FINALS SCHM

what are the two dimensions of quality?

product quality and service quality

product quality

performance
aesthetics
special features
conformance (how closely it fits specifications)
reliability
durability
serviceability
perceived quality (subjective customer evaluation)

service quality

convenience
reliability
responsiveness
time
assurance
courtesy
tangible
consistency

what are the 3 types of quality?

quality of:
design, conformance, performance
(DCP)

craft performance

when 1 worker made product start to finish
quality is under 1 person's control

mass production

when worker made small part of the product
quality affected by large # of ppl
nobody had control of quality so nobody could be singled out for being responsible for quality

quality control school of thought

attempted to regain “control of quality” that was lost w mass production

scientific management approach was taken

statistical process control was invented

philosophy of quality control school of though

every process is subject to variation

process variation produces quality variation in output

quality variation should be detected and filtered out

quality assurance school of thought

alternative to quality control school

design/build quality into a product or service

“Do it right the first time, every time”
“Low quality is costly”
“Quality is everybody’s responsibility”

philosophy of quality assurance school of thought

find and eliminate sources of process variation

the irony was that the staggering success of the Japanese were built on...

principles of an American, a management intellectual, largely ignored in his own country

Deming is

statistician by training

when America joined the WWII,

Deming's skills were used to train managers who had to run the production lines for war effort

Deming's work methods are baesd on

rigorous application of statistics

what was his key message?

eliminate waste

Americans sent consultants to advise on

better management methods

Japanese were afraid of

they had established a reputation for shoddy quality and cheap price and that it was irreverseable

"when I talked w management in Japan

I was talking to 80% of the capital"

despite the dry stats, Deming's stats are very sensitive to

ppl

after WWII, even if the quality of American goods were only adequate or even questionable

there was nowhere else to go and dictums of Deming were forgotten

total quality management (TQM)

philosophy that involves everyone in org in a continual effort to improve quality and achieve customer satisfaction

FOCUS on EVERYONE, CONTINUAL IMPROVEMENT, CUSTOMER SATISFACTION

what is the input, process, and output in statistical methods?

input + output = acceptance sampling
process = statistical process control

what does statistical process control (SPC) measure?

quality of conformance

what is the problem with SPC?

production output is variable

questions for SPC

how much variability is acceptable?
how much variability is normal?
how much variability is inevitable?
where does variability come from in the first place???

sources of variability

common variability (random) or assignable variablitiy

common variability

natural variation in the output of a process caused by countless minor factors

assignable variability

non-random variation whose causes can be identified and eliminated

what 3 things do you do for SPC?

monitor a process (collect data)

identify an acceptable/normal range

alert when process goes out of this range

what is a control chart

time-ordered plot of sample stats used to distinguish between random and nonrandom variability

control charts rely on

random sampling

control charts establishes

upper and lower control limits just like hypothesis testing

2 types of errors in control charts

type 1 and type 2

when you conclude "out of control" when the process is in control = type 1 error (producer's risk)

when you conclude "in control" when the process is out of control = type 2 error (customer's risk)

2 control charts for variables

mean control chart
range control chart

2 control charts for attributes

p-chart and c-chart

mean control chart is used to

monitor central tendency of process

mean control chart can be calculated by using

standard deviation and range (R)

p-chart

control chart for attributes used to monitor the proportion of defective items in a process

p =

# of defective items/ # of total items

c-chart

control chart for attributes used to monitor the number of defects per unit

c =

# of total defects/ # of total items

run

sequence of observations w a certain characteristic

run test

test for patterns in a sequence

if process is stable

there should be no patterns in control chart

if process is not stable

there should be trends/patterns/shifts in mean

acceptance sampling was developed by who

US military in WWII for testing bullets

main idea of acceptance sampling is

take a random sample from the lot

test/appraise sample

accept or reject whole lot based on sample result

acceptance sample can be use with

attributes or variables

acceptance sampling is employed when

testing is destructive
cost of 100% inspection is very high
100% inspection takes too long

acceptance sampling does not

assess the exact quality of the lot
assess the performance of production process

single sampling plans are denoted as

(n,c) plans
n = sample size n
c = lot is rejected if there are more than c defectives

single sampling plans are the most

common and easiest plans to use although not the most efficient in terms of average number of samples needed

example of acceptance sampling

lot size = 100 pieces
sample size = 20 pieces

producer's goal (acceptance quality level) = 5% (5/100)

customer's goal (lot tolerance percentage defective) = 10% (10/100)

rule: accept if sample has 0 or 1 defective part, reject if sample has more than 1 defective part

transportation infrastructure

supports flow of our nations economy

transport functionality primarily consists of

product movement services

2 elements in movement of inventory to specified destinations

restrictive element and flexible element

restrictive element

in-transit inventory is "captive", usually inaccessible during transportation

flexible element

inventory can be diverted during shipment to a new destination

transportation consumes 3 different things

time, financial, and environmental resources

transportation is more than what percent of cost of logistics

60

transportation is one of the largest consumers of what

oil and gas in US

transportation impacts 2 things

traffic congestion
noise and air pollution

transport functions as what for products while in a vehicle

storage services

in-transit inventory is captive in

transport system

managers strive to do what with in-transit inventory

minimize

products can also be stored in

vehicles at origin or destination (trailers, trucks, railcars)

