Operations Management Final Exam

Prof. Castro

Job

Set of tasks an individual performs

Job Design

Determining the specific job tasks and responsibilities, the work environment, and the methods by which the tasks will be carried out to meet the goals of operations

Job enlargement

The horizontal expansion of the job to give the worker more variety - although not necessarily more responsibility

Job enrichment

Vertical expansion of job duties to give the worker more responsibility

Ergonomics

Concerned with improving productivity and safety by designing workplaces, equipment, instruments, computers, workstations, and so on that take into account the physical capabilities of people.

Work measurement

A systematic procedure for the analysis of work, and determination of standard times required to perform key tasks in a process

Standard Time

A reasonable estimate of the amount of time needed to perform a task based on an analysis of the work by a trained industrial engineer or other operations expert.

Time Study

The development of a standard time by observing a task with the use of a stopwatch and analyzing the data

Allowances

The time for labor fatigue and personal needs, equipment breakdowns, rest periods, information delays, and so on.

Fixed Position Layout

Consolidates the resources necessary to manufacture a good or deliver a service, such as people, materials, and equipment, in one physical location

Assembly line

A product layout dedicated to combining the components of a good or service that has been created previously.

Assembly-line Balancing

The technique that groups tasks among workstations so that each workstation has - in the ideal case - the same amount of work

Bottleneck

The work activity that effectively limits the throughput of the entire process.

Product layout

An arrangement based on the sequence of operations that is performed during the manufacturing of a good or delivery of a service.

Normal Time

The expected time required to perform some work activity at a normal pace, under normal operating conditions, and using a prescribed method.

Normal Time Calculation

observed time x performance rating factor

OT x PRF

Standard Time Calculation

Normal time x (1 + allowance factor)

Forecasting

The process of projecting the values of one or more variables into the future.

Planning Horizon

The length of time on which a forecast is based.

Time Bucket

The time-period size used in the MRP explosion process and usually are one week in length.

Time Series

A set of observations measured at successive points in time or over successive periods of time.

Trend

The underlying pattern of growth or decline in a time series.

Seasonal Patterns

Repeatable periods of ups and downs over short periods of time.

Cyclical Patterns

Regular patterns in a data series that take place over long periods of time.

Random Variation (noise)

The unexplained deviation of a time series from a predictable pattern, such as a trend, seasonal, or cyclical pattern.

Irregular Variation

The onetime variation that is explainable.

Statistical forecasting

The assumption that the future will be an extrapolation of the past.

Judgmental Forecasting

Opinions and expertise of people in developing forecasts.

Grassroots Forecasting

Asking those who are close to the end customer, such as salespeople, about the customers’ purchasing plans.

Delphi Method

Forecasting by expert opinion by gathering judgments and opinions of key personnel based on their experience and knowledge of the situation.

Utilization

The fraction of time a workstation or individual is busy over the long run.

Utilization Calculation

Resources used OR Demand Rate

Resources available Service rate x # of servers

Demand rate calculation

Utilization x service rate x # of servers

Throughput

The number of units or tasks that are completed per unit time from a process.

Bottleneck

The work activity that effectively limits the throughput of the entire process.

Flow Time (Cycle Time)

The average time it takes to complete one cycle of a process.

Little’s Law

A simple equation that explains the relationship among flow time (T), throughput (R), and work-in-process (WIP).

Work in Process (WIP) Calculation

Throughput x Flow Time

R x T

Queue

A waiting line.

Queueing system

Customers that arrive for service, one or more servers that provide the service, and a queue of entities that wait for service if the server is busy.

Queueing theory

The analytical study of waiting lines.

Theory of Constraints

A set of principles that focuses on increasing total process throughput by maximizing the utilization of all bottleneck work activities and workstations.

Physical Constraint

The capacity of a resource such as a machine, employee, or workstation.

Non-bottleneck work activity

One in which idle capacity exists.

Nonphysical constraint

Environmental or organizational, such as low product demand or an inefficient management policy or procedure.

Inventory

Any asset held for future use or sale.

Inventory Management

Planning, coordinating, and controlling the acquisition, storage, and other assets needed to meet customer wants and needs.

Competing Inventory Desires

Sales, Marketing, and operations want high inventory levels for customer service & process efficiency.

Finance prefers small inventory to minimize inventory investment.

Environmentally Preferable purchasing

The affirmative selection and acquisition of products and services that most effectively minimize negative environmental impacts over their life cycle of manufacturing transportation, use, and recycling or disposal.

