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Operations Mid-Term
Chapters 1, 2, 3, 5, 6
90
Business
Undergraduate 3
09/21/2013

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Term
Operations and Supply Chain Management
Definition
The design, operation, and improvement of the systems that create and deliver the firm's primary products and services
Term
5 categories of Operations and Supply Chain Processes
Definition
Planning
Sourcing
Making
Delivering (Logistics)
Returning
Term
Planning
Definition
The processes needed to operate an existing supply chain strategically
- Firms must determine how anticipated demand will be met with available resources
- Developing a set of metrics to monitor the supply chain
Term
Sourcing
Definition
The selection of suppliers that will deliver the goods and services needed to create the firm's product
- Pricin, delivery, and payment processes are needed together with metrics for monitoring and improving relationships between partners of the firm
Term
Making
Definition
Where the major product is produced or the service provided
- Scheduling processes for workers and coordination of material and other critical resources such as equipment to support producing or providing the service
Term
Delivering
Definition
Carriers are picked to move products to warehouses and customers, coordinate and schedule the movement of goods and info through the supply network, develop and operate warehouses, etc.
Term
Returning
Definition
Processes for receiving worn-out, defective, and excess products back from customers and support for customers who have problems with delivered products
Term
Efficiency
Definition
Doing something at the lowest possible cost
Term
5 aspects that distinguish a service and a good
Definition
1. A service is an intangible process
2. A service requires some degree of interaction with the customer
3. Services are inherently heterogeneous
4. Services as a process are perishable and time dependent
5. The specifications of a service are defined and evaluated as a package of features that affect the 5 senses
Term
Effectiveness
Definition
Doing the things that will create the most value for the customer
Term
Value
Definition
The attractiveness of a product relative to the cost
Term
Formula for value
Definition
Quality / Price
Term
Wall Street Measures
Definition
1. Net income per employee
2. Revenue per employee
3. Receivable Turnover - Annual Credit sales/ Average AR
- Measures company's efficiency at collecting its sales on credit
- High ratio implies the company operates on mostly cash or its very efficient
4. Inventory Turnover - COGS/Avg Inventory
- Measures the liquidity of inventory
- The higher the more efficient since holding inventory ties up capital that could be used for other purposes
5. Asset Turnover - Revenue / Total Assets
Term
Supply Network
Definition
The pipeline movement of the materials and information needed to produce a good or service
Term
Triple Bottom Line Strategy
Definition
A strategy that meets the needs of shareholders, and employees, and that preserves the environment
Term
Product-Service Bundling
Definition
Refers to when a company builds service activities into its product offerings
Term
Service
Definition
A business where the major product is intangible, meaning it cannot be weighed or measured
Term
Total Quality Control
Definition
A philosophy that aggressively seeks to eliminate causes of production defects
Term
Business Process Re-engineering
Definition
An approach that seeks to make revolutionary changes as opposed to evolutionary changes
Term
Lean Manufacturing
Definition
An approach that combines Total Quality Management and Just in Time production
Term
Six Sigma Quality
Definition
Tools that are taught to managers in "Green and Black Belt Programs"
Term
Service Science Management and Engineering
Definition
A program to apply the latest concepts in information technology to improve service productivity
Term
Operations and Supply Chain Strategy
Definition
The setting of broad policies and plans that will guide the use of the resources needed by the firm to implement its corporate strategy
Term
Operations Effectiveness
Definition
Performing activities in a manner that best implements strategic priorities at minimum cost
Term
Sustainability
Definition
The ability to meet current resources needs without compromising the ability of future generations to meet their needs
Term
Main competitive dimensions
Definition
Cost/Price
Quality (design quality or process quality)
Delivery Speed
