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69 Cards in this Set
- Front
- Back
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types of processing - job shop
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- job shop is customized goods or services
- advantages are able to handle a wide variety of work - disadvantages are slow, high cost per unit, complex planning and scheduling |
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T.O.P - batch
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- batch is semi-standardized goods or services
- advantages are flexibility; easy to add or change products or services - moderate cost per unit, moderate scheduling complexity |
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T.O.P - repetitive/assembly
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- repetitive assembly is standardized goods or services
- advantages are low unit cost, high volume efficient - disadvantages are low flexibility, high cost of downtime |
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T.O.P - continuous
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- continuous is highly standardized goods or services
- advantages are very efficient, very high volume - disadvantages are very rigid, lack of variety, costly to change, very high cost of downtime |
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examples of volume and flexibility
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job shop: repair shop/emergency room (low volume high flex)
batch: commercial bakery/classroom lecture (moderate volume, moderate flex) repetitive: assembly line/automatic car wash (high volume, low flex) continuous flow: petroleum refining/water treatment (very high volume, very low flex) |
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product layouts
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layout that uses standardized processing operations to achieve smooth, rapid, high-volume flow
- used for repetitive processing - see slide |
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process layouts
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layouts that can handle varied processing requirements
- used for intermittent processing, job shop or batch - see slide |
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fixed position layouts
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layout in which the product or project remains stationary, and workers, materials, and equipment are moved as needed
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location decision options
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existing companies generally have 4 options available in location planning
- expand an existing facility - add new locations while retaining existing facilities - shut down one location and move to another - do nothing |
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supply chain network
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customers are sized by demand
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supply chain network location
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- see slide
- average distance to customer is 742 miles |
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service location
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also applies to service industry, not just product industry
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forces driving globalization
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resource acquisition, market expansion, technological changes, social changes, competitive forces
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specialization and global supply chain
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- economies and companies could improve their "wealth" by allowing specialization of tasks
- it is an important role of logistics to help extend the market area of countries or companies through improved efficiency to lower the "landed cost" in new market areas - global supply chain is made up of interrelated organizations, resources, and processes across countries, which create and deliver products and services to end consumers - in the instance of global supply, the chain is extended to many different countries around the world |
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low cost country sourcing: pros
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- lower costs of production
- increased number of suppliers - opportunities to identify improved processes and technologies |
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low cost country sourcing: cons
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- identification of qualified suppliers
- complexity of importing and exporting - communications and transporting - security - inventory costs - transportation costs |
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locational cost-volume-profit analysis
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technique for evaluating location choices in economic terms:
- determine the fixed and variable costs for each alternative - plot the total cost lines for all alternatives on the same graph - determine the location that will have lowest total cost (or highest profit) for the expected level of output |
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assumptions of cost-volume profit analysis
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- fixed costs are constant for the range of probable output
- variable costs are linear for the range of probable output - the required level of output can be closely estimated - only 1 product is involved |
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equation for cost-volume-profit analysis
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Total cost = FC + V x Q
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examples of cost-volume-profit analysis
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-see slides for numbers and plotted graph
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In graph of locational cost-volume-profit analysis example
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solely depends on quantity and location
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transportation mode choices
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air, rail, motor, water, pipeline, intermodal
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air carrier mode
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types of service: all cargo, mixed passenger/freight, domestic, international
- many mixed carriers, fewer all cargo - domestic deregulated, international by treaty - high costs/lowest transit time (high value/weight ratio) - limited accessibility - common and contract - advantage is speed, disadvantage is expense and limit for capacity |
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rail freight mode
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carry wide variety of goods: low-value/high weight over long distance, bulk goods more common
- few carriers - common and contract - longer service time vs. truck - accessibility can be low |
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motor carrier mode
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carry wide variety of goods: higher value/weight ratio, manufactured goods
- many carriers - high accessibility (door to door) - common, contract, and private - roads are everywhere which makes for high accessibility |
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water carrier mode
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vessel types: general cargo (container), dry bulk (ore and agricultural), liquid bulk (tanker)
- carry wide variety of goods - low cost (longer transit times and low value/weight ratio) - reduced accessibility - rivers, waterways, seaports - advantage for international business, disadvantage because it takes a very long time |
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pipeline mode
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types of services: not suitable for general transportation
- accessibility is very low - cost structure is highly fixed with low variable costs - own rights-of-way much like railroads - major advantage is low rates - mainly for liquids like oil |
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inter-mode
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combination of modes - combine relative strengths, address accessibility
- common intermodal combinations: rail-truck, rail-ship, air-truck - common for international business |
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international logistics
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- see slide 29 and youtube video
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mode selection
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- product characteristics: value, volume
- accessibility: advantage - motor carriage, disadvantage - air, rail, water - transit time: advantage - air and motor carriage, disadvantage - rail, water, and pipeline - reliability: advantage - air carriers, disadvantage - water carriers |
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mode selection 2
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cost: advantage - motor, water, disadvantage - air transportation
product safety: advantage - air and motor carriage, disadvantage - rail and water capability: advantage - rail and water, disadvantage - air and motor carriage |
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to make mode selection decision
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when we forecast demand, and then choose what type of mode selection will work best.
