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102 Cards in this Set

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A key disadvantage of a process-oriented layout is:

the complex scheduling problem presented by this layout strategy.

The layout that uses standardized processing operations to achieve smooth, rapid, high volume flow is known as:

Product Layout


The upper limit or ceiling on the load that an operating unit can handle is known as:

Capacity

Effective capacity will always be ___________ than design capacity.

less than

An effective inventory management system must address all of the following questions EXCEPT:



a. When to order?


b. How much to order?


c. Which warehouse should we hold inventory in?


d. Which items to inventory?


e. All of the above are inventory management system questions.

Which warehouse should we hold inventory in?

Which of the following is NOT a type of inventory?



a. finished goods


b. raw materials


c. work-in-process


d. MRP


e. replacement parts

MRP

Which of the following is a function of inventory?



a. anticipated inventory


b. smoothing production requirements


c. take advantage of order cycles


d. hedge against price increases


e. all of the above are functions of inventory

all the above are functions of inventory

The assumptions to the basic EOQ model include all of the following EXCEPT:



a. only 1 product


b. known demand


c. shortages


d. a constant usage rate


e. no quantity discounts

shortages

Which inventory management system keeps track of removals from inventory on continual basis, thus monitoring current levels of each item?

Q inventory management system

The analysis of environmental impacts of products from the design stage through end of life with the goal of reducing the environmental impact throughout the product's life, and a focus on the 3 R's - reduce, reuse, and recycle, is known as:

life cycle assessment

Corporate footprint refers to:

the aggregation of carbon emissions associated with all supply chain activities and across all products.

A series of environmental management standards established by the ISO is known as:

ISO14000

Design capacity will always be ________ effective capacity.

more than

When the average unit cost of service or product increases as output increases, there are:

diseconomies of scale.

Which of the following is not one of the four principles of bottleneck management?



a. release work orders to the system at the bottleneck's capacity pace.


b. lost time at the bottleneck is lost system capacity.


c. increasing capacity at non-bottleneck stations is a mirage.


d. increased bottleneck capacity is increased system capacity.


e. bottlenecks should be moved to the end of the system process.

bottlenecks should be moved to the end of the system process.

A strategy to address a mismatch of demand to capacity whereby production maintains a steady rate of regular time output while meeting variations in demand by combination of other options to absorb fluctuations is known as:

level capacity

The quantity and timing of specific end items for the schedule horizon and short-range planning is known as:

Master Production Schedule (MPS)

Which of the following is a function of inventory?



a. to decouple or separate parts of the production process.


b. to decouple the firm from fluctuations in demand and provide a stock of goods that will provide a selection for customers.


c. to take advantage of quantity discounts.


d. to hedge against inflation


e. all of the above are functions of inventory.

all of the above are functions of inventory.

Which of the following statements regarding the production order quantity model is true?



a. it applies only to items produced in the firm's own production departments.


b. it relaxes the assumption that all the order quantity is received at one time.


c. it relaxes the assumption that the demand rate is constant.


d. it minimizes the total productions costs.


e. it minimizes inventory.

it relaxes the assumption that all the order quantity is received at one time.

ABC analysis is based upon the principle that:

there are usually a few critical items, and many items which are less critical.

Dependent demand and independent demand items differ in that:

for any product, all components are dependent-demand items.


the need from independent-demand items is forecast.


the need from dependent-demand items is calculated.

What is the lot-sizing technique that generates exactly what was required to meet the plan?

Lot for Lot

Benefits to using an MRP system include all of the following:

decreased WIP


keeps track of material requirements


ability to evaluate capacity requirements


means of allocating production time.

Continuously updating the computer system which reflects changes as they occur is known as:

regenerative system

A visual depiction of requirements in a bill of materials, where all components are listed by levels is known as:

Product Tree Structure

Characteristics of JIT partnerships with respect to quantities include:

suppliers package in exact quantities as needed.

Which one of the following is NOT a benefit of the implementation of JIT?



a. cost reduction


b. work-in-process reduction


c. variability increase


d. quality improvement


e. delay reduction

variability increase

Just-in-time systems make demands on layouts, including:

distance reduction


increased flexibility


reduced space and inventory


cross-trained, flexible employees

Define capacity.

capacity is the upper limit or ceiling on the load that an operating unit can handle.



capacity can be expressed in either inputs or outputs.



capacity enables managers to make decisions or plans related to the projected capacity.

Questions in capacity planning?

1. what kind of capacity is needed?


2. how much is needed?


3. when is it needed?

Importance of capacity decisions:

1. meet future demands for products and services.



2. initial cost invested. the greater the capacity, the greater the cost.



3. relationship between capacity and operating costs. ideally they would match, tends to minimize operating costs.



4. long-term commitment of resources.

Define design capacity.

the maximum output that can possibly be obtained; by design parameters.

Define effective capacity.

the maximum possible output given a product mix, scheduling difficulties, machine maintenance, qualify factors, etc.

Define actual output.

the rate of output actually achieved. it cannot exceed effective capacity and is often less than this due to breakdowns, defective output, shortages of material, etc.

