Operations Management and Supply Chain Basics

This set of flashcards covers key concepts in Operations Management and Supply Chain Basics, including definitions and important terms.

Operations Management

Managing processes that transform inputs into outputs.

Supply Chain

Network of suppliers, manufacturers, distributors, retailers, and customers.

Value-Added Activity

Activity that increases value from customer perspective.

Non-Value-Added Activity

Activity that does not add customer value (waste).

Goods

Tangible output of a process.

Goods – Customer Contact

Little direct contact with customer.

Goods – Production Timing

Produced separately from customer.

Goods – Standardization

Can be produced to tight specifications.

Goods – Storage

Can be inventoried.

Services

Intangible process.

Services – Measurement

Cannot be weighed or measured.

Services – Customer Interaction

Requires customer interaction.

Services – Variability

Inherently heterogeneous.

Services – Perishability

Cannot be stored; time dependent.

Services – Evaluation

Evaluated as a package of features.

Planning

Determining future actions to achieve objectives.

Sourcing

Acquiring materials, services, and inputs.

Making

Transforming inputs into outputs.

Delivering

Transportation, distribution, and logistics.

Returning

Handling defective, excess, or returned items.

Benchmarking

Comparing performance to best-in-class organizations.

Outsourcing

Using external suppliers for business activities.

Productivity

Output divided by input.

Inventory Turnover

Cost of goods sold divided by average inventory.

Profit Margin

Net income divided by sales.

Return on Assets (ROA)

Net income divided by total assets.

Strategy

Plan to achieve competitive advantage.

Triple Bottom Line

People, Planet, Profit.

People (TBL)

Social responsibility to employees and community.

Planet (TBL)

Environmental sustainability.

Profit (TBL)

Economic performance.

Stakeholders

Individuals or groups affected by firm decisions.

Shareholders

Owners focused on financial returns.

Push System

Production based on demand forecasts.

Push System Risk

Higher inventory levels.

Pull System

Production based on actual demand.

Pull System Benefit

Lower inventory and waste.

Market-Pull Product

Product development begins with market need.

Technology-Push Product

Begins with proprietary technology.

Platform Product

Built around pre-existing technological subsystem.

Process-Intensive Product

Process drives product design.

Customized Product

Slight variations to standard products.

High-Risk Product

High technology or market uncertainty.

Quick-Build Product

Fast design and market release.

Complex System

Uses concurrent engineering to update subsystems.

Competitive Dimension – Cost

Competing on lowest price.

Competitive Dimension – Quality

Competing on best quality.

Forecast

Estimate of future demand.

Quantitative Forecasting

Forecasting using numerical data.

Qualitative Forecasting

Forecasting using judgment and expertise.

Simple Moving Average

Average demand over last n periods.

SMA Formula

Ft = (At-1 + At-2 + … + At-n) ÷ n.

Weighted Moving Average

Moving average with assigned weights.

WMA Formula

Ft = w1At-1 + w2At-2 + … + wnAt-n.

Exponential Smoothing

Time-series method with declining weights.

Exponential Smoothing Formula

Ft = Ft-1 + α(At-1 − Ft-1).

Alpha (α)

Smoothing constant between 0 and 1.

Causal Forecasting

Uses independent variables to predict demand.

Linear Regression (LSM)

Least squares method for causal forecasting.

Market Research

Customer surveys and studies.

Panel Consensus

Forecast from group of experts.

Make-to-Stock (MTS)

Produce for inventory

Make-to-Order (MTO)

Produce after customer order

Assemble-to-order (ATO)

Assemble from stocked components

Engineer-to-Order (ETO)

Design and produce uniquelyfor each customer order, allowing for customization and meeting specific client requirements.

Workcenter

Area where similar resources are groupedto facilitate production processes.

Buffer

Temporary storage between stages of production to accommodate fluctuations in workflow and ensure smooth operations.

Blocking

No place to deposit finished items

Starving

No work available for a stage

Indexing

Calibrating stages to a regular pace

Pacing

Synchronizing production rates

SS - Service Package

Bundle of service features

SS - Supporting Facility

Physical resources required

SS - Facilitating Goods

Materials consumed by buyer

SS - Information

Data provided to customer

SS - Explicit Services

Observable benefits

SS - Implicit Services

Psychological benefits

SS - Buffered System

A service system where customers have limited interaction with employees and the service provider.

SS - Permeable System

A service system that allows for varying levels of customer interaction with employees and the service provider.

SS - Extent of Customer Contact

Refers to the degree to which customers are involved in the service delivery process, affecting the service experience.

SS - High Customer Contact System

A service system where customers interact extensively with employees during the service delivery, influencing both the service process and outcome.

SS - Low Customer Contact System

A service system where customer interaction with employees is minimal during the service delivery, resulting in a more standardized experience.

Chase Strategy

A demand management approach where production and inventory levels are adjusted to match customer demand fluctuations, ensuring efficiency and minimizing costs.

ERP

An integrated software system that manages and automates core business processes across various departments.

MRP

A production planning and inventory control system that manages manufacturing processes by calculating material requirements based on forecasted demand.

MRP Components

These include bill of materials, inventory records, and production schedules, which help determine the materials and quantities needed for production.

MPS

A plan that specifies what is to be produced, in what quantity, and when it will be produced, to meet demand and inventory levels.

Lot-for-Lot (L4L)

A lot sizing technique in which order quantities are set equal to demand for each period, minimizing inventory while ensuring enough materials are available for production.

EOQ

A model that determines the optimal order quantity to minimize total inventory costs.

Least Unit Cost (LUC)

A method used to measure the cost-effectiveness of producing items by calculating the total production cost per unit. It helps in minimizing costs and maximizing efficiency during production.

DMAIC

Define problem, measure process, analyze data, improve solutions, control outcomes

Total Quality Management (TQM)

An organizational approach aimed at improving quality and performance through ongoing refinement of processes, focusing on customer satisfaction and employee involvement.

Decoupling Inventory

A type of inventory used to separate different stages of production, allowing each stage to operate independently. This helps in balancing supply and demand, reduces lead times, and improves workflow efficiency.

Lean Best Application

High volume, low variety

Kanban Cards

A visual tool used in Lean management to signal the need for replenishment or the movement of inventory.

Logistics

The management of the flow of goods, services, and information from point of origin to point of consumption. It involves transportation, warehousing, inventory management, and order fulfillment.

Bottleneck

A stage in a process that reduces the overall speed or capacity, leading to delays in production or service delivery. It often restricts flow and can be identified for optimization.