Operations Exam Definitions Review
Operations Exam Definitions Review BADM 3601
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This 12 page Study Guide was uploaded by Annalea Soudry-Maurer on Thursday May 7, 2015. The Study Guide belongs to BADM 3601 at George Washington University taught by Dr. Marie Matta in Spring 2015. Since its upload, it has received 456 views. For similar materials see Operations Management in Business Administration at George Washington University.
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Date Created: 05/07/15
Term Definition Defect Any instance when a process fails to satisfy its customer Prevention costs Costs associated with preventing defects before they happen Appraisal costs Costs incurred when the firm assess the performance level of its processes Internal Failure costs Costs resulting from defects that are discovered during the production of a service or product External Failure costs Costs that arise when defect is discovered after the customer receives the service or product Warranty A written guarantee that the producer will replace or repair defective parts or perform the service to the customer s satisfaction Quality A term used by customers to describe their general satisfaction with a service or product Quality at the source A philosophy whereby defects are caught and corrected where they were created Six sigma A comprehensive and flexible system for achieving sustaining and maximizing business success by minimizing defects and variability in processes Statistical Process Control SPC The application of statistical techniques to determine whether a process is delivering what the customer wants Variables Service or product characteristics such as weight length volume or time that can be measured Attributes Service or product characteristics that can quickly be counted for acceptable performance yes or no questions Sampling plan A plan that specifies a sample size the time between successive samples and decision rules that determine when action should be taken Sample size A quantity of randomly selected observations of process outputs Common causes of variation The purely random unidentifiable sources of variation that are unavoidable with the current process Assignable causes of variation Any variationcausing factors that can be identified and eliminated Control chart A timeordered diagram that is used to determine whether observed variations are normal Rchart A chart used to monitor process variability xchart A chart used to see whether the process is generating output on average consistent with a target value set by management for the process or whether its current performance with respect to the average of the performance measure is consistent with past performance Term Definition pchart A chart used for controlling the proportion of defective services or products generated by the process cchart A chart used for controlling the number of defects when more than one defect can be present in a service or product Chapter 5 Statistical Process Control Chapter 9 Inventory Management Term Definition Inventory A stock of materials used to satisfy customer demand or to support the production of services or goods Inventory holding cost The sum of the cost of capital and the variable costs of keeping items on hand such as storage and handling taxes insurance and shrinkage Stockout An order that cannot be satisfied resulting in a loss of the sale Backorder A customer order that cannot be filled when promised or demanded but is filled later Ordering cost The cost of preparing a purchase order for a supplier or a production order for manufacturing Setup cost The cost involved in changing over a machine or workspace to produce a different item Quantity discount A drop in the price per unit when an order is sufficiently large WorkinProcess Items such as components or assemblies needed to produce a final product in manufacturing or service operations Finished Goods The items in manufacturing plants warehouses and retail outlets that are sold to the firm s customers Cycle inventory The portion of total inventory that varies directly with lot size Lot sizing The determination of how frequently and in what quantity to order inventory Safety stock Surplus inventory that a company holds to protect against uncertainties in demand lead time and supply changes Anticipation inventory Inventory used to absorb uneven rates of demand or supply predictable seasonal demand patterns Pipeline inventory Inventory that is created when an order for an item is issued but not yet received inventory moving from point to point in a material flow system Economic Order Quantity EOQ The lot size that minimizes total annual inventory holding and ordering costs Term Definition Time Between Orders TBO The average elapsed time between receiving or placing replenishment orders of Q units for a particular lot size Independent Demand Items for which demand is influenced by market conditions and is not related to the inventory decisions for any other item held Continuous review Q systems A system designed to track the remaining inventory of a SKU each time a withdrawal is made to determine whether it is time to reorder Inventory Position IP The measurement of a SKU s ability to satisfy future demand Scheduled receipts SR Orders that have been placed but have not yet been received open orders Reorder point R The predetermined minimum level that an inventory position must reach before a fixed quantity Q of the SKU is ordered Cycleservice level 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 arrives in stock Protection interval The period over which safety stock must protect the user from running out of stock Periodic Review System P A system in which an item s inventory position is reviewed periodically rather than continuously can simplify delivery scheduling because it establishes a routine a new order is always placed at the end of each review the time between orders T80 is fixed at P total demand between reviews varies Q may vary from one order to the next but T80 is fixed lead times are certain supply is known demand uncertainty is allowed for Term Definition Facility location The process of determining geographic sites for a firm s operations Distribution center A warehouse of stocking point where goods are stored for subsequent distribution to manufacturers wholesalers retailers and customers Critical mass A situation whereby several competing firms clustered in one location attract more customers than the total number who would shop at the same stores at scattered locations Geographical Information System A system of computer software hardware and data that the firm s personnel can use to manipulate analyze and present information relevant to a location decision Term Definition Loaddistance method A mathematical model used to evaluate locations based on proximity factors the objective is to select a location that minimizes the