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MGT 325 Operations MGT

Lean Operation
A flexible system that uses minimal resources and produces high-quality goods or services
Just-In-Time (JIT)
A highly coordinated processing system in which goods move through the system, and services are performed, just as they are needed
Waste and Inefficiency
Pull System
Replacing material or parts based on demand
A manual system that signals the need for parts or materials
workload leveling
Continuous improvement of the system
quality at the source (automation)
Supporting Goals
1. Eliminate disruptions
2. Make the System Flexible
3. Eliminate waste, especially excess inventory
Seven wastes of Lean Philosophy
Waiting time
unnecessary transporting
processing waste
inefficient work methods
product defects
The Kaizen Philosophy for Eliminating Waste:
1. Waste is the enemy, and to eliminate waste it is neccessarty to get that hands dirty.
2. Improvement should be done gradually and continuously
3. Everyone should be invovled: Top managers, middle and workers
4. Kaizen is build on a cheap strategy, and it does not require spending great sums of technology or consultants
Building Blocks
1. Product Design
2. Process Design
3. Personnel/Organizational Elements
4. Manufacturing planning and control.
Single-Minute exchange of die (SMED)
a system for reducing changeover time
Automatic detection of defects during production
Takt Time
The cycle time needed to match customer demand for final product
Safeguards built into a process to reduce the possibility
System of lights used at each workstation to signal problems or slowdowns
Activity-based costing
Allocation of overhead to specific jobs based on their percentage of activities
Push System
Work is pushed to the next station as it is completed
Pull System
A workstation pulls output from the preceding station as it is needed.
Card or other device that communicates demand for work or materials from the preceding
P-Kanban / Production Kanban
Signals the need to produce parts
Conveyance Kanban (C- kanban)
Signals the need to deliver parts to the next work center
Preventive Maintenance
maintaining equipment i good operating condition and replacing parts that have tendency to fail before they actually do fail.
maintaining a workplace that is clean and free of unnecessary
Value Stream mapping
a visual tool to systematically examine the flow of materials and information
Supply Cain Management
the strategic coordination of the supply chain for the purpose of integrating supply and demand
The part of a supply chain involved with the forward and reverse flow of goods, services, cash, ad information
Manufacturing Supply Chain
Supplier, Mfg, Storage, Distributor, Retailer, Customer
Service Supply Chain
Supplier, Storage, Service, Customer
Purchasing cycle
Series of steps that begin with a request for purchase and end with notification of shipment received in satisfactory condition
Centralized Purchasing
Purchasing is handled by one special department
Decentralized purchasing
Individual departments or separate locations handle their own purchasing requirements
Strategic Partnering
Two or more business organizations that have complementary products or services join so tat each may realize a strategic benefit
Inventory velocity
The speed at which goods move through a supply chain
Bullwhip effect
Inventory oscillations become progressively larger looking backward through the supply chain
Vendor-Managed inventory
Vendors monitor goods and replenish retail inventories when supplies are low
Order Fulfillment
the processes involved in responding to customers orders.
The movement of materials, services, cash, and information in a supply chain
Traffic management
Over-seeing the shipment of incoming and outgoing goods
Radio Frequency Identification (RFID)
A technology that uses radio waves to identify objects, such as goods in supply chains
Third-party logistics (3-PL)
The outsourcing of logistics management
Strategic sourcing
Analyzing the procurement process to lower costs by reducing waste and non-value-added, activities, increase profits, reduce risk, and improve supplier performance
Information Velocity
The speed at which information is communicated in a supply chain
Supply chain visibility
A major trading partner can connect to its supply cian to access data in real time
Event management
The ability to detect and respond to unplanned events
Fill rate
the percentage of demand filled from stock on hand
Reverse Logistics
the process of transporting returned items
Screening returned goods to prevent incorrect acceptance of goods
Finding ways to minimize the number of items that are returned
Closed-Loop Supply Chain
A manufacturer controls both the forward and reverse shipment of product
a technique whereby goods arriving at a warehouse from a supplier are unloaded from the supplier’s truck and loaded onto outbound trucks, thereby avoiding warehouse storage
Delayed differentiation
Production of a standard components and sub assemblies, which are held until late in the process to add differentiating features
reducing one or more steps in a supply chain by cutting out one or more intermediaries
Establishing the timing of the use of equipment, facilities, and human activities in an organization
Flow System
High volume system in which jobs all follow the same sequence
Flow-shop scheduling
Scheduling for flow systems
Job-shop scheduling
Scheduling for low-volume systems with many variations in requirements
The assignment of jobs to processing centers
Gantt Chart
Chart used as a visual aid for loading and scheduling purposes
Load Chart
A gannt chart that shows the loading and idle times for a group of machines or list of departments
Infinite loading
Jobs are assigned to work centers with-out regard to the capacity of the work center
Finite loading
Jobs are assigned to work centers taking into account the work center capacity and job processing times.
