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SCM 345 Final Study Notes

Terms in this set (77)

To improve a product's design for manufacturability a company might choose to:
Rely more on custom parts, rather than standard parts comment to multiple applications
Order winning criteria are those product and service characteristics that
create a competitive advantage for the company
On a product process matrix
a diagonal position corresponds to a proper match between the desired product variety and the necessary process flexibility
The ability to quickly ramp production up or down to match fluctuations in market demand is referred to as
Volume flexibility
Which of the following best describes a general difference between service organizations and manufacturing organizations
Services typically involve high customer contact while manufacturing typically involves low customer contact
Which of the following is NOT a general characteristic of companies that compete on the basis of cost?
Generally use process focused layouts
A make to stock product strategy occurs when
Products are built in anticipation of demand without knowing who will purchase the product
Simultaneously designing the product and the process to produce it is known as
Concurrent Engineering
Which process selection would most generally be used by a company that is focused on producing small quantities of custom products based on customer orders?
Batch Processing
A firm is considering producing a new product. The fixed cost associated with the new product is $750,000. The firm estimates the variable cost associated with the product to be $5.00 per unit. If the product is sold at a price of $8.00 per unit, then the breakeven quantity would be
Q = $750,000 / (8.00-5.00)
=250,000 units
Using cross functional teams so that product design and process development can be completed simultaneously is referred to as
Concurrent Engineering
According to Jonah, the book The Goal, regardless of the company there is only one basic goal for the company. That basic goal is
To make money
The product's flow time (also a customer's flow time) is equal to
The sum of the product's processing times and waiting times
A company wants to reduce its flow time while keeping its throughput rate, which is close to capacity, constant. Based on Little's Law the company should
Decrease work-in-process (WIP) inventory levels
When discussing productivity with Alex, Jonah tells him that he has arrived at the conclusion that productivity is
The act of bringing a company closer to its goal
Alex needs to define the goal of his company using business language that relates to the decisions he and his managers must make. Which of the following best describes how Alex expressed the goal of his company using these business terms?
Increase throughput while simultaneously reducing both inventory and operating expense
In his discussions with Jonah about the goal of the company three measures for expressing the goal are discussed and defined. One of these measurements is throughput. According to Jonah's definition, throughput is
The rate at which the system generates money through sales
Capacity Planning is best defined as
The process of establishing the output rate that can be achieved at a facility
A pizza parlor has a special oven that has been designed to bake 50 extra-large pizzas every day. Presently the oven is baking 40 extra-large pizzas every day. What is the oven's utilization relative to its design capacity?
= 40/50
=80%
Segmenting larger operations into smaller operating units with focused objectives is referred to as
A plant within a plant
Process capacity is the (related to question 7)
Bottleneck capacity
If, on average, a call center can process a call every 150 seconds, then the center's hourly service rate, µ, would be
=3,600/150
=24/hr
In waiting line analysis, the term jockeying refers to the event where
A customer switches between alternate queues in an effort to reduce waiting time
An immigration officer at Heathrow Airport in London can on the average process (serve) 15 arriving passengers every hour. If on the average 12 passengers arrive per hour at her station, then:
- The probability that an arriving passenger will have to wait for this immigration officer is
p = utilization = 12/15 = .8 = 80%
An immigration officer at Heathrow Airport in London can on the average process (serve) 15 arriving passengers every hour. If on the average 12 passengers arrive per hour at her station, then:
- The average number of entrants (passengers) in line waiting for the immigration officer is
Lq = 4 * .8 = 3.2
An immigration officer at Heathrow Airport in London can on the average process (serve) 15 arriving passengers every hour. If on the average 12 passengers arrive per hour at her station, then:
- On average, the amount of time, in minutes, spent by a passenger in the entire immigration system, waiting and being processed, would be
W = 1 / (15-12) = .3333 X 60 min = 20 minutes
An immigration officer at Heathrow Airport in London can on the average process (serve) 15 arriving passengers every hour. If on the average 12 passengers arrive per hour at her station, then:
- The probability that there are 4 or more people in the system
Probability of n or more in the system = (12/15)^4 = .4096
An immigration officer at Heathrow Airport in London can on the average process (serve) 15 arriving passengers every hour. If on the average 12 passengers arrive per hour at her station, then:
- The probability that the time spent waiting in line will exceed 20 minutes.
Prob queue waiting time exceeds t =
(12/15) [e (-15 (1-12/15) .3333)
= .8e^(-.9999)
= .2943

