Operations Management Final

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 assesses the level of performance 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 tht arise when a defect is discovered after the customer receives the service or product
a written guarantee that the producer will replace or repair defective parts or perform the service to the customer’s satisfaction
total quality management
philosophy stresses 3 principles for achieving high levels of process performance and quality. 1. customer satisfaction 2. employee involvement 3. continuous improvement in performance
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
small groups of people who have a common purpose, set their own performance goals and approaches, and hold themselves accountable for success
employee empowerment
an approach to teamwork that moves responsibility for decisions further down the organizational chart-to the level of the employee actually doing the job
quality circles
another name for problem-solving teams, small groups of supervisors and employees who meet to identify, analyze, and solve process and quality problems
special-purpose teams
groups that address issues of paramount concern to management, labor, or both
self-managed team
a small group of employees who work together to produce a major portion, or sometimes all, of a service or product
continuous improvement
the philosophy of continually seeking ways to improve processes based on a japanese concept called KAIZEN
plan-do-study-act cycle
cycle used by firms actively engaged in continuous improvement to train their work teams in problem solving
six sigma
a comprehensive and flexible system for achieving, sustaining, and maximizing business success by minimizing defects and variability in processes
green belt
employee who achieved first level of training in a six sigma program and spends part of his or her time teaching and helping teams with their projects
black belt
an employee who reached who reached the highest level of training in a six sigma program and spends all of his or her time teaching and leading teams involved in six sigma projects
master black belt
full-time teachers and mentors to several black belts
acceptable quality level
the quality level desired by the consumer
acceptance sampling
application of statistical techniques to determine whether a quantity of material should be accepted or rejected based on the inspection or test of a sample
statistical process control
application of statistical techniques to determine whether a process is delivering what the customer wants
service or product characteristics ex. weight length volume or time that can be measured
service or product characteristics that can be quickly counted for acceptable performance
sampling plan
plan that specifies a sample size, the time between successive samples, and decision rules that determine when action should be taken
sample size
quantity of randomly selected observations of process outputs
common causes of variation
random, unidentifiable sources of variation that are unavoidable with the current process
assignable causes of variation
any variation-causing factors that can be identified and eliminated
control chart
time-ordered diagram that is used to determine whether observed variations are abnormal
type 1 error
error occurs when the employee concludes that the process is out of control based on a sample result that falls outside the control limits, when in fact it was due to pure randomness
type 2 error
error occur when the conclusion is that the process is in control and only randomness is present, when actually is out of statistical control
chart used to monitor process variability
x-bar 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 consistent with its past performance
chart used for controlling the proportion of defective services or products generated by the process
chart used for controlling the number of defects when more than one defect can be present in a service or product
nominal value
target for design specifications
process capability
ability of the process to meet the design specifications for a service or product
allowance above or below the nominal value
process capability index
an index that measures the potential for a process to generate defective outputs relative to either upper or lower specifications
process capability ratio
the tolerance width divided by six standard deviations
quality engineering
approach combining engineering and statistical methods to reduce costs and improve quality to optimizing product design processes
quality loss function
rationale that a service or product that barely conforms to the specifications is more like a defective service or product that a perfect one
ISO 9001:2008
set of standards governing documentation of a quality program
ISO 14000:2004
documentation standards that require participating companies to keep track of their raw materials use and their generation, treatment, and disposal of hazardous wastes
ISO 26000:2010
international guidelines for organizational social responsibility
baldridge performance excellence program
award promotes, recognizes, and publicizes quality strategies and achievements
process analysis
documentation and detailed understanding of how work is performed and how it can be redesigned.
