L13: Statistical Process Control, L14: Sales and Operations Planning, L15: Internet of Things

statistical quality control (SQC)

A number of different techniques designed to evaluate quality from a conformance view.

Assignable Variation

Deviation in the output of a process that can be clearly identified and managed

ex: variation caused by workers not being equally trained or improper machine adjustment

Common variation

Deviation in the output of a process that is random and inherent in the process itself

(random variation)

ex: variation caused by the type of equipment used to complete a process

𝑥̄

sample mean

n

size of one sample

σ (sigma)

standard deviation of the process distribution

Upper and lower specification limits

The range of values in a measure associated with a process that is allowable given the intended use of the product or service.

ex: ±0.02 of 10.00, so 10.02 and 9.98 are ok

Capability index

shows how well the parts being produced fit into the range specified by the design specification limits

statistical process control (SPC)

Techniques for testing a random sample of output from a process to determine whether the process is producing items within a prescribed range.

Attribute data

Data that classifies either conforming or not conforming to specification.

control chart

used to visually monitor status of a process over time

Acceptance Sampling

using statistical techniques to determine if parts conform to specification limits (useful when receiving materials from suppliers)

m

total number of samples

s𝑥̄

the standard deviation of the sample means

z

number of standard deviations for a specific confidence level

=

x

the average of the sample means

Variable data

Data that shows how well a result meets a requirement, often shown on a scale or as a rating.

aggregate operations plan

A plan for labor and production for the intermediate term with the objective to minimize the cost of resources needed to meet demand.

sales an operations planning

The process that companies use to keep demand and supply in balance by coordinating manufacturing, distribution, marketing, and financial plans.

long-range planning

One year or more.

intermediate-range planning

Involves a time period of usually 3 to 18 months.

short-range planning

from a day to six months

production rate

Number of units completed per unit of time.

workforce level

Number of workers needed in a period.

inventory on hand

Inventory carried from the previous period.

Production planning strategies

Plans for meeting demand that involve trade-offs in the number of workers employed, work hours, inventory, and backlogs.

pure strategy

A simple strategy that uses just one option, such as hiring and firing workers, for meeting demand.

mixed strategy

A more complex strategy that combines options for meeting demand.

- more widely used in industry

yield management

Given limited capacity, the process of allocating capacity to customers at the right price and time to maximize profit.

- occurs when firm adjusts price of its product or service to influence demand (flight tickets, hotels, senior discounts)

Internet of Things

Refers to the billions of devices that are connected to the Internet.

Enterprise resource planning (ERP)

A computer system that integrates application programs in accounting, sales, manufacturing, and the other functions in a firm. This integration is accomplished through a database shared by all the application programs.

transaction processing

This is the posting and tracking of the detailed activities of a business.

decision support

This is the ability of the system to help a user make intelligent judgments about how to run the business.

real time

As soon as a transaction is entered, the effect is known by all users of the system.

level strategy

keep production steady, only make specific number each month

- stable workforce

- predictable production level and cost

data warehouse

A special program that is designed to automatically capture and process data for uses that are outside the basic ERP system applications.

chase strategy

produce what is needed (dependent on demand)

- less inventory holding cost

- never have overproduction

- workforce instability

mixed strategy

use current employees --> overtime or subcontract

- less control, more complex to manage

- most flexibility