Define efficiency.

ratio of actual output to effective capacity.

Define utilization.

ration of actual output to design capacity.

Define bottleneck.

limiting factor or constraint in a system.

Define capacity analysis.

means of determining throughout capacity of workstations or an entire production system.

Define theory of constraint.

1. identify the constraints.


2. develop a plan for overcoming the identified constraints.


3. focus resources on plan.


4. reduce the effects of the constraints by offloading work or by expanding capability. make sure that the constraints are recognized by all those who can impact upon them.


5. when one set of constraints is overcome, identify new constraints and repeat.

Define bottleneck management.

1. release work order to the system at the pace set by the bottleneck's capacity: drum-buffer rope.


2. lost time at the bottleneck represents lost capacity for the whole system.


3. increasing the capacity of a non-bottleneck station is a mirage.


4. increasing the capacity of the bottleneck increases capacity for the whole system.

Define economies of scale.

average unit cost of service or product can be reduced by increasing output. based upon four principles:



1. spreading fixed costs.


2. reducing construction costs


3. cutting costs of purchased materials


4. finding process advantages

Define diseconomies of scale.

occurs when average unit cost of service or product increases as output increases. typically due to:



1. increased complexity


2. loss of focus and 'touch' with lower management levels.


3. inefficiencies due to size and scope.

Calculating Processing requirements.

a reasonably accurate demand forecast for each product, and standard processing time for unit for each product, number of work days per year, and the number of shifts that will be used.

Define cash flow.

difference between the cash received from sales and the cash outflow of labor materials, overhead and taxes.

Define present value.

expresses current value of all future cash flows of an investment proposal.

Define payback.

focuses on the length of time to repay initial investment.

Define internal rate of return (IRR):

summarizes the initial cost, expected annual cash flows, and estimated future salvage value of an investment proposal in an equivalent interest rate.

Aggregate planning (sales & operations planning):

used for medium range capacity planning (usually 3 to 18 months)



Goal: balance capacity and demand.

Define long-term decisions.

products, process, forecasting, layout, and location.

Aggregate decisions.

capacity equal to demand in mid-range plan.



demand = capacity


demand > capacity


demand < capacity

Short term decisions.

scheduling and sequencing.

Purpose of Aggregate planning

to develop feasible production plan to achieve balance of expected demand and capacity over planning horizon while minimizing cost.



1. meet demand


2. minimize cost

Inputs to aggregate planning

1. available resources over period must be known (need to know inputs)


2. 'known' forecast for expected demand (treat as if no errors).


3. employment policies.

What are the demand options?

price changes, promotion, backorders, and new demand/counter-seasonal demand.

Demand: price changes (advantage)

if lower price, price elasticity. quick and easy. drive up volume, get more sales. be careful of expenses and costs, may lose profit.

Demand: promotion (advantage)

Advantage: increasing conumer awareness, drives up demand.

Demand: promotion

advantage: increasing consumer awareness. drives up demand.

Define: promotion (disdvantage)

may cost too much money, may lower profit, might not be effective as predicted.

Define backorders.

like a raincheck; delays satisfaction of demand to a later time. potential for a loss sale.



advantage: not available, but if customer want to wait for specified date.

Define new demand/counter-seasonal demand.

develop different product using same resources. use majority of assets; levels. opposite seasonal demand, using same resources.

Define hire & fire (layoffs) workers.

consideration to costs including:


1. hiring: recruitment, screening & training.


2. fire: severance pay, realigning workers, worker motivation, loss of moral.



advantage: increase or decrease product output; can control supply.



disadvantage: impact upon people; morale of people.

Define overtime.

extra pay; short-term increase on supply.



disadvantage: company has to pay extra; productivity decreases; slow-down; decreases quality, increases accidents.

Define part-time workers.

Advantage: employer does not have to pay additional benefits; replaceable; satisfies need for overtime.



Disadvantage: not there 40 hours per week, may not get information needed.

Define inventories.

Advantage: demand for future; finished item/product waiting for sale.



Disadvantage: space it takes up; waiting for the sale; costs (money tied up).

Define subcontracting.

Advantage: hire third party when supply and demand increases and capacity is reached; need extra help; meets demand when needed.



Disadvantage: expensive; takes time to find someone with necessary skills to do the job.

Basic strategies for uneven demand.

1. level capacity


2. chase demand


3. hybrid

Define level capacity.

maintain steady rate of regular time output while meeting variations in demand by combinations of options; use subcontracting, backlogging & use of inventories to absorb fluctuations.



Advantage: work moral good.



Disadvantage: predicting actual demand; cost of holding is expensive.


Define chase demand.

match capacity to demand; planned output for a period would be equal to expected demand for that period. naive forecasting strategy.



Advantage: no inventory build-up.



Disadvantage: lack of stability; not predictable; schedule change.

Define hybrid.

combination of level and chase used over time to balance demand versus capacity. looks for stability.



Advantage: allows for flexibility.



Disadvantage: optimal level could be constantly changing.

Explain choosing a strategy.

seek to match capacity to demand within time periods.

see powerpoint.

What are the 6 assumptions?

