Operations Management Vocabulary Flashcards

Vocabulary flashcards covering key concepts, processes, formulas, and terminology from the Operations Management lecture notes.

Operations

The processes through which people, capital, and material are combined to produce the services and goods consumed by the public

Goods

Tangible outputs; articles of trade, merchandise, or wares

Services

Intangible outputs performed on demand

Strategy

An organization's goals plus the key policies used to implement them

Ethics

A sense of right and wrong that guides behavior, often stricter than legal standards

Triple Bottom Line

Balancing economic profitability, social responsibility, and environmental viability

Competitive Advantage

Giving customers what they want in a better way than other companies

Four Key Business Processes

Strategy development, product development, development of systems to produce services and goods, and order fulfillment

SWOT Analysis

A technique examining Strengths and Weaknesses (internal) and Opportunities and Threats (external)

Productivity Formula

Output divided by Input

Perpetual Inventory

A system used to track critical inventory items continuously

Periodic Inventory

A system for items where status does not need constant tracking; categorized using ABC analysis

Four Inventory Costs

Ordering costs, carrying costs, stockout costs, and purchase costs

EOQ (Economic Order Quantity)

A model used to determine the optimum order quantity that minimizes total inventory costs

QDM (Quantity Discount Model)

A model used to determine order quantity when suppliers offer price discounts for larger orders

Stockout

When inventory is depleted

Lead Time

The time needed to replenish inventory after an order is placed

Order Point (Reorder Point)

The inventory level at which a new order should be placed

Safety Stock

Extra inventory kept as a buffer to avoid stockouts

Fitness for Use

The consumer oriented definition of quality; focuses on being reliable, useful, and feasible

Cost of Quality Categories

Failure costs (internal and external), appraisal costs, and prevention costs

Poka Yoke

A mistake proofing technique used to prevent defects

TQM Components

Management commitment, focus on the customer, total employee involvement, continuous process improvement, supplier partnering, and performance measures

Employee Empowerment Steps

Enable, engage, enhance, and empower

PDCA Cycle

Plan, Do, Check, Act; also called the Deming Wheel or Shewhart Cycle, used for continuous improvement

Benchmarking

Comparing practices against best practices to identify areas for improvement

Cause and Effect Diagram

Also called a Fishbone or Ishikawa Diagram; shows the impact of various inputs on the result of a process

Check Sheet

A tool for recording raw data points in real time

Histogram

A chart showing the frequency of data observations within preset ranges of values

Scatterplot

A chart displaying the relationship between two variables

Pareto Chart

A chart showing data in descending order to highlight the most frequent occurrences

Control Chart

A graph plotting process output in real time between upper and lower control limits

Flowchart

A chart depicting the steps or flow of a process

Six Sigma

A quality standard equal to 3.4 defects per million opportunities, or 99.99966% error free

DMAIC

Define, Measure, Analyze, Improve, Control; the main Six Sigma method for improving existing processes

DMADV (DFSS)

Define, Measure, Analyze, Design, Verify; the Six Sigma method for designing new products or processes

Supply Chain

All activities involved in the flow of goods and services from raw material extraction to the final consumer

Logistics

Managing the internal movement of materials, components, and information within the supply chain

Forward Logistics

The flow of goods pushed toward the customer

Reverse Logistics

The flow of goods moving back from the customer to the manufacturer for return or recycling

Vertical Integration

An operations strategy of owning multiple stages or assets in the supply chain

Backward Vertical Integration

When a company owns its supplier or supply process

Forward Vertical Integration

When a company owns distribution systems or retail outlets that sell its products

Insourcing

Providing goods or services using the organization's own resources

Outsourcing

Procuring products or services from sources external to the organization

Agile Supply Chain

Uses responsiveness, flexibility, and quickness to meet detailed, customized customer needs

Lean Supply Chain

Focuses on producing high volume at low cost by reducing waste and non value added activities

Vendor Managed Inventory (VMI)

The supplier manages and replenishes retailer inventory using point of sale data

Supply Chain Bottleneck Types

Regulatory, labor, technology, decision making, physical, process, and financial

Strategic Alliance

An agreement between independent organizations to pursue shared objectives that improve supply chain performance

Supplier Development

Helping suppliers improve their production and service capabilities

Supplier Relationship Management (SRM)