Forward scheduling
Scheduling ahead from a point in time
Backward scheduling
scheduling backward from a due date
Scheduling Chart
A gannt chart that shows the orders or jobs in progress and whether they are on schedule
Input/output (I/O) Control
Managing work flow and queues at work centers
Assignment model
A linear programming model for optimal assignment of tasks and resources
Hungarian method
Method of assigning jobs by a one-for-one matching to identify the lowest-cost solution
Determining the order in which jobs at a work center will be processed
an area where one or a few workers and/or machines perform similar work
Priority rules
Simple heuristics used to select the order in which jobs will be processed
Job time
Time needed for setup and processing of a job
Local priority rules
Focus on information pertaining to a single workstation when establishing a job sequence
Global priority rules
Incorporate information from multiple workstations when establishing a job sequence
Job Flow time
The amount of time from when a job arrives until it is finished
Job lateness
The difference between the actual completion date and the due date
Total time needed to complete a group of jobs from the beginning of the first job to the completion of the last job
Johnson’s Rule
Technique for minimizing makespan for a group of jobs to be processed on two machines or at two work centers
Process batch
The economical quantity to produce upon the activation of a given operation
Transfer Batch
The quantity to be transported from one operation to another, assumed to be smaller than the first operation’s process batch
Theory of Constraints
Production planning approach that emphasizes balancing flow throughout a system, and pursues a perpetual five-step improvement process centered around the system’s currently most restrictive constraint
Yield Management
The application of pricing strategies to allocate capacity among various categories demand
Project Champion
A person who promotes and supports a project
Work Breakdown Structure (WFBS)
a hierarchical listing of what must be done during a project
PERT (program evaluation and review technique)
Planning and coordinating large projects
CPM (Critical Path method)
Critical path method, for planning and coordinating large projects
Networking Diagram
Diagram of project activities that shows sequential relationships by use of arrows and nodes
Activity-on-Arrow (AOA)
Network diagram convention in which arrows designate activities
Activity-on-Node (AON)
Network diagram convention in which nodes designate activities
Project steps that consume resources and/or time
The starting and finishing of activities, designated by nodes in the AOA convention
A sequence of activities that leads from the starting node to the finishing node
Critical Path
The longest path; determines the expected project duration
Critical Activities
Activities on the critical path
Allowable slippage for a path; the difference between the length of a path and the length of the critical path
Time estimates that are fairly certain
Estimates of times that allow for variation
Optimistic times
The length of time required under optimal conditions
Pessimistic time
The length of time required under the worst conditions
Most Likely Time
The most probable length of time that will be required
Beta Distribution
Used to describe the inherent variability in activity time estimates
Assumption that path duration times are independent of each other; requiring that activity times be independent, and that each activity is on only one path
Crashing “Project Crashing”
Shortening activity durations. By spending more money and expediting the project
Which of the following is not one of the assumptions of the basic EOQ model?
D. Quantity discounts are available
Which is an application for RFID tags?