storing products in vehicles at origin or destination is usually

more expensive than traditional warehousing bc mut pay for rental or demurrage charges on vehicles usef for storage

what are the transportation stakeholders involved in transportation

consignor (shipper)
consignee (receiver)
carrier and agents
government
internet (marketplace)
public

what are the interests of consignor (shipper) and consignee (receiver)

have a common interest in moving goods from origin to destination within a given time at the lowest cost

what is the interest of carriers

desire to maximize their revenue for movement while minimizing associated costsa

what are the interests of agents (brokers and freight forwarders)

to facilitate carrier and customer matching

what are the interest of government

desire a stable and efficient transportation environment to support econ growth

what are the interest of the public

concerned w transportation accessibility, expense, standards for security, safety, and environment

what are the interests of internet

new marketplace for transportation
replaces phone, fax, other tech

transportation structure consists of

rights-of-way
vehicles
carriers operating within 5 basic modes

5 basic transportation methods

rail
highway
water
pipeline
air

mode is

basic transportation method

motor carriers

trucks
exceeds all other modes combined in domestic freight market

expanded rapidly since end of WWII

benefits include: speed of transit, ability to operate door-to-door

more efficient than rail for small shipments over short distances

dominate freight moves under 500 miles and from manufacturing to wholesalers to retailers

many companies run their own truck fleets (like WalMart)

railroads

historically handled the largest number of ton-miles within continental US

track mileage declined by over half since 1970

traffic shifted from broad range of commodities to hauling specific freight in traffic segments: from carload, intermodal, container

new tech include articulated cars, unit trains, double-stack cars

water carriers

oldest form of US transport dating back to birth of nation
percentage of ton-miles stayed between 19-30% since 1960

ranks between rail and truck in fixed cost

rights of way (canals and rivers) maintained by federal gov

pipeline

accounts for 68% of all crude and petroleum ton-mile movements in US

highest fixed costs and lowest variable costs of all modes

unique transportation mode:
can operate 24/7
no emissions
no empty container/vehicle to return

not flexible and limited to liquids and gases

air carriers

newest and least utilized transport mode for freight

accounts for only 1% of intercity ton-miles

fastest

fixed cost is 2nd lowest but variable costs are extremely high

air-shipped products have high value, high priority, or extreme perishability

piggyback

most widely used form of intermodal coordination

trailer of container is hauled by truck at origin and destination (railcar hauls for portion of intercity travel)

2 types of piggyback

trailer on a flatcar (TOFC)
container on a flatcar (COFC)

containerships

oldest form of intermodal transport

loads a truck trailer, railcar/container onto barge or ship for the line-haul movement on inland waterways

land bridge concept moves containers in a combo of sea and rail transport (common for containers moving from Europe to Pacific Rim)

transfer of freight between modes often requires handling containers and imposition of duties (function of ports: make this seamless and fast)

port throughput is big concern for supply chain managers

air-express

coordinated air-truck is commonly used for premium package services

many smaller cities lack airfreight services

costs can be leveraged w delivery time by linking the modes

non-operating intermediaries

companies that do not operate their own transportation assets but provide services to match shippers that need transportation service with companies that have transportation capacity

DONT OWN EQUIPMENT

3 types of non-operating intermediary

freight forwarders
shipper associations and agents
brokers

freight forwarders

consolidate small shipments from various customers into bulk shipment for a common carrier for transport

shipper associations and agents

groups of shippers who employ an agent to consolidate purchases and shipments for them

brokers

intermediaries that coordinate transportation arrangements for shipper, consignees and carriers, operating on a commission basis

mode and carrier selection

lowest rate does not necessarily translate into the most economical transportation service

selection process

1. problem recognition
2. search process
3. choice process
4. post-choice evaluation

problem recognition

identify transportation service requirements:
when, where, how much to ship
support services (tracking, documentation, etc)
interactions, transactions, relationships

assign priorities, weights, importance

assess current and future needs

translate service requirements into selection criteria

sample selection criteria

cost
transit time and reliability
capability
accessibility
security
speed
availability
dependability
capability
frequency

search process

gather market intelligence about all possible carriers

identify main groups of providers (service, reputation, capabilities, past performance, references)

narrow down all potential candidates to a short-list

important considerations for search process

transit time reliability
negotiated rates
consolidating shipments among a few carriers
financial stability
sales rep
special equipment

choice process

finalize RFQ/RFP

obtain responses from the providers in the short list

evaluate responses, follow up if necessary

make final choice for transportation service provider

negotiate and sign agreement

post-choice evaluation

establish performance criteria for transportation services

establish monitoring processes

tie payment to performance

periodic review of relationship between shipper and carrier

continuous improvement

bill of lading

shows title to goods, name and address of consignor and consignee

summarizes goods in transit and their class rates

electronic bills now appearing where carrier and shipper have an established strategic alliance

note:
articles of extraordinary value must be in tariff or carrier can refuse carriage

explosives require written notice

no recourse on freight bills to shipper

substitute bill of lading same terms as original

water carriers liable for loading and seaworthiness of vessel

alterations to bills must be initialed by carrier