Which statement is true about capacity requirements planning (CRP)?
Available capacity is compared to calculated workloads of relevant items
Why is capacity requirements planning (CRP) important?
it provides the ability to compare available production capabilities to the planned workload
Which project life cycle phase includes identifying the need for a project?
conception
A company decides and makes plans to enter into a new market.
Which project life cycle phase does this strategy relate to?
Conception
Which definition is used for quality, evaluates how well a product performs its intended function?
Fitness for use
14 points for quality improvement
Which total quality management (TQM) process was developed to stress management’s responsibility for quality?
ISO 9000
Set of international standards on quality management and quality assurance, critical to international business
-TQM process consists of 13 published standards and guidelines
-Like when joint commission shows up at the hospitals
Checklist
A list of common defects and the number of observed occurrences of these defects.
scatter diagram
a plot of two variables showing whether they are related
Control Chart
A graph that shows whether a sample of data falls within the common or normal range of variation.
mean
A statistical measure of central tendency, or average, based on dividing a total by the number of individual cases.
assignable causes of variation
-Causes can be identified and eliminated
-e.g. poor employee training, worn tool, machine needing repair
common causes or random
Stuff you cannot identify
-Random causes that we cannot identify, unavoidable
Cpk measures
How close one is to a target and how consistent one is with the average performance.
-How closely it measures
Six Sigma
Technical tolls and people involvement
The empirical rule, 3 standard deviations. This is 3 sigma’s.
6 sigmas and you are almost at 100%
DMAIC
DMAIC (Define, Measure, Analyze, Improve, Control)
a six sigma process that outlines the steps that should be followed to improve an existing business process
define stage
includes the voice of the customer and value stream
Job Design
It does not have anything to do with people.
-The process by which managers decide how to divide tasks into specific jobs
waiting time
-Screen patients and fast track those with minor ailments
-amount of time a process has been waiting in the ready queue
Service location decisions
-proximity to customers
-Quality of life issues
proximity to customers
-key factor of a location analysis for a service company
-if you need to have a car repaired, you wont drive too far.
Capacity Planning
Hospital- Capacity is beds and output is the patients. If you have 1 pt for 2 days and one for 3 days. The output is how many patients and not how many beds we have.
capacity utilization
are you using more workers and what are your resources? Measures how much of the available capacity is actually being used. Measures effectiveness.
Capacity Focus
facilities that are small, specialized, and focused on a narrow set of objectives.
effective capacity
capacity measurement at the best operating level
when the average unit cost is minimized
center of gravity approach
an approach for locating a single facility that minimizes the distance to existing facilities.
-use the breakeven analysis -how many units needed to manufacture to breakeven.
break-even analysis
the process of determining the number of units a firm must sell to cover all costs. Considers fixed costs, variable costs.eg Fed EX is in Tennessee so it will be in the middle
repetitive process
classic assembly line. A line process, a continuous process.
Project Process
make a one-at-a-time product exactly to customer specifications, expensive. Like an automobile collision shop that does body and engine repair as well as custom vehicle paint job.
Batch Process
a process in which goods or services are produced in groups (batches) and not in a continuous stream eg. auto shop offers body repair, engine repair, and custom vehicle paint options
Bottleneck in a flowchart
the longest part in the process eg manufacturing a car and the car needs to be painted or the time the cake in the oven.
compute process velocity
Throughput time/value-added time
-How fast we are going
Actual output/standard output
Which formula would indicate that a fast-food restaurant was performing at, above, or below its benchmark?
-We know how many burgers were making and what the standard is
output/input
productivity formula
Throughput time/value-added time
How long it takes from the raw materials to become finished goods.
Process
Each item goes through process
Which total quality management (TQM) process was developed to stress management’s responsibility for quality?
14 points for quality improvement
Hybrid
any mix of elements from a product layout and a process layout, to gain the advantages of both eg group technology
standard time
Determines how long it takes a qualified operator to perform a duty of the job requirements under the assumption that the operator is working at a sustainable pace with the proper tools for the process.
-How long t takes somebody to finish the work
performance time
How long it actually took
observed time
Actual time
-The time measured from stopwatch
infinite loading
A scheduling approach that ignores capacity constraints.
