oriented and service businesses more product focused, such differentiation has blurred. Examples of service businesses are restaurants, banks, health care, and education.

Question 53

Tooling

Answer 53

Tooling and dies refer to hardware (or software) that is developed specifically for a part so that a when that tool or die is inserted into a general-purpose machine, that machine will produce or shape that part uniquely. Tool and die makers design and make tooling and dies. The two terms are almost synonyms. Engineers or tool designers design tools and dies. Examples of tools and dies are: ? Molds that are used in plastic injection molding machines to make everything from plastic cups to complex plastic parts for industrial or commercial use ? Tool steel dies designed for hydraulic and mechanical presses so that a flat piece of steel or other metal can be formed into such products as fenders, CRT enclosures, or cooking ware ? Templates used for printing, painting, and lithography ? A set of patterns for cutting cloth or leather ? Digital data that guide a general purpose machine in its cutting of materials ? Cookie and bread molds for cooking ? A metal stamp that embosses the figures on a coin blank ? Camera-ready copy of a manuscript to be published

Question 54

Variance

Answer 54

That deviation from the standard cost for a product or process in production. Positive variances denote performance better than standard.

Question 55

PP&E

Answer 55

The property, plant and equipment or fixed assets of a company.

Question 56

Seven Zero’s

Answer 56

The seven even zeros are an essential part of the TPS They are:

• Zero Defects: To avoid delays due to defects (Quality at the source)
• Zero (Excess) Lot Size: To avoid “waiting inventory” delays
• Zero Setups: To minimize setup delay and facilitate small lot sizes
• Zero Breakdowns: To avoid stopping tightly coupled line
• Zero (Excess) Handling: To promote flaw of parts
• Zero Lead-Time: To ensure rapid replenishment of parts
• Zero Surging: Necessary in system without work in progress buffers

Question 57

Shop Committee

Answer 57

That committee that represents the union in its relations and negotiations with a company or plant.

Question 58

Queuing

Answer 58

Formation of a line. Queuing theory is the study of the formation and variation of queues. It is applied to operations where capacity constraints or variations produce lines or queues.

Question 59

TQM

Answer 59

Total quality management–see TQC.

Question 60

Pacing Process

Answer 60

That process in a product production line that is used to signal all the other processes in the line for the production Takt time. It is generally the final process but does not have to be. The production rate of each process is then tied to the production rate of the pacing process.

Question 61

Release (Material)

Answer 61

Release means the process and data by which a supplier is notified that material is to be shipped. Releases imply that the supplier already has a purchase contract for the goods to be supplied. The supplier may choose either to manufacture the product in anticipation of the release (forecasting) or wait until receiving the release and manufacture the product between the time that the release is received and the time that the supplier must ship the product to reach the customer plant on time. Release information usually specifies the part number and quantity required and the time it is to be received at the customer plant dock.

Question 62

MRP

Answer 62

Material requirements planning- MRP systems are used in almost all plants. They coordinate the bill of materials, forecasted demand, long lead-time parts, and the inventory in the plant. The reasons MRP systems are generally required relate to the fact that all parts cannot be supplied JIT and that schedules are not predictable. There are still suppliers that give price discounts for larger orders. Further, material receipt, inventory tracking, and engineering changes introduce complexity in plants unless the bills of material are few and simple. A plant that uses JIT exclusively is very rare. Forecasted demand is common for many supplied parts. Further, parts get lost, stolen, and damaged. Parts that do not meet quality standards must be reworked or resupplied. For all these reasons and more, an MRP system is required. MRP systems are quite complex and computer-based. The software incorporating MRP systems can be expensive and difficult to install because it requires and evaluation and possible change of all business practices.

Question 63

Net Income

Answer 63

The income remaining after all expenses have been deducted from revenues including taxes and extraordinary.

