Operations Management Mid-term

Production

Creation of goods and services.

Operations management

Set of activities that creates value by transforming inputs into outputs.

Input

Resources used to produce goods or services.

Output

The final product or service created from a process.

Productivity

Measure of process involvement, calculated as output relative to input.

Single-factor productivity

Measured as output per unit of a single input, such as labor, material, or energy.

• output/material or energy

Multifactor productivity

Measured as output divided by the sum of multiple inputs, like labor, material, capital.

• output/ labour+material+energy+capital+miscellaneous

Efficiency

Doing the thing right at the lowest cost, shortest time, and highest quality.

Effectiveness

Doing the right thing that adds value, focused on important objectives.

Forecasting

Predicting future trends or values based on historical data.

Quantitative forecasting

Forecasting based on numerical data and statistical methods.

Qualitative forecasting

Forecasting that relies on expert opinions and non-numerical data.

Mean absolute deviation (MAD)

The average of the absolute errors between predicted and observed values.

Weighted moving average

A forecast method that applies different weights to past observations.

Exponential smoothing

A forecasting technique that adjusts predictions based on previous forecast errors.

Supply chain management

Management of flows of goods, services, information, and finances in a supply chain.

Make/Buy considerations

Deciding whether to produce in-house or purchase from external suppliers.

Purchase requisition

An internal document requesting the purchasing department to buy goods or services.

Purchase order (PO)

A document issued to a supplier to order goods or services.

RFQ (Request for Quotation)

A document requesting suppliers to provide a price for goods or services.

RFP (Request For Proposal)

A document inviting suppliers to submit proposals for providing goods or services.

Just-in-Time (JIT) inventory

Inventory management strategy where materials are ordered just as needed in production.

ABC analysis

Inventory classification method categorizing inventory into three classes based on value.

Inventory turns

A measure of how often inventory is sold or used over a period.

Economic Order Quantity (EOQ)

The optimal number of units to order that minimizes total inventory costs.

Stock-out

A situation where inventory is insufficient to meet demand.

Bullwhip effect

Fluctuations in demand becoming larger up the supply chain.

Outsourcing

Procuring goods or services from external suppliers.

Advantages of outsourcing

Includes cost savings, gaining outside expertise, and focusing on core competencies.

Disadvantages of outsourcing

Includes loss of control, increased transportation costs, and potential quality issues.

Inventory holding costs

Costs associated with storing unsold goods.

Ordering costs

Costs incurred in ordering inventory and receiving supplies.

Cycle counting

A method of auditing inventory through regular physical counts.

Re-order point

The inventory level at which new stock must be ordered.

Stock-out cost

The cost resulting from running out of stock, which can affect sales and customer satisfaction.

Delphi method

A forecasting technique using expert opinions to reach a consensus.

Factors affecting mission

Elements such as customers, environment, values, profitability, and public image influencing an organization's direction.

Main strategies of competitive advantage

Differentiation, cost leadership, and quick response strategies.

Characteristics of service

Intangible, produced and consumed at the same time, often requiring high customer interaction.

Types of holding costs

Include storage costs, insurance, spoilage costs, and opportunity costs associated with unsold inventory.

Types of ordering costs

Include costs incurred during the process of ordering inventory, such as supplier communication costs, delivery charges, inspection and handling costs, and administrative expenses tied to placing the order.