Term
A plan for labor and production for the intermediate term with the objective to minimize the cost of the resources needed to meet demand
o Intermediate term – 3 to 18 months
o Finds the best combination of production rate, workforce level, and inventory |
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Definition
| Aggregate Operations Plan |
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Term
| The process that companies use to keep demand and supply in balance and to coordinate distribution, marketing, and financials plans |
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Definition
| Sales and Operations Planning |
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Term
Match the production rate to the order rate by hiring and laying off employees as the order rate varies
o Success of this strategy depends on having a pool of easily trained applicants to draw on as order volumes increase |
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Definition
| Chase Production Strategy |
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Term
Vary the output by varying the number of hours worked through flexible work schedules or overtime
o By varying the number of work hours, you can match production quantities to orders
o Provides workforce continuity and avoids the emotional and tangible costs of hiring and firing |
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Definition
| Stable Workforce Production Strategy |
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Term
Maintain a stable workforce working at a constant output rate. Shortages and surpluses are absorbed by fluctuating inventory levels, order back longs, and lost sales
o Employees benefit from stable work hours at the cost of potentially decreased customer service levels and increased inventory costs (inventory may become obsolete) |
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Definition
| Level Production Strategy |
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Term
| When doing aggregate planning, these are the 3 general operations-related variables that can be |
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Definition
| Production rate, workforce level, and inventory |
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Term
| Sometimes a firm may choose to have all or part of the work done by an outside vendor. This is the term used for the approach |
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Definition
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Term
| In a service setting, what general operations-related variable is not available compared to a production setting? |
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Definition
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Term
| The practice of allocating capacity and manipulating demand to make it more predictable |
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Definition
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Term
| A computer system that integrates application programs in account, sales, manufacturing, and the other functions in a firm |
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Definition
| Enterprise Resources Planning |
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Term
The logic for determining the number of parts, components, and materials needed to produce a product
o Based on dependent demand (caused by the demand for a higher-level item) |
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Definition
| Materials Requirement Planning |
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Term
| Components of an MRP record |
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Definition
• Gross Requirements: Anticipated usage or demand for each period.
• Scheduled Receipts: Existing replenishment orders at the beginning of period.
• Projected Available Balance: The current and projected inventory status at the end of period.
• Net Requirements: The amount needed with then projected available balance plus scheduled receipts in a period are not sufficient to cover gross requirements.
• Planned Order Releases: Planned replenishment orders for the beginning of each period.
ents of an |
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Term
| A time-phased plan specifying how many and when the firm plans to build each end item |
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Definition
| Master Production Schedule |
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Term
The complete product description, listing the materials, parts, and components, and also the sequence in which the product is created
• Often called the product tree because it shows how a product is put together |
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Definition
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Term
| Period of time during which a customer has a specified level of opportunity to make changes |
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Definition
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Term
| If an item is used in two places in a bill of material, say level 3 and level 4, what low-level code would be assigned to the item |
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Definition
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Term
| These are orders that have already been released and are to arrive in the future |
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Definition
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Term
| This is the total amount required for a particular item |
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Definition
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Term
| This is the amount needed after considering what we currently have in inventory and what we expect to arrive in the future |
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Definition
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Term
| The planned order receipt and planned order release are offset by this amount of time |
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Definition
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Term
| These are the part quantities issued in the planned order release section of an MRP report |
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Definition
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Term
| Ordering exactly what is needed each period without regard to economic considerations |
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Definition
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Term
| None of the techniques for determining order quantity consider this important noneconomic factor that could make the order quantity infeasible |
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Definition
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Term
| Managing the entire organization so that it excels on all dimensions of products and services that are important to the customer |
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Definition
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Term
| 2 fundamental operation goals of TQM |
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Definition
o Careful design of the product or service
o Ensuring that the organization’s systems can consistently produce the design |
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Term
| The inherent value of the product in the marketplace |
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Definition
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Term
| Performance, features, reliability/durability, serviceability, aesthetics, and perceived quality |
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Definition
| Dimensions of Design Quality |
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Term
| The degree to which the product or service design specifications are met |
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Definition
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Term
| Making the person who does the work responsible for ensuring that specifications are met |
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Definition
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Term
A statistical term to describe the quality goal of no more than four defects out of every million units. Also refers to a quality improvement philosophy and program
o Seeks to reduce variation in the processes that lead to these defects |
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Definition
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Term
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Definition
DMAIC
Define
Measure
Analyze
Improve
Control |
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Term
• Identify customers and their priorities
• Identify a project suitable for 6-sigma efforts based on business objectives
• Identify CTQs (critical-to-quality characteristics) that customers think have a large impact on quality |
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Definition
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Term
• Determine how to measure the process and how it is performing.
