Su 4 Operational Efficiaency And Business Process Performance

Front 1

What is a constraint?

Back 1

The bottleneck operation which backs up WIP the most.

Front 2

Short-term profit maximization requires maximizing the ____________________ through the constraint, called the throughput margin

Back 2

Contribution margin

Front 3

throughput costing

Back 3

recognizes only direct materials costs as being truly variable and thus relevant to the calculation of throughput margin.

Front 4

Equation for Throughput margin

Back 4

Throughput margin= Sales - Direct Materials

Front 5

Drum-buffer-rope

Back 5

How production flow through a constraint is managed

Front 6

Drum

Back 6

Bottleneck Operation. It sets the pace for the entire process

Front 7

The buffer

Back 7

the minimal amount of workin process input to the drum that is maintained to ensure that it is always in operation

Front 8

Rope

Back 8

Sequence of activities preceding and including the bottleneck operation that must be coordinated to avoid inventory buildup.

Front 9

difference between ABC and TOC costing

Back 9

ABC is long term, focusing on all aspects of the operation.


TOC is short term, focusing solely on the direct materials and product mix.

Front 10

Capacity Planning

Back 10

Maximizing the value crated within an organization starts with understanding the nature and capabilities of all the companies resources. f

Front 11

Capacity level influences what three areas?

Back 11

1. Product costing
2. Pricing Decisions
3. Financial statements

Front 12

What is the impact of excess capacity?

Back 12

A company will have to charge higher prices for its products or will have to report lower income on its financial statements.

Front 13

What is the impact of full capacity?

Back 13

Producing at full capacity can have a cost in the form of opportunity costs. A company that could generate additional sales if it had more capacity needs to address weather the acquisition of additional capacity is warranted.

Front 14

3 issues with expanding capacity.

Back 14

1. capital required.
2. difficulty of forming accurate expectations.
3. long timeframe of the lead times and commitment.

Front 15

Porters Model of the decision process for capacity expansion:

Back 15

1. Identify options and response by competitors
2. forcast demand, costs, and developments.
3.determine when each will expand
4. predict total industry capacity and firms market shares.
5. testing for inconsistencies.

Front 16

Effective cost capacity management matches

Back 16

the firms resources with current and future market opportunities.

Front 17

Capacity expansion is also referred to as

Back 17

Market Penetration

Front 18

To remain on the market, a product must accomplish what 2 things?

Back 18

It must provide value to the customer and profit to the seller.

Front 19

The producers profit

Back 19

the difference between the costs and the price charged.

Front 20

The value chain

Back 20

a model for depicting the way in which every function in a company adds value to the final product.

Front 21

Supply Chain

Back 21

The flow of materials and services from their original sources to final consumers.

Front 22

Value Chain analysis

Back 22

A strategic analysis tool that allows a firm to focus on activities that are consistant with its overall strategy.

Front 23

Process analysis

Back 23

A means of linking a firms internal processes to its overall strategy

Front 24

Process value analysis

Back 24

comprehensive understanding of how an organization generates its output. It involves a determination of which activities that use resources are value-adding or nonvalue-adding and how the latter may be reduced or eliminated

Front 25

Activity Analysis

Back 25

Determines what is done, by whom, at what cost in time and other resources, and the value added by each activity

Front 26

Measures of activity performance

Back 26

efficiency, quality, time.

Front 27

Business process reengineering

Back 27

complete rethinking of how business functions are performed to provide value to customers.

Front 28

Benchmarking

Back 28

ongoing process that entails qantitative and qualitative measurement of the difference between the company and the world.

Front 29

Balanced Scorecard

Back 29

employs multiple measures of performance to permit a determination as to whether the organization is achieving certain objectives at the expense of others that may be equally or more important.

Front 30

Balanced Scorecard:
4 categories

Back 30

1. Financial
2. Customer
3. Learning growth and innovation
4. INternal business prcesses

Front 31

4 Costs of quality

Back 31

1. Prevention
2. Appraisal
3. Internal Failure
4. External Failure

Front 32

Costs of quality
Prevention

Back 32

attempts to avoid defective output.

1. Preventive maintenance
2. Employee Training
3. Review of equipment design
4. Evaluation of suppliers

Front 33

Costs of quality
Appraisal

Back 33

statistical quality control programs
inspection
testing.

Front 34

Costs of quality
Internal failure

Back 34

defective products are detected before shipment

Front 35

External failure

Back 35

lost opportunity
Lost profits from a decline in market share.

Front 36

Stockout Costs

Back 36

Economic consequences of not being able to meet an internal or external demand from the current inventory. Such costs consist of internal costs (delays, labor time wastage, lost production, etc.) and external costs (loss of profit from lost sales, and loss of future profit due to loss of goodwill). Also called shortages costs.