suggestion system
voluntary system by which employees submit their ideas on process improvements
design team
group of knowledgeable, team oriented individuals who work at one or more steps in the process, conduct the process analysis, and make the necessary changes
performance measures that are established for a process and the steps within it
swim lane flowchart
groups functional areas responsible for different sub-processes into lanes, appropriate when business process spans several department boundaries
service blueprint
special flowchart of a service process that shows which steps have high customer contact
time study
4 steps in setting a time standard for a job or process 1. selecting work elements 2. timing the elements 3. determining sample size 4. final standard
elemental standard data
database of standards compiled by a firms analysts for basic elements that they can draw on later to estimate the time required for a particular job
predetermined data approach
divides each work element into a series of micromotions
work sampling
process estimates the proprtion of time spent by people or machines on different activities based on observations randomized over time
learning curve
line displays the relationship between processing time and the cumulative quantity of a product or service produced
process chart
way of documenting all the activitied performed by a person or group of people, at a workstation, with a customer, or on materials
form used to record the frequency of occurence of certain process failures
process failure
performace shortfall ex. error, daley, environmental waste, rework
summarizes data measured on a continuous scale
pareto chart
bar chart on which factors are plotted along the horizontal axis in decreasing order of frequency
scatter diagram
plot of 2 variables shwoing whether they are related
cause-and-effect diagram
diagram relates a key performance problem to its potential causes
systematic procedure that measures a firms processes, services, and products against those of industry leaders
lean systems
operations systems that maximize the value added by each of a company’s activities by removing waste and delays from them
just in time philosophy
waste can be eliminated by cutting unnecessary capacity or inventory and removing non-value added activities in operations
JIT system
organizes the resources, information flows, and decision rules that enable a firm to realize the benefits of JIT principles
a quantity of items that are processed together
single-digit setup
goal of having a setup time of less than 10 minutes
push method
production of the item begins in advance of customer needs
pull method
customer demand activates production of the service or item
automatically stopping the process when something is wrong and then fixing the problems on the line itself as they occur
mistake-proofing methods aimed at designing fail-safe systems that minimize human error
takt time
cycle time method to match the rate of production to the rate of sales or consumption
leveling of production load by both volume and product mix
mixed-model assembly
type of assembly that produces a mix of models in smaller lots
5 workplace practices: sorting, straightening, shining, standardizing, and sustaining- that are conductive to visual controls and lean production
group technology
option for achieving line-flow layouts with low volume processes, creates cells not limited to just one worker and has a unique way of slecting work to be done by the cell
value streaming mapping
qualitative lean tool for eliminating waste (mud a) that involves a current state drawing, a future state drawing, and an implementation plan
“card” “visible record” refers to cards used to control the flow of production through a factory
supply chain design
designing a firms supply chain to meet the competitive priorities of the firms operations strategy
average aggregate inventory value
total average value of all items held in inventory for a firm
weeks of supply
inventory measure obtained by dividing the average aggregate inventory value by sales per week at cost
inventory turnover
annual sales at cost divided by average aggregate inventory value maintained during the year
centralized placement
keeping all inventory of a product at a single location such as a firms manufacturing plant or a warehouse and shipping directly to each of its customers
inventory pooling
reduction in inventory and safety stock because of the merging of variable demands from customers
forward placement
locating stock closer to customers at a warehouse, dc, wholesaler, or retailer
channel assembly
process of using members of the distribution channel as if they were assembly stations in the factory
paying suppliers and distributors to perform processes and provide needed services and materials
make or buy decision
managerial choice between whether to outsource a process or do it in house
backward integration
firms movement upstream toward the sources of raw materials, parts and services through acquisitions
forward integration
aquiring more channels of distribution, suh as distribution centers and retail stores, or even business customers
supply chain strategy that involves moving processes to another country
supply chain integration
effective coordination of supply chain processes through the seamless flow of information up and down the supply chain
bullwhip effect
ordering patterns experience increasiing variance as you proceed upstream in the chain
SCOR model
framework that focuses on a basic supply chain of plan, source, make, delivery, and reutnr processes, repeated again and agin along the supply chain
concurrent engineering
brings product engineers, process engineers, marketers, buyers, information specialists, quality specialists, and suppliers together to design a product and the processes that will meet customer expectations
activity that decides which suppliers to use, negotiates contracts, and determines whether to buy locally
green purchasing
identifying, assessing and managing the flow of environmental waste and finding ways to reduce it and minimize its impact on the environment
early supplier involvement
program that includes suppliers in the design phase of a service or product
suppliers are selected early in a products concept development stage and are given significant responsibility for the design of certain components or systems of the product
value analysis
systematic effor to reduce the cost or improve the performance of services or products, either purchased or produced
competitive orientation
supplier relation that views negotiations between buyer and seller as a zero-sum game. one side loses, the other side gains, short term advatanes are prized over long-term commitments
cooperative orientation
supplier relation in which the buyer and seller are partners, each helping the other as much as possible
sole sourcing
awarding of a contract for a service or item to only one supplier
electronic data interchange
technology that enables the transmission of routine business documents having a standard format from computer to computer over telephone or direct leased lines
catalog hubs
system whereby suppliers post their catalog of items of the internet and buyers select what they need and purchase them electronically
electronic marketplace where buying firms and selling firms come together to do business
marketplace where firms place competitive bids to buy something
radio frequency identification
method for identifying items through the use of radio signals from a tag attached to an item
vendor-managed inventories
system in which the supplier hsa access to the customers inventory data and is responsible for maintaining the inventory on the customer’s site
packing of products on incoming shipments so that they can be easily sorted at intermediate warehouses for outgoing shipments based on their final destinations
electronic commerce
application of information and communication technology anywhere along the supply chain of business processes