• Identify the key internal processes that influence CTQs and measure the defects currently generated relative to these processes |
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Definition
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Term
• Determine the most likely causes of defects.
• Understand why defects are generated by identifying the key variables that are most likely to create process variation |
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Definition
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Term
• Identify means to remove the causes of defects
• Confirm the key variables and quantify their effects on the CTQs
• Identify the maximum acceptance ranges of the key variables and a system for measuring deviations of the variables
• Modify the process to stay within an acceptable range |
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Definition
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Term
| • Monitor the process to ensure that improvements are actually made and maintained. |
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Definition
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Term
| A number of different techniques designed to evaluate quality from a conformance view |
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Definition
| Statistical Quality Control |
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Term
| Deviation in the output of a process that can be clearly identified and managed |
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Definition
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Term
| Deviation in the output of a process that is random and inherent in the process itself |
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Definition
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Term
| The range of values in a measure associated with a process that is allowable given the intended use of the product or service |
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Definition
| Upper and lower specification limits |
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Term
| Occurs when the mean is right in the middle of the upper and lower specification limits |
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Definition
| Perfectly centered process |
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Term
| When can we classify a process as "capable" |
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Definition
| When the mean and standard deviation of the process are operating such that the upper and lower control limits are acceptable relative to the upper and lower specification limits |
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Term
| The ratio of the range of values produced by a process divided by the range of the values allowed by the design specification |
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Definition
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Term
| Steps to find the probability of producing a defect |
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Definition
o Calculate the z scores associated with the upper and lower specification limits
o Find the probabilities associated with each z score
o This number is telling us the probability that an item will fall to the left of the specification limit |
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Term
| Techniques for testing a random sample of output from a process to determine whether the process is producing items within a prescribed range |
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Definition
| Statistical process control |
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Term
| Quality characteristics that are classified as either conforming or not conforming to specification |
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Definition
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Term
• A chart that contains an upper process control limit and a lower process control limit
• We can draw these limits on a graph and plot the fraction defective of each individual sample tested |
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Definition
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Term
| Quality characteristics that are measured in actual weight, volume, inches, centimeters, or other measure |
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Definition
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Term
| Performed on goods that already exist to determine what percentage of products conform to specifications |
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Definition
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Term
| The probability associated with rejecting a high-quality lot is denoted what variable? |
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Definition
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Term
| The probability associated with accepting a low-quality lot is denoted by what variable? |
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Definition
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Term
| What is the enemy of good quality? |
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Definition
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Term
| Accepted series of international quality standards |
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Definition
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Term
| A Six Sigma process that is running at the center of its control limits would expect this defect rate |
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Definition
| 2 parts per billion units |
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Term
| The standard quality improvement methodology developed by General Electric |
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Definition
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Term
| An alternative to viewing an item as simply good or bad due to it falling in or out of the tolerance range |
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Definition
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Term
| A quality chart suitable for when a number of blemishes are expected on each unit |
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Definition
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Term
| A chart that depicts the manufacturer’s and consumer’s risks associated with a sampling plan |
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Definition
| Operating Characteristic Curve |
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Term
| The stock of any item or resource used in an organization |
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Definition
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Term
| Basic purpose of inventory analysis |
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Definition
o When items should be ordered
o How large the order should be |
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Term
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Definition
1. To maintain independence of operations.
2. To meet variation in product demand.
3. To allow flexibility in production scheduling.
4. To provide a safeguard for variation in raw material delivery time.
5. To take advantage of economic purchase-order size.
6. Other domain specific reasons (anticipation of price changes) |
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Term
| 4 types of inventory costs |
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Definition
• Holding (or carrying) costs.
