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Operations Management- Ch 1-3

Terms in this set (134)

Operations Management
The systematic design, direction, and control of processes that transform inputs into services and products for internal, as well as external, customers.
Process
Any activity or group of activities that takes one or more inputs, transforms them, and provides one or more outputs for its customers.
Operation
A group of resources performing all or part of one or more processes.
Supply Chain
An interrelated series of processes within and across firms that produces a service or product to the satisfaction of customers.
Supply Chain Management
The synchronization of a firm's processes with those of its suppliers and customers to match the flow of materials, services, and information with customer demand.
External Customers
A customer who is either an end user or an intermediary (e.g. manufacturers, financial institutions, or retailers) buying the firm's finished services or products.
Internal Customers
One or more employees or processes that rely on inputs from other employees or processes to perform their work.
External Supplier
The businesses or individuals who provide the resources services, product, and materials for the firm's shot-term and long-term needs.
Internal Suppliers
The employees or processes that supply important information or materials to a firm's processes.
Nested Process
The concept of a process within a process.
Core Process
A set of activities that delivers value to external customers
Supplier Relationship Process
A process that selects the suppliers of services, materials, and information and facilitates the timely and efficient flow of these items into the firm.
New Service/product development process
a process that designs and develops new services or products from inputs received form external customer specifications or from the market in general through the customer relationship process.
Order fulfillment process
a process that includes the activities required to produce and deliver the service or product to external customer.
Customer Relationship Process
A process that identifies, attracts, and builds relationships with external customers and facilitates the placement of orders by customers, sometimes referred to as customer relationship management.
Support Process
A process that provides vital resources and inputs to the core processes and therefore is essential to the management of the business.
Supple Chain Process
Business processes that have external customers or suppliers
Operations Strategy
The means by which operations implements the firm's corporate strategy and helps to build a customer-driven firm.
Core Competencies
The Unique resources and strengths that an organization's management considers when formulating strategy.
Lead Time
The elapsed time between the receipt of a customer order and filling it.
Competitive priorities
The critical dimensions that a process or supply chain must possess to satisfy its internal or external customers, both now and in the future.
Competitive Capabilities
the cost, quality, time, and flexibility dimensions that a process or supply chain actually possesses and is able to deliver.
Time Based Competition
A Strategy that focuses on the competitive priorities of delivery speed and development speed.
Order Winner
A criterion customers use to differentiate the services or product of one firm from those of another
Order Qualifier
Minimal level required from a set of criteria for a firm to do business in a particular market segment. '
Low Cost Operations - cost of acquiring inputs must ve kept to a minimum to allow for competitive pricing
...
Top Quality
New services must be carefully designed.
Consistent Quality
quality of the inputs must adhere to the required specification. In addition, information provided to suppliers must be accurate
Delivery Speed
Customers want immediate information regarding flight schedules and other ticketing information
On time Delivery
Inputs must be delivered to tight scedules
Development Costs
it is important to get the market fast to preempt the competition.
Customization
The process must be able to create unique services
Variety
Many different inputs must be acquired.
Volume Flexibility
The process must be able to handle variations in supply quantities efficiently
Core Processes
Low Cost Operations, Top Quality, Consistent Quality, Delivery Speed, On time Delivery, Development Speed, Customization, Variety, Volume Flexibility.
Productivity
The value of outputs produced divided by the values of input resources.
Multifactor Productivity
is an index of the output provided by more than one of the resources used in production.
Break Even quantity
The volume at which total revenues equal total costs
Break Even Analysis The use of the break even quantity; it can be used to compare processes by finding the volume at which two different processes have equal total costs
...
Variable Costs
The portion of the total cost that varies directly with volume of the output
Fixed Costs
The portion of the total cost that remains constant regardless of changes in levels of output
Sensitivity Analysis
A technique for systematically changing parameters in a model to determine the effect of changes.
Preference Matrix
A table that allows the manager to rate an alternative according to several performance criteria
Decision Theory
A general approach to decision making when the outcomes associated with alternatives are often in doubt
Payoff Table
A table that shows the amount for each alternative if each possible event occurs
Process Strategy
The pattern of decisions made in managing process so that the will achieve their competitive priorities.
Process Analysis
The documentation and detailed understanding of how work is performed and how it can be redesigned.
Process Structure
the Process type relative to the kinds of resources needed, how resources are partitioned between them, and their key characteristics
Layout
The physical arrangement of operations or departments relative to each other.