t = 20 min/60 min = .3333
Which one of the following statements concerning the psychology of waiting lines is NOT generally true?
Explained waits seem longer than unexplained waits
In acceptance sampling, the risk associated with the situation where the sample contains a greater percentage of defectives than the population (shipment) as a whole, thus causing a "good" shipment to be rejected is known as
The producer's risk

Acceptance sampling -
Sampling Error:
1) Good lot gets rejected - producer's risk
2) Bad lot gets accepted - consumer's risk
If a sample of 40 units of output found 500 defects, then the center line for monitoring the average number of defects per unit of output would be
C bar = average number of defects
c bar = 500/40 = 12.5
Twenty samples, with each sample consisting of 5 items, were randomly selected from a cereal manufacturer's production process to monitor the average cereal box fill weight. Based on the sampled items the average range was 0.075 oz. and the average of the sample means was 24 oz. If the sample results are used together to construct an -chart then the "look-up" factor for determining the 3-sigma upper control limit for the -chart would be
Sample size 5
A2 = .58
In statistical process control, variation, other than the natural, inherent variation, which can be clearly identified and possibly managed or eliminated is called
Assignable cause variation
In The Goal, Alex tells some of his plant managers "If we've got a Herbie, it's probably going to have a huge pile of work in process sitting in front of it" In this case, Herbie refers to:
A bottleneck
The relationship between demand and capacity means that
Alex should try to balance the flow of product through the plant with the demand from the market.
Jonah explains to Alex in the Goal that a bottleneck refers to
Any resource whose capacity is equal to or less than the demand placed upon it
While playing the match game on the hike, Alex begins to realize an important characteristic about balanced plant and inventory flows. That realization is
Inventory in a balanced plant moves through the process in waves rather than in manageable flows
One of the concepts that Jonah has taught Alex about the relationship between plant capacity and bottleneck operations is
The capacity of the plant is equal to the capacity of the bottlenecks
Non-Bottleneck
any resource whose capacity is greater than the demand placed upon it
In order to meet demand and make money, the plant Alex manages must find more capacity. In order to increase plant capacity
Alex must increase the capacity of only the bottleneck operations in his plant
During the hike Alex understands that the
Slowest moving boy scout in the troop determines the throughput
A major lesson learned in the goal is that an hour lost on the bottleneck
Is an hour lost for the entire plant
What explanation does Jonah give Alex for why it is impossible to perfectly balance capacity to demand?
Because of the combination of statistical fluctuations and dependent events
As he understands more about the operation of his plant Alex begins to realize that the flow of product through the plant is determined by
The bottleneck resources
Slide 36 - So how do you go about fixing the problem of keeping the non-bottleneck machines working at the same rate as the bottleneck?
Use a rope and a drum
Rope: Attach a rope from Herbie (bottleneck machine) to the kid at the front (assembly). The length of rope represents inventory.
Drum: Herbie tells the kid at the front to slow down or speed up (beats the drum). Need some kind of signaling or communication between assembly and the bottleneck.
Slide 37 -How is the rope and drum concept implemented in the plant?
Identified it takes about 2 weeks from when parts are released to the floor until they get to bottleneck.
Setup system that monitors when inventory is processed at the bottleneck. Material required 2 weeks later is then released to the floor.
Non-bottleneck parts are released according using the same principle but tied to assembly.
Burden Cost
The accounting rules:
Cost per part = raw material + direct labor + burden cost
Burden cost is all the indirect labor costs.
Burden = direct labor x burden factor
A manufacturing company is implementing Total quality Management. Which of the following would we LEAST expect to occur as TQM is implemented?