Question 64

Little’s Law

Answer 64

The equation relating Throughput, Inventory, and Flow

Question 65

Terminal Value

Answer 65

The value of an operation or entity at the end of the time period considered. For discounted cash flow, it is the net value of the entity considering all future cash flows at a terminal time in the future.

Question 66

Utilization

Answer 66

The average fraction of the capacity of a process or activity that is utilized during an operation

Question 67

Selling and Administrative Cost (SG&A)

Answer 67

Those costs that are associated with the marketing, sales, and administrative functions for a plant or company.

Question 68

Throughput

Answer 68

The production rate of a process or activity measured in units or flow per unit time. Throughput divided by Capacity is Utilization

Question 69

Shrinkage

Answer 69

The amount inventory is less than what is on the “books”. Shrinkage can occur from unrecorded scrapped parts, short shipments by supplier, pilferage, unrecorded over shipments, and damaged parts that are discarded without relieving inventory. Shrinkage reduces pretax profits directly.

Question 70

ROI

Answer 70

Return on investment- average yearly income divided by the average investment–usually applicable for a project. See IRR and RONA.

Question 71

Releasing off Bill of Material

Answer 71

Releasing off a bill of material means that the only information a supplier receives is a time sequence of finished product part or model numbers. The suppliers must then know which parts in the bill of materials are theirs. This sequence of final products can be the only information shipped out to all suppliers that do not use the “vending machine” approach. This greatly simplifies material control and release. Instead of each part number for each supplier part being separately communicated to the right supplier, all suppliers receive only the sequence of final product or model numbers. In the case of a vehicle or a refrigerator, the suppliers would only receive the model number of the product being produced in the production sequence along with the options code. It would then be the suppliers’ responsibility to ship the right parts for that model in sequence to the customer plant JIT.

Question 72

Line Balancing

Answer 72

In a production or process operation line with several processes, machines, or operations in sequence, the discipline of balancing the throughput of each operation in the sequence such that production of any one unit in the sequence is equivalent or “balanced” with each of the other units in the sequence.

Question 73

Multiple Sourcing

Answer 73

Sourcing more than one supplier for the same part or system.

Question 74

Routings

Answer 74

Routings are the sequence of steps that a product follows through a manufacturing plant as it moves from machine to machine. There may be several subsystems in a product that follow different routes finally converging at one or more machines or assembly lines that complete the final product.

Question 75

Single Sourcing

Answer 75

Sourcing all the requirements for a particular part to one supplier is called single sourcing. It has been a purchasing truism forever that sourcing to more than one supplier is required to obtain competitive pricing, quality, and delivery. The Japanese automotive industry developed a system, however, that made a form of single sourcing work more effectively than the multiple sourcing practiced by the U.S. automotive industry. This modified single sourcing system has begun to be adopted by all automotive companies and by other industries as well. The system sources to a single supplier all the requirements for a product line early enough in the design cycle so that the supplier has significant design responsibilities. The volumes can be quite attractive. In the seating industry, the average contract in the early 1980s before this system was adopted was in the range of one to three million dollars per year for one year. After the new system was adopted the contracts were for fifty to one hundred million dollars per year for five years or more. The supplier works to a target cost for the product that is set independently and prior to the design process. The responsibility of the supplier is then to design the product to the cost specified by the customer and make a profit, to deliver the product to the customer on time, and to meet the customer quality specifications. The supplier must develop significant expertise in such subsystems to win and keep business in this sourcing strategy. In this system, a mutual dependency develops whereby the supplier has the business for a model run of four to six years. Since the supplier wants the business for the next model as well as the current model, the supplier is motivated to keep costs down, quality up, and delivery on time. At the next model design, more than one supplier has the opportunity to bid for the yet to be designed product. In this way, the full history of the current supplier is known during the bidding for the next design. However, new ideas and concepts can be brought to the customer by competitors. The system works well when there are at least two capable suppliers that can bid on such large contracts. The seating industry has evolved to this status from more than two dozen small firms in the early 1980s to a very few, very large firms in the late 1990s. In 1981, Hoover Universal seating (which JCI acquired) had less than one hundred fifty million-dollar sales per year and Lear had less. In 1998, both Lear and JCI are above nine billion dollars in sales.

