Operations Management Exam 1-Definitions

World Trade Organization
an international organization that promotes world trade by lowering barriers to the free flow of goods across borders
NAFTA
a free trade agreement between US, Mexico, and Canada
Mission
the purpose or rationale for an organization’s existence
Strategy
how an organization expects to achieve its missions and goals
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
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
SWOT Analysis
a method of determining internal strengths and weaknesses and external opportunities and threats
Key Success Factors
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 advantages, KSFs, and supporting activities
Outsourcing
transferring a firm’s activities that have traditionally been internal to external suppliers
International Business
a firm that engages in cross border transactions
Multinational Corporations
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
Multi domestic Strategy
a strategy in which operating decisions are decentralized to each country to enhance local responsiveness
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
Planning
this phase includes goal setting, defining the project, and team organization
Scheduling
this phase relates people, money, and supplies to specific activities and relates activities to each other
Controlling
here the firm monitors resources, costs, quality, and budgets
Project Organization
an organization formed to ensure that programs receive the proper management and attention
Work breakdown Structure
a hierarchical description of a project into more and more detailed components
Gantt Charts
planning charts used to schedule resources and allocate time
PERT
a project management technique that employs three time estimates for each activity
CPM
a project management technique that uses only one time factor per activity
Critical Path
the computed longest time path through a network
the activities on the critical path represent tasks that will delay the entire project if they are not completed on time
Activity-on-node AON
a network diagram in which nodes designate activities
Activity-on-arrow AOA
a network diagram in which arrows designate activities
Critical Path Analysis
a process that helps determine a project schedule
Earliest Start
earliest time at which an activity can start, assuming all predecessors have been completed
Earliest Finish
earliest time at which an activity can be finished
Latest Start
latest time at which an activity can start so as to not delay the completion time of the entire project
Latest Finish
latest time by which an activity has to finish so as to not delay the completion time of the entire project
Forward Pass
a process that identifies all the early times
Backward Pass
an activity that finds all the late start and late finish times
Slack Time
free time for an activity
length of time an activity can be delayed without delaying the entire project
Optimistic Time
the best activity completion time that could be obtained in a PERT network
Pessimistic Time
the worst activity time that could be expected in a PERT network
Most likely time
the most probable time to complete an activity in a PERT network
Crashing
shortening activity time in a network to reduce time on the critical path so total completion time is reduced
Forecasting
the art and science of predicting future events
Short-range forecast
this forecast has a time span of up to one year but is generally less than 3 months
Medium-range forecast
spans from 3 months to 3 years
Long-range forecast
generally 3 years or more in time span
Economic Forecast
planning indicators that are valuable in helping organizations prepare medium to long-range forecast
Technological Forecasts
long-term forecasts concerned with the rates of technological progress
Demand Forecast
projections of a company’s sales for each time period in the planning horizon
Quantitative Forecast
forecasts that employ mathematical modeling to forecast demand
Qualitative Forecasts
forecasts that incorporate such factors as the decision maker’s intuition, emotions, personal experiences, and value system
Jury of Executive Opinion
a forecasting technique that uses the opinion of a small group of high-level managers to form a group estimate of demand
Delphi Method
a forecasting technique using a group process that allows experts to make forecasts
decision makers, staff personnel, and respondents
Sales Force Composite
a forecasting technique based on salespersons’ estimates of expected sales
Market Survey
a forecasting method that solicits input from customers or potential customers regarding future purchasing plans
Time Series
a forecasting technique that uses a series of past data points to make a forecast
Trend
the gradual upward or downward movement of the data over time
Seasonality
a data pattern that repeats itself after a period of days, weeks, months, or quarters
Cycles
patterns in the data that occur every several years
Random Variations
blips in the data caused by chance and unusual situations
Naive Approach
a forecasting technique which assumes that demand in the next period is equal to demand in the most recent period
Moving Averages
a forecasting method that uses an average of the n most recent periods of data to forecast the next period
Exponential Smoothing
a weighted-moving-average forecasting technique in which data points are weighted by an exponential function
Smoothing Constant
the weighting factor used in an exponential smoothing forecast, a number greater than or equal to 0 and less than or equal to 1
Mean Absolute Deviation
a measure of the overall forecast error for a model
