Operations Management Final

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Operations Management

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The systematic design, direction, and control of processes that transform inputs into services and products for internal, as well as external customers

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Process

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any activity or group of activiites that takes one or more inputs, transforms them, and provides one or more outputs for its customers

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Operation

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a group of resources performing all or part of one or more processes

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supply chain

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an interrelated series of processes within and across firms that produces a service or product to the satisfaction of customers

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supply chain management

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the synchronization of a girm's processes with those of its suppliers and customers to match the flow of materials, services, and information with customer demand.

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external customers

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a customer who is either an end user or an intermediary (e.g.) manufacturers, financial institutions, or retailers) buting the firm's finished services or products

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internal customers

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one or more employees or processes that rely on inputs from other employees or processes in order to perform their work

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external suppliers

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the businesses or individuals who provide the resources, services, products, and materials for the firm's short term and long term needs

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internal suppliers

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the employees or processes that supply important information or materials to a firm's processes

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core process

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a set of activities that delivers value to external customers

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support process

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a process that provides vital resources and inputs to the core processes and therefore is essential to the management of the business

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operations strategy

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the means by which operations implements the firm's corporate strategy and helps to build a customer driven firm.

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core competencies

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the unique resources and strengths that an organization's management considers when formulating strategy

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competitive priorities

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the critical dimensions that a process or supply chain must possess to satisfy its internal or external customers, both now and in the future

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competitive capabilities

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the cost, quality, time, and flexibility dimensions that a process or supply chain actually possesses and is able to deliver

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order winner

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a criterion customers use to differentiate the services or products of one firm from those of another

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order qualifier

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a demonstrated level of performance of an order winner that is required for a firm to do business in a particular market segment

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productivity

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the value of outputs (services and products) produced divided by the values of input resources (wages, costs of equipment, etc.)

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break even quantity

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the volume at which total revenues equal total costs

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break even analysis

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the use of the break-even quantity; it can be used to compare processes by finding the volume at which two difference processes have equal total costs

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variable cost

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the portion of the total cost that varies directly with volume of output

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fixed cost

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the portion of the total cost that remains constat regardless of changes in levels of output

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preference matrix

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a table that allows the manager to rate an alternative according to several performance criteria

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decision theory

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a general approach to decision making when the outcomes associated with alternatives are often in doubt

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payoff table

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a table that shows the amount for each alternative if each possible event occurs

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decision tree

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a schematic model of alternatives available to the decision maker, along with their possible consequences

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project

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an interrelated set of activities with definite starting and ending point, which results in a unique outcome for a specific allocation of resources

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project management

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a systemized, phased approach to defining, organizing, planning, monitoring, and controlling projects

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program

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an independent set of projects that have a common strategic purpose

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work breakdown structure

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a statement of all work that has to be completed

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activity

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the smallest unit of work effort consuming both time and resources that the project manager can schedule and control

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network diagram

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a network planning method, designed to depict the relationships between activities, that cosits of nodes (circles) and arcs (arrows)

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precedence relationship

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a relationship that determines a sequence for undertaking activities; it specifies that one activity cannot start until a preceding activity has been completed

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critical path

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the sequence of activities between a project's start and finish that takes the longest time to complete

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activity slack

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the maximum length of time that an activity can be delated without delaying the entire project

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normal time

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the time necessary to complete an activity under normal conditions

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normal cost

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the activity cost associated with the normal time

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crash time

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the shortest possible time to complete an activity

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crash cost

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the activity cost associated with the crash time

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minimum cost schedule

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a schedule determined by starting with the normal time schedule and crashing activities along the critical path, in such a way that the costs of crashing

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optimistic time

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the shortest time in which an activity can be completed, if all goes exceptionally well

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most likely time

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the probable time required to perform an activity

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pessimistic time

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the longest estimated time required to perform an activity

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any instance when a process fails to satisfy its customer

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defect

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costs associated with preventing defects before they happen

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prevention costs

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costs incurred when the firm assess the performance level of its processes

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appraisal costs

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costs resulting from defects that are discovered during the production of a service or product

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internal failure costs

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costs that arrise when a defect is discovered after the customer receives the service or produce

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external failure costs

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a written guarentee tha the produce will replace or repair defective parts or perform the service to the customers satisfaction

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warranty

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a philosophy that stresses three principles for achieving high levels of process performance and quality: customer satisfaction, employee involvement, and continuous improvement in performance

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total quality management

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a term used by customers to describe their general satisfaction with a service or product

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quality

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the philosophy of continually seeking ways o improve processes based ona japanese concept called kaizen