Question 76

Toyota Production System

Answer 76

Toyota Motor Company developed a comprehensive business system that produced the remarkable results in quality, productivity, and continuous improvement marked by Toyota’s products and services. This system led to the “lean” manufacturing and “lean” enterprise concepts in the U. S. and Europe. It has also spawned innumerable other “production systems” for firms that have tried to emulate Toyota’s record of success. Toyota bases the system on continuous reduction of waste, respect for their employees, and customer satisfaction.

Question 77

Rework

Answer 77

That activity that reprocesses defective parts to make them satisfactory for reuse in the production process.

Question 78

Work in Process (WIP)

Answer 78

Inventory consisting of products that are in a semi finished state. Work in process is valued at the cost of the purchased material plus the cost of manufacturing up to the stage of completion at the time that the inventory is valued.

Question 79

Workman’s Compensation

Answer 79

This is a state-administered program whereby employees are guaranteed medical coverage in case they are injured on the job and companies are limited as to their liability for such job-related injuries.

Question 80

Tier One

Answer 80

Tier one designated those group of suppliers who have becomes directly responsible for not only product supply but product development. The tier one suppliers in the automotive industry, for example, supply complete seats, braking systems, drive trains, and other complete systems that have been developed in cooperation with the OEMs.

Question 81

Spare Parts (Service Parts)

Answer 81

Parts for products already produced that can be shipped to customer order or stored for future orders.

Question 82

Product Mix

Answer 82

The proportion of different products in the total production of an operation or plant.

Question 83

Setup

Answer 83

Denotes the process of changing or fitting tools on general-purpose equipment to produce a particular product. Best practice reduces setup times and effort by designing the tools and their clamping and fixing devices for rapid attachment and detachment, by having all the required hand and special tools located conveniently near the equipment, and by training the operational teams to make quick, safe tool changes.

Question 84

Plant Rate

Answer 84

Plant rate is the total value added by a plant divided by the total direct labor hours in a yearly budget. It is the shop rate plus all other plant costs divided by the direct labor hours in a yearly budget.

Question 85

Maintenance

Answer 85

That classification of employees and process by which machines and equipment are maintained for sustained production.

Question 86

Reorder Point

Answer 86

That inventory level where new is ordered.

Question 87

Marginal Analysis

Answer 87

Analysis of the effect of an action or activity at the limits or at a point in the operation rather than on the average. The marginal cost of an additional unit of production may be lower or higher than the average cost.

Question 88

Normal Distribution

Answer 88

Denotes the Gaussian probability function defined by the exponent of the weighted squared probability variable

Question 89

Union Shop

Answer 89

A facility in which all hourly employees are unionized, or more formally a clause in a collective bargaining agreement under which membership in the union is required as a condition of employment.

Question 90

NLRB

Answer 90

National Labor Relations Board is an independent administrative agency responsible directly to the President who administers most of the provisions of the National Labor Relations Act. It is the federal agency responsible for administering union matters and issues.

Question 91

Time for a Process

Answer 91

THROUGHPUT = INVENTORY divided by FLOW TIME

Question 92

ROS

Answer 92

Ratio of net profits to sales expressed in percent

Question 93

QS 9000

Answer 93

The automotive industry version of the ISO 9000 requirements.

Question 94

MRP II

Answer 94

Material Resource Planning- an advanced version of MRP that integrates the whole value chain in planning material orders, production, scheduling, and shipments.

Question 95

Productivity

Answer 95

Measure of labor efficiency. Amount of goods produced per unit of labor cost or hours. It can be applied more generally to the efficiency of machines and systems.

Question 96

Setup Time Efficiency

Answer 96

The ratio of the setup time to the process flow time.

