Operations Final

The management of the entire process that transforms what into what

Inputs into outputs

As production systems are developed, managed and improved….

Chaos turns to order

What is the foundation for corporate sustainability

Integrity

What are the two types of integrity

Structural and moral integrity

Businesses are shifting from shareholders only view to

All stakeholders view

What are the three pillars of sustainability

Environmental, social and economic

What are the three pillars on the holistic business scorecard

Planet, value, people

What is the triple bottom line framework

Examines a firms economic, social and environmental impact

Is sustainability the responsibility of the business

Depends

What will drive a firms position on sustainability

Strategy, stakeholders, internal characteristics, and external environment

What is the value proposition

Change in value is greater than or equal to the change in cost

What are the 3 conditions of the value proposition

As long as the value proposition is satisfied

Market conditions exist

And government does not prohibit exchange

What does market conditions exist mean

Buyer and seller are aware of each other

Legal system of contract enforcement

Means of exchange

In managing a production system, we want to identify opportunities where

Differential value is high and operations cost is low

Operations value is defined by two concepts

Form utility and customer service level

Will you ever reach the most efficient frontier

No. You are constantly seeking to get closer to it though

What are the three zones on the total cost- service trade off map

Infrastructure, returns and inventory

Who sets the CSL required for each product-customer transaction

The market

How is a firms strategy determined

By the types of initiatives that management invests in

What is strategy

Choosing a unique position- doing things differently from competitors in a way that lowers costs or better serves a particular set of customer needs

What a firm chooses to do to create and sustain value for stakeholders

The operations function organizes the system of resources that does what

Creates and delivers the firms product and service offerings

What is operations strategy

A framework or plan for the utilization of resources that lowers costs or better serves a particular set of customer needs

What are the operational performance objectives

Cost, quality, delivery and flexibility

What must be strategically aligned with corporate/organizational strategy

Operations strategy

What is management

The finite assignment of resources to tasks in order to achieve organizational objectives

What is bettermization

The allocation of resources that improves the bang (allocation of objectives) to buck (total system cost) ratio

What is the purpose of the operations manager

Make decisions among the trade-offs that result in a bettermal level of CSL/TC

what is the corporate strategy of Southwest Airlines

Low cost and high customer service

What are some of the operational initiatives of southwest

• turn around times

• 737s only

• Point to point vs hub

• Convenience, price, people

How does Jonah define productivity

When you are accomplishing something in terms of your goal

What is the goal

to make money by increasing net profit, while simultaneously increasing ROI, and simultaneously increasing cash flow

What are the three operational measurements that express the goal

Increase throughput, decrease inventory and decrease operational expense

Are activating and utilizing a resource the same thing

NO

What is often the effect if the 100% activation of non-bottleneck operations

A lot of WIP

what is the definition of throughput according to the goal

the rate at which the system generates money through sales

what is inventory related to the goal

all the money that the system has invested in purchasing things it intends to sell

what is operational expense related to the goal

all the money the system spends in order to turn inventory into throughput

what is a bottleneck according to the goal

any resource whose capacity is equal to or less than the demand placed on it

what is a non-bottleneck according to the goal

any resource whose capacity is greater than teh demand placed on it

what effect did improving the robots efficiency have on sales, inventory and costs

sales: level or decreased

inventory: went up

costs: increased because of inventories

does the constraint always have to be a person or machine?

no it can be a market, policy or practice

what are the 5 steps of the theory of constraints

1. identify the system’s constraints

2. exploit the bottleneck

3. subordinate everything to the bottleneck

4. elevate the bottleneck to increase capacity

5. go back to step 1- do not let inertia to cause a system’s constraint

what is throughput time

the minimum time it takes one unit to go from the beginning to the end of the process

how do you calculate throughput time

add the times at each station in the sequential flow

what is labor content

the sum of process times at each station in a process

• tells you how much labor goes into a product

what is a bottleneck

the slowest part of any process

what is cycle time

the time between successive (finished product) units coming off the end of the process

what is capacity

the maximum output in a specified time period

how do you calculate capacity

divide the specified time period by the cycle time of the bottleneck

what is utilization

the ratio of actual output to capacity

how do you calculate utilization for one station

divide the station cycle time by the cycle time of the bottleneck

how do you calculate utilization for the entire process

divide the sum of station cycle times by (the cycle time of the bottleneck multiplied by the number of stations)

what is a parallel process

each unit goes through each step but work is done simultaneously in parallel steps

how do you calculate throughput time for a parallel process

includes the longer process time of the parallel steps

how do you calculate labor content for a parallel process

should include all process times

what is cross-training

when workers learn how to complete the tasks at one or more stations

when workers are cross trained what happens to labor utilization and capacity

labor utilization goes to 100% and capacity rises

what is the cycle time when workers are cross trained

the sum of task times divided by the number of workers doing the work

what is labor utilization

ratio of actual time worked to time available

how do you calculate overall process labor utilization

divide your labor content by the (cycle time of the bottleneck multiplied by the number of stations)

how do you calculate capacity at startup

1. calculate the TPT for your first unit

2. subtract the TPT from one hour

3. divide the remaining units by the cycle time

   1. add step 1 and 3 together

what is direct labor

the paid time for one unit of production

what is lead time

the time needed to complete an activity from start to finish

how do you calculate lead time

1. calculate TPT for the first unit of demand

2. multiply the remaining units of demand by the process cycle time

3. add steps 1 and 2 together

what is takt time

the cycle time required to meet demand

how do you calculate takt time

divide the time available by the total demand

what are the three process performance objectives

capacity, efficiency and effectiveness

what is efficiency

process produces equal/more output with fewer resources

what is effectiveness

process able to meet demand placed on it

how do you exploit the constraint

• eliminate waste

• simplify process steps

• reduce processing time

• reduce process variability

• eliminate inefficient/ineffective policies/practices

how do you subordinate everything to the constraint

balance non-bottleneck performance with bottleneck performance

how do you elevate the constraint

• hire new employees

• purchase new machines

• allow for overtime

what is a supply chain

a network of organizations connected by forward and reverse flow of goods, information and enabling resources all interested in creating value for the ultimate customer

what is supply chain management

the management of relationships in the network of organizations from end customer through original suppliers using key cross-functional business processes to create value for customers and other stakeholders

relationship strategy should be driven by

overall corporate strategy

what are the advantages of partnering

• to gain the advantages of vertical integration while still maintaining organizational independence

• to take advantage of “best in class” expertise

• to achieve service improvements

• to gain operational efficiencies

• to respond to competition

what is the bullwhip effect

results from the combination of demand variability (from SC partners, not consumers) combined with the time lag in receiving information

what is the bullwhip effect often attributed to

demand forecast updating, order batching, price fluctuation, rationing and shortage gaming

how do you avoid the bullwhip effect

improve information sharing

improve channel alignment

improve operational efficiency

how was HEB able to elevate their constraints in response to the surge in demand for meat caused by the pandemic

increase production capacity