Total quality management (TQM)
is an integrated organizational effort designed to improve quality at every level
customer-defined quality
quality expectations as defined by the customer; this is called
Conformance to specifications
measures how well the product or service meets the targets and tolerances determined by its designers
Fitness for use
focuses on how well the product performs its intended function or use
Value for price paid
is a definition of quality that consumers often use for product or service usefulness
Support services provided
are often how the quality of a product or service is judged.
Psychological criteria
is a subjective definition that focuses on the judgmental evaluation of what constitutes product or service quality.
conformance
which is the degree to which a product characteristic meets preset standards
reliability
meaning that the product will function as expected without failure
features
the extras that are included beyond the basic characteristics
durability
the expected operational life of the product
serviceability
how readily a product can be repaired
continuous improvement
A philosophy of never-ending improvement.
plan-do-study-act (PDSA) cycle
describes the activities a company needs to perform in order to incorporate continuous improvement in its operation
benchmarking
Studying the business practices of other companies for purposes of comparison.
quality circle
A team of volunteer production employees and their supervisors who meet regularly to solve quality problems.
Cause-and-effect diagrams
identify potential causes of particular quality problems. They are often called fishbone diagrams because they look like the bones of a fish
flowchart
is a schematic diagram of the sequence of steps involved in an operation or process
checklist
is a list of common defects and the number of observed occurrences of these defects
control charts
Charts used to evaluate whether a process is operating within set expectations.
Scatter diagrams
are graphs that show how two variables are related to one another
Pareto analysis
is a technique used to identify quality problems based on their degree of importance
histogram
is a chart that shows the frequency distribution of observed values of a variable
quality function deployment (QFD)
A tool used to translate the preferences of the customer into specific technical requirements.
reliability
the probability that a product, service, or part will perform as intended for a specified period of time under normal conditions
Quality at the source
is the belief that it is far better to uncover the source of quality problems and correct it than to discard defective items after production
ISO 9000
A set of international quality standards and a certification demonstrating that companies have met all the standards specified.
ISO 14000
A set of international standards and a certification focusing on a company's environmental responsibility.
common causes of variation
Random causes that cannot be identified.
assignable causes of variation
Causes that can be identified and eliminated.
process capability
The ability of a production process to meet or exceed preset specifications.
Product specifications
often called tolerances, are preset ranges of acceptable quality characteristics
process capability index
An index used to measure process capability.
Six Sigma quality
A high level of quality associated with approximately 3.4 defective parts per million.
capacity
The maximum output rate that can be achieved by a facility.
Capacity planning
is the process of establishing the output rate that can be achieved by a facility
design capacity
The maximum output rate that can be achieved by a facility under ideal conditions.
effective capacity
The maximum output rate that can be sustained under normal conditions.
Capacity utilization
simply tells us how much of our capacity we are actually using
best operating level
The volume of output that results in the lowest average unit cost.
economies of scale
A condition in which the average cost of a unit produced is reduced as the amount of output is increased.
diseconomies of scale
A condition in which the cost of each additional unit made increases.
focused factories
Facilities that are small, specialized, and focused on a narrow set of objectives.
capacity cushions
Additional capacity added to regular capacity requirements to provide greater flexibility.
decision tree
is a diagram that models the alternatives being considered and the possible outcomes
Decision points
These are the points in time when decisions, such as whether or not to expand, are made. They are represented by squares, called "nodes.
Decision alternatives
They are represented by "branches" or arrows leaving a decision point.
Chance events
These are events that could affect the value of a decision
Outcomes
For each possible alternative an outcome is listed
expected value (EV)
is a weighted average of the chance events, where each chance event is given a probability of occurrence
Facility location
is determining the best geographic location for a company's facility
Globalization
is the process of locating facilities around the world
Factor rating
can be used to evaluate multiple alternatives based on a number of selected factors
load-distance model
is a procedure for evaluating location alternatives based on distance
Break-even analysis
is a technique used to compute the amount of goods that must be sold just to cover costs
transportation method
The method relies on a specific algorithm to evaluate the cost impact of adding potential location sites to the network of existing facilities
Intermittent operations
are used to produce a variety of products with different processing requirements in lower volumes
Repetitive operations
are used to produce one or a few standardized products in high volume
Project processes
are used to make one-of-a-kind products exactly to customer specifications
Batch processes
are used to produce small quantities of products in groups or batches based on customer orders or product specifications
Line processes
are designed to produce a large volume of a standardized product for mass production
Continuous processes
operate continually to produce a very high volume of a fully standardized product
Process flow analysis
is a technique used for evaluating a process in terms of the sequence of steps from inputs to outputs with the goal of improving its design
process flowchart
is used for viewing the sequence of steps involved in producing the product and the flow of the product through the process
bottleneck
Longest task in the process.
make-to-stock strategy
Produces standard products and services for immediate sale or delivery.
assemble-to-order strategy
Produces standard components that can be combined to customer specifications.
make-to-order strategy
Produces products to customer specifications after an order has been received.