a. Additional inspectors hired to screen our defective products after they have been produced
b. Increased emphasis on identifying and correcting the root causes of quality problems
c. Formation of teams of employees for continuous improvement activities
d. Basic statistical training for employees who operate production machines so can use statistical quality control
Answer: A
A scatter diagram is a useful tool for
Determining whether there is a relationship between two variables
A quality improvement tool that employees a graphical representation of the process elements to analyze potential quality problems at their root cause is known as:
Ishikawa or Cause and Effect (Fishbone) Diagra
A product characteristic that is measured on a continuous scale is known as a
Variable characteristic
The quality costs associated with a failure at a customers site, including returns, repairs and recalls is an example of
External failure cost
A circular never ending problem solving process for continuous process improvement is known as
The Deming Wheel, or Plan, Do, Study, Act (PDSA)
A useful quality improvement tool for translating customer specification and customer preferences into the product design process is known as
Quality function development
Forecast methods based on judgment, opinion, past experiences, or best guesses are known as
Qualitative forecasting methods
What information is required of a simple exponential smoothing model?
The previous forecast, the current demand, and the smoothing parameter.
To increase the responsiveness of a single exponential smoothing forecasting model the forecasting analyst should
Increase the value of the smoothing parameter, alpha.
Over time, the forecast is too high more often than it is too low (Forecast errors are generally negative). This is referred to as
Forecast bias
A company uses a simple exponential forecasting model to predict the month by month demand for a product it sells. Suppose the forecast for this product for January was 250 and the actual January demand was 275. If a smoothing parameter, α = 0.20 is used, then the February forecast would be
D = 275 F = 250
Alpha =.20
F = .20 (275) + (1-.20) 250
= 255
In the previous question, suppose Big Al changes the order of his moving average from order N=4 to a moving average forecasting procedure of order N= 5. This change will make his forecasting procedure
More stable
A linear trend line was estimated using 24 months of demand data. If the estimated trend line is y = 576 + 42x then the linear trend forecast for the next month (period 25) would be
y = 576 + 42 (25)
Meeting demand fluctuations entirely by hiring and firing workers so that production closely matches demand each period is an example of a(n)
chase demand strategy
The primary cost associated with the level production strategy when compared to the chase production strategy is the
Cost of holding inventory
Demand for components that does not have to be forecasted but is derived (calculated) from the demand for the finished product is referred to as
dependent demand
An independent demand product is managed using the Economic Order Quantity (EOQ) model. The two major decisions for the inventory analyst managing this item are
Determining the magnitude and the timing of the replenishment order.
Which of the following statements regarding the periodic (fixed) interval inventory model is correct?
The time between replenishment orders is constant but the replenishment quantity can vary.
Break - Even Equation
QBE = Fixed Costs / (Selling Price -Variable Cost)
Little's Law
I = TR X FT
Efficiency Formula
Efficiency = Sum of Task Times / (# WS x Cycle Time)
Balance Delay
Balance Delay = 1 - Efficiency
Worker - Paced Process
Worker - Paced = time for first (sum of activity times) + (n-1) x CT
Time for Empty Process
Time for Empty Process =
time for 1st unit + (x-1) x bottleneck time
When process is not centered.. Cpk =?
Cpk = min { USL - u / 3 o ; u - LSL / 3 o}

Cp < 1 process is NOT capable
Cp = 1 process is exactly capable
Cp > 1 process is MORE than capable
Reliability:
C1 (.95) -> C2 (.90) -> C3 (.99)
B2 (.80)
=(.95) [.9 + (1-.9)(.80)] (.99)
= .92169
Average Inventory
Q/2
also
EOQ/2
Safety Stock
SS = z * oLT

oLT =standard deviation of lead time
CSL =
CSL = Prob (DDLT < or equal to ROP)
= prob (z < or equal to (ROP - uLT) / oLT )
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