Question 97

Pick and Place

Answer 97

Equipment that picks up parts from one station on an assembly line and places them on the next. It is usually a pick and place robot.

Question 98

Voluntary Layoff

Answer 98

Layoffs where the employees are given the option of taking a non-paid leave from their work for a short, specified period of time.

Question 99

Visual Management

Answer 99

That system of deployment of visual graphs, charts, inventory arrangements, tool & fixture storage, and order that aids in implementing and maintaining lean manufacturing and order within a plant. It is based on the concept that people are apt to understand and relate to visual cues and data better than to other communication means.

Question 100

Wellness

Answer 100

The process of fostering healthy practices and lifestyles for people to improve foster health and well being.

Question 101

Master Production Schedule (MPS)

Answer 101

The schedule of finished goods that are to be manufactured based on actual or forecasted customer demand. Work centers are scheduled to manufacture the products to meet the MPS.

Question 102

Material Release

Answer 102

Release means the process and data by which a supplier is notified that material is to be shipped. Releases imply that the supplier already has a purchase contract for the goods to be supplied. The supplier may choose either to manufacture the product in anticipation of the release (forecasting) or wait until receiving the release and manufacture the product between the time that the release is received and the time that the supplier must ship the product to reach the customer plant on time. Release information usually specifies the part number and quantity required and the time it is to be received at the customer plant dock.

Question 103

Mix

Answer 103

The breakdown of the total demand or production that identifies the different products in an aggregate demand or production run.

Question 104

Quality Function Deployment (QFD)

Answer 104

The formal process whereby products and services are designed that meet all customer expectations cognizant of costs, competitors, manufacturing, and flexibility.

Question 105

Make-to-Stock

Answer 105

Operations that make products to inventory in anticipation of customer demand–requires demand forecasts.

Question 106

SPC

Answer 106

Statistical process control involves the implementation of statistical tools (including control charts) that monitor processes in order to identify improvement opportunities. Process faults are identified, a root cause of the fault is isolated, and corrective actions are taken to improve the process.

Question 107

Target Cost

Answer 107

A system for utilized in product development where part of the specifications of the product is the cost. The system was developed by the Japanese auto manufactures and has become a concept and system in wide use in business.

Question 108

Muda

Answer 108

Waste. Reducing waste throughout the enterprise is one of the fundamentals tenets of the Toyota Production System.

Question 109

Materials

Answer 109

Those components that are part of the production bill of material that are process by an operation.

Question 110

Labor

Answer 110

The workforce in a plant, the people activity that produces value in a product stream.

Question 111

Product Liability

Answer 111

That legal liability for product malfunction in the hands of a consumer or customer. It is also the process by which liability is established.

Question 112

Working Capital

Answer 112

In a manufacturing operation, working capital generally refers to inventory plus accounts receivable minus accounts payable. These are the dominant requirements for cash in a plant in addition to payroll and property, plant, and equipment. For a company, the accounting definition of working capital is current assets minus the current liabilities. This definition refers to the working capital that the company has. From a manufacturing perspective, the working capital requirement to run the operations is what is important. This allows a forecast of the cash required to produce a new order, to negotiate with suppliers and customer on payment terms, and to communicate with corporate treasury functions on the cash needed so that it can be lined up from banks or investors. For this purpose, working capital is current assets minus cash minus current liabilities plus the current portion of debt due.

Question 113

Takt Time

Answer 113

The pace at which consumers demand a product–production scheduling at that pace. The line speed in an auto assembly plant (around 1 vehicle per minute) is the Takt time for that plant.

Question 114

Operations

Answer 114

Any activity that transforms and adds value to an input stream. The input stream can be a physical entities, services, or flows. The valued added transformation produces products or services that are designed to meet a customer demand. Operations range from processing loan applications to production of computers, to designing buildings.

Question 115

Material Control

Answer 115

That process whereby materials are ordered, received, and distributed throughout an operation to satisfy the master production schedule.