Operations Management Lecture Review

100 question-and-answer flashcards covering key terms, definitions, and concepts from the Operations Management lecture notes.

What is the definition of production in operations management?

The creation of goods and services.

What does Operations Management (OM) encompass?

Activities that relate to the creation of goods and services through the transformation of inputs to outputs.

Name the three core functions every organization performs to create goods and services.

1) Marketing, 2) Production/Operations, 3) Finance/Accounting.

Give one reason why students study Operations Management.

To learn how people organize themselves for productive enterprise (other valid answers: to learn how goods and services are produced; to understand what operations managers do; because OM is a costly part of an organization).

List any four of the ten strategic OM decisions.

Possible answers: Design of goods and services; Managing quality; Process strategies; Location strategies; Layout strategies; Human resources; Supply chain management; Inventory management; Scheduling; Maintenance.

Identify one ethical challenge faced by operations managers.

Efficiently developing and producing safe, quality products (other valid answers: maintaining a clean environment; providing a safe workplace; honoring stakeholder commitments).

Who are stakeholders?

Those with a vested interest in an organization.

State one reason firms move from domestic to international operations.

Improve supply chain (other valid answers: reduce costs and exchange-rate risks; improve operations; understand markets; improve products; attract and retain global talent).

What is operational hedging?

Maintaining excess capacity in different countries and shifting production as costs or exchange rates change.

Define maquiladoras.

Mexican factories along the U.S.–Mexico border that receive preferential tariff treatment.

What role does the World Trade Organization (WTO) play?

It promotes world trade by lowering barriers to the free flow of goods across borders.

Which agreement replaced NAFTA?

USMCA (United States–Mexico–Canada Agreement).

How many member states are in the European Union (EU)?

27 member states.

What is an organization’s mission?

The purpose or rationale for an organization’s existence.

Define strategy in the OM context.

How an organization expects to achieve its mission and goals.

Name one of the three generic strategies for competitive advantage.

Differentiation (others: Cost leadership; Response).

What is competitive advantage?

The creation of a unique advantage over competitors.

Explain differentiation.

Distinguishing an organization’s offerings in a way customers perceive as adding value.

What is experience differentiation?

Engaging customers through imaginative use of the five senses so they “experience” the product.

Describe low-cost leadership.

Achieving maximum value, as perceived by the customer, through low costs.

What does response emphasize as a strategy?

Rapid, flexible, and reliable performance.

What is the resources view?

Managers evaluate the resources at their disposal and manage or alter them to gain competitive advantage.

Define value-chain analysis.

Identifying the elements in the product/service chain that uniquely add value.

What does the Five Forces model analyze?

The five forces in the competitive environment affecting profitability.

During which product-life-cycle stage are frequent product and process design changes most likely?

Introduction stage.

In which stage does standardization and long production runs dominate OM strategy?

Maturity stage.

What is SWOT analysis?

Determining internal Strengths and Weaknesses and external Opportunities and Threats.

Define key success factors (KSFs).

Activities or factors that are key to achieving competitive advantage.

What are core competencies?

A set of unique skills, talents, and activities a firm does particularly well.

What does an activity map show?

Graphical links among competitive advantage, KSFs, and supporting activities.

Give the textbook definition of outsourcing.

Procuring from external sources services or products normally part of an organization.

State the theory of comparative advantage in one sentence.

Countries benefit by specializing in products they produce relatively better and importing those they produce relatively worse.

Name one potential risk of outsourcing.

A drop in quality or customer service (others: political backlash, negative impact on employees, future competition, increased logistics and inventory costs).

What is an international business?

A firm that engages in cross-border transactions.

Define multinational corporation (MNC).

A firm with extensive international involvement, owning or controlling facilities in more than one country.

Which global strategy uses exports and licenses with little local responsiveness?

International strategy.

Which strategy decentralizes decisions to enhance local responsiveness?

Multidomestic strategy.

Which global approach centralizes decisions to achieve economies of scale?

Global strategy.

Which strategy combines global efficiencies with local responsiveness?

Transnational strategy.

List the three phases of project management.

1) Planning, 2) Scheduling, 3) Controlling.

What is project organization?

