Production & Operation Management Midterm Exam (Chapter 1-7 )

Uses of forecasts
1. Finance – Cash flow and funding.
2. Marketing – Pricing, promotion, strategy.
3. Operations – Schedules, MRP, workloads.
Two important factors of forecast
1. Accuracy. 2. Cost
Qualitative Forecasting
Relies on soft information such as human factors and personal opinions.
Quantitative Forecasting
Relies on hard data such as strong statistical data and meaningful sample size.
Steps in the forecasting process
1. Determine the purpose of the forecast.
2. Establish a time horizon.
3. Obtain, clean, and analyze appropriate data.
4. Select a forecasting technique.
5. Make the forecast.
6. Monitor the forecast errors.
4 Elements of a good forecast
1. Timely
2. Accurate
3. Reliable
4. Cost effective
A measure of the effective use of resources usually expressed as the ratio of output to input.
Higher productivity relatives to the competition leads to competitive advantage in the market place.
Internal & External factors that effect strategy formulation.
1. Technology. 2. Consumers. 3. Products and services.
1. Technology. 2. Markets. 3. Competition.
Strategy and tactics
Strategy is the plan for achieving the organizational goals, it’s for long term.
Tactics is the methods and action taken to accomplish strategies.
Tactics are more specific than strategy, they provide guidance and direction for carrying out actual operations.
Operations influences competitiveness
1. cost. 2. location. 3. quality. 4. flexibility
Why some business fail
1. Neglecting operations strategy.
2. Failing to consider customer wants and needs.
3. Neglecting investments in capital and human resources.
4. Failing to take advantages of strengths and opportunities.
5. Putting too much emphasis on short-term financial performance at the expense of research and development.
How business compete
Through some combination of price, delivery time, and product and service differentiation.
3 ways marketing can influence competitiveness
1. Identifying consumer wants and/or needs.
2. Price and quality.
3. Advertising and promotion.
Disadvantage of standardization
1. Designs may be frozen with too many imperfections remaining.
2. High cost of design changes increases resistance to improvements.
3. Decreased variety results in less consumer appeal.
Extent to which there is an absence of variety in a product, service or process.
Advantage of standardization
1. Fewer parts to deal with in inventory & manufacturing.
2. Reduced training cost and time.
3. Orders filled from inventory.
Key questions of P & S design
1. Is there demand for it?
2. Can we do it?
3. What level of quality is appropriate?
4. Does it make sense from an economic standpoint?
Activities involved in product and service design
1. Formulate quality goals.
2. Formulate cost targets.
3. Construct and test prototypes.
4. Document specification.
Mass customization
A strategy of producing basically standardized goods or services, but incorporating some degree of customization in the final product or service.
Delayed differentiation
The process of producing, but not quite completing, a product or service until customer preferences are known.
Modular Design
A form of standardization in which component parts are grouped into modules that are easily replaced or interchanged.
Concurrent Engineering
To achieve a smoother transition from product design to production, and to decrease product development time, many company using concurrent engineering.
3 key questions for planning capacity
1. what kind of capacity is needed?
2. how much capacity is needed to match demand?
3. when is it needed?
The upper limit or ceiling on the load that an operating unit can handle.
Capacity designs are strategic
Affect operating costs.
can affect competitiveness
are a major determinant of initial cost
affect the ease of management
obtain a good or service from an external provider
Factors to consider when making the decision to outsource
Cost, Risks, Available capacity
Work that concentrates on some aspect of a product or service
Requirements for successful team building
1. Clearly stated and commonly held vision and goals.
2. Talent and skills required to meet goals.
3. Effective and skilled interpersonal relations.
4. A system of reinforcement and celebration.
Standard Time
The amount of time it should take a qualified worker to complete a specified task, working at a sustainable rate, using given methods, tools and equipment, raw material inputs, and workplace arrangement.
Job design
The act of specifying the contents and methods of jobs
Incorporation of human factors in the design of the workplace.
3 Key questions for process selection
How much variety of the product or service
What degree of equipment flexibility is required
What is the expected volume of output
5 process type
job shop; batch; assembly line; continuous; project(buildings, bridges)
The basic objective of layout design
1. To avoid bottlenecks.
2. To minimize material handling costs.
3. To use workers and space efficiency.
Product layout & Process layout
product layout used for repetitive processing. process layout used for intermittent processing. (job shop and batch)
Line balancing
The process of assigning tasks to workstations in such a way that the workstations have approximately equal time requirements.
The importance of line balancing
1. It allow us to use labor and equipment more efficiency.
2. To avoid fairness issues that arise when one workstation must work harder than another.
3. Perfectly balanced lines have a smooth flow of work.
3 basic layouts
Product layout, process layout, fixed position layout
Cellular layout
Layout in which machines or other operations are grouped into a cell (physical location) that can process items that have similar processing requirements.
Designed for the Part Families.
Less Material Handling & Reduced Set Up Times.
Group technology
The grouping into Part Families of items with similar design or manufacturing characteristics.
Effective form of Cellular Production.