C720 Section 1: Operational Strategies key terms

Operations

The process through which people, capital, and material are combine to produce services and goods consumed by public.

ABC Analysis

developed to determine which inventory should receive highest control focusing efforts on highest payoff.

Business Process

work activities with preferred order, clear beginning/end, clearly defined outputs that add customer value

Competitive advantage

capabilities that customers value and gives edge against competition

Competitive capabilities

outcomes of well-designed business process, enabling to satisfy customer requirements

Demand patterns

regular fluctuations in demand for a product/service caused by seasons, cycles, trends

Random demand

unpredictable patterns

Cyclical demand

demand that occurs and is generally predictable

Seasonal Demand

shoppers adjust purchase velocity in line with holidays

Trend demand

general regular uptick or downward flow trend

Economic Order Quantity (EOQ)

model concerned primarily with cost of ordering and holding inventory

Economic Production Quantity (EPQ)

controls the cost of ordering, receiving, holding inventory, allows incremental ordering and depletion commonly used for production processes where inventory is arriving

Ethical behavior

corporate issue that affects the bottom line

ethics

sense of right and wrong that guides behavior

Goods

Tangible articles of trade, merchandise, or wares

Carrying (holding) costs

storage space, interest on borrowed money, losses incurred due to damage or obsolescence

Inputs

people, capital, materials, energy applied that lead to value creation

Inventory

goods available for sale and raw materials used to produce goods

Lead time

the time it takes supply order to reach suppliers offices, the time to fill the order, the shipping time

Market share

percentage of sales divided by total sales for all organizations in that particular market

Operations

processes that acquire inputs and transform into outputs for public to consume

Operations management

multidisciplinary science used to acquire inputs and transform them into outputs

Order fulfillment

steps required to satisfy an order

Ordering costs (setup costs)

costs associated with changing over equipment from producing one item to another

Order point (re-order point)

level of inventory at which an order should be placed so that order arrives before stockout occurs

Organizational structure

infrastructure of formal relationships among different functions like marketing, finance, operations...

Outputs

services or goods

Periodic review system

designed to place an order only when within specific delivery intervals

Perpetual inventory system

continuously monitors inventory levels

Price

amount paid for service or good

Process design

how the product is produced

Product design

characteristics, features, performance of a product

Product development

teamwork-oriented process beginning with strategy and analysis of market as inputs

Product quality

extent the product successfully serves purposes of user

Productivity

measures the ability to produce goods and services (outputs) compared to inputs used in the process.

Productivity equation

productivity = output / input

Profitability

efficient use of resources getting as much positive return as possible

Quantity discounts model (QDM)

items usually cost less per unit when purchased in bulk

Review interval

time between inventory reviews

Safety stock

inventory to protect against unexpected demand

Service

companion activities such as arranging financing for a purchase or installation of equipment

Service level

selecting a level of stockouts that the company is willing to accept

Services

intangible products from and organization provided to customer

Stockout

occurs when inventory is depleted

Stockout costs

demand during lead time to replenish inventory is greater than planned

Strategy

organizational goals / methods for implementing goals. key policies. how an organization chooses to compete

Sustainability

ethical issues to balance financial performance while maintaining social responsibility standards and responsible environmental profile.

SWOT analysis

technique for analyzing strengths, weaknesses, opportunities, and threats

Strengths

internal. advantage

Weaknesses

internal. disadvantage

Opportunities

external. exploitable advantages

Threats

external. creates trouble

Target level

quantity ordered to increase inventory to a level to cover anticipated demand until next order

Technology

applying knowledge to solve problems

Triple constraint factors

determining factors of whether or not to outsource. cost, time, scope, quality

Raw materials

parts / materials obtained from supplier used in production process

Work-in-process (WIP)

partly finished

Finished goods

ready to ship to customer, no more work required

Maintenance, Repair, Operating (MRO) supplies

parts / materials used to support production but not usually a component of the product