Delivery Reliability
Coping with Changes in Demand
Flexibility and New-Product Introduction Speed
Support Systems
Social/Environmental Dimensions
Term
Order Winner
Definition
A specific marketing-oriented dimension that clearly differentiates a product from competing products
Term
Order Qualifier
Definition
A dimension used to screen a product or service as a candidate for purchase
Term
Supply Chain Risk
Definition
The likelihood of a disruption that would impact the ability of a company to continuously supply products or services
Term
2 types of supply chain risks
Definition
Supply chain coordination risks (day-to-day)
Disruption risks
Term
3 step risk management process applied where disruptions are possible
Definition
1. Identify the sources of potential disruptions
2. Assess the potential impact of the risk
3. Develop plans to mitigate the risk
Term
Productivity
Definition
Common measure of how well a country, industry, or business unit is using its resources
- Outputs/Inputs
Term
Partial productivity measure
Definition
Concerned with the ratio of some output to a single input
Term
Multi-factor productivity measure
Definition
Look at the ratio of some output to a group of inputs (not all inputs)
Term
Total Factor Measure of Productivity
Definition
Describes the productivity of an entire organization
Term
The most difficult competitive dimension in which to compete
Definition
Cost
Term
Straddling
Definition
Occurs when a company seeks to match what a competitor is doing while maintaining its existing competitive position
Term
Activity-System Map
Definition
A diagram showing the activities that support a company's strategy
Term
2 types of forecasting
Definition
Strategic
- Medium and long-term forecasts that are used for decisions related to strategy and aggregate demand
Tactical
- Short-term forecasts used for day-to-day decisions related to meeting demand
Term
6 components of demand
Definition
1. Average demand for the period
2. Trend
3. Seasonal Elements
4. Cyclical Elements
5. Random variation
6. Auto-correlation
Term
Time Series Analysis
Definition
Models that try to predict the future based on past data
Term
Moving Average
Definition
A forecast based on average past demand relative to the most recent n number of months
- As periods becomes longer and more periods are used, and there is more oscillation, there is a closer following of the trend
Term
Weighted Moving Average
Definition
A forecast made with past data where more recent data is given more significance than older data
Term
Exponential Smoothing
Definition
A time series forecasting technique using weights that decrease exponentially (1 - a) for each past period
- Most used of all forecasts
Term
Smoothing Constant alpha
Definition
The parameter in the exponential smoothing equation that controls the speed of reaction to differences between forecasts and actual demand
- Usually estimated using 2 / (n+1)
Term
How does alpha relate to the amount of error in your forecast?
Definition
The higher the alpha, the less error
Term
Mean Absolute Deviation
Definition
Average size of the error in your forecast
- (sum of absolute value of each error) / N
Term
Running Sum of Forecast Error
Definition
Sum of each forecast error (no absolute value)
Term
Tracking Signal
Definition
RSFE / MAD
- A measure of whether the forecast is keeping pace with any genuine upward or downward changes in demand. Used to detect bias
Term
Mean Absolute Percent Error
Definition
MAD / Average Demand
- Scales the average error in relation to actual demand
Term
Forecast Error
Definition
The difference between actual demand and what was forecast
Term
Which type of demand is most appropriate for using forecasting models?
Definition
Independent demand
Term
What term is used for actually influencing the sale of a product or service?
Definition
Demand Management
Term
Decomposition
Definition
Identifying and separating time series data into components of demand
Term
If the tracking signal for your forecast was consistently positive, what could you say about your forecasting technique?
Definition
It is biased, consistently too low
Term
How can you improve a biased forecast?
Definition
Add a trend component
Term
You know that sales are greatly influenced by the amount your firm advertises in the local paper/ What forecast technique would you would you suggest trying?
Definition
Causal relationship forecasting (regression)
Term
What forecasting tool is most appropriate when closely working with customers dependent on your products?
