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74 Cards in this Set
- Front
- Back
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Value Analysis
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Examination of the function of parts and materials in an effort to reduce cost and or improve product performance.
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Disgning for operations
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Taking into account the capabilities of the organization in designing goods and services
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Price-led costing
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market price - required Profit margin - other costs = target cost
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Focus on Customer
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Value to customer> cost of providing
Customer requirements incorporated in decision and cost analysis |
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Cross-functional involvement
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Cross func product and process team are responsible for product from initial concept through final design
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Value- chain involvement
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All member of value chain included in target costing
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A life cycle orientation
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Life cycle costs are minimized for producer and customer
purchase price, op costs, maintain, distribution costs |
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Determinants of product cost should come from clear strategic vision of
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The markets org need to compete in
Quality and price customers desire target profit and returns required by investors |
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Target costing steps
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Estimate of profit requirements and SG&A
Estimate retail $ in target market Estimate manufact target price Compute Op target cost vs actual Conduct research |
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Product liability
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the responsibility of a manufacturer for any injuries or damages caused by a faulty product
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Uniform commercial code
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products carry an implication of merchantability and fitness
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Life cycle
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Introduction
growth maturity decline *based on need and rate of tech change |
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Standardization
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Extend to which there is absense of variety in a product
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Advantages of standardization
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Fewer parts
Reduced training costs More routine purchasing Long production runs and automation needs few parts= more $ on quality |
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Disadvantages of Standardization
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Design may be frozen by imperfections
High cost of design changes Decreased variety results in less appeal |
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Mass customization
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A strategy of producing basically standardized goods but some customization
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Delayed differentiation
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The process of producing but not quite completing a product or service until customer preferences are known
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Modular design
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From of standardization in which component parts are grouped into module that are easily replaced or interchanged
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Reliability
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ability to perform intended function under preassure
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Robust Design
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Products with broad range of conditions and uses
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Reverse engineering
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dismantling and inspecting a competitor and discover improvements
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Types of research
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Basic: objective of advancing state of knowledge without application or expectation
Applied: objective of achieving commercial application Development: converts results of applied into applications |
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Concurrent engineering
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bringing engineering design and manufacturing personnel together in design phase
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Design for Manufacturing (DFM)
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designing of products that are comparable with an organization's capabilities
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Design for assembly (DFA)
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design that focuses on reducing number of parts in a product and on assembly methods and sequence
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Manufacturing
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Ease of fabrication or assembly
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Quality function deployment (QFD)
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Approach that integrates the voice of customer in product and service development
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Supply chain management
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strategic coordination of the supply chain for the purpose of integrating supply and demand management
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Logistics
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part of a supply chain involved with the forward and reverse flow of goods, services cash and information
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Bullwhip effect
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inventory oscillates becoming progressively larger looking backward through the supply chain
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strategic buffering
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holding bulk of retail inventory at distribution center rather than outlets
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Traffic management
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over-seeing the shipment of incoming and outgoing goods
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Distribution requirements planning (DRP)
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a system for inventory management and distribution
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Third Party logistics (3-PL)
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outsourcing of logistics management to specialist companies
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Reverse logistics
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backwards flow of goods return to supply chain
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Anticipation Stock
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held to satisfy expected demand
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seasonal inventories
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stock built in preseason to meet overly high requirements during season
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inventory buffers
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allows operations to continue even with problems
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safety stock
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stocks in excess of average demand to compensate for variability in demand and lead times
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Periodic inventory counting system
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physical count of items in inventory made at periodic systems
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Perpetual inventory system
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system that keeps track of removals from inventory continuously, monitoring current levels
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two-bin system
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two containers of inventory; order when fist empty
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UPC code
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printed on label that has infor about item
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Lead time
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time interval between ordering and receiving the order
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ABC Inventory
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A items = 10-20 % of inventory but 60-70% of annual dollar value
C item=50-60% of inventory but 10-14% of annual dollar value |
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Economic order quantity
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the order size that minimizes total annual cost
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Reorder point
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lead time* usage rate
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Annual carrying cost
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QH/2
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Annual ordering cost
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DS/Q
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total annual cost
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(QH/2) + (DS/Q)
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Optimal order quantity
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Sq rt (2DS/H)
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length of order cycle
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Q/d
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Single period model
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model for ordering of perishable and other items with limited lives
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Shortage costs
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unrealized profit per unit= Rev/Q - $/Q
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Excess cost
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Original cost/Q - Salvage/Q
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Balance point
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optimum stocking quantity
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Service level
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Shortage cost / (shortage cost +Excess cost)
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Quantity discount
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QH/2 + DS/Q + PD
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Reorder point
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when the quantity on hand of an item drop to this amount the item is reordered
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ROP using demand rate
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Demand rate * Lead time
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ROP using safety stock
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Expected demand during LT + Safety stock
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service level
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the probability that demand will not exceed supply during lead time
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service level (equation)
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100% - stockout risk
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ROP with standard deviation
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Expected demand during LT + z* (SD of lead time demand)
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Capacity
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Upper limit of ceiling on the load that an operating unit can handle
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Design capacity
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the maximum output rate or service capacity an operation, process or facility is designedfor
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Effective capacity
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design capacity - allowances (scrap)
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Efficiency
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Actual output/ effective capacity
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Utilization
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actual output/ design capacity
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Capacity cushion
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extra demand intended to offset certainty
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Capacity cushion (equation)
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100%- utilization
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Profit EQ
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=RQ- (FC+VQ)
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Q needed for specific profit
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P+FC/ R-V
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QBEP equation
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FC/ R-V
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