– Costs for storage, handling, insurance, value of the investment, etc.
• Setup (or production change) costs.
– Costs for arranging specific equipment setups, etc.
• Ordering costs.
– Costs of someone placing an order, etc.
• Shortage costs.
– Costs of canceling an order, etc. |
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Term
| The demands for various items are unrelated to each other |
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Definition
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Term
| The need for any one item is a direct result of the need for some other item, usually an item of which it is a part |
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Definition
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Term
| Provides the organizational structure and the operating policies for maintaining and controlling goods to be stocked |
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Definition
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Term
| Used in a one-time purchasing decision (selling t-shirts at a football game) |
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Definition
| Single-Period inventory system |
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Term
| An inventory control model where the amount requisitioned is fixed and the actual ordering is triggered by inventory dropping to a specified level of inventory (event triggered) |
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Definition
| Fixed-Order Quantity Model |
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Term
| An inventory control model that specified inventory is ordered at the end of a predetermined time period. The interval of time between orders is fixed and the order quantity varies (time triggered) |
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Definition
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Term
| The amount of inventory carried in addition to the expected demand |
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Definition
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Term
| Based on the EOQ-type ordering criterion, what cost must be taken to zero if the desire is to have an order quantity of a single unit |
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Definition
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Term
| If we take advantage of a quantity discount, would you expect your average inventory to go up or down? |
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Definition
| Will probably go up if the stock out probability remains the same |
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Term
| This is an inventory auditing technique where inventory levels are checked more frequently than one time a year |
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Definition
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Term
| Integrated activities designed to achieve high-volume, high-quality production using minimal inventories of raw materials, work-in-process, and finished goods |
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Definition
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Term
| These are the value-adding and non-value adding activities required to design, order, and provide a product from concept to launch, order to delivery, and raw materials to customers |
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Definition
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Term
| The optimization of value-adding activities and elimination of non-value-adding activities that are part of the value stream |
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Definition
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Term
| Components of a Lean Supply Chain |
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Definition
o Suppliers – Able to respond to changes
o Procurement – The key is automation
o Manufacturing – Produce what the customer wants, in the quantity they want, when they want it, with minimum resources
o Warehousing – Eliminates non-value-added steps and waste in product storage processes
o Logistics – Applies lean concepts to key areas such as optimized mode selection and pooling order, combined multistep truckloads, optimized routing, cross docking, import/export transportation processes, and backhaul minimization
o Customers – Have a great understanding of their business needs and specify meaningful requirements |
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Term
| The development and management of the supplier relationships to acquire goods and services in a way that aids in achieving the immediate needs of a business |
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Definition
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Term
| The variability in demand is magnified as we move from the customer to the producer in the supply chain |
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Definition
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Term
| What does the Bullwhip Effect indicate? |
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Definition
| The effect indicates a lack of synchronization among supply chain members |
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Term
| Ways to mitigate the Bullwhip Effect |
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Definition
o Remove echelons in the supply chain
• Example from our Canadian company – get rid of the independent distributors
o Direct communication between customer and the factory – if possible have the factory produce directly to order.
• May need to carry inventory if change over (setup) is significant or if lead time is too long. The key is to carry inventory where it will be most effective (focus on a single location in the supply chain).