-Working backwards
-ex Amazon doesn’t have the computer you want but they have a network where they can send you to someone who can give it to you
finite loading
-Working forward.
-Jobs are assigned to work centers taking into account the work center capacity and job processing times.
-Have fixed capacity
-ex I go to a bike shop to buy a bike. They know what people will want. They offer repair, the can say I need this employee for repair shop. They have resources to manage
Backwards Scheduling
Begins with required delivery date and works in the reverse order to determine when each process step must be preformed.
Respect for people
A 3rd element element of JIT that considers human resources as an essential part of the JIT philosophy.
Reducing waste is achieved
by Just in time and lean system
Lean Systems
systems that maximize productivity by reducing waste and delays. Not sacrificing productivity
-JIT is a part of lean system
Kanban System
a pull system that uses cards to visually signal the need for inventory.
-Exact quantity that needs to be produced
-small lot and shorten manufacturing lead time
-forecast how much inventory your going to need
Which total quality management (TQM) process consists of 13 published standards and guidelines?
ISO 9000
ISO 9000
total quality management (TQM) process consists of 13 published standards and guidelines
A company manufactures shoes using a quality management system. The company needs to put a process in place to measure any defects. The company would like to measure the number of defects and observe the number of occurrences to isolate the particular defect.
Which quality tool should the company use to focus on correcting this particular issue?
checklist
Which quality control tool should be used to monitor the current status or end result of a process?
Flowchart
Which group of keywords or phrases describes the crucial role that marketing plays in the total quality management (TQM) process?
Review and recommend product changes, satisfy customers needs, open communication
What is the common theme in total quality management (TQM) across all functions in an organization?
To satisfy customer needs
Which concept of variation measures the central tendency of a set of data?
mean
What do assignable causes of variation indicate?
Equipment was found out of control
Which continuous improvement method does Cpk measure?
How close one is to a target and how consistent one is with the average performance
What are two important aspects of Six Sigma?
people involvement
technical tools
Which strategy is used by some emergency rooms to overcome customer frustrations about long waiting times?
Screen patients and fast-track those with minor ailments
Which two factors affect a service location decision?
Proximity to customers
Quality of life issues
Which is a key factor of a location analysis for a service company?
Proximity to customers
What helps an organization identify and plan the actions necessary to meet current and future customer demands?
capacity planning
Which capacity planning measurement tells how much capacity a company is using?
Capacity utilization
Design Capacity
The maximum output rate or service capacity an operation, process, or facility is designed for.
-the maximum designed service capacity or output rate.
Effective capacity
Design capacity minus allowances such as personal time and maintenance.
-Lower than design capacity.
-eg on the average, the bakery can make 20 custom cakes but during Christmas can do30 custom cakes
Capacity measurement at the best operating level
when the average unit cost is minimized
conducting a location analysis
-proximity to sources of supply
-site consideration
proximity to customers
major factor in the decision to locate a business near its primary market territory
Which two statements are true about effective capacity?
An effective capacity maintains a minimum output rate under normal conditions.
An effective capacity is lower than design capacity
When is capacity measurement at the best operating level?
When the average unit cost is minimized
Which two capacity measurement concepts should a firm consider when conducting a location analysis?
proximity to sources of supply
site considerations
What is a major factor in the decision to locate a business near its primary market territory?
proximity to customers
load-distance model
a model used in designing functional layouts where movement is minimized e.g. open a new distribution center location in order to minimize distribution costs
A manufacturing company decides to open a new distribution center location in order to minimize distribution costs to warehouses or stores.
What tool should the manufacturing company use to determine where the new distribution center should be located?
by using the load-distance model
Which two types of operations include repetitive processes?
continuous process
line process
A comprehensive automobile collision shop offers body and engine repair as well as custom vehicle paint options.
Which two operational processes would suit this shop?
batch process
project process
What is a bottleneck in a flowchart?
The longest task in the process
throughput time/value-added time
Which formula would compute process velocity?
Which formula would compute process velocity?
