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OM 300: Test 1 Study Guide

by: Julie Knight

OM 300: Test 1 Study Guide OM 300

Julie Knight
GPA 3.8

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This study guide covers chapters 1, 2, 5, 5s ,6, and 7.
Operations Management
Andrea Marks
Study Guide
OM 300, OM, Operations Management
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This 14 page Study Guide was uploaded by Julie Knight on Monday February 8, 2016. The Study Guide belongs to OM 300 at University of Alabama - Tuscaloosa taught by Andrea Marks in Winter 2016. Since its upload, it has received 150 views. For similar materials see Operations Management in Business at University of Alabama - Tuscaloosa.


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Date Created: 02/08/16
OM 300 Andrea Marks Operations Management Test Review (Chapters 1,2,5,5s,6,and7) Chapter 1: Operations and Productivity  Production- the creation of goods and services  Operations management (OM)- activities that relate to the creation of goods and services through the transformation of inputs to outputs  All organizations perform three functions to create goods and services: o Marketing- which generates demand o Production/operations- which creates the product o Finance/accounting- which tracks how well the organization is doing, pays the bills, and collects the money  Supply chain- a global network of organizations and activities that supplies a firm with goods and services  We study OM for four reasons: o To learn how people organize themselves for productive enterprise o To learn how goods and services are produced o To understand what operations managers do o Because OM is a costly part of an organization  10 strategic OM decisions- 1) design of goods and services; 2) managing quality; 3) process strategy; 4) location strategies; 5) layout strategies; 6) human resources; 7) supply chain management; 8) inventory management; 9) scheduling; 10) maintenance  Services- economic activities that typically produce an intangible product (such as education, entertainment, lodging, government, financial, and health services)  Service sector- the segment of the economy that includes trade, financial, lodging, education, legal, medical, and other professional occupations  Productivity- the ratio of outputs (goods and services) divided by one or more inputs (such as labor, capital, or management) o Productivity= (units produced)/(input used)  Single factor productivity- indicates the ratio of one resource (input) to the goods and services produced (outputs)  Multifactor productivity- indicates the ratio of many or all resources (inputs) to the goods and services produced (outputs) o = (output)/(labor+ material+ energy+ capital+ miscellaneous)  Productivity variables- the three factors critical to productivity improvement- labor, capital, and the art and science of management OM 300 Andrea Marks  Knowledge society- a society in which much of the labor force has migrated from manual work to work based on knowledge  Challenges for operations managers: o Global focus; international collaboration o Supply chain partnering; joint ventures; alliances o Sustainability, green products; recycle, reuse o Rapid product development; design collaboration o Mass customization; customized products o Just in time performance; lean; continuous improvement o Empowered employees; enriched jobs  Stakeholders- those with a vested interest in an organization, including customers, distributors, suppliers, owners, lenders, employees, and community members Chapter 2: Operations Strategy in a Global Environment  Domestic businesses decide to form some sort of international operations for six reasons: o Improve supply chain o Reduce costs o Improve operations o Understand markets o Improve products o Attract and retain global talent  Maquiladoras- Mexican factories located along the U.S.-Mexico border that receive preferential tariff treatment  World Trade Organization (WTO)- an international organization that promotes world trade by lowering barriers to the free flow of goods across borders  North American Free Trade Agreement (NAFTA)- a free trade agreement between Canada, Mexico, and the U.S.  European Union (EU)- a European trade group that has 27 member states  Mission- the purpose or rationale for an organization’s existence  Strategy- how an organization expects to achieve its missions and goals  There are three strategic approaches to competitive advantage: o Differentiation o Cost leadership o Response  Competitive advantage- the creation of a unique advantage over competitors  Differentiation- distinguishing the offerings of an organization in a way that the customer perceives as adding value  Experience differentiation- engaging a customer with a product through imaginative use of the five senses, so the customer “experiences” the product  Low cost leadership- achieving maximum value, as perceived by the customer  Response- a set of values related to rapid, flexible, and reliable performance  Resources view- a method managers use to evaluate the resources at their disposal and manage or alter them to achieve competitive advantage OM 300 Andrea Marks  Value chain analysis- a way to identify those elements in the product/service chain that uniquely add value  Five forces model- a method of analyzing the five forces in the competitive environment; 1) immediate rivals; 2) potential entrants; 3) customers; 4) suppliers; 5) substitute products  Stages of the product life cycle o Introduction o Growth o Maturity o Decline  SWOT analysis- a method of determining internal strengths and weaknesses and external opportunities and threats  Key success factors (KSFs)- activities or factors that are key to achieving competitive advantage  Core competencies- a set of skills, talents, and capabilities in which a firm is particularly strong  Activity map- a graphical link of competitive advantage, KSFs, and supporting activities  Outsourcing- transferring a firm’s activities that have traditionally been internal to external suppliers   Theory of comparative advantage- a theory which states that countries benefit from specializing in (and exporting) goods and services in which they have relative advantage, and they benefit from importing goods and services in which they have a