Process performance metrics
are measurements of different process characteristics that tell us how a process is performing
throughput time
Average amount of time it takes a product to move through the system.
process velocity
Ratio of throughput time to value-added time
utilization
Ratio of time a resource is used to time it is available for use.
efficiency
Ratio of actual output to standard output.
Process Layouts
are layouts that group resources based on similar processes or functions
Product Layouts
are layouts that arrange resources in a straight-line fashion to promote efficient production
Hybrid layouts
combine aspects of both process and product layouts
group technology (GT) or cell layouts
Hybrid layouts that create groups of products based on similar processing requirements.
cells
or small product layouts,
fixed-position layout
is used when the product is large and cannot be moved due to its size
block plan
a schematic that shows the placement of departments in a facility
from-to matrix
is a table that shows the number of trips or units of product moved between any pair of departments
REL chart
is a tool that reflects opinions of managers with regard to the importance of having any two departments close together
systematic layout planning (SLP)
Using a relationship chart to develop acceptable layouts is part of a classic layout technique called
ALDEP
Computer software packages for designing process layouts using REL Chart
CRAFT
Computer software packages for designing process layouts using from-to matrix.
Methods analysis
is the study of how a job is done
work measurement
Determines how long it should take to do a job.
standard time
is the time it should take a qualified operator, working at a sustainable pace and using the appropriate tools and process, to do the job
time study
sets a standard time based on timed observations of one employee taken over a number of cycles
performance rating factor
A subjective estimate of a worker's pace relative to a normal work pace.
frequency of occurrence
How often the work element must be done each cycle.
normal time
The mean observed time multiplied by the performance rating factor by the frequency of occurrence.
allowance factor
The amount of time the analyst allows for personal time, fatigue, and unavoidable delays.
elemental time data
Establish standards based on previously completed time studies, stored in an organization's database.
Predetermined time data
is a large database of valid work element times
Work sampling
is a method used for estimating the proportion of time that an employee or machine spends on different work activities
Job design
specifies the work activities of an individual or a group in support of an organization's objectives
technical feasibility
of a job is the degree to which an individual or group of individuals is physically and mentally able to do the job
economic feasibility
of a job is the degree to which the value a job adds and the cost of having the job done create profit for the company
behavioral feasibility
of a job is the degree to which an employee derives intrinsic satisfaction from doing the job
specialization
The breadth of the job design.
Job enlargement
is the horizontal expansion of a job
Job enrichment
is the vertical expansion of a job
Job rotation
exposes a worker to other jobs in the work system
Problem-solving teams
are small groups of employees who meet to identify, analyze, and solve operational problems
Special-purpose teams
address issues of major significance to the company
self-directed teams
Integrated teams empowered to control portions of their process.
alternative workplace
is a combination of nontraditional work practices, settings, and locations that supplements traditional offices
time-based compensation systems
Pay based on the number of hours worked.
output-based (incentive) systems
Pay based on the number of units completed.
waste
is anything that does not add value
types of waste
Material, energy, time, and space.
broad view of the organization
Tasks and procedures are important only if they meet the company's overall goals.
simplicity
The simpler a solution, the better it is.
continuous improvement (kaizen)
A philosophy of neverending improvement.
visibility
Problems must be visible to be identified and solved.
flexibility
A company can quickly adapt to the changing needs of its customers.
JIT system
The three elements are just-in-time manufacturing, total quality management, and respect for people.
just-in-time manufacturing
The element of JIT that focuses on the production system to achieve value-added manufacturing.
master production schedule
final assembly schedule
acceptable quality level (AQL)
to indicate the acceptable number of defective parts
quality at the source
Uncovering the root cause of a quality problem.
respect for people
An element of JIT that considers human resources as an essential part of the JIT philosophy.
kanban card
A card that specifies the exact quantity of product that needs to be produced.
production card
A kanban card that authorizes production of material.
withdrawal card
A kanban card that authorizes withdrawal of material.
small-lot production
The ability to produce small quantities of products.
Internal setups
require the machine to be stopped for the setup to be performed
External setups
can be performed while the machine is still running
uniform plant loading
A constant production plan for a facility with a given planning horizon.
multifunction workers
who can perform more than one job
cell manufacturing
the placement of dissimilar machines and equipment together in order to produce a family of products with similar processing requirements
infinite loading
Scheduling that calculates the capacity needed at work centers in the time period needed without regard to the capacity available to do the work.
finite loading
Scheduling that loads work centers up to a predetermined amount of capacity.
forward scheduling
Schedule that determines the earliest possible completion date for a job.
due date
Time when the job is supposed to be finished.
backward scheduling
Scheduling method that determines when the job must be started to be done on the due date.
slack
The amount of time a job can be delayed and still be finished by its due date.