• There may be a significant cost/lead time trade-off. |
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Term
| Hau Lee's Uncertainty Framework |
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Definition
| • Hau Lee’s approach to supply chain (SC) is one of aligning SC’s with the uncertainties revolving around the supply and demand of the SC |
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Term
| 4 types of Supply Chains according to Hau Lee's framework |
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Definition
Efficient
Risk-Hedging
Responsive
Agile |
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Term
Utilize strategies aimed at creating the highest cost of efficiency
• Eliminates non-value-added activities, pursues scale economies, employs optimization techniques to get the best capacity utilization |
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Definition
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Term
Utilize strategies aimed at pooling and sharing resources in a supply chain so that risks in supply disruption can be shared
• Sharing safety stock with other companies
• Heavy emphasis on IT because real-time information is vital for its success and allows cost-effective management and transshipment of goods between partners sharing inventory |
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Definition
| Risk-Hedging Supply Chains |
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Term
Utilize strategies aimed at being responsive and flexible to the changing and diverse needs of the customer
• Use build-to-order and mass customization processes to meet customer requirements |
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Definition
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Term
Utilize strategies aimed at being responsive and flexible to customer needs, while the risks of supply shortages or disruptions are hedged by pooling inventory and other capacity resources
• Combine the strengths of hedged and responsive supply chains |
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Definition
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Term
| Two common Measures to evaluation supply chain efficiency |
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Definition
o Inventory turnover
• Inventory Turover = COGS / Avg. Aggregate Inventory Value
o Weeks of Supply
• (Avg. Aggregate Inventory Value / COGS) x 52 weeks |
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Term
| The total value of all items held in inventory for the form, valued at cost |
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Definition
| Average Aggregate Inventory value |
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Term
| Refers to how common an item is or how many substitutes might be available |
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Definition
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Term
| When a customer allows the supplier to manage an item or group of items |
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Definition
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Term
| Products that satisfy basic needs and do not change much over time |
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Definition
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Term
| Products with short life cycles and typically high profit margins |
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Definition
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Term
| A supply chain that must deal with high levels of both supply and demand uncertainty |
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Definition
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Term
| In order to cope with high levels of supply uncertainty, a firm would use this strategy to reduce risk |
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Definition
| Multiple sources of supply (pooling) |
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Term
| Used to describe functions related to the flow of material in a supply chain |
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Definition
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Term
| When a firm works with suppliers to look for opportunity to save money and benefit the environment |
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Definition
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Term
| Refers to an estimate of the cost of an item that includes all costs related to the procurement and use of an item, including the costs of disposing after its useful life |
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Definition
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Term
| The art and science of obtaining, producing, and distributing material and product in the proper place and in the proper quantities |
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Definition
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Term
| All functions concerned with the movement of materials and finished goods on a global scale |
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Definition
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Term
| A company that manages all or part of another company’s product delivery operations (UPS, FedEx, DHL) |
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Definition
| Third-Party Logistics Company |
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Term
| 6 modes of transportation |
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Definition
Highway
Water
Air
Rail
Pipelines
Hand Delivery |
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Term
Offers great flexibility for moving goods to virtually any location not separated by water
o Size of product, weight, and liquid or bulk can all be accommodated with this mode |
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Definition
| Highway (truck) transportation |
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Term
Very high capacity and low cost, but transit times are slow, and large areas of the world are not directly accessible to water carriers
o Especially useful for bulk items such as oil, coal, and chemical products |
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Definition
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Term
Fast but expensive
o Most appropriate for small, light, expensive items |
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Definition
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Term
Fairly low-cost alternative, but transit times can be slow and subject to variability
o Much depends on rail infrastructure (highly developed and efficient in Europe, less attractive in US) |
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Definition
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Term
Highly specialized and limited to liquids, gases, and solids in slurry forms. No packaging is needed and costs per mile are low
o Initial cost to build is very high |
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Definition
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Term
The last step in many supply chains
o Getting the product in the hands of the customer is often a slow and costly activity due to high labor content |
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Definition
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Term
| A special linear programming method that is useful for solving problems involving transporting products from several sources to several destinations |
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Definition
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Term
| 2 common objectives of the transportation model |
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Definition
o Minimize the cost of shipping n units to m locations
o Maximize the profit of shipping n units to m locations |
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Term
| When large shipments are broken down directly into smaller shipments for local delivery |
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Definition
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Term
| Sorting goods in the main purpose of this type of warehouse |
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Definition
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Term
| A place where foreign goods can be brought into the US without being subject to normal customs requirements |
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Definition
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Term
| The main cost criterion used when a transportation model is used for analyzing a logistics network |
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Definition
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Term
| The Microsoft Excel function used to solve the transportation model |
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Definition
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Term
| For the transportation model to be able to find a feasible solution, this must always be greater than or equal to demand |
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Definition
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Term
| The “changing cells” in a transportation model represent this |
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Definition
| Allocation to a plant or warehouse |
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Term
| This is a method that locates facilities relative to an X, Y grid |
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Definition
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Term
| A technique that is useful for screening potential locations for services |
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Definition
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