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59 Cards in this Set
- Front
- Back
- 3rd side (hint)
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Need for Location Decisions
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Marketing Strategy
Cost of Doing Business Growth Depletion of Resources |
None
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Strategic Importance of Location Decisions
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Long term commitment/costs
Impact on investments, revenues, and operations Supply chains |
None
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Objectives of Location Decisions
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Profit potential
No single location may be better than others Identify several locations from which to choose |
None
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Location Options
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Expand existing facilities, Add new facilities, Move
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Making Location Decisions
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Decide on the criteria
Identify the important factors Develop location alternatives Evaluate the alternatives Evaluate and make selection |
None
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Steps to identifying the alternatives
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Identify general region
Identify a small number of community alternatives Identify site alternatives |
None
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Regional Factors
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Location of raw materials
Location of markets Labor factors Climate and taxes |
None
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Community Considerations
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Quality of life, Services, Attitudes, Taxes, Environmental regulations, Utilities, Developer support
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Site Related Factors
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Land, Transportation, Environmental, Legal
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Cost-Profit-Volume Model
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Determine fixed and variable costs associated with each location
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Transportation Model
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Decision based on movement costs of raw materials or finished goods
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Factor Rating
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Decision based on quantitative and qualitative inputs
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Center of Gravity Method
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Decision based on minimum distribution costs
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Capacity Planning
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Capacity is the upper limit or ceiling on the load that an operating unit can handle
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The basic question in capacity handling are:
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What kind of capacity is needed?
How much is needed? When is it needed? |
None
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Design Capacity
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Maximum output rate or service capacity an operation, process, or facility is designed for
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Effective Capacity
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Design capacity minus allowances such as personal time, maintenance, and scrap
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Actual Output
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Rate of output actually achieved—cannot exceed effective capacity
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Key Decisions of Capacity Planning
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Amount of capacity needed
(capacity cushion (100% - utilization)) Time of changes Need to maintain balance Extent of flexibility of facilities |
None
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Capacity Cushion
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Extra demand intended to offset uncertainty
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Steps for Capacity Planning
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Estimate future capacity requirements
Evaluate existing capacity Identify alternatives Conduct financial analysis Assess key qualitative issues Select one alternative Implement alternative chosen Monitor results |
None
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_____ relates to overall level of capacity such as facility size, trends, and cycles
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Long-Term
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_____ relates to variations from seasonal, random, and irregular fluctuations in demand
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Short-Term
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Planning Service Capacity
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Need to be near customers
Inability to store services Degree of volatility of demand |
None
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Outsource
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Obtain a good or service from an external provider
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In-House or Outsourcing
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Available capacity
Expertise Quality considerations Nature of demand Cost Risk |
None
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Developing Capacity Alternatives
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Design flexibility into systems
Take stage of life cycle into account Take a “big picture” approach to capacity changes Prepare to deal with capacity “chunks” Attempt to smooth out capacity requirements Identify the optimal operating level |
None
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Economies of Scale
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If the output rate is less than the optimal level, increasing output rate results in decreasing average unit costs
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Diseconomies of Scale
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If the output rate is more than the optimal level, increasing the output rate results in increasing average unit costs
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Evaluating Alternatives
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Cost-Volume Analysis
Financial Analysis Decision Theory Waiting-Line Analysis |
None
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Cost-Volume Analysis
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Break-even point
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Financial Analysis
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Cash Flow, Present Value
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Decision Theory
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Helpful tool for financial comparison of alternatives under conditions of risk or uncertainty
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Decision Theory Elements
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A set of possible future conditions exists that will have a bearing on the results of the decision
A list of alternatives for the manager to choose from A known payoff for each alternative under each possible future condition |
None
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Decision Theory Process
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Identify possible future conditions called states of nature
Develop a list of possible alternatives, one of which may be to do nothing Determine the payoff associated with each alternative for every future condition If possible, determine the likelihood of each possible future condition Evaluate alternatives according to some decision criterion and the best alternative |
None
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Bounded Rationality
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The limitations on decision making caused by costs, human abilities, time, technology, and availability of information
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Suboptimization
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The result of different departments each attempting to reach a solution that is optimum for that department
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Maximin
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Choose the alternative with the best of the worst possible payoffs
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Maximax
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Choose the alternative with the best possible payoff
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Laplace
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Choose the alternative with the best average payoff of any of the alternatives
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Minimax Regret
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Choose the alternative that has the least of the worst regrets
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What is the goal of the theory of constraints?
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To make money now, as well as in the future
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What are the bottom line measurements?
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Net Profit (absolute)
Return on Investment (relative) Cash Flow (survival) |
None
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Local measures include what?
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Utilization and Efficiency
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Global measures include what?
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Profit, ROI, Cash Flow, Throughput, Inventory Expense, and Operating Expense
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What is activation?
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The employment of a resource or work center to process materials or products.
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What is utilization?
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Refers to activation of a resource that contributes positively to the performance of a company (throughput).
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What is throughput?
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The rate at which the system generates money through sales.
Everything we make and sell. |
None
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What is inventory expense?
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All the money the system invests in purchasing things the system intends to sell or intends to use to make items to sell.
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What is operating expense?
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All the money the system spends in turning inventory into throughput.
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What is a constraint?
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Anything that prevents a system from achieving higher performance relative to its goal.
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What are types of constraints?
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Capacity, Material, Market, Logistics, Managerial, Behavioral
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What is a Bottleneck Resource?
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Any resource whose capacity is equal to or less than the demand placed on it.
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What is a Non-Bottleneck Resource?
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Any resource whose capacity is greater than the demand placed on it.
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What is the TOC Principle #1?
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Do not focus on balancing capacities, focus on synchronizing the flow.
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What is the TOC Principle #2?
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The marginal value of time at a bottleneck resource is equal to the throughput rate of the products processed by the bottleneck.
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What is the TOC Principle #3?
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The marginal value of time at a non-bottleneck resource is negligible.
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What is the TOC Principle #4?
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The level of utilization of a non-bottleneck resource is controlled by other constraints within the system.
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What is the TOC process?
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1. Identify the system’s constraint(s)
2. Decide how to exploit the system’s constraint(s). 3. Subordinate everything else to the decisions made in Step 2. 4. Elevate the system’s constraint. 5. If a constraint is broken in Step 4, go back to Step 1. |
None
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