Mean Squared Error
the average of the squared differences between the forecasted and observed values
Trend Projection
a time-series forecasting method that fits a trend line to a series of historical data points and then projects the line into the future for forecasts
Seasonal Variations
regular upward or downward movements in a time series that tie to recurring events
Linear-regression Analysis
a straight-line mathematical model to describe the functional relationships between independent and dependent variables
Coefficient Correlation
a measure of the strength of the relationship between two variables
Multiple Regression
an associative forecasting method with more than one independent variable
Tracking Signal
a measurement of how well a forecast is predicting actual values
Bias
a forecast that is constantly higher or consistently lower than actual values of a time series
Adaptive Smoothing
an approach to exponential smoothing forecasting in which the smoothing constant is automatically changed to keep errors to a minimum
Focus forecasting
forecasting that tries a variety of computer models and selects the best one for a particular application
Quality
the ability of a product or service to meet customer needs
User Based
quality lies in the eyes of the beholder
Manufacturing Based
believe that quality means conforming to standards and making it right the first time
Product Based
views quality as a precise and measurable variable
Company Reputation
an organization can expect its reputation for quality to follow it
Product Liability
the courts hold organizations that design, produce, or distribute faulty products or services liable for damages or injuries resulting from their use
Global Implications
for both a company and a country to compete effectively in the global economy, products must meet global quality, design, and price expectations
Cost of quality
the cost of doing things wrong, that is the price of nonconformance
Prevention Costs
costs associated with reducing the potential for defective parts or services
Appraisal Costs
costs related to evaluating products, processes, parts and services
Internal Failure Costs
costs that result from production of defective parts or services before delivery to customers
External Failure Costs
costs that occur after delivery of defective parts or services
Total Quality Management
management of an entire organization so that it excels in all aspects of products and services that are important to the customer
Continuous Improvement
a never-ending process of continuous improvement that covers people, equipment, suppliers, materials, and procedures
PDCA
a continuous improvement model of plan, do, check, act
Six Sigma
a program to save time, improve quality, and lower costs
DMAIC
defines, measures, analyzes, improves, and controls
Employee Empowerment
enlarging employee jos 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
Benchmarking
selecting a demonstrated standard of performance that represents the very best performance for a process or an activity
Just in Time JIT
designed to produce or deliver goods just as they are needed
Quality Robust
products that are consistently built to meet customer needs in spite of adverse conditions in the production process
Quality loss function
identifies all costs connected with poor quality and shows how these costs increase as the product moves away from being exactly what the customer wants
Targeted-oriented Quality
a philosophy of continuous improvement to bring a product exactly on target
Check Sheets
any kind of form that is designed for recording data
Scatter Diagrams
show the relationship between two measurements
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 ruled as the 80/20 rule
Flowcharts
block diagrams that graphically describe a process or system
Statistical Process Control
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
it has come to mean a device or technique that ensures the production of a good unit every time
Checklist
a type of poke-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 in a continuum scale, such as dimension or strength
Service Recovery
training and empowering frontline workers to solve a problem immediately
Natural Variations
variability that affects every production process to some degree and is to be expected; also known as common cause
Assignable Variation
variation in a production process that can be traced to specific causes
x bar chart
a quality control chart for variables that indicates when changes occur in the central tendency of a production process
R chart
a control chart that tracks the range within a sample; it indicates that a gain or loss in uniformity has occurred in dispersion of a production process
P chart
a quality control chart that is used to control attributes
C chart
a quality control chart used to control the number of defects per unit of output
Run Test
a test used to examine the points in a control chart to see if nonrandom variation is present
Process Capability
the ability to meet design specifications
Acceptance Sampling
a method of measuring random samples of lots or batches of products against predetermined standards
Producer’s Risk
the mistake of having a producer’s good lot rejected through sampling
Consumer’s Risk
the mistake of a customer’s acceptance of a bad lot overlooked through sampling
Acceptable Quality Level
the quality level of a lot considered good
Type I Error
statistically, the probability of rejecting a good lot
Type II Error
statistically, the probability of accepting a bad lot
Average Outgoing Quality
the percentage of defective in an average lot of goods inspected through acceptance sampling