All organizations including service firms such as banks, and hospitals, have a production function
OM is the set of activities that creates value in the form of goods and services by transforming inputs into outputs
father of scientific mgmt
Primary functions of all organizations
marketing, production/operations, and finance/accounting
operations functions in commercial bank
teller scheduling, check clearing, maintenance, collection
operations manager is involved in -
work scheduling to meet due dates, design of goods + services to satisfy customers, the quality of goods + services to satisfy customers, maintenance schedules
Scope of OM
Location of facilities, design of Goods and processes, managing quality
contributed to assembly line operations
General picture of operations
Input ---> transform ----> output
output/input .... can be multiple inputs
Meaningful measures are
changes in productivity from period to period
visual devices that show the duration of activities in a prj
On a specific project...
there can be multiple critical paths, all with exactly the same duration
critical path is...
If a specific project has multiple critical paths, all of them will have the same duration
the time an activity will take assuming very unfavorable events
Expected time calculated in PERT is
weighted average of a, m, b with m weighted 4x as heavily as a and b
Fact about PERT
The expected time estimate is calculated as t = (a+4m+b)/6
In a PERT network, non-critical activities that have little slack need to be monitored closely, why?
Because near critical paths could become critical paths with small delays in these activities
every network has at least one critical path
c) Mean absolute deivation for the forecast developed using the 3 year moving ave is 2.59 and for the 3 year weighted moving ave is 2.79. based on this info the better forecast is achieved using which one?
3 year moving average approach.
based on the comparison of MAD, the best forecast is achieved using the...?
Trend project method
are rarely perfect
forecasts are usually classified by time horizon into three categories
short range, medium range, and long range
a forecast with a time horizon of about 3 months to 3 years is typically called a
medium range forecast
forecasts used for new product planning, capital expenditures, facility location or expansion, and R&D typically utilize a
long range time horizon
forecasts are based on...
the assumption that the analysis of past demand helps predict future demand
gradual movement in time series data over time
time series that assumes that demand in the next period will be equal to the most recent periods demand
this time series model uses past forecasts and past demand data to generate a new forecast
the following smoothing constants would make an exponential smoothing forecast equivalent to a naïve forecast
the primary purpose of the mean absolute deviation (MAD) in forecasting is to
measure frequency accuracy
for a given product demand, the time series trend equation is 53-4x. The negative sign on the slope of the equation is an indication that...
product demand is declining
A fundamental distinction between trend projection and linear regression is that
in trend projection the independent variable is time, in linear regression the independent variable need not be time, but can be any varaible with explanatory power
The last 4 weekly values of sales were 80, 100, 105, and 90 units. The last four forecasts were 60, 80, 95 and 75 units.
these forecasts illustrate BIAS
This expresses the error as a percent of the actual values, undistorted by a single large value
regression with time as the independent variable, slope of the line is the trend, can forecast more then one period into the future
decision tables are used when...
future is uncertain
expected in decision tables is used when..
situation is repeated over and over
conservative or pessimistic
optimistic or desperate
expected value of perfect info
maximum increase in expected value if outcome is known in advance
decision trees are used when..
multiple sequential decisions must be made
first step in decision making process is
clearly define the problem
last step in decision making process is
implement the decision
an occurrence or situation over which the decision maker has no control is called a(n)...
state of nature
A tabular presentation that shows the outcome for each decision alternative under the various possible states of nature is called a...
The decision criterion that would be used by an optimistic decision maker solving a problem under conditions of uncertainty would be the...
A decision maker who uses the maximin criterion when solving a problem under conditions of uncertainty is...
The difference between the expected payoff under perfect information and the maximum expected payoff under risk is...
expected value of perfect info
percentage of defective items in a batch
x bar chart
measurement, range of std dev and range!
number of defects per item
control charts for variables are based on data that come from....
averages of small samples
The number of defects after a hotel room cleaning (sheets not straight, smears on mirror, missed debris on carpet) should be measured using a(n)
The number of late insurance claim payouts per 100 should be measured with a(n)
An x bar control chart was examined and no data points fell outside of the limits. Can this process be considered
no there could be a pattern, and the R chart must be checked
Statistical process control charts display...
upper and lower limits for process variables or attributes, and signal when a process is no longer in control
Jars of pickles are sampled and weighed. Sample measures are plotted on control charts. The ideal weight should be...
x bar and r charts
The usual purpose of an R chart is to signal whether there has been a ...
gain or loss in dispersion
According to the text, the most common choice of limits for control charts is usually...
+ or - std dev
p charts can have lower control limits at...
The statistical process chart used to control the number of defects per unit of output is the
The c chart signals whether there has been a
change in number of defects per unit
A manufacturer uses statistical process control to control the quality of the firms products. Samples of 50 of product A
P chart for A, C chart for B
A nationwide parcel delivery service keeps track of the number of late deliveries (more than 30 minutes past the time promised to clients) per day. WHAT CHART
is used to determine whether to accept or reject a lot of material based on the evaluation of a sample
An acceptance sampling plans ability to discriminate between low quality lots and high quality lots is described by
an operating characteristics curve
An operating characteristics curve shows
how the probability of accepting a lot varies with the population percent defective
25) Producers risk is the probability of
rejecting a good a lot
type 1 error occurs when..
a good lot is rejected
A Type II error occurs when
a bad lot is accepted
An acceptance sampling plan is to be designed to meet the organizations targets for product quality and risk levels. Which of the following is true?
AQL, LTPD, α and β collectively determine n and c
=actual output / design capacity
= actual output / effective capacity
Utilization will always be lower than efficiency because
effective capacity is less then design capacity
Adding a complementary product to what is currently being produced is a demand management strategy used when
The existing product has seasonal or cyclical demand
break even =
total revenue = total cost
While fixed costs are ordinarily constant with respect to volume
they can "step" upward if volume increases result in additional fixed costs
these costs would be incurred even if no units were produced?
building rental costs
is it balanced when talking about transportation?
total demand = total supply
Manufacturers may want to locate close to their customers, if the transportation of finished goods is expensive or difficult
The graphic approach to location break-even analysis displays the range of volume over which each location is preferable
this is not one of the top considerations in choosing a country for a facility location -
factor rating method
community attitudes, zoning restrictions, and quality of labor force are likely to be considered in this location decision methods
factor rating analysis
This method considers intangible costs related to a location decision -
On the crossover chart, where the costs of 2 or more location alternatives have been plotted, the quantity at which 2 cost curves cross is the quantity at which
total costs are equal to two alternative locations
a regional bookstore chain is about to build a distribution center that is centrally located for its eight retail outlets. It will most likely employ this following tool analysis -
center of gravity model
this is a location analysis technique typically employed by a manufacturing organization -