- between water and air see slide 33 |
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benefits of good quality
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- enhanced reputation for quality
- ability to command premium prices - increased market share - greater customer loyalty - lower liability costs - fewer production or service problems - lower production costs - higher profits |
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dimensions of product quality
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- performance: main characteristics of product
- aesthetics: appearance, feel, smell, taste - special features: extra characteristics - conformance: how well the product conforms to design specifications reliability: consistency of performance durability: the useful life of the product perceived quality: indirect evaluation of quality serviceability: handling complaints or repairs |
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dimensions of service quality
(some are subjective - some people have different ideas of things like convenience) |
- convenience: availability and accessibility of the service
- reliability: ability to perform a service dependably, consistently, and accurately - responsiveness: willingness to help customers in unusual situations and to deal with problems - time: the speed with which the service is delivered - assurance: knowledge exhibited by personnel and their ability to convey trust and confidence - courtesy: way customers are treated by employees - tangibles: physical appearance of facilities, equipment, personnel and communication materials - consistency: ability to provide same level of good quality repeatedly |
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appraisal costs
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costs of activities designed to ensure quality or uncover defects, such as costs of inspectors, testing, test equipment and labs
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prevention costs
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all TQ training, TQ planning, customer assessment, process control, and quality improvement costs to prevent defects from occurring
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failure costs
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costs incurred by defective parts/products or faulty services
- internal failure costs: costs incurred to fix problems that are detected before the product/service is delivered to the customer external failure costs: all costs incurred to fix problems that are detected after the product/service is delivered to the customer |
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improved quality issue
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provided by people, remember quality is free, means that if we produce high quality products, it will be cheaper than low quality product. low quality we will have to take care of if something goes wrong in future (recall, logistics, etc)
- Philip B. Crosby: zero defects, quality is free 1979 |
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Total Quality Management (TQM)
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a philosophy that involves everyone in an organization in a continual effort to improve quality and achieve customer satisfaction
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TQM approach
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- find out what the customer wants
- design a product or service that meets or exceeds customer wants - design processes that facilitate doing the job right the first time - keep track of results - extend these concepts throughout the supply chain |
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TQM elements
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- continuous improvement: improve on an ongoing basis
- competitive benchmarking - employee empowerment - team approach - decision based on fact, not opinion - knowledge of tools - supplier quality - champion - quality at the source: making each worker responsible for quality - suppliers are partners in the process |
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obstacles to implementing TQM
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- lack of company-wide definition of quality
- lack of strategic plan for change - lack of customer focus - poor inter-organizational communication - lack of employee empowerment - view of quality as a "quick fix" - emphasis on short-term financial results - inordinate presence of internal politics and "turf" issues - lack of strong motivation - lack of time to devote to quality initiatives - lack of leadership |
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quality tools
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process maps: way for us to ensure process in forward way
cause & effect diagram: backwards way to control process histogram: way we calculate frequency of product in graph check sheets: collect and organize data pareto charts: reps highest defect place - bars and lines on graph scatter plot: if 2 variables have correlation or not run and control charts: observations of products over time |
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Six Sigma quality and failure rates
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"six sigma" refers to variation that exists within plus or minus six standard deviations of the process outputs
- based on one-sided tail of normal distribution - process mean is allowed to shift +/- 1.5 - traditional standard for high-quality is at 3 sigma (93.90%) |
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quality variation - random
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natural variation in the output of a process, created by countless minor factors
-example: not sleeping well before an exam and performing poorly on the exam |
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quality variation - assignable
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a variation whose cause can be identified, a nonrandom variation
-example: something we can control like coming for class and therefore doing good on the exam - to improve control, eliminate assignable variation and reduce random variation, we can't eliminate all. |
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generating ideas - brainstorming
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group of people share thoughts and ideas on problems in a relaxed atmosphere
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generating ideas - quality circle
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- groups of workers who voluntarily meet to discuss ways of improving products or processes
- quality circle teams have historically had relatively little authority to make any but the most minor changes |
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generating ideas - benchmarking
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- identify a critical process that needs improvement
- identify an organization (may be from other industries) that excels in this process - contact the organization - analyze the data - improve the critical process |
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how much to inspect?