An organization formed to ensure projects receive proper management and attention.

What does a Work Breakdown Structure (WBS) accomplish?

It defines a project by dividing it into more detailed components.

What information does a Gantt chart provide?

It schedules resources and allocates time for project activities.

Give one purpose of project scheduling.

Identifying precedence relationships among activities (others: show activity relationships; encourage realistic estimates; identify bottlenecks).

How do waterfall projects progress?

Smoothly in a step-by-step manner until completion.

What is a key trait of agile projects?

They require collaboration and constant feedback to adjust to unknowns.

Define a dummy activity in network diagrams.

An activity with zero time added to maintain logical relationships.

What does PERT stand for?

Program Evaluation and Review Technique.

How many time estimates does CPM use per activity?

One estimate.

What is the critical path?

The longest time path through a project network; any delay on it delays the entire project.

In Activity-on-Node (AON) diagrams, what do the nodes represent?

Activities.

What is an optimistic time (a) in PERT?

The best activity completion time that could be obtained.

What is the pessimistic time (b) in PERT?

The worst activity time that could be expected.

Define most likely time (m) in PERT.

The most probable time required to complete an activity.

Provide the definition of forecasting.

The art and science of predicting future events.

What are economic forecasts used for?

Planning indicators helpful for medium- to long-range forecasts.

What is the focus of technological forecasts?

Long-term predictions about rates of technological progress.

Define demand forecasts.

Projections of a company’s sales for each time period in the planning horizon.

How many basic steps are in the forecasting process?

Seven steps.

What distinguishes quantitative forecasts?

They use mathematical models to forecast demand.

What is the jury of executive opinion method?

A group estimate of demand based on the opinions of high-level managers.

Describe the Delphi method.

An interactive group process that allows experts to make forecasts anonymously until consensus is reached.

What is a sales force composite?

A forecast based on salespersons’ estimates of expected sales.

What does a market survey seek?

Input from customers or potential customers on future purchasing plans.

State the naive approach in one sentence.

It assumes demand next period equals demand in the most recent period.

How is a moving-average forecast calculated?

By averaging the n most recent data points to predict the next period.

What is exponential smoothing?

A weighted-moving-average technique where recent data are given exponentially more weight.

Define smoothing constant (α).

The weighting factor between 0 and 1 used in exponential smoothing.

What does MAD measure?

Mean Absolute Deviation—the overall forecast error.

What is MSE?

Mean Squared Error—the average of squared forecast errors.

Explain MAPE.

Mean Absolute Percent Error—the average absolute percent difference between forecast and actual values.

What is trend projection?

A method that fits a trend line to historical data and projects it into the future.

What are seasonal variations?

Regular upward or downward movements in data tied to recurring events.

Define cycles in time-series data.

Patterns that occur every several years.

What does linear regression analysis provide?

A straight-line model describing the relationship between an independent and dependent variable.

What does the coefficient of correlation indicate?

The strength of the relationship between two variables.

What is multiple regression used for?

Associative forecasting with more than one independent variable.

What does a tracking signal monitor?

How well a forecast is predicting actual values.

Define forecast bias.

A forecast consistently higher or lower than actual values.

What is Total Quality Management (TQM)?

Managing an entire organization so it excels in all aspects important to the customer.

Name the four major cost categories in Cost of Quality (COQ).

Prevention, appraisal, internal failure, and external failure costs.

What does PDCA stand for in continuous improvement?

Plan, Do, Check, Act.

Statistically, what defect rate does Six Sigma target?

3.4 defects per million opportunities (99.9997% accuracy).

What is employee empowerment?

Moving responsibility and authority to the lowest level possible in the organization.

Define benchmarking.

Selecting a demonstrated standard of performance representing the best for a process or activity.

What is the underlying philosophy of Just-in-Time (JIT)?

Producing or delivering goods exactly when they are needed while enforcing problem solving and continuous improvement.

What is a Pareto chart used for?

Identifying the few critical items versus many less important ones.

Define Statistical Process Control (SPC).

Monitoring standards, making measurements, and taking corrective action while a product or service is being produced.

What is a poka-yoke?

A device or technique that ensures the production of a good unit every time by mistake-proofing the process.