1. regular capacity in all periods.


2. cost is linear function (dollars x per unit).


3. plans are feasible (discussed at meetings to make more realistic and implement).


4. all costs associated can be represented by lump sum or unit costs.


5. cost figures can be reasonably estimated and are constant.


6. inventories can change at uniform rate.

Define informal techniques.

graphing & charting. as long as numbers on paper is good, it can be feasible.



Example: trial & error table.

What is the purpose of linear programming/transportation method?

optimal solution; minimize cost or maximize profit.

Define Master Production Schedule (MPS).

quantity & timing of specific end items (SKU) for schedule horizon as well as on-hand inventory; short-range planning.

Define rough-cut planning.

approximate balancing of capacity & demand to test feasibility of master schedule.

Explain how to develop MPS.

Inputs:


1. beginning inventory


2. forecasts for demand


3. customer orders



Outputs: projected inventory, production requirements, uncommitted inventory (available to promise inventory - ATP)

Projected on-hand inventory formula.

previous inventory level minus current requirements.

Define demand time fence.

the point in time inside of which the forecast is no longer included in total demand and projected available inventory calculations; inside this point only customer orders are considered.

Define planning time fence.

a point in time denoted in the planning horizon of the master scheduling process that marks a boundary inside of which changes to the schedule can manually be made by the master scheduler. the customer requirements within this time fence are the larger of teh forecast or customer orders.

What are the types of inventory?

1. raw material & purchased goods


2. work-in-process (WIP)


3. Finished Goods (FG)


4. maintenance, repair & operating (MRO) inventory

List some functions of inventory managment.

1. anticipated demand.


2. smoothing production requirements.


3. de-couple components.


4. protect against stock-outs.


5. advantage of order cycles.


6. hedge against price increases & quantity discounts.


7. permit operations.

What is the objective of inventory management?

to strike a balance between inventory investment and customer service.



right goods, in sufficient quantities, in right place at the right time.

What are the requirements for effective inventory management?

Need to know:


1. which items to inventory?


2. how much to order?


3. when to order?

What is the demand forecast & lead time information for inventory?

crucial link between forecasting & inventory management.

What types of cost is required with inventory management?

1. holding/carrying costs.


2. ordering costs or setup costs.


3. shortage costs.

Define holding or carrying costs.

includes interest insurance, taxes, depreciation, obsolescence, deterioration, spoilage, pilferage, breakage, warehousing, opportunity costs.

Define ordering costs.

including determining how much to order, costs of invoices, inspection & temporary storage (e.g. machine setup costs).


Define setup costs.

costs result when changing over from one fixture type to another, involved with product changes, cost of labor and fixturing.

Define shortages costs:

resulting when demand exceeds the supply of inventory on-hand including not making sales loss of customer goodwill, lateness costs.

What is the ABC approach?

classifying inventory according to some measure of importance & allocating control efforts.



A = high importance; everyday.


B = medium importance; every quarter.


C= lowest importance; once a year.

What is cycle counting?

a continuous reconciliation of inventory with records; a process by which inventory records are verified.

Define the periodic (P) system.

physical count of items in inventory made at periodic intervals; period remains the same; quantity changes based upon target inventory level and inventory position at time of physical count.

Define Continuous (Q) system.

keeps track of removals from inventory on continual basis, thus monitoring current levels of each item; when inventory reaches a predetermined minimum, fixed quantity is ordered.

Economic Order Quantity (EOQ) assumptions:

identify order sizes to minimize sum of annual holding costs and ordering costs of inventory.



assumptions:


1. only 1 product


2. known demand


3. usage rate constant


4. constant lead time


5. single order delivery of quantity


6. no quantity discounts


7. no shortages

Define Quantity discounts.

price reductions for large orders offered to customers to induce them to buy in large quantities.



goal: select order quantity that will minimize total cost (TC)

Method for EOQ.

1. compute common EOQ.


2. identify curve with EOQ in feasible range.


if feasible EOQ is on the lowest price curve, that is the optimal order quantity otherwise, if feasible EOQ is on any other curve, compute TC for EOQ and for price breaks of all lower cost curves.



objective: identify an order quantity that will represent the lower total cost for entire set of curves.

Materials Requirement Planning (MRP).

Dependent demand = demand for items in inventory that are subassemblies or components to be used in Finished Goods.



Independent demand = demands for items that are Finished Goods.

What is the basics of MRP?

MRP is a computerized information system that translates four basic inputs into several outputs that help decision-making in various materials management areas.

List historic ordering and scheduling problems.

1. task of scheduling, keeping track of parts and coping with changes.


2. lack of differentiation between independent and dependent demand.


Two basic principles of MRP.

1. derive the dependent demand for components from the production schedules of their parents.



2. offset replenishment orders relative to the date when they are needed.


What is the purpose of Master Production Schedule (MPS)?

which end items are to be produced, when these end items are needed and what quantities are needed.

What is the Bill of Materials? (BOM)

listing of all subassemblies, assemblies and raw materials that are needed to produce one unit of finished product.



product structure tree is the visual depiction of requirement in a BOM, where all components are listed by levels.