Stock Keeping Unit (SKU)

Single item or asset stored at a particular location.

Independent demand

Demand for an SKU that is unrelated to the demand for other SKUs and needs to be forecasted.

Dependent demand

Demand that is directly related to the demand of other SKUs and can be calculated without needing to be forecasted.

Static Demand

The unchanging demand over time.

Dynamic Demand

Demand that varies over time

Single Period

Inventory for short selling seasons with no leftovers.

Multi-period

Concerned with planning over an extended time period such as monthly over a year.

Lead Time

Time between placement of an order & its receipt.

Stockout

Inability to satisfy the demand for an item.

Backorder

When a customer is willing to wait for an item.

Lost Sale

When customer is unwilling to wait & purchases the item elsewhere.

Fixed-Quantity System

Fixed order quantity or lot size each time

Inventory Position

On-hand quantity plus any orders placed that have not arrived, minus backorders

IP = OH + SR (orders placed) - BO

Reorder point

Value of inventory position that triggers a new order.

Quantity Discounts

Discounts for purchasing larger quantities of goods due to economies of scale, shipping larger loads, or not breaking apart boxes.

Safety Stock

Additional, planned on-hand inventory that acts as a buffer to reduce the risk of a stockout.

Service Level

Desired probability of not having a stockout during a lead-time period.

Supply Chain Management

Management of all activities that facilitate the fulfillment of a customer order for a manufactured good to achieve customer satisfaction at a reasonable cost.

SCOR Model

Framework for understanding the scope of supply chain management that is based on five basic functions involved in managing a supply chain: plan, source, make, deliver, and return.

Supply Chain integration

Process of coordinating the physical flow of materials to ensure that the right parts are available at various stages of the supply chain.

Logistics

Management of transportation activities and flow of materials within supply chain to ensure adequate customer service at a reasonable cost.

Different Forms of Transportation

Rail - balance between goods & time; can haul heavy tonnage

Truck - most flexible of all modes - Backhaul: when a truck delivers its load and also carries freight on the return journey

Air - highest cost; fast for long distances

Ships - limited quantity; slower

Vendor managed inventory

Where vendor monitors and manages inventory for the customer

Bullwhip Effect

When inventory exhibits wild swings up and down

Order amplification

When each member “orders up” to buffer its own inventory

Risk Management

Identifying risks that can occur, assessing the likelihood that they will occur, determining the impact on the firm and its customers, and identifying steps to mitigate the risks.

Intermediary

Coordinating and sharing information between buyers and sellers.

Return Facilitator

Handles all aspects of customer returns.

Scheduling

Assignment of start and completion times to a particular job, people, or equipment.

Sequencing

Determining order jobs or tasks are processed.

Production Scheduling

All activities that must be performed to manage & control production process & efficiently utilize manufactured resources.

Flow Time

Amount of time a job spends in the shop or facility.

Flow Time Calculation

Start Time + Processing Time

Makespan

Time needed to process a given set of jobs.

Makespan Calculation

Completion time of last job - start time of first job in group

C_L - S_F

Lateness

The difference between the completion time & the due date (either positive or negative)

Lateness Calculation

Flow time - Due date

F - D

Tardiness

Amount of time by which the completion time exceeds the date

First come, first served

Used to prioritize jobs arriving intermittenly.

Shortest processing time

Used to prioritize in the short term (use jobs with the shortest processing time first).

Earliest Due Date

Used to prioritize jobs in the short term

Dispatching

Process of selecting jobs for processing & authorizing the work to be done.

Quality Management

Systematic policies, methods, and procedures used to ensure that goods and services are produced with appropriate levels of quality to meet the needs of customers.

Quality

Meeting or exceeding customers’ expectations (This is determined by the customer).

Quality of conformance

Extent to which a process is able to deliver outputs that conform to design specifications.

Specifications

Targets & tolerances determined by designers of goods and services

Service Quality

Consistently meeting or exceeding customer expectations & service delivery system performance criteria.

Edward Deming

Quality management - PDSA: Plan, Do, Study, Act

Joseph Juran

Quality principles; “Fitness for use” plan, control, improve

Philip Crosby

Absolutes of Quality Management & Basic Elements of Improvement; no quality problems, only system problems; do it right the first time.

Lean

Any activity material, or operation that does not add value to an organization is considered waste