A. Monitoring the temperature of fruit during shipment
A non-linear cost related to order size is the cost of
D. Receiving
In a two-bin inventory system, the amount contained in the second bin is equal to the:
When carrying costs are stated as a percentage of unit price, the minimum points on the total curves …..
C. Do not line up
Dairy items, fresh fruit, and newspapers are items that
C. are subject to deterioration and spoilage
Which is not included in order costs?
E. temporary storage of delivered goods
In an ABC system, the typical percentage of the number of items in inventory for A items is about:
A. 10
In the ABC classificiation system, items which account for fifteen percent of the total dollar-volume for a majority of the inventory items would be classified as:
C. C items
Dairy items, fresh fruit, and newspapers are items that
C. are subject to deterioration and spoilage
In the ABC classificiation system, items which account for sixty percent of the total dollar volume for few inventory items would be classified as:
A. A items
The purpose of “cycle counting” is to:
C. reduce discrepancies between inventory records and actual
The EOQ model is most relevant for which of the following?
E. determining fixed order quantities
In a supermarket, the every Monday morning restocking of shelves by a bread vendor is an example of
D. Fixed order interval
A cycle count program will usually require that ‘A’ items be counted:
E. more frequently than annually
A risk avoider would want ___ safety stock
B. More
In the basic EOQ model, if annual demand doubles, the effect on the EOQ is:
E. It increases by about 40 percent
In the basic EOQ model, if lead time increases from five to 10 days, the EOQ will:
D. remain the same
In the basic EOQ model, an annual demand of 40 units, an ordering cost of $5, and a holding cost of $1/unit per year will result in
A. 20
In the basic EOQ model, if D= 60 per month, S=$12, and H = $10 per unit per month, EOQ is:
B. 10
In the basic EOQ model, if annual demand is 50, carrying cost is $2, and ordering cost is $15, EOQ is approximately:
D. 28
Which of the following is not true for the EOQ with incremental replenishment model?
D. THere are no ordering or set up costs
The introduction of quantity discounts will cause the optimum order quantity to be:
E. unchanged or greater
A fill rate is the percentage of____ filled by stock on hand
B. Demand
In the quantity discount model, with carrying cost stated as a percentage of unit purchase price, in order for the EOQ of the lowest curve to be optimum, it must:
B. be in a feasible range
Which of the following is not generally a determinant of the reorder point?
E. purchase cost
If no variations in demand or lead time exist, the ROP will equal:
B. expected usage during the lead time
If average demand in an inventory item is 200 units per day, lead time is three days, and safety stock is 100 units, the reorder point is:
E. 700 units
Which of the following is implied by a “lead time” service level of 95 percent?
D. The probability is 95 percent that demand during lead time will not exceed the amount on hand at the beginning of lead time
The management of supply chain inventories focuses on:
C. both internal and external inventories
An operations strategy for inventory management should work towards:
B. decreasing lot sizes
The Japanese manufacturing strategy of recognizing the numerous opportunity costs of carrying inventories result in:
D. decreased lot sizes
An operations strategy which recognizes high carrying costs and reducces ordering costs will result in:
C. greatly decreased order quantities
The need for safety stocks can be reduced by an operations strategy which:
E. decreases lead time variability
If average demand for an item is 20 units per day, safety stock is 50 units, and lead time is four days, the ROP will be:
E. 130 days
With an ABC system, an item that had a high demand but a low annual dollar volume would probably be classified as:
C. C
Which item would be least likely to be ordered under a fixed order interval system?
B. auto parts at an assembly plant
Which one of these would not be a factor in determining the reorder point?
A. the EOQ
Which of the follwoing most closely describes dependent deman?
C. derived demand
ERP implementation probably won’t require:
B. more than three or four months to install
A computer based information system designed to handle ordering and scheduling of dependent-demand inventories is:
D. material requirements planning (MRP)
The development and application of MRP depnded upon two developments: (1) the recognition of the difference between independent and dependent demand, and (2):
A. computers
The output of MRP is:
C. a schedule of requirements for all parts and end items
Which one of the following is not an input in an MRP system?