sum of the loads multiplied by the distance the load travels use the actual distance between any two points and multiply the loads flowing to and from the facility by the distances traveled the score is the sum of these loaddistance products by selecting a new location based on load distance scores customer service is improved or transportation costs reduced the goal is to find a location that minimizes the score whether the location is defined by its x coordinate and y coordinate or longitude and latitude Center of Gravity A good starting point to evaluate locations in the target area using the loaddistance model determine x and y coordinates of different locations mUItiIOIY eaCh IOOint s x value by its load summing the products and divide by the sum of the loads not the best but it s a good starting point for finding optimal location Breakeven analysis can help a manager compare location alternatives on the basis of quantitative factors that can be expressed in terms of total cost useful when the manager wants to define ranges over which each alternative is best determine variable and fixed costs plot total cost lines for all sites identify the approximate ranges for which each location as the lowest cost Chapter 11 Location Chapter 14 Forecasting Term Definition Forecast A prediction of future events used for planning purposes Term Definition Time series The repeated observations of demand for a service or product in their order of occurrence Aggregation THe act of clustering several similar services or products so that forecasts and plans can be made for whole families Timeseries analysis A statistical approach that relies heavily on historical demand data to project the future size of demand and recognizes trends and seasonal patterns Forecast error The difference found by subtracting the forecast from actual demand for a given period Mean Squared Error MSE A measurement of the dispersion of forecast errors Standard deviation A measurement of the dispersion of forecast errors Mean absolute deviation MAD A measurement of the dispersion of forecast errors Mean absolute percent error MAPE A measurement that relates the forecast error to the level of demand and is useful for putting forecast performance in the proper perspective Simple moving average method A timeseries method used to estimate the average of a demand time series by averaging the demand for the n most recent time periods Weighted moving average method A time series method in which each historical demand in the average can have its own weight the sum of the weights equals to O Exponential smoothing method A weighted moving average method that calculates the average of a time series by implicitly giving recent demands more weight than earlier demands Chapter 10 Supply Chain Management Term Definition Supply chain design Designing a firm s supply chain to meet the competitive priorities of the firm s operations strategy Inventory turnover An inventory measure obtained by dividing annual sales at cost by the average aggregate inventory value maintained during the year Inventory pooling A reduction in inventory and safety stock because of the merging of variable demands from customers Outsourcing Paying suppliers and distributors to perform processes and provide needed services and materials Makeorbuy decision A magnesia choice between whether to outsource a process or do it in house Backward integration A firm s movement upstream toward the sources of raw materials parts and services through acquisitions Forward integration Acquiring more channels of distribution such as distribution centers and retail stores or even business customers Bullwhip effect The phenomenon in supply chains whereby ordering patterns experience increasing variance as you proceed upstream in the chain Chapter 12 Supply Chain Integration Term Definition Supply chain integration The effective coordination fo supply chain processes through the seamless flow of information up and down the supply chain Chapter 2 Project Management Term Definition Project An interrelated set of activities with a definite starting and ending point which results in a unique outcome for a specific allocation of resources Project management A systemized phased approach to defining organizing planning monitoring and controlling projects Work Breakdown Structure WBS A statement of all work that has to be completed Activity The smallest unit of work effort consuming both time and resources that the project manager can schedule and control Network diagram A network planning method designed to depict the relationships between activities that consists of nodes circles and arcs arrows Term Definition Program evaluation and review technique PERT A network planning method created for the US navy s Polaris missile project in the 1950s which involved 3000 separate contractors and suppliers Critical path method CPM A network planning method developed in the 1950s as a means of scheduling maintenance shutdowns at chemicalprocessing plants Precedence relationship A relationship that determines a sequence for undertaking activities it specifies that one activity cannot start until a preceding activity has been completed ActivityonNode network An approach used to create a network diagram in which nodes represent activities and arcs represent the preceded relationships between them Path The sequence of activities between a project s start and finish Critical path The sequence of activities between a project s start and finish that takes the longest time to complete Earliest finish tim EF An activity s earliest start time plus its estimated duration EF ES t Earliest start time ES The earliest finish time of the immediately preceding activity Latest finish time LF The latest start time of the activity that immediately follows Latest start time LS The latest finish time minus its estimated duration LS LF t Activity slack The maximum length f time that an activity can be delayed without delaying the entire project calculated as S LS ES Supplement D Linear Programming Term Definition Linear Programming A technique that is useful for allocating scarce resources among competing demands Objective function An expression in linear programming models that states mathematically what is being maximized or minimized Decision variables Variables that represent the choices the decision maker can control Term Definition Constraints The limitations that restrict the permissible choices for the decision variables Feasible region A region that represents all permissible combinations of the decision variables in a linear programming models Parameter A value that the decision maker cannot control and that does not change when the solution is implemented Certainty The word that is used to describe that a fact is known without doubt Linearity A characteristic of linear programming models that implies proportionality and additivity there can be no products or powers of decision variables