OPMT Chapt. 13 & 11

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  1. p-chart
    control chart for attributes, used to monitor the proportion of defective items in a process (fraction); use when observations can be placed into 2 categories (good/bad, pass/fail, operates/doesn't operate) & when the data consists of multiple samples of serveral observations each
  2. c-chart
    control chart for attributes, used to monitor the # of defects per unit; # of occurrences per unit can be counted, non-occurrences can't be counted; units might be hotel rooms or typed pages- calls, complaints, or failures per unit of time
  3. process capability (Cpk)
    the inherent variability of process output (process width) relative to the variation allowed by the design specifications (specification width)
  4. process capability index
    used when a process is not centered at its target, or nominal value
  5. capability index
    used to assess the ability of a process or machine to meet specifications; 1.33 or more= capable; the greater this is, the greater the probability that the output of a process will fall within design specifications
  6. inventory
    a stock or store of goods; focus here is on independent demand items= those that are ready to be sold or used, buying whole product like an Ipad or computer
  7. radio frequency identification tags (RFID)
    a technology that uses radio waves to identify objects, such as goods in supply chains; provides real-time info. that increases ability to track & process; carries much more info. & doesn't require line-of-sight to be scanned
  8. lead time
    time interval between ordering and receiving the order; the greater the potential variability, the greater the need for additional stock to reduce the risk of a shortage between deliveries
  9. purchase cost
    the amount paid to a vendor or supplier to buy the inventory; typically the largest of all inventory costs
  10. holding (carrying) costs
    costs to carry an item in inventory for a length of time, usually a year; includes theft, spoilage, interest, taxes, insurance, depreciation, breakage, tracking, & warehousing (heat, light, rent)
  11. ordering costs
    costs of ordering and receiving inventory; include shipping costs, determining how much is needed, preparing invoices, inspecting goods upon arrival for quality and quantity, & moving the goods to temporary storage
  12. setup costs
    costs involved in preparing equipment for a job; when a firm produces its own inventory; ex. preparing equipment for the job by adjusting the machine & changing cutting tools
  13. shortage costs
    costs resulting when demand exceeds the supply of inventory; often unrealized profit per unit; from opportunity cost of not making a sale, loss of customer loyalty, loss of process work, loss of customer goodwill, late charges, & backorder costs
  14. A-B-C approach
    classifying inventory according to some measure of importance and allocating control efforts accordingly; A (very important, very few, & costly, 10-20% of the # of items in inventory & 60-70% of the annual $ value), B (moderately important), C (least important, large volume, cheap, 50-60% of the # of items in inventory & 10-15% of the annual $ value)
  15. cycle counting
    a physical count of items in inventory; purpose= to reduce discrepancies between the amounts indicated by inventory records & the actual quantaties of inventory on hand; conducted more frequently than once a year
  16. economic order quantity (EOQ)
    used to determine how much to order; the order size that minimizes total annual cost
  17. quantity discounts
    price reductions for larger orders offered to customers to induce them to buy in large quantities; price decreases as order quantity increases; select order quantity that will minimize total costs (carrying, ordering, & purchasing costs)
  18. reorder point (ROP)
    when the quantity on hand of an item drops down to a predetermined amount, the item is reordered; amount generally includes expected demand during lead time & perhaps an extra cushion of stock; in order to know when this is reached, perpetual inventory monitoring is required
  19. safety stock
    held in excess of expected demand due to variable demand and/or lead time; to reduce the risk of running out of inventory (a stockout); reorder point increases by the amount of this
  20. service level
    the probability that demand will not exceed supply during lead time; the amount of stock on hand will be sufficient to meet demand; this increases as the risk of stockout decreases; ex. this 95% implies stockout of 5%
  21. fill rate
    the percentage of demand filled by the stock on hand (inventory)
  22. fixed-order-interval (FOI) model
    orders are placed at fixed time intervals (weekly, twice a month); timing is set; supplier's policy may encourage use of this, grouping orders from the same supplier can produce savings in shipping costs, requires only periodic checks of inventory levels
  23. aggregate planning
    intermediate-range capacity planning that typically covers a time horizon of 2-18 months; useful for organizations that experience seasonal or other fluctuations in demand or capacity; goal= to achieve a production plan that will effectively utilize the organization's resources to match expected demand
  24. sales and operations planning (SOP)
    making intermediate-range decisions to balance supply & demand & integrate financial & operations planning; used by some instead of aggregate planning; since plan affects functions throughout the organization, it's typically prepared w/ inputs from sales (demand forecasts), finance (financial constraints), & operations (capacity constraints)
  25. level capacity strategy
    maintaining a steady rate of output while meeting variations in demand by a combination of options, such as inventories, overtime, part-time workers, subcontracting, and back orders; stable output rates & workforce, but greater inventory costs, increased idle time, & resource utilizations vary over time
  26. chase demand strategy
    matching capacity to demand; the planned output for a period is set at the expected demand for that period; investment in inventory is low (enables substantial savings) & labor utilization is high, but lack of stability in operations & the cost of adjusting output rate and/or workforce levels
  27. master production schedule (MPS) or master schedule
    indicates the quantity and timing of specific end items (planned completed production) for a scheduled horizon, usually 6-8 weeks ahead; shows planned output for individual parts rather than an entire product group; important info. for mktg= when completed orders are to be shipped; doesn't show planned production
  28. rough-cut capacity planning (RCCP)
    approximate balancing of capacity & demand to test the feasibility of a master schedule; involves checking the capacities of production & warehouse facilities, labor, & vendors to ensure no gross defiencies (obvious capacity constraints) exist that will render the MPS unworkable; validates the tentative MPS
  29. time fences
    points in time that separate phases of a master schedule planning horizon; usually referred to as frozen, slushy, & liquid in reference to the firmness of the schedule; facilitate order promising & the entry of orders into the system
  30. available-to-promise (ATP) inventory
    uncommitted inventory; knowledge of this can enable marketing to make realistic promises to customers about deliveries of new orders
Card Set
OPMT Chapt. 13 & 11
second half of Chapt. 10 & first half of Chapt. 13
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