Customer Involvement
The ways in which customers become part of the process and the extent of their participation
Resource Flexibility
The ease with which employees and equipment can handle a wide variety of products, output levels, duties, and functions.
Capital Intensity
The mix of equipment and human skills in a process
Customer Contact
Then extent to which the customer is present, is actively involved and receives personal attention during the service process.
Process Divergence
The extent to which the process is highly customized with considerable latitude as to how its tasks are performed.
Flexible Flow
The customers, material, or information move in diverse ways, with the path of one customer or job often crisscrossing the path that the next one takes.
Line Flow
The customers, materials, or information move linearly from one operation to the next, according to a fixed sequence.
From Office
A process with high customer contact where the service provider interacts directly with the internal or external customer.
Hybrid Office
A process with moderate levels of customer contact and standard services with some options available
Back Office
A process with low customer contact and little service customization.
Process Choice
A way of structuring the process by organizing resources around the process or organizing them around the products.
Job Process
A process with the flexibility needed to produce a wide variety of products in significant quantities, with conservable divergence in the steps performed.
Batch process
A process that differs from the job process with respect to volume, variety, and quantity.
Line Process
A process that lies between the batch and continuous processes on the continuum; volumes are high and products are standardized, which allows resources to be organized around particular products.
Continuous flow process
The extreme end of high volume standardization production and rigid line flows, with production not starting and stopping for long time intervals.
Design to Order Strategy
A Strategy that involves designing new products that do not currently exist, and then manufacturing them to meet unique customer specifications
Make to Order Strategy
A strategy used be manufacturers the make products to customer specifications in low volumes.
Assemble to order
A strategy for producing a wide variety of products from relatively few subassemblies and compenents after the customer orders are received.
Postponement
The strategy of delaying final activities in the provision of a product until the orders are received.
Mass Customization
The strategy that uses highly divergent processes to generate a wide variety of customized products at reasonably low costs
Make to Stock Strategy
A strategy that involves holding items in stock for immediate delivery, thereby minimizing customer delivery times.
Mass Production
A term sometimes used in the popular press for a line process that uses the make to stock strategy.
Advantages of Customer Involvement
Increase net value to customer. Better quality, faster delivery, greater flexibility, and lower costs. Coordinate across supply chain.
Disadvantages of customer involvement
disruptive, making the process less efficient. Managing the timing and volume of customer demands become more challenging if the customer is physically present. Interpersonal skill necessary. Requires many small decentralized facilities.
Flexible Workforce
a workforce whose members are capable of doing many tasks, either at their own workstations or as the move from one workstation to another.
Automation
A system, process, or piece of equipment that is self-acting and self-regulating.
Fixed automation
A manufacturing process that produces one type of part or product in a fixed sequence of simple operations.
Flexible (or programmable) automation
A manufacturing process that can ve changed easily to handle various products.
Industrial Robot
Versatile, computer controlled machine programmable to perform various tasks.
Economies of scope
Economies that reflect the ability to produce multiple prodects more cheaply in combination than separately
Plants within plants (PWPs)
Different Operations within a facility with individualized competitive, processes, and work forces under the same roof.
Focused Factories
The result of a firm's splitting large plants that produced all the company's products into several specialized smaller plants.
Reengineering
The fundamental rethinking and radical redesign of processes to improve performance dramatically in terms of cost, quality, service, and speed.
Process Improvement
The systematic study of the activities and flows of each process to improve it.
Metrics
Performance measures that are established for a process and the steps within it.
Green Belt
An employee who achieved the first level of training in a Six Sigma program and spends part of his or her time teaching and help teams with their projects.
Black Belt
An employee who reached the highest level of training in a Six Sigma program and spends all of his or her time teaching and leading teams involved in Six Sigma projects.
Master Black Belt
Full time teachers and mentors to several black Belts.
Flow Chart
A Diagram that traces the flow of information, customers, equipment, or materials through the various steps of a process.
Swim Lane Flowchart
A visual representation that groups functional areas responsible for different suppresses into lanes it is most appropriate when the business process spans several department boundaries
Service Blueprint
A special flowchart of a service process that shows which steps have high customer contact.
Time Study
A work measurement method using a trained analyst to perform four basic steps in setting a time standard for a job or process: selecting the work elements (or nested processes) within the process to be studied, timing the elements, determining the sample size, and setting the final standard.
Elemental Standard Data
A database of standards compiled by a firm's analysts for basic elemenets that they can draw on later to estimate the time required for a particular job which is most appropriate when products or services are highly customeized, job processes prevail, and process divergence is great.