relative disadvantage  International business- a firm that engages in cross border transactions  Multinational corporation (MNC)- a firm that has extensive involvement in international business, owning or controlling facilities in more than one country  International strategy- a strategy in which global markets are penetrated using exports and licenses  Multidomestic strategy- a strategy in which operating decisions are decentralized to each country to enhance local responsiveness OM 300 Andrea Marks  Global strategy- a strategy in which operating decisions are centralized and headquarters coordinates the standardization and learning between facilities  Transnational strategy- a strategy that combines the benefits of global scale efficiencies with the benefits of local responsiveness Chapter 5: Design of Goods and Services  Product decision- the selection, definition, and design of products  Product by value analysis- a list of products, in descending order of their individual dollar contribution to the firm, as well as the total annual dollar contribution of the product  Quality function deployment (QFD)- a process for determining customer requirements (customer “wants”) and translating them into the attributes (the “hows”) that each functional area can understand and act on  House of quality- a part of the quality function deployment process that utilizes a planning matrix to relate customer “wants” to “how” the form is going to meet those “wants”  Product development teams- teams charged with moving from market requirements for a product to achieving product success OM 300 Andrea Marks  Concurrent engineering- use of cross functional teams in product design and preproduction manufacturing  Manufacturing and value engineering- activities that help improve a product’s design, production, maintainability, and use  Robust design- a design that can be produced to requirements even with unfavorable conditions in the production process  Modular design- a design in which parts or components of a product are subdivided into modules that are easily interchanged or replaced  Computer aided design (CAD)- interactive use of a computer to develop and document a product  Design for manufacture and assembly (DFMA)- software that allows designers to look at the effect of design on manufacturing of the product  Standard for the exchange of product data (STEP)- a standard that provides a format allowing the electronic transmission of three dimensional data  Computer aided manufacturing (CAM)- the use of information technology to control machinery  3D printing- an extension of CAD that builds prototypes and small lots  Virtual reality- a visual form of communication in which images substitute for reality and typically allow the user to respond interactively  Value analysis- a review of successful products that takes place during the production process  Time based competition- competition based on time; rapidly developing products and moving them to market   Joint ventures- firms establishing join ownership to pursue new products or markets  Alliances- cooperative agreements that allow firms to remain independent, but pursue strategies consistent with their individual missions  Engineering drawing- a drawing that shows the dimensions, tolerances, materials, and finishes of a component OM 300 Andrea Marks  Bill of material (BOM)- a list of the hierarchy of components, their description, and the quantity of each required to make one unit of a product  Make or buy decision- the choice between producing a component or a service and purchasing it from an outside source  Group technology- a product and component coding system that specifies the size, shape, and type of processing; it allows similar products to be grouped  Assembly drawing- an exploded view of the product  Assembly chart- a graphic means of identifying how components flow into subassemblies and final products  Route sheet- a listing of the operations necessary to produce a component with the material specified in the bill of material  Work order- an instruction to make a given quantity of a particular item  Engineering change notice (ECN)- a correction of modification of an engineering drawing or bill of material  Configuration management- a system by which a product’s planned and changing components are accurately identified  Product life cycle management (PLM)- software programs that tie together many phase of product design and manufacture  Process chain network (PCN) analysis- analysis that focuses on the ways in which processes can be designed to optimize interaction between firms and their customers  Process chain- a sequence of steps that accomplishes an identifiable purpose (of providing value to process participants)  Steps to form a decision tree: o Include all possible alternatives (including “do nothing”) and states of nature o Enter payoffs at the end of the appropriate branch o Determine the expected value of each course of action by starting at the end of the tree and working toward the beginning Chapter 5s: Sustainability in the Supply Chain  Corporate social responsibility (CSR)- managerial decision making that considers environmental, societal, and financial impacts  Sustainability- meeting the needs of the present without compromising the ability of future generations to meet their needs o Systems view- looking at a product’s life from design to disposal, including all of the resources used o The commons- inputs or resources for a production system that are help by the public o Triple bottom line- systems needed to support the three Ps: people, planet, and profit OM 300 Andrea Marks o  Carbon footprint- a measure of total greenhouse gas emissions caused directly or indirectly by an organization, a product, an event, or a person   Economic sustainability- appropriately allocating scarce resources to make a profit  Life cycle assessment- analysis of environmental impacts of products from the design stage through end of life o The three Rs: reduce, reuse, and recycle o Revenue retrieval= (total resale revenue)+(total recycling revenue)-(total processing cost)-(total disposal cost) o Total life cycle cost= (cost of vehicle)+(life cycle cost of fuel)+(life cycle operating cost) o  Closed loop supply chains- supply chains that consider forward and reverse product flows over the entire