Input/output control
is a capacity-control technique used to monitor workflow at individual work centers
theory of constraints (TOC)
a system's output is determined by three kinds of constraints: internal resource constraint, market constraint, and policy constraint
internal resource constraint
A regular bottleneck.
market constraint
results when market demand is less than production capacity
Policy constraint
means that a specific policy dictates the rate of production
supply chain
is the network of activities that delivers a finished product or service to the customer
Supply chain management
is the vital business function that coordinates and manages all the activities of the supply chain linking suppliers, transporters, internal departments, third-party companies, and information systems
tier one supplier
Supplies materials or services directly to the processing facility.
tier two supplier
.
Directly supplies materials or services to a tier one supplier in the supply chain
logistics
.
Activities involved in obtaining, producing, and distributing materials and products in the proper place and in proper quantities
traffic management
Responsible for arranging the method of shipment for both incoming and outgoing products or materials.
distribution management
Responsible for movement of material from the manufacturer to the customer.
bullwhip effect
Inaccurate or distorted demand information created in the supply chain.
automated order entry system
A method using telephone models to send digital orders to suppliers.
electronic data interchange (EDI)
A form of computer-to-computer communications that enables sharing business documents.
electronic storefronts
On-line catalogs of products made available to the general public by a single supplier.
net marketplaces
Suppliers and buyers conduct trade in a single Internet-based environment.
virtual private network (VPN)
A private Internetbased communications environment that is used by the company, its suppliers, and its customers for day-to-day activities.
advertising revenue model
Provides users with information on services and products and provides an opportunity for suppliers to advertise.
subscription revenue model
A Web site that charges a subscription fee for access to its contents and services.
transaction fee model
A company receives a fee for executing a transaction.
sales revenue model
A means of selling goods, information, or services directly to customers.
affiliate revenue model
Companies receive a referral fee for directing business to an affiliate.
intranets
Networks that are internal to an organization.
extranets
Intranets that are linked to the Internet so that suppliers and customers can be included in the system.
green supply chain management
Focuses on the role of the supply chain with regard to its impact on the environment.
Raw materials
are the purchased items or extracted materials that are transformed into components or products
Components
are parts or subassemblies used in building the final product
Work-in-process (WIP)
refers to all items in process throughout the plant
finished goods
Products sold to customers.
Distribution inventory
consists of finished goods and spare parts at various points in the distribution system
Maintenance, repair, and operational (MRO) inventory
are supplies that are used in manufacturing but do not become part of the finished product
anticipation inventory
Inventory built in anticipation of future demand.
fluctuation inventory
Provides a cushion against unexpected demand.
lot-size inventory
A result of the quantity ordered or produced.
transportation inventory
Inventory in movement between locations.
speculative inventory
Used to protect against some future event.
inventory turnover
by the level of customer demand satisfied by the supply on hand
periodic counting
A physical inventory is taken periodically, usually annually.
cycle counting
Prespecified items are counted daily.
Vendor-managed inventory (VMI)
requires the vendor to maintain an inventory of certain items at the customer's facility
strategic business plan
with its long-term focus, provides your company's direction and objectives for the next 2 to 10 years
Sales and operations planning
integrates the medium-range functional plans developed by marketing, operations, engineering, and finance
marketing plan
Identifies the markets to be served, desired levels of customer service, product competitive advantage, profit margins, and the market share needed to achieve the objectives of the strategic business plan.
aggregate plan
Includes the budgeted levels of finished products, inventory, backlogs, workforce size, and aggregate production rate needed to support the marketing plan.
financial plan
indicates the sources and uses of funds, expected cash flows, anticipated profits, and projected budgets
engineering plan
supports the research and development of new products introduced in the marketing plan and subsequently planned for in the aggregate plan
master production schedule
is an anticipated production schedule and is typically stated as specific finished goods
level aggregate plan
maintains a constant workforce and produces the same amount of product in each time period of the plan
chase aggregate plan
produces exactly what is needed to satisfy demand during each period
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.
Reactive options
in which the operations department uses inventories and back orders to react to demand fluctuations.
proactive option
in which marketing tries to shift the demand patterns to minimize demand fluctuations.
capacity-based options
changes output capacity to meet demand through the use of overtime, undertime, subcontracting, hires, fires, and part-timers or temps
Shifting demand
is a proactive marketing approach to leveling demand in which your company tries to change consumer buying patterns by offering incentives
point of departure
is the percentage of normal capacity your company is currently operating at
Magnitude of the change
is the size of change needed
Duration of the change
is the length of time you expect to need the different level of capacity
Material requirements planning (MRP)
is an information system that uses the concept of backward scheduling
capacity requirements planning (CRP)
Determines the labor and machine resources needed to fill the open and planned orders generated by the MRP.
bill of material (BOM)
Lists all the subassemblies, component parts, and raw materials that go into an end item and shows the usage quantity of each required.
Independent demand
is the demand for finished products; it does not depend on the demand for other products
dependent demand
Demand for component parts is based on the number of end items being produced.
time-phased
Expressing future demand, supply, and inventories by time period.
gross requirements
The total-period demand for an item.
open shop orders
Released manufacturing orders.
project
is a unique, one-time set of activities that is intended to achieve an objective in a given time period