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Operations Exam 1
Terms in this set (41)
Any activity or group of activities that takes one or more inputs, transforms them, and provides one or more outputs for its customers
A group of resources performing all or part of one or more processes
An interrelated series of processes within and across firms that produces a service or product to the satisfaction of customers
Physical, durable output
Output can be inventoried
Low customer contact
Long response time
Quality easily measured
Intangible, perishable output
Output cannot be inventoried
High customer contact
Short response time
Quality not easily measured
The Role of Management
Understand implications of metrics and drive organizational improvement
Minimum level required from a set of criteria for a firm to do business in a particular market segment
A criterion customers use to differentiate the services or products of one firm from those of another.
The volume at which total revenues equal total costs
Quantitative analysis to compare processes by finding the volume at which two different processes have equal total costs.
The fundamental rethinking and radical redesign of processes to improve performance dramatically in terms of cost, quality, service, and speed
The systematic study of the activities and flows of each process to improve it
Most changes are in this category.
A systematic procedure that measures a firm's processes, services, and products against those of industry leaders
Why reinvent the wheel when you can learn from others?
May also "benchmark" against an internal best practice - many times this is better and faster
A term used by customers to describe their general satisfaction with a service or product
Any instance when a process fails to satisfy its customer
Costs associated with preventing defects before they happen (built in quality)
Costs incurred when the firm assesses the performance level of its processes (ex: inspection)
Internal Failure costs
Costs resulting from defects that are discovered during the production of a service or product (rework and scrap)
External Failure costs
Costs that arise when a defect is discovered after the customer receives the service or product
Ethical Failure Costs
Societal and monetary costs associated with deceptively passing defective services or products to customers
The application of statistical techniques to determine whether a process is delivering what the customer wants.
Used in SPC to detect defective services or products or to identify that the process has changed and will deviate from specifications unless something is done to correct the situation.
Variation of Outputs
No two services of products are exactly alike because the processes used to produce them contain many sources of variation, even if the processes are working as intended.
Service or product characteristics that can be measured
Service or product characteristics that can be quickly counted for acceptable performance
The purely random, unidentifiable sources of variation that are unavoidable with the current process
Assignable cause (or Special Cause)
- Any variation-causing factors that can be identified and eliminated
The ability of the process to meet the design specification for a service or product.
Process Capability Ratio
Measure of process variability against the allowable range.
It is the tolerance width divided by six standard deviations
Process Capability Index
An index that measures the potential for a process to generate defective outputs relative to either upper or lower specifications
Use Output Measures when
The firm uses high volume, standardized processes
Relatively small number of products
Also good for measuring individual processes within a firm
Use Input Measures when
The firm uses low-volume, flexible processes
High variety and product mix
Greatest level of output that can be sustained for a longer period of time
the amount of reserve capacity a process uses to handle sudden increases in demand or temporary losses of production capacity.
It measures the amount by which the average utilization (in terms of total capacity) falls below 100 percent.
Large variation in demand
Cheaper to have additional staff on hand than to lose customers due to long lines
Changing product mix
Amount of effort changes as the mix of product or services changes
Unstable supply chain
Need to respond when material is available
Normal operating issues
Absenteeism, vacations, holidays, may offset the need for high overtime
limited number of customers, such as machines for maintenance. There is a _____ number.
where the number in the system do not appreciably affect the rate of generation of new customers. Ex: ordering from Amazon
A (simple and) fundamental law that relates the number of customers in a waiting-line system to the arrival rate and waiting time of customers.
Shows relationship with work-in-process (L), arrival rate ( ), and processing times (W).
Can be used for waiting lines and in manufacturing improvements
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