life cycle  ISO 14000- a series of environmental management standards established by the International Organization for Standardizations (ISO) Chapter 6: Managing Quality OM 300 Andrea Marks  Quality- the ability of a product or service to meet customer needs   ISO 9000- a set of quality standards developed by the International Organization for Standardization (ISO)  Cost of quality (COQ)- the cost of doing things wrong- that is, the price of nonconformance o Prevention costs o Appraisal costs o Internal failure costs o External failure costs  Total quality management (TQM)- management of an entire organization so that it excels in all aspects of products and services that are important to the customer o Continuous improvement o Six Sigma o Employee empowerment o Benchmarking o Just in time o Taguchi concepts o Knowledge of TQM tools  PDCA- a continuous improvement model of plan, do, check, act  Six Sigma- a program to save time, improve, quality, and lower costs   Employee empowerment- enlarging employee jobs so that the added responsibility and authority is moved to the lowest level possible in the organization  Quality circle- a group of employees meeting regularly with a facilitator to solve work related problems in their work area OM 300 Andrea Marks  Benchmarking- selecting a demonstrated standard of performance that represents the very best performance for a process or an activity  Quality robust- products that are consistently built to meet customer needs in spite of adverse conditions in the production process  Quality loss function- (QLF)- a mathematical function that identifies all costs connected with poor quality and shows how these costs increase as product quality moves from what the customer wants  Target oriented quality- a philosophy of continuous improvement to bring a product exactly on target     Cause and effect diagram- a schematic technique used to discover possible locations of quality problems  Pareto charts- a graphic way of classifying problems by their level of importance, often referred to as the 80-20 rule OM 300 Andrea Marks  Flowcharts- block diagrams that graphically describe a process or system  Statistical process control (SPC)- a process used to monitor standards, make measurements, and take corrective action as a product or service is being produced  Control charts- graphic presentations of process data over time with predetermined control limits   Inspection- a means of ensuring that an operation is producing at the quality level expected  Source inspection- controlling or monitoring at the point of production or purchase- at the source  Poka yoke- literally translated, “foolproof”; it has come to mean a device or technique that ensures the production of a good unit every time  Checklist- a type of poka yoke that lists the steps needed to ensure consistency and completeness in a task  Attribute inspection- an inspection that classifies items as being either good or defective  Variable inspection- classifications of inspected items as falling on a continuum scale, such as dimension or strength  Service recovery- training and empowering frontline workers to solve a problem immediately Chapter 7: Process Strategy  Process strategy- an organization’s approach to transforming resources into goods and services OM 300 Andrea Marks  Process focus- a production facility organized around processes to facilitate low volume, high variety production  Modules- parts or components of a product previously prepared, often in a continuous process  Repetitive process- a product oriented production process that uses modules  Product focus- a facility organized around products; a product oriented, high volume, low variety process  Mass customization- rapid, low cost production that caters to constantly changing unique customer desires    Build to order- produce to customer order rather than to a forecast  Postponement- the delay of any modifications or customizations to a product as long as possible in the production process  Crossover chart- a chart of costs at the possible volumes for more than one process OM 300 Andrea Marks   Flexibility- the ability to respond with little penalty in time, cost or customer value  Flowchart- a drawing used to analyze movement of people or material  Time function mapping (or process mapping)- a flowchart with time added on the horizontal axis   Value stream mapping (VSM)- a process that helps managers understand how to add value in the flow of material and information through the entire production process  Process charts charts that use symbols to analyze the movement of people or material OM 300 Andrea Marks   Service blueprinting- a process analysis technique that lends itself to a focus on the customer and the provider’s interaction with the customer  Four different services: 1) service factory; 2) service shop; 3) mass service; 4) professional service  Techniques for improving service o Separation o Self service o Postponement o Focus o Modules o Automation o Scheduling o Training  Computer numerical control (CNC)- machinery with its own computer and memory  Automatic identification systems (AIS)- a system for transforming data into electronic form, for example, bar codes  Radio frequency identification (RFID)- a wireless system in which integrated circuits with antennas send radio waves  Process control- the use of information technology to control a physical process  Vision systems- systems that use video cameras and computer technology in inspection roles  Robot- a flexible machine with the ability to hold, move, or grab items  Automates storage and retrieval systems (ASRS)- computer controlled warehouses that provide for the automatic placement of parts into and from designated places in a warehouse  Automated guided vehicle (AGV)- electronically guided and controlled cart used to move materials  Flexible manufacturing systems (FMS)- a system that uses electronic signals from a centralized computer to automate production and material flow  Computer integrated manufacturing (CIM)- a manufacturing system in which CAD, FMS, inventory control, warehousing, and shipping are integrated OM 300 Andrea Marks  Process redesign- the fundamental rethinking of business processes to bring about dramatic improvements in performance


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