Nonnegativity An assumption that the decision variables must be positive or zero Chapter 15 Ops Planning and Scheduling Term Definition Ops planning and schedang The process of balancing supply with demand from the aggregate level down to the shortterm scheduling level Product family A group of services or products that have similar demand requirements and common process labor and materials requirements Business plan A projected statement of income costs and profits Annual plan A plan for financial assessment used by a nonprofit service organization Demand management The proces sof changing demand patterns using one or more demand options Complementary products Services or products hat have similar resource requirements but different demand cycles Revenue management Varying price at the right time for different customer segments to maximize revenues yielded by existing supply capacity Backlog An accumulation of customer orders that a manufacturer has promised for delivery at a future date Overtime The timet hat employees work that is longer than the regular workday or workweek for which they receive additional pay Undertime The situation that occurs when employees do not have enough work for the regulartime workday or workweek Chase strategy A strategy that involves hiring and laying off employees to match the demand forecast Level strategy A strategy that keeps the workforce constant but varies its utilization via overtime undertime and vacation planning to match the demand forecast Mixed strategy A strategy that considers the full range of supply options Term Definition Inventory holding costs that vary with the level of innovatory investments the costs of capital tied up in inventory variable storage and warehousing costs pilferage and obsolescence costs insurance costs and taxes Chapter 16 Resource Planning Term Definition Resource planning A process that takes sales and operations plans processes information in the way of time standards routings and other information on how services or products are produced and then plans the input requirements Enterprise process A companywide process that cuts across functional areas business units geographical regions and product lines Material requirements planning MRP A computerized information system developed specifically to help manufacturers manage dependent demand inventory and schedule replenishment orders MRP explosion A process that converts the requirements of various final products into a material requirements plan that specifies the replenishment schedules of all the subassemblies components and raw materials needed to produce final products Dependent demand The demand for an item that occurs because the quantity required varies with the production plans for other items held in the firm s inventory Parent Any product that is manufactured from one or more compoenents Component An item that goes through one or more operations to be transformed into or become part of one or more parents Bill of Materials BOM A record of all the components of an item the parentcomponent relationships and the usage quantities derived from engineering and process designs Usage quantity The number of units of a component that are needed dot make one unit of its immediate parent End item The final product sold to a customer Intermediate item An item that has at least one parent and at least one component Subassembly An intermediate item that is assembled from more than one component Purchased item An item that has one or more parents but no components because it comes from a supplier Part commonality The degree to which a component has more than one immediate parent Term Definition Master Production Schedule MPS A part of the material requirements plan that details how many end items will be produced within specified periods of time Projected onhand invnetory An estimate of the amount of inventory available each week after gross requirements have been satisfied Planned receipts Orders that are not yet released to the shop or the supplier Fixed Order Quantity FOO A rule that maintains the same order quantity each time an order is issued Periodic Order Quantity POO A rule that allows a different order quantity for each order issued but issues the order for predetermined time intervals quantity ordered can change but time between orders T80 is constant order quantity equals the amount of the item needed during the predetermined time between orders and must be large enough to prevent shonages LotforLot L4L rule A rule under which the lot size ordered covers the gross requirements of a single week the goal is to minimize inventory levels this rule ensues that the planned order is just large enough to prevent a shortage in the single week it covers Projected on hand inventory combined with the new order will equal zero at the end of week t Chapter 8 Lean System Term Definition Lean systems Operations systems that maximize the value added by each of a company s activities by removing waste and delays from them Lot a quantity of items that are processed together Pull method A method in which customer demand activates production of the service or item Push method A method in which production of the item begins in advance of customer needs Kanban A Japanese word meaning quotCardquot or quotvisible recordquot that refers to cards used to control the low of production through a factory meant to limit the amount of inventory build up Show Your Work Control charts either upper or lower control limit calculation one problem doesn39t say if its a p chart or a c chart p chart proportion defective c chart average complaints c amp p charts are attributes is it defective or is it not variable measurements average amounts range amounts Variables are more costly to measure because you have to measure exact amounts Diagram from homework 9 make diagram find slack longest slack highest number Center of Gravity question points and demand use that to find the center of gravity Total load distance using rectilinear or euclidian distance EOQ given everything for it make sure that units are consistent P and Q inventory system problem finding the reorder point target inventory level Lot Sizing Chart FOQ L4L OR periodic Very end true or false and multiple choice problems about operations as a whole Given exponential smoothing calculate year 5 if you39re given 14 Error measurements how they measure bias which one is best at measuring bias best way cumulative forecast error if you39re looking at1 forecast if you39re looking at multiple forecasts Mean square error or absolute difference is the best Independent and dependent demand a Shoelaces shoes b engine auto c ice skates roller skates C has independent demand because they don t need each other Variability normal distribution bias just error how much your forecast was wrong variability how much something varies from the mean changes from the mean
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