A. planned-order schedules
The MRP input stating which end items are to be produced, when they are neeeded, and what quantities are needed, is the:
A. master schedule
In an MRP master schedule, the planning horizon is often separated into a series of times periods called:
D. time buckets
The MRP input listing the assemblies, subassemblies, parts, and raw materials needed to produce one unit of finished product is the:
B. bill-of-materials
A visual depiction of the subassemblies and components that are needed to produce and/or assemble a product is called a(n):
B. product struture tree
The MRP input storing information on the status of each item by time period (e.g., scheduled receipts, lead time, lot size) is the:
C. inventory-records
Which one of the following most closely describes net material requirements?
A. gross requirements-amount on hand – scheduled receipts
In MRP, “scheduled receipts” are:
C. open orders (that is, ordered before the first time bucket, but not delivered yet)
In MRP under lot-for-lot ordering, “planned-order receipts” are:
B. identicial to “planned-order releases”
Under lot-for-lot, order sizes for component parts are essentially determined directly from which one of the following?
B. net requirements
In MRP, the gross requirements of a given component part are calculated from:
E. planned orders of the immediate parent
The identification of parent items is called:
B. Pegging
Periodic updating of an MRP system to account for all changes which have occurred within a given time interval is called:
D. regenerative
An MRP system whose records are updated continuously is referred to as a(n):
D. net-change system
Which is true of a net-change system?
C. the basic production plan is modified to reflect changes as they occur
Which one of the following most closely describes the MRP approach that is used for components or subassemblies to compensate for variations in lead time?
D. safety time
Which of the following lot sizing methods does not attempt to balance ordering (or setup) and holding costs?
C. lot for lot
When MRPII systemes include feedback, they are known as:
E. closed up MRP
The multiplication process used by MRP to determine lower level requirements is called:
E. exploding
____ is choosing how many to order or make
C. Lot sizing
Which of the following is not usually necessary in order to have an effective MRP system?
C. lot-for-lot ordering
The ___ of ERP makes it valuable as a strategic planning tool.
D. Real-time aspect
A recent effort to expand the scope of production resource planning by invlving other functional areas in the planning process has been:
C. manufacturing resources planning
Which statement concerning MRP II is flase?
E. it produces a production plan which includes all resources required
Which of these items would be most likely to have dependent demand?
A. X-box batteries
Which of these products would be most likely to have dependent demand?
B. automobile engines
JIT in its conceptual sense:
ALL THE ABOVE (is a lean production system, has no idle items wainging to be processed, has no idel workers, and has no idle workstations waiting to process work)
JIT philosophy suggests that workers are …
A. Assets
The ultimate goal of JIT is to have:
C. a smooth, rapid flow of materials through the system
Which one of the following is not one of the building blocks that is the foundation of JIT?
E. kanban
Building up an inventory of standard parts or modules instead of immediately producing the finished end items is the essence of:
A. delayed differentiation
Which of the wolloing would you not expect to see in JIT?
E. a signficant number of daily schedule changes
The comprehensive approach used in JIT systems to deal with quality includes:
D. A, B and C
Which of the following is not a benefit of small lot sizes in JIT systems?
B. Each product is produced less frequently
In the JIT philosophy, the ideal lot size is:
C. one unit
Which of the following does not contribute to reduced setup time and cost?
C. custom setup procedures for each product
A conveyance ____ signals parts movement
D. Kanban
The term that refers to the automatic detection of defects is:
C. autonomation
A basic requirement for operating with low inventories present in JIT systems is:
D. major problems must have been solved
Which of the following is not characteristic of preventive maintenance in JIT systems?
D. eliminating supplies of spare parts to reduce capital investment
The Five S’s don’t include …
C. Sanitize
The Kaizen Philosophy applies to ….
C. Waste
A kanban card is used to signal that:
A. work is needed at the work center
With regard to suppliers, JIT systems typically require:
D. long-term relationships and commitments
Which of the following is characteristic of the JIT philosophy?