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continuous improvement

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a cycle, also called the deming wheel, used by firms actively engaged in continuous improvement to train their work teams in problem solving

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plan-do-study-act cycle

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a comprehensive and flexble system for achieving, sustaining, and maximizig business success by minimizing defects and variabilitiy in processes

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six sigma

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the application of statistical techniques to determine whether a quantity of material should be accepted or rejected based on the inspection or test of a sample

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acceptance sampling

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the applicatio of statistical techniques to determine whether a process is delivering what the customer wants

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statistical process control

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service or product characteristics such as weight, length, volume, or time that can be measured

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variables

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service or product characteristics that can be quickly counted for acceptable performance

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attributes

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the purely random, unidentifiable sources of variation that are unavoidable with the current process

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common causes of variation

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any variation-causing factors that canbe indentified and estimated

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assignable causes of variation

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a time-ordered diagram tat is used to determine whether observed variations are abnormal

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control chart

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a chart used to monitor process variability

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r-chart

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a chart used to see whether the process is generating output, on average consistent with a target value set by management for the processes or whetere is current performance with respect to the average of the performance measure is consistent with past performance

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x-chart

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a chart used fo controlling the proportion of defective services or products generated by the process

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p-chart

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a chart used for controlling the number of defects when more than one defect can be present in a service or product.

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c-chart

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the ability of the process to meet the design specification for a service or product

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process capability

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an index that measures the potential for a process to generate defective outputs relative to either upper or lower specification

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process capability index

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the tolerance width divided by 6 standard deviations

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process capability ratio

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designing a firm's supply chain to meet the competitive priorities of the firm's operations strategy

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supply chain design

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the sum of the cost of capital and the variabl costs of keeping items on hand such as storage and handlig, taxes, insurance, and shrinkage

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inventory holding cost

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an order that cannot be satisfied, resulting in a loss of sale

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stockout

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a customer order that cannot be filled when promised or demanded but is filled later

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backorder

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the cost of preparing a purchase order for a supplier or a production order for manufacturing

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ordering cost

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the cost involved in changing over a machine or workspace to produce a different item

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setup cost

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the inventories needed for the production of services or goods

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raw materials

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items such as components or assemblies needed to produce a final product in manufacturing

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work-in-progress

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the items in manufacturing plants, warehouses, and retail outlets that are sold to the firm's customers

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finished goods

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the portion of total inventory that varies directly with lot size

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cycle inventory

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the determination of how frequently and in what quantity to order inventory

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lot sizing

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surplus inventory that a company holds to protect against uncertainties in demand, lead time, and supply changes

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safety stock inventory

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inventory that is created when an order for an item is issued but not yet placed in inventory

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pipeline inventory

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the total average value of all items held in inventory for a firm

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average aggregate inventory value

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an inventory measure obtained by dividing the average aggregate inventory value by sales per week at cost

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weeks of supply

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an inventory measure obtained by dividing annual sales at cost by the average aggregate inventory value maintained during the year

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inventory turnover

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the effective coordination of supply chain processes through the seamless flow of information up and down the supply chain

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supply chain integration

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the phenomenon in supply chains whereby orderng patterns experience increasing variance as you proceed upstream in the chain

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bullwhip effect

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a framework that focuses on a basic supply chain of plan, source, make, deliver, and return processes, repeated again and again along the supply chain

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SCOR model (supply chain operations reference model)fi

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a concept that brings product engineers marketers, buyers, information specialists, and suppliers together to design a product and the processes that will meet customer expectations

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concurrent engineering

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a characterisic of processes that are meeting humanity's needs without harming future generatons

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sustainability

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the process of planning, implementing, and controlling the efficient, cost effective flow of products, materials and information from the point of consumption back to the point of origin for returns, repair, remanufacture or recycling

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reverse logistics

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the lot size that minimizes total annual inventory holding and ordering costs

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economic order quantity

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the average elapsed time between receiving (or placing) replenishment orders of Q units for a particular lot size

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time between orders

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a system designed to tract the remaining inventory of a SKU each time a withdrawal is made to determine whether it is time to reorder

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continuous review system or reorder point system

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the measurement of a SKU's ability to satisfy future demand

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inventory position

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the predetermined minimum level that an inventory position must reach before a fixed quantity of the SKU is ordered

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reorder point

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the desired probability of not running out of stock in any one ordering cycle, which begins at the time an order is placed and ends when it is placed and ends when it arrives in stock

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service level

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the period over which safety stock must protect the user from running out of stock

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protection interval

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a system in which an item's inventory position is reviewed periodically rather than continuously

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periodic review system