MGMT 4000 Exam 1 Review - Operations and Supply Chain Management

Vocabulary practice flashcards covering key terms, metrics, and concepts for Operations Management Exam 1 (MGMT 4000).

Operations Management (OSCM)

The design, operation, and improvement of the systems that create and deliver the firm's primary products and services.

Supply Chain

An interconnected network that includes organizations, activities, and people working together to achieve efficient flow of inventory, information, and finances to deliver products and services.

Planning

Processes needed to operate an existing supply chain strategically and efficiently.

Sourcing

The selection of suppliers that will deliver the goods and services needed to create the firm's product.

Making

The supply chain process activity responsible for producing the major product or service.

Delivering

Logistics processes such as selecting carriers, coordinating the movement of goods and information, and collecting payments from customers.

Returning

Processes associated with receiving worn-out, excess, and/or defective products back from customers.

Operations Processes

Manufacturing and service processes used to transform resources into products.

Supply Chain Processes

Processes that move information and material to, through, and from the firm.

Transformed Resources

Input resources that are transformed in some way by the operation to produce output goods or services, classified as materials, information, or customers.

Transforming Resources

Input resources used to perform the transformation process, such as staff, facilities, and technology.

Goods

Tangible items that can be used, stored, evaluated, taken home, or consumed, such as appliances, clothing, and automobiles.

Services

Intangible properties where the service receiver does not obtain physical ownership, evaluated as a package of features that affect customer perceptions.

The Goods-Services Continuum

A spectrum ranging from Pure Goods to Pure Services that categorizes offerings based on their relative combination of tangible and intangible elements.

5 I's of Services

The key characteristics defining services: Intangibility, Inventory (cannot be stored), Inseparability, Inconsistency (heterogeneous delivery), and Involvement (customer participation).

Efficiency

Doing something at the lowest possible cost and with minimal resources.

Effectiveness

Doing the right things to create the most value for the organization and its customers.

Value

The relative worth, utility, or importance of something and the extent to which it provides benefits for the consumer.

Straddling

A risky business strategy where a firm seeks to match a successful competitor by adding features, services, or technology to existing activities.

Order Qualifiers

Screening dimensions that are necessary for a firm's products or services to be considered for purchase by customers.

Order Winners

Specific criteria used by customers to differentiate the products and services of one firm from those of competitor firms to make the final purchase decision.

Productivity

A measure of the effective use of resources, calculated as the ratio $\text{Productivity} = \frac{\text{Output}}{\text{Input}}$.

Partial Productivity Measure

A productivity metric expressing the ratio of output to a single input, such as $\frac{\text{Output}}{\text{Labor}}$ or $\frac{\text{Output}}{\text{Energy}}$.

Multifactor Productivity Measure

A productivity metric expressing the ratio of output to a specific combination of inputs, such as $\frac{\text{Output}}{\text{Labor} + \text{Capital} + \text{Materials}}$.

Total Productivity Measure

A productivity metric calculating the ratio of total goods and services produced to all resources used ($\frac{\text{Total Output}}{\text{Total Input}}$).

Production Efficiency Rate

A percentage measurement comparing actual output to a target or optimal output standard ($\text{Production Efficiency} = \frac{\text{Actual Output}}{\text{Target Output}} \times 100\times10^{-2}$ or $\frac{\text{Actual Output}}{\text{Target Output}} \times 100$\%).

Product Design

The strategic process of identifying user problems and creating functional, beneficial solutions across physical goods and digital experiences.

Service Design

A holistic, user-centered process that plans and organizes an organization's people, infrastructure, communication, and materials to improve service quality and customer journeys.

Design Thinking Process

A human-centered, iterative problem-solving methodology consisting of five phases: Empathize, Define, Ideate, Prototype, and Test.

Quality Function Deployment (QFD)

A process using cross-functional teams to translate customer requirements and market research into technical specifications and clear operational objectives.

House of Quality

A matrix design tool used within Quality Function Deployment that maps customer wishes against product specifications, correlations, and target values.

Concurrent Engineering

The simultaneous development of project design functions with open communication across teams to reduce time to market, decrease costs, and improve quality.

Value Analysis/Value Engineering (VA/VE)

A design simplification technique that aims to achieve better product performance at lower cost while maintaining all customer functional requirements.