Definition
CPFR
Collaborative planning, forecasting, and replenishment
Term
Project
Definition
A series of related activities usually directed toward some major output and requiring a significant period of time to perform
Term
Project Management
Definition
The management activities of planning, directing, and controlling resources (people, equipment, material) to meet the technical, cost, and time constraints of a project
Term
Pure Project
Definition
A structure for organizing a project where a self-contained team works full-time on the project
Term
Functional Project
Definition
A structure where team members are assigned from the functional units of the organization. The team members remain a part of their functional units and typically are not dedicated to the project
Term
Matrix Project
Definition
A structure that blends the functional and pure project structures. Each project uses people from different functional areas. A dedicated project manager decides what tasks need to be done and when, but the function managers control which people to use
Term
Gantt Chart
Definition
Shows in a graphic manner the amount of time involved and the sequence in which activities can be performed (bar chart)
Term
Earned Value Management
Definition
Technique that combines measured of scope, schedule, and cost for evaluating project progress
Term
Essential Features of EVM
Definition
1. A project plan that identifies the activities to be accomplished
2. A valuation of each activity work
3. Predefined earning or costing rules to quantify the accomplishment of work
Term
Critical Path
Definition
The sequence(s) of activities in a project that forms the longest chain in terms of their time to complete
Term
Prerequisites for CPM
Definition
A project must have:
- Well defined activities whose completion marks the end of the project
- Independent activities
- Activities that follow a given sequence
Term
Steps in the CPM with Single Time Estimate
Definition
1. Activity Identification
2. Activity Sequencing and Network Construction
3. Determine the critical path(s)
Term
When is CPM with a single time estimate used?
Definition
- When activity times are known with certainty
- To determine timing estimates for the project, each activity in the project, and slack time for activities
Term
When are Time-Cost models used
Definition
- When cost trade-off information is a major consideration in planning
- To determine the least cost in reducing total project time
Term
Milestone
Definition
Specific events that upon completion mark important progress toward completing a project
Term
What defines the hierarchy of project tasks, subtasks, and work packages?
Definition
Work Breakdown Structure
Term
Slack
Definition
The difference between the late and early start time for an activity
Term
What technique is used when activities are scheduled with probabilistic task times?
Definition
The Program Evaluation and Review Technique (PERT)
Term
Lead Time
Definition
the time needed to respond to a customer order
Term
Customer Order Decoupling Point
Definition
Determines where inventory is positioned to allow processes or entities in the supply chain to operate independently
- The closer this point is to the customer, the faster the customer can be served
Term
Make-to-Stock Firms
Definition
Firms that serve customers from finished goods inventory
- Essential issue: balance finished inventory with customer service
- Examples: telephones, clothing, packaged food products
Term
Assemble-to-Order firms
Definition
Firms that combine a number of pre-assembled modules to meet a customer’s specifications
- Prime task is to define a customer’s order in terms of alternative components and options since these are carried in inventory
- Example: Dell Computer’s desktop making process
- Number of finished products is usually greater than number of components that are combined to make the finished product
Term
Make-To-Order firms
Definition
Firms that make the customer’s product from raw materials, parts, and components
Term
Engineer-to-order firms
Definition
firms that work with the customer to Design the product and then make it from purchased materials, parts, and components
Term
Workcenter Layout/Job Shop
Definition
Where similar equipment or functions are grouped together
- Flexibility to produce a variety of products, typically at lower volume levels
- Example: drilling machines in one area and stamping machines in another
Term
Manufacturing Cell Layout
Definition
Dedicated area where products that are similar in processing requirements are produced
Term
Assembly Line
Definition
an item is produced through a fixed Sequence of workstations, designed to achieve a specific production rate (sequential)
Term
Continuous Process
Definition
A process that converts raw materials into finished products in one contiguous process (simultaneous)
Term
Product-Process Matrix
Definition
Framework depicting when the different production process types are typically used depending on product volume and how standardized the product is
Term
Steps in Assembly Line Balancing
Definition
1. Specify Sequential relationships among tasks
2. Determine the required workstation cycle time
3. Determine the theoretical minimum number of workstations
4. Assign tasks, one at a time, until the sum of the tasks is equal to the workstation cycle time
5. Evaluation the efficiency of the balance
6. Re-balance if needed
Term
Formula to detemine required workstation cycle time
Definition
C = Production time per day / Required output per day (in units)
Term
Formula to determine theoretical minimum of workstations
Definition
N = Sum of task times / Cycle time
Term
Formula to evaluate efficiency of the balance of an assembly line
Definition
E = Sum of task times / (Actual number of workstations x Workstation cycle time)
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