Operations Management EXAM 2

Two ways that quality improves profitability are

Sales gain via improved response, price flexibility, increased market share, and/or improved reputation.
Reduced costs via increased productivity, lower rework and scrap costs, and/or lower warranty costs.

Operations Management Objective

To build a total quality management system that identifies and satisfies customer needs.

Quality

The ability of a product or service to meet customer needs

The American Society for Quality defines quality as

the totality of features and characteristics of a product or service that bears on its ability to satisfy stated or implied needs

Two most well-known quality awards are

U.S. Malcolm Baldrige National Quality Award, named after a former secretary of commerce
Japan: Deming Prize, named after an American, Dr. W. Edwards Deming

Cost of Quality

The cost of doing things wrong; that is, the price of non-conformance.

ISO 9000

A set of quality standards developed by the International Organization for Standardization.

ISO 14000

A series of environmental management standards established by the ISO.

ISO 14000 contains five core elements

environmental management, auditing, performance evaluation, labeling and life cycle assessment.

Total quality management (TQM)

Management of an entire organization so that it excels in all aspects of products and services that are important to the customer.

Seven concepts for an effective TQM program are:

Continuous improvement, six sigma, employee empowerment, benchmarking, just-in-time (JIT), Taguchi concepts and knowledge of TQM tools.

PDCA

A continuous improvement model that involves for stages: plan, do, check and act.

Kaizen

Japanese word to describe the ongoing process of unending improvement- the setting and achieving of ever higher goals.

Six sigma

A program to save time, improve quality, and lower costs.

Employee empowerment

Enlarging employee jobs 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.

Philosophy behind just in time JIT

involves continuing improvement and enforced problem solving. JIT systems are 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 (QLF)

A mathematical function that identifies all costs connected with poor quality and shows how these costs increase as product quality moves from what the customer wants: L=D^2C

Target oriented quality

A philosophy of continuous improvement to bring the product exactly on target

Cause-effect diagram (also called Ishikawa diagram or a fish-bone chart)

A schematic technique used to discover possible locations of quality problems. 4ms, material, machinery, man power and method

Pareto chart

A graphic that identifies the few critical items as opposed to many less important ones.

Flowchart

A block diagram that graphically describes a process or system.

Statistical process control (SPC)

A process used to monitor standards, make measurements, and take corrective action as a product or service is being produced.

Control chart

A graphic presentation 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

Literally translated "foolproof"; it has come to mean a device or technique that ensures the production of a good unit every time

Attribute inspection

An inspection that classifies items as being either good or defective.

Variable inspection

Classifications of inspected items as falling on a continuous scale, such as dimension, size or strength

Service recovery

Training and empowering frontline workers to solve a problem immediately.

Process strategy

An organization's approach to transforming resources into goods and services

Objective of process strategy

To build a production process that meets customer requirements and product specifications within cost and other managerial constraints

Process strategies

Process focus, repetitive process, mass customization and product focus.

Process focus

A facility organized around processes to facilitate low-volume, high variety production.

Repetitive process

A product-oriented production process that uses modules

Modules

Parts or components of a product previously prepared, often in a continuous process.

Product focus

A facility organized around products; a product oriented, high-volume, low-variety process.

Mass customization

Rapid low cost production that caters to constantly changing unique customer desires

Built-to-order

Produce a customer order rather than to a forecast .

Major challenges of built-to-order system include

product design, process design, inventory management, tight schedules and responsive partners.

Postponement

The delay of any modifications or customization to a product as long as possible in the production process.

Crossover chart

A chart of costs at the possible volumes for more than one process.

5 Tools of process analysis

Flowcharts, time function mapping, value-stream mapping, process charts and service blueprinting.

Flowchart

a drawing used to analyze movement of people or materials.

Time-function mapping

A flowchart with time added on the horizontal axis.

Value-stream mapping

A tool that helps managers understand how to add value in the flow of material and information through the entire production process.

Process charts

charts that use symbols to analyze movement of people or materials

Service blueprinting

a process analysis technique that lends itself to a focus on the customer and the provider's interaction with the customer.

Flexibility

the ability to respond with little penalty in time, cost, or customer value

Computer numerical control

Machinery with its own computer and memory

Automatic identification system

A system for transforming data into electronic for (bar codes)

Radio frequency identification

a wireless system in which integrated circuits with antennas send radio waves

process control

the use of information technology to control a physical process.

vision systems

systems that use video cameras and computer technology in inspection roles.

automated storage and retrieval systems

computer-controlled warehouses that provide for the automatic placement of parts into and from designated places within a warehouse

flexible manufacturing system

automated work cell controlled by electronic signals from a common centralized computer facility

computer integrated manufacturing

a manufacturing system in which CAD, FMS, inventory control, warehousing and shipping are integrated

Objective of location strategy

is to maximize the benefit of location to the firm

tangible costs

readily identifiable costs that can be measured with some precision

intangible costs

a category of location costs that cannot be easily quantified, such as quality of life and government

clustering

location of competing companies near each other, often because of critical mas of information, talent, venture capital, or natural resources

Factor-rating method

a location method that instills objectivity into the process of identifying hard to evaluate costs

6 steps of factor rating method

Develop a list of relevant factors called key success factors
Assign a weight to each factor to reflect its importance
Develop scale
Have management score each location for each factor and total the score for each location
Make recommendations based on re

Location break even analysis

a cost-volume analysis used to make an economic comparison of location alternatives

center of gravity method

a mathematical technique used for finding the best location for a single-distribution point that services several stores and areas.

Transportation model

a technique for solving a class of linear programming problems.

Geographic information system

a system that stores and displays information that can be linked to a geographic location.