Agile Supply Chain

A supply chain designed to operate efficiently while optimizing speed and adaptability, suitable for innovative products with short lifecycles.

Lean Supply Chain

A supply chain focused on eliminating waste and minimizing cost, best suited for traditional products with stable demand and long lifecycles.

Backward Vertical Integration

A corporate ownership strategy where a focal firm owns assets upstream in its supply chain, such as acquiring suppliers or raw material sources.

Forward Vertical Integration

A corporate ownership strategy where a focal firm owns downstream assets in its supply chain, such as retail stores or distribution networks.

Purchase Order (PO)

A buyer's formal offer that becomes a legally binding contract once accepted by the supplier.

Work-in-Process (WIP)

Inventory consisting of partly finished parts, components, subassemblies, or modules currently undergoing transformation.

Strategic Sourcing

The strategic development and management of supplier relationships to acquire goods and services in ways that support immediate and long-term business goals.

Vendor-Managed Inventory (VMI)

An operational model where the customer grants the supplier authority to directly manage and replenish stock levels for specific items.

Just in Time II (JIT II)

An advanced integration model where a supplier places an employee full-time on-site at the customer's facility with authorization to purchase materials on the customer's behalf.

Strategic Alliance

An agreement between independent organizations to pool resources and pursue joint operational objectives while maintaining separate corporate identities.

Green Sourcing

Making procurement decisions that account for environmental responsibility and the triple bottom line (people, planet, profit).

Inventory Turnover

A metric showing how many times inventory is replaced per year, calculated as $\text{Inventory Turnover} = \frac{\text{Cost of Goods Sold}}{\text{Average Aggregate Inventory Value}}$.

Weeks of Supply

A metric measuring how many weeks of demand current inventory will cover, calculated as $\text{Weeks of Supply} = \frac{\text{Average Aggregate Inventory Value}}{\text{Cost of Goods Sold}} \times 52$.

Logistics

The art and science of obtaining, producing, and distributing material and products in the proper place, correct quantities, and correct times.

Third-Party Logistics (3PL)

An external company hired to manage all or part of an organization's logistics, warehousing, and fulfillment functions.

Logistics-System Design Matrix

A framework mapping modes of transportation (rail, water, highway, pipeline, air, hand delivery) based on speed, cost, and shipment volume.

Factor-Rating System

The most widely used plant location decision tool that evaluates candidate sites by assigning point ranges and weights to qualitative and quantitative factors.

Centroid Method

A mathematical technique for locating single facility hubs that calculates coordinate points based on distances and shipping volumes to existing network locations.

Total Cost Equation

The equation used to calculate operational expenses for location and capacity decisions: $\text{TC} = \text{VC}(x) + \text{FC}$, where $\text{VC}$ is unit variable cost, $x$ is unit volume, and $\text{FC}$ is fixed cost.

Design Capacity

The theoretical maximum designed service or production output rate of a facility or system under ideal conditions.

Effective Capacity

The maximum realistic service or production output rate achievable given operating constraints, maintenance, and mix of work.

Capacity Utilization

A measure of how much of total design capacity is utilized, calculated as $\text{Capacity Utilization} = \frac{\text{Actual Output}}{\text{Design Capacity}} \times 100$\%.

Efficiency Rate

A measure of actual output produced relative to effective capacity, calculated as $\text{Efficiency Rate} = \frac{\text{Actual Output}}{\text{Effective Capacity}} \times 100$\%.

Capacity Cushion

The reserve capacity held in excess of expected demand, calculated as $\text{Cushion} = 1 - \text{Utilization Rate}$.

Economies of Scale

The cost advantages realized when expanding output volume causes average cost per unit to decline by spreading fixed costs across more units.

Diseconomies of Scale

The point where an operational plant becomes too large, leading to increasing average costs per unit as output volume expands.

Economies of Scope

Efficiencies achieved by leveraging a single operational setup or equipment line to produce a diverse variety of similar products.

Lead Strategy

A proactive capacity expansion strategy where capacity is increased ahead of anticipated market demand.

Lag Strategy

A reactive capacity strategy where operational capacity is expanded only after actual demand exceeds existing capacity.

Match Strategy

A capacity planning strategy that incrementally adjusts capacity up or down to align directly with real-time demand patterns.

Decision Tree

A schematic model mapping decision choices, chance events, probabilities, and financial outcomes sequentially to determine optimal capacity choices.