(Throughput time) / (Value Added Time)
Which formula would indicate that a fast-food restaurant was performing at, above, or below its benchmark?
actual output/standard output
process layout
similar equipment and functions are grouped together
In which organizational layout would one expect to see items arranged by type?
process
hybrid layout
any mix of elements from a product layout and a process layout, to gain the advantages of both eg group technology
Process Layout Advantages
-can handle a variety of processing requirements
-not particularly vulnerable to equipment failures
-general-purpose equipment is often less costly than the specialized equipment used in product layouts
-it is possible to use individual incentive plans
Product Layout Advantages
higher output rates, lower work-in-process inventories, less material handling, higher labor/equipment utilization, simple planning/control systems
group technology
challenges within one of the facilities:
-production qualities are low and only a small number of homes are built efficiently
-the facility space allows for low handling of materials
-there is limited space available for employees to operate
-hybrid layout
-is where you have a number of facilities and each facility is responsible for a particular process.
A construction company produces pre-fabricated homes. The manager has discovered the following challenges within one of the facilities:
-production qualities are low and only a small number of homes are built efficiently
-the facility space allows for low handling of materials
-there is limited space available for employees to operate
Which hybrid layout should be used to address the company’s needs?
group technology
block plan
a plan that allocates space and indicates the placement of each operation. -would use an allocation process for space requirements in an industry scenario.
-A From to Matrix gives the number of trips between departments.
-Use Rectilinear distance
rectilinear distance
The shortest distance between two points measured by using only north-south and east-west movements
from-to matrix
A table that gives the number of trips or units of product moved between any pair of departments.
Which instrument would use an allocation process for space requirements in an industry scenario?
block plan
What would be an organizations next step after it has revised or implemented new operations?
-follow up to make sure the new operation resolves —–quality problems
Why is it beneficial for an organization to designate employees to communicate alternative ways to complete a job in a methods analysis?
they may have suggestions for improving the operation
Which factor determines how long it takes a qualified operator to perform a duty of the job requirements under the assumption that the operator is working at a sustainable pace with the proper tools for the process?
standard time
Which design work system minimizes repetitiveness in tasks by assigning employees the role of planning and scheduling?
job enrichment
labor specialization
The division of labor into specialized activities that allow individuals to be more productive. – acknowledges the benefits of employee proficiency?
Which work system acknowledges the benefits of employee proficiency?
labor specialization
forward scheduling
Starting an activity as soon as possible, regardless of its deadline.
Which term means to schedule a job that starts immediately, regardless of the due date?
forward scheduling
just-in-time (JIT) system
An inventory management and control system whose objective is to reduce waste throughout the production and delivery of a product or service; in manufacturing, also known as lean production or value-added manufacturing. Use a pull system
basic element in the just in time (JIT) system are
- TQM 2. JIT manufacturing 3. respect for people
Push vs. Pull
Push: workflow idea that you make something even if no one is buying it
Pull: you use what you need but get enough just in time –> continuous work flow, Kanban system
What is the third basic element in the just in time (JIT) system if the first element is the total quality management (TQM) and the second is JIT manufacturing?
respect for people
How do just in time (JIT) and lean systems add value?
by reducing waste
Enterprise Resource Planning (ERP) Systems
the concept takes a total system approach to create an efficient operation and combines concepts such as just in time (JIT), total quality management (TQM), and continuous improvement a software system that integrates information from across the entire company,
Which concept takes a total system approach to creating an efficient operation and combines concepts such as just in time (JIT), total quality management (TQM), and continuous improvement?
enterprise resource planning (ERP)
Kanban System is a
a pull system that uses cards to visually signal the need for inventory. It specifies the exact quantity of a product that needs to be produced
kanban significant to the “pull” system?
It specifies the exact quantity of a product that needs to be produced
What are two product system differences between the push and pull processes?
push moves the product forward in anticipation for demand
pull eliminates excessive inventory
Which function does marketing play in a just in time (JIT) organization?
JIT marketing focuses on customer driven quality
How does a just in time (JIT) system influence all functional areas within a company?
-companies are able to reduce waste
-companies enhance workers ability to perform
What are two ways management can assist employees focus in a just in time (JIT) processing environment?
-ensure that workers receive multifunctional training
-develop an incentive system to reward workers for their efforts
Supply Chain Management
managing upstream and downstream value-added flows of materials, final goods, and related information among suppliers, the company, re-sellers, and final consumers
Tier one supplier
Supplies materials or services directly to the processing facility.