An ERP module that facilitates collaboration and information sharing between a buyer and its suppliers

Continuous Flow Process

High volume, standardized, non discrete, mostly fixed cost, uses a product layout

Assembly Line Process

High volume, standardized, discrete, mostly fixed cost, uses a product layout

Batch Flow Process

Aggregates similar products to generate sufficient volume; discrete with increased product variety

Job Shop Process

A flexible facility for high variety, low volume production, using a process layout

Project Process

Unique, one of a kind jobs where workers go to the product; mostly variable cost

Economies of Scale

Producing more goods at a lower unit cost by better utilizing fixed costs; tied to production volume

Economies of Scope

Covering fixed costs by producing a variety of products on the same equipment; tied to product diversity

Theory of Constraints (TOC)

The idea that a system's bottleneck, or slowest operation, determines system throughput

TOC Five Focusing Steps

Identify, exploit, subordinate, elevate, and repeat the process around the constraint

Lead Capacity Strategy

Adds capacity in anticipation of an increase in demand

Lag Capacity Strategy

Adds capacity only after demand exceeds current capacity

Match Capacity Strategy

Adds capacity gradually in response to changing market demand

Product Layout

A high volume, low mix layout arranged to fit the dominant flow of product

Process Layout

A high mix, low volume layout grouped by similar machine types

Design Capacity

The maximum achievable output of a process

Effective Capacity

The maximum output given product mix, changeovers, and scheduled downtime

Capacity Utilization

A measure of how much design capacity is being used

Efficiency Rate

A measure of how much effective capacity is being used

Quantitative Location Factors

Labor costs, material costs, transportation, utilities, taxes, construction costs, and government incentives

Qualitative Location Factors

Labor climate, quality of life, and proximity to customers, suppliers, and competition

Total Cost Equation

Total cost equals fixed cost plus variable cost per unit multiplied by volume

MAD (Mean Absolute Deviation)

The average magnitude of forecast errors

MSE (Mean Squared Error)

The average of the squared forecast errors

Delphi Technique

A qualitative forecasting method using multiple rounds of expert questionnaires

Simple Moving Average

A forecasting method that averages past data over a specific period

Weighted Moving Average

A forecasting method that assigns different weights to data points to adjust for trends

Aggregate Planning

Combines individual items into groups for planning, later disaggregated into a Master Production Schedule

Master Production Schedule (MPS)

Converts aggregate plans into specific products and timelines using planning horizons, time fences, and time buckets

Planning Horizon

The future time period covered by a plan

Time Fences

Points in the planning horizon that limit changes to the schedule

Time Buckets

The time increments used within a planning schedule

MRP Inputs

Master Production Schedule, Bill of Materials, and inventory records

MRP Outputs

Shop orders and purchase orders

Enterprise Resource Planning (ERP)

An integrated system providing centralized data, automation, reporting, and security across an organization

Peak Demand Scheduling

Matches service capacity to periods of peak demand

Chase Demand Scheduling

Continually adjusts capacity to match changing demand

Reservation Scheduling

Manages capacity through customer appointments

Job Shop Scheduling

Also called Capacity Requirements Planning; a flexible scheduling approach for low volume, high variety production

Run Out Time

The time required to deplete current stock, used to optimize inventory and scheduling

Toyota Production System (TPS)

A system combining assembly line, quality, and planning concepts to eliminate waste and produce quality goods at the lowest cost in the shortest time

Just In Time (JIT)

A philosophy that seeks to maximize efficiency and eliminate waste; also called stockless production or zero inventory

Lean Systems

An approach emphasizing continuous improvement and respect for people to maximize customer value and eliminate waste

Eight Wastes of Lean (DOWNTIME)

Defects, overproduction, waiting, non use of employee ideas, transportation, inventory, motion, and excess processing

Value Stream Mapping

A process map used to identify value added and non value added activities

Swim Lane Diagram

A type of process map that organizes steps by the person or department responsible

5S Methodology

A lean method with five pillars (sort, set in order, shine, standardize, sustain) used to eliminate waste through an organized workplace

Kanban

A visible signal system used in pull production to authorize parts production based on actual demand

Quality at the Source (QATS)

Checking quality at every step of production rather than only at the end