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Output: unique, one of a kind
Example: custom home, designing a video games
Process: unique sequencing, high complexity, employees & equipment flexibility, activities outsourced to specialists |
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Output: customized, low volume
Example: auto repair, beauty salon, copy shop
Process: high variety of inputs & process flows, job sequencing is challenging, high work-in-process inventory, highly skilled and flexible workers, general purpose equipment |
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Output: moderate volume & variety
Example: bakery, automotive parts, cinema
Process: dominant flow patterns, some common inputs, setup time can be high, moderately flexible employees and equiptment |
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| Process Type: Repetitive Process |
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Output: standard products w/ a range of options
Example: Appliances, automobiles, buffet restaurant
Process: all products follow the same sequence, standard methods & materials are used, low-skilled workers specialize in completing a limited number of activities |
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Output: commodities with high volume, little variety
Example: aluminium cans, laundry detergent, gasoline
Process: Products follow sequence, operations often run 24/7, line stoppages are very costly, highly specialized equipment, low-skilled operators |
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| unique, customized products |
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| similar design, customized during production |
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| produced from standard components and modules |
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| goods made and held in inventory in advance of customer orders |
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| all actions done by customers during service delivery |
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| employee actions in the face-to-face encounter |
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| behind the scenes activities |
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| activities necessary for the service, done by employees without direct customer contact |
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| tangibles the customers see or collect from the organization |
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| product cannot be moved during production |
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| groups together similar resources |
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| resources arranged by regularly occurring sequence of activities |
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| Line Balancing in Product Layouts |
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Definition
Used to assign individual tasks to work areas for a desired output rate
1.Determine precedence relationships
2.Calculate Takt time
3.Determine minimum number of work stations
4.Determine efficiency |
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| fitness for consumption in meeting customers needs and desires |
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| match between designed features and customer requirements |
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| meeting design specifications |
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| organization wide quality focus |
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| perceived quality, performance, reliability, aesthetics, support, durability, features, conformance |
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| holistic view of responsibility for quality, variability as source of most problems,importance of customer |
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| broadened definition of quality, focuses on change management, cost of quality management |
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| quality is free, zero defects, focus on incremental change |
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| kaizen system of continuous improvement, intense process oriented view, heavy dependence on the front-line worker insights, emphasis on worker training and development |
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| Costs associated with preventing defects and limiting failure and appraisal costs (e.g., training, improvement projects, data gathering, analysis) |
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| Costs associated with inspection to assess quality levels (e.g. staff, tools, training, etc.) |
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| Costs from defects found before delivery to the customer (e.g., rework, scrap, etc.) |
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| Costs associated with defects found after delivery to customer (e.g., warranty, recall, etc.) |
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Definition
Plan: identify problem an actions for improvement
Do: implement formulated plan
Check: monitor results
Act: take corrective action and institutionalize change |
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Definition
quality improvement through elimination of defects and variation
standard deviation: statistical measure o variation |
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Definition
define: determine critical quality control (CTQ) characteristics from customers perspective
measure: gather data on CTQ processes
analyze:determine cause of defects
Improve: modify processes
Control: ensure improvements are maintained |
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Term
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Definition
internationally accepted standards for quality management systems
ISO 9000 requires:
fulfilling the customer's quality requirements, and
meeting applicable regulatory requirements, while aiming to
enhancing customer satisfaction, and
achieving continuous improvement of its performance in pursuit of these objectives. |
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Term
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Definition
-Balancing Supply and demand:decouples difference in supply and demand requirements
-Buffers against uncertainties: variation in supply and demand are manages with buffer (safety) stock
-enabling economies of buying: price discounts or reduced shipping costs
-enabling geographic specialization: supply and demand locations vary |
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Definition
| opportunity cost, storage and warehouse management, taxes and insurance, obsolescence spoilage and shrinkage, material handling tacking and management |
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| Ordering and set up costs |
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Definition
purchase items: placing and receiving orders
make items: change over between items |
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| Ordering and set up costs |
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Definition
purchase items: placing and receiving orders
make items: change over between items |
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Definition
| lost sales or customer loyalty, expediting, schedule disruption |
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| lost sales or customer loyalty, expediting, schedule disruption |
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Definition
ratio of average inventory on-hand and level of sales
= Cost of goods sold / Average inventory at cost
= Net sales / Average inventory at selling price
= Unit sales / Average inventory in units |
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| High Inventory turnover advantages |
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Definition
| Advantages: fresh inventory from high sales, reduced risk or mark down from obsolescence, reduced total carrying costs, lower asset investment & higher productivity |
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| High Inventory turnover disadvantages |
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Definition
| stock outs may mean lower sales, increase costs from missing quantity requirements, increased ordering costs |
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Definition
length of time operations can be supported with inventory on-hand
Days of supply = Inventory/Daily demand |
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Definition
| ability to meet customer demand without a stock out |
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| no inventory is available |
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Definition
demand is beyond control of the organization
(car) |
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demand is driven by demand of another item
(tires) |
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| inventory levels are constantly monitored to determine when to place a replenishment order |
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Term
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Definition
sum of all relevant annual inventory costs
Holding costs: associated with storing and assuming risk of having inventory
Ordering costs: associated with placing orders and receiving supply
TAC = annual ordering cost + annual carrying cost |
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| Economic Order Quantity (EOQ) |
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Definition
| minimizes total acquisition costs; point at which holding and orders costs are equal |
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Definition
minimum level of on-hand inventory that triggers a replenishment
dt |
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| Assumptions underlying EOQ |
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Definition
No quantity discounts
No lot size restrictions
No partial deliveries
No variability
No product interactions |
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Term
| Determining best price break quantity |
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Definition
-identify price breaks/lot size restrictions
-calculate EOQ for each price/lot size
-evaluate viability of each option
-calculate TAC for each option
-select best TAC option |
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| Production order quantity |
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Definition
| most economical order quantity when units become available at rate produced |
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| determining the acceptable stock out risk level |
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Definition
| fixed time between inventory review, on-hand level is unknown during this uncertainty period |
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| single period inventory model |
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Definition
| items are ordered once, and have little left over value |
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Definition
| probability of meeting demand |
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Definition
| estimation of impact of changing the number of locations on inventory |
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Definition
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| using ABC analysis and reducing lead time |
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Definition
| balance inventory, lead time and service levels |
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| Implementing Inventory Models |
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Definition
| matching management system to specific items |
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Definition
| ranking inventory by importance |
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Term
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Definition
| small percentage of items have a large impact on sales, profit or costs |
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Term
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Definition
global trade item number: identification system for finished goods sold to consumers
part number: unique identifier used by a specific firm |
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| inventory record accuracy |
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Definition
| cycle counting: inventory is physically counted on a routine schedule |
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Term
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Definition
| variation increases upstream in the supply chain (from consumer to manufacturers) |
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Term
| Vendor-managed Inventory (VMI) |
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Definition
the vendor is responsible for managing inventory for the customer
Vendor monitors and replenishes inventory balances
Customer saves holding costs
Vendor has higher visibility of inventory usage |
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Term
| Collaborative planning, forecasting and replenishment (CPFR) |
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Definition
| supply chain partners sharing information |
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