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inspection level determined by inspection cost and cost of passing defectives - fully depends on the cost
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Plan-Do-Study-Act Cycle - an example of continuous improvement
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Plan: begin by studying and documenting the current process, collect data on the process or problem, analyze the data and develop a plan for improvement, specify measures for evaluating the plan
Do: implement the plan, document any changes made, collect data for analysis Study: evaluate the data collection during the do phase, check results against goals formulated during the plan phase. Act: if successful results, standardize the new method and communicate it to the relevant personnel, implement training for new method, if unsuccessful revise the plan and repeat the process |
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Statistical Process Control
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- statistical evaluation of the output of a process
- helps us to decide if a process is "in control" or if corrective action is needed - simple steps: sampling and sampling distribution, control process (figures and charts), process capability - most important tool in quality management. We make a sample out of our population, then use figures and charts that were introduced before, and then calculate process to see if capable or not |
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sampling distribution
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a theoretical distribution that describes the random variability of sample statistics, the normal distribution is commonly used for this purpose
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central limit theorem
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the distribution of sample averages tends to be normal regardless of the shape of the process distribution
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Cp: process capability index
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- used to assess the ability of a process to meet specification
- Cp is used to determine "capability" when the process is mean-centered - mean is assumed to sit directly between UTL and LTL |
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Cp Process capability index equation
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Cp = UTL (upper control limit) - LCL (lower control limit) / 6standard deviation
- if Cp is > 1.33 then process is capable. |
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Cpk: process capability index
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- used to asses the ability of a process to meet specifications
- Cpk is used to determine "capability" when the process is mean-shifted |
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Cpk process capability index equation
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min (UTL - grand mean, / 3standard deviation, grand mean - LTL, / 3standard deviation
- if Cpk is > 1.33 then the process is capable |
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project manager
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-ultimately responsible for the success or failure of the project
- most important role - must effectively manage: the work, human resources, communications, quality, time, costs |
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Work Breakdown Structure (WBS)
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- hierarchical listing of what must be done during a project
- establishes a logical framework for identifying the required activities for the project -identify the major elements of the project -identify the major supporting activities for each of the major elements -break down each major supporting activity into a list of the activities that will be needed to accomplish it |
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PERT (program evaluation and review technique) and CPM (critical path method)
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- 2 techniques used to manage large-scale projects
- very similar - can obtain a graphical display of project activities (Network diagram), estimate of how long the project will take, an indication of which activities are most critical to timeline project completion, an indication of how long any activity can be delayed without delaying the project |
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critical path
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- network approach that helps calculate project duration
- "path" is a sequence of activities that begins at the start of the project and goes to the end of the project - critical path is the path that takes the longest to complete and thus determines the minimum duration of the project |
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determining slack
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slack: the amount of time an activity on a non-critical path can be delayed without affecting the duration of the project
- knowledge of slack times provides managers with information for planning allocation of scarce resources (control efforts will be directed toward those activities that might be most susceptible to delaying the project) |
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4 values used in determining slack
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early start - earliest an activity can start
early finish - earliest it can finish late start - latest an activity can start and not delay the project late finish - latest an activity can finish and not delay the project - - reasons for slack, time and funding is always limited, may have to delay some certain activity due to this |
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time-cost trade-offs
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activity time estimates are made for some given level of resources
- - it may be possible to reduce the duration of a project by injecting additional resources |
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crashing
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shortening activity durations
- - typically involves the use of additional funds to support additional personnel or more efficient equipment, and the relaxing of some work specifications - - the project duration may be shortened by increasing direct expenses, thereby realizing savings in indirect project costs |
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crashing projects
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- a methodical approach to reducing project duration
- - focus on time of activities on the critical path - - looking for greatest improvement with least cost |
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steps to crashing projects
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- create network
- identify critical path - identify costs of reducing each activity on path - reduce most cost effective activity - look for critical path changes - crash next activity |