C. Vendors are co workers, essentially other departments of our organization
The activities controlled in the same way by kanban and MRP II is the determination of
B. products to be built
Process design supporting JIT doesn’t include…
B. Duplicate facilities
Allowing suppliers to manage the restocking of their products in our inventories is part of:
A suffessful conversion to a JIT system requires that the conversion:
C. convert vendors to JIT as one of the last steps
A potenetial obstacle to conversion to a JIT system is:
D. all of the above
A system of lights used at each workstation to signal problems or slowdowns is:
C. andon
Which of the following contributes to the competitive advantage enjoyed by firms using JIT/lean production?
E. Greater flexibility to cope with change
With regard to suppliers, JIT systems typically involve:
C. long-term relationships
A common objective of both MRP and JIT is to:
B. minimize inventory
The ultimate objective in a JIT system is:
D. balanced and rapid flow
Which of the following is not a goal of supply chain management?
D. lowest possible transportation costs
Logistics includes all of these except:
D. customer selection
Small changes in consumer demand can result in large variations in orders placed because of the …
D. Bullwhip effect
RFID chips:
(I) are used to track goods in distribution
(II) are used to track job progress in production
(III) may provide special instructions to operators
(IV) can be used in invetory record keeping
D. I, II, and IV
Which of the following is not a benefit of RFID?
C. frequent deliveries of smaller shipments
A factor that makes it desirable for business organizations to actively manage their supply chains is;
B. increasing globalization
Which of the following is not a benefit of effect supply chain management?
E. larger number of suppliers
Which of the following is not a measure of the reliability of the supply chain?
A. supply chain response time
The automatic identification of material is part of:
Which of the following is not an application of E-business?
E. universal product codes
Which of the following is an advantage of e-business?
(I) reduction of transaction costs
(II) shortened supply chain response time
(III) greater customer loyalty
C. I and II
Which of the following is a barrier to integration of separate organizations in the supply chain?
(I) conflicting objectives of the companies in the chain
(II) different level of capacity of the companies in the chain
(III) reluctance of the organizations in the chain to allow other organizations access to their data.
D. I and III
_____ has helped business concentrate on their core business.
C. Outsourcing
Outsourcing followed by ________ is not simple.
C. backsourcing
The interface between the firm and its suppliers is:
A. purchasing
The two types of decisions that are relevant to supply chain management are:
E. Strategic, operational
One important object of purchasing is to:
B. be knowledgeable about new products
The purchasing cycle begins with:
E. receiving a requisition
Examination of the sources of a supply for purchased parts or materials in order to improve performance is called:
A. vendor analysis
Vendor analysis has the greates potential for savings for items which have:
E. high annual cost-volume
Which of the following is not true of vendor analysis?
A. It involves an examination of the function of purchased parts or raw materials
Which of the following is not a performance dirver?
C. Stability
Which of the following would not usually be a mian factor in selecting a vendor?
D. inventory turnover
Which of the following is part of the purchasing cycle?
(I) Purchasing selects a supplier
(II) Orders from vendors are received
(III) Purchasing receives a requisition
B. I, II, and III
Which of the following is not a key consideration when a company chooses a supplier?
C. value analysis
Which of the following is not a benefit of centralized purchasing?
C. quick response to local needs
The purchasing perspective of the supplier as a partner is characterized by:
B. one or a few suppliers
Vendor Analysis is the examination of the ____ of purchased materials.
B. Source
A system for inventory management involving multi-echelon warehouse is called:
Which of the following is a principle required for ethical behavior in purchasing?
D. all of the above
(loyalty to employer, justice to those you deal with, faith in your profession)
The activity which begins with a request from within the organization is:
B. Purchasing cycle
Our organization can obtain visibility to potential trading partners on the internet by using:
C. B2B
Real time information about product movement on store shelves could benefit from the use of:
D. radio frequency identification tags
The webiste and order fulfillment are essential features of :
B. e-commerce

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