Predetermined Data Method
A database approach that divides each work element into a series of micromotions that make up the element. The analyst the consults a published datavased that contains the normal times for the full array of possible micromotions.
Work Sampling
A process that estimates the proportion of time spent by people or machines on different activities, based on observations randomized over time.
Learning Curve
A line that siplays the relationship between processing time and the cumulative quantity of a product or service produced.
Process Chart
An organized way of documenting all the activities performed by a person or group of people, at a workstation, with a customer, or on materials.
As a functional area of a business, Operations translates materials and services into outputs. T/F
True
A core process is a set of activities that delivers value to external customers.T/F
True
Competitive priorities are the means by which operations implements the firm's corporate strategies.T/F
False
Contact with the customer is usually higher in a manufacturing process than in a service process. T/F
False
A business focusing on increasing the efficiency of its operations is more directly addressing:
Low-cost.
Regardless of how departments like Accounting, Engineering, Finance, and Marketing function in an organization, they are all linked together through
processes.
operations management is part of a production system that can be described in the following manner: Organization: inputs>processes>outputs. Which one of the following correctly describes a production system?
Furniture manufacturer: wood>sanding>chair
Manufacturing processes usually have
physical, durable output
At the process level, it is much easier to distinguish whether the process is providing a service or manufacturing a product.
True
A process produces 5000 units of output that yield $6 per unit. Resources contributed to this output are 200 hours of labor at $15 per hour, materials at $700 and overhead at $300. What is the labor productivity?
25 units per hour
A manufacturer that produces standard products in large volumes is likely to be using a(n):
...
make
to-stock strategy
A job process should be preferred when
customization is high and volume is low
The first unit of production takes 20 hours to produce and the learning rate is expected to be 90 percent. How long will it take to produce the fourth unit?
greater than 15.0 hours but less than or equal to 18.0 hours.
A process that is primarily back office is
the payroll clerk that calculates your paycheck.
One of the advantages of customer involvement in a service process is that
...
if the customers are price sensitive, they will feel they are receiving more value
...
Combining a line process with the make
to-stock strategy is sometimes called:- mass production
Front offices typically emphasize
...
top quality and customization
...
Which one of the following statements about flexible automation is best?
...
It is an automatic process that can be reprogrammed to handle various products.
...
Which of the following statements regarding capital intensity in NOT true?
Decreased amounts of automation increase capital intensity.
The product
process matrix used to analyze manufacturing operations brings together the elements of- customization, volume, and process.
Process Capability
The ability of the process to meet the design specifications for a service or product.
ISO9001:2008
A set of standards governing documentation of a quality program.
Type II error
An error that occurs whe the employee concludes that the process is in control and only randomness is present, when actually the process is out of statistical control.
Six Sigma
A comprehensive and flexible system for achieving, sustaining, and maximizing business success by minimizing defects and variability in processes.
Continuous improvement
The philosophy of continually seeking ways to improve processes based on a Japanese concept called kaizen.
Five samples of size 4 were taken from a process. A range chart was developed that had LCLr = 0 and UCLr = 2.50. Similarly, an average chart was developed with the average range from the five samples, with LCLx = 15.0 and UCLX = 24.0. The ranges for each of the five samples were 1.75, 2.42, 2.75, 2.04, and 2.80, respectively. The values of the sample average for each sample were 19.5, 22.3, 17.4, 20.1, and 18.9, respectively. What can you tell management from this analysis?
The process variability is out of control, but the process average is in control.
Process capability determines whether a process is capable of producing the product or services that customers demand.T/F
True
The UCL and LCL for an x bar chart are 25 and 15 respectively. The central line is 20, and the process variability is considered to be in statistical control. The results of the next six sample means are 18, 23, 17, 21, 24, and 16. What should you do?
Nothing; the process is in control
When should complete inspection be used?
When the cost of product failure is high relative to the inspection costs
The investment a company makes in training employees to perform their duties and redesigning products and processes to improve them would be categorized as prevention costs.T/F
True
A hotel tracks the number of complaints per month. When the process is in control, there is an average of 35 complaints per month. Assume that a 2
sigma control limit is used. What is the upper control limit? HINT: p-charts like you used in the simulation!- More than 45 but less than or equal to 55
Which of the following can be used to eliminate "common" causes of variation?
They cannot be eliminated.
When considering the plan
do-study-act cycle for problem solving, evaluating how closely a project's results correspond to the initial goals set for the work is part of which step?- Study
An assignable cause of variation in the coin catapult simulation might be placement of the pen (fulcrum) relative to the ruler used to flip the coin. T/F
True
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