Which tier-level supplier directly supplies materials or services to a processing and packaging plant?
tier one suppliers
External Distributors
transport finished products to appropriate locations
-third party logistics providers play in the supply chain
Third-party logistics (3PL) provider
an independent logistics provider that performs any or all of the functions required to get a client’s product to market. transport finished products to appropriate locations eg fed ex
Which role do third party logistics providers play in the supply chain?
external distributors
A company manufactures and distributes its own products.
When should the company consider outsourcing distribution?
when the company determines that distribution is no longer a core function
verticle integration
the measure of how much supply chain is owned or operated by the manufacturer. Gaining control of all the steps used to change raw materials into finished products
What is the measure of how much supply chain is owned or operated by the manufacturer?
vertical integration
Which two areas should managers consider in order to adapt to the business dynamics affecting their company?
-their control over internal operations
-their advertising costs
What are two strategic objectives for every member of the supply chain?
-becoming more efficient
-reducing production and delivery times
How does the status of overall customer satisfaction support supply chain objectives?
it measures efficiency
Supply Chain Operations Reference Model (SCOR)
the model that has been created to examine the four different supply chain perspectives of reliability, flexibility, expenses, and asset/utilization
What is the name of the model that has been created to examine the four different supply chain perspectives of reliability, flexibility, expenses, and asset/utilization?
SCOR (Supply Chain Operations Reference)
The annual cost of goods sold for a company is $8,400,000 and the average inventory is $1,200,000.
What is the number of weeks of supply?
7
percentage of line items shipped on schedule
When there are Finished Goods
a customer service measure appropriate when customer orders vary in number of line items ordered
A manufacturing firm uses warehouses and shippers in their supply chain.
At which stage of the firm’s inventory management system would the statement “percentage of the line items shipped on schedule” be used?
finished goods
How does inventory management differ for manufacturing organizations compared to service organizations?
manufacturing organizations must keep a large amount of product on hand at all times, regardless of demand
What is one advantage of a periodic review system?
less inventory is needed to protect against stockouts
A company’s monthly widgets demand has been consistent for the past few years but now a variable shift in demand is forecasted.
The demands are predicted to be:
-Jan 20,000 units
-Feb 17,000 units
-Mar 19,000 units
-Apr 21,000 units
-May 22,000 units
June 24,000 units
Beginning inventory of 10,000 units should be maintained.
What is the average monthly new widget production demand for the company?
20,500
A company suddenly finds demand has increased to 140% of its previous capacity. It has been able to hire only a fraction of the employees previously laid off, and a warehouse fire destroyed 80% of its inventory.
Which two options does the company have to rapidly meet the new demand?
-subcontract a portion of production capacity
-hire temporary workers
What are two reasons a company might be hesitant to provide overtime as a capacity-based option?
-overtime is not a long term solution
-overtime is typically a 50% wage premium
demand-based options
A group of options that respond to demand fluctuations through the use of inventory or back orders, or by shifting the demand pattern. IT IS RISKY
Why might a company avoid using demand-based options such as inventory and backorders over a long period of time?
it is more risky
Which element is part of a financial plan?
budget projections
Why is the marketing plan essential to the creation of the aggregate plan?
the marketing plan provides insight into operations goals and activities for the year
What is meant by “duration of the change”?
the length of time one expects to need the different level of capacity
chase aggregated plan
is preferable when a company produces custom or special purpose equipment, one of a kind, or highly perishable products
Which type of aggregated plan is preferable when a company produces custom or special purpose equipment, one of a kind, or highly perishable products?
a chase aggregated plan
What are two common drawbacks of implementing an enterprise resource planning (ERP) solution?
-it requires extensive, often complex, training
-it takes a long time to implement and to see any benefits
What is the primary purpose in using the master production schedule (MPS) in the marketing department of an organization?
to identify new product demand
Capacity Requirements Planning (CRP)
A company is experiencing an unusual amount of deliveries that are either late or an incorrect quantity.
Which type of system is used to identify and manage this typ of problem?
CRP (capacity requirements planning)
Which statement is true about capacity requirements planning (CRP)?
production capacity is created for future production time
Why is capacity requirements planning (CRP) important?
it provides the ability to compare available production capabilities to the planned workload
Which project life cycle phase includes identifying the need for a project?
conception
A company decides and makes plans to enter into a new market.
Which project life cycle phase does this strategy relate to?
feasibility analysis