Strategic Risk and Innovation Management
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Questions and Answers

What strategic risk arises when the market expectations exceed operational capabilities?

  • Increasing operational efficiency
  • Aligning production with demand
  • Deviations from the line of fit (correct)
  • Over-optimizing features

What should a company do if it cannot meet market expectations?

  • Increase marketing efforts
  • Enhance operational capability or change target segment (correct)
  • Invest in research and development
  • Reduce pricing strategy

What does the importance-performance matrix help a company to identify?

  • Financial constraints on operations
  • Employee performance metrics
  • Unexploited market opportunities
  • Relative priorities for improvement (correct)

How is the performance of competitive factors evaluated in the matrix?

<p>Using a 1-9 scale (C)</p> Signup and view all the answers

In product and service innovation, what is essential during the concept generation stage?

<p>Capturing the product's nature and specifications (D)</p> Signup and view all the answers

What factor should guide product design according to customer preferences?

<p>Customers' needs and desires (D)</p> Signup and view all the answers

Which of the following is NOT a constraint that can delay market innovations?

<p>Audience engagement levels (B)</p> Signup and view all the answers

What does it mean to downgrade features of a product in response to market requirements?

<p>To align features with actual market needs (A)</p> Signup and view all the answers

What is one of the main goals of inventory management?

<p>Minimizing the costs involved in stocks while satisfying customers (A)</p> Signup and view all the answers

Which type of demand relates to the final end-product and is not dependent on other items?

<p>Independent Demand (C)</p> Signup and view all the answers

What are ordering costs associated with?

<p>The costs incurred when placing an order to a supplier (B)</p> Signup and view all the answers

Which of the following is NOT a type of inventory cost discussed?

<p>Transport costs (B)</p> Signup and view all the answers

What results from a higher rate of receiving work-in-process compared to total output delivery?

<p>Increased inventory levels (A)</p> Signup and view all the answers

Which strategy focuses on balancing inventory costs with customer satisfaction?

<p>Just-in-time inventory (D)</p> Signup and view all the answers

Which management aspect is critical for tracking inventory flow along with production?

<p>Production control (B)</p> Signup and view all the answers

Which inventory management method aims to avoid excess inventory by ordering materials only as needed?

<p>Lean inventory (B)</p> Signup and view all the answers

What does increasing capacity do to inventory costs?

<p>Increases inventory costs (A)</p> Signup and view all the answers

Which of the following is NOT a component to judge the appropriateness of capacity planning?

<p>Employee salaries (D)</p> Signup and view all the answers

What is the utilization rate formula?

<p>$U = \frac{Actual Output}{Design Capacity}$ (B)</p> Signup and view all the answers

A bottleneck in a process is defined as what?

<p>A resource whose capacity is less than the demand placed on it (A)</p> Signup and view all the answers

Which types of constraints can affect system performance?

<p>Physical, market, and managerial (D)</p> Signup and view all the answers

What does a capacity-constrained resource (CCR) indicate?

<p>Its utilization is close to capacity (C)</p> Signup and view all the answers

What is the primary goal of synchronous manufacturing?

<p>Ensure all phases work together to achieve objectives (C)</p> Signup and view all the answers

Why is managing constraints crucial in operations?

<p>To increase throughput and efficiency while ensuring flow continuity (D)</p> Signup and view all the answers

What do specification limits represent in a process?

<p>The target performance set by customer requirements (A)</p> Signup and view all the answers

What does a process capability index (CP) of less than 1 indicate?

<p>The process is not capable of meeting specifications (C)</p> Signup and view all the answers

Which statement accurately describes CP and CPK?

<p>CP is a measure of potential capability but does not consider centering (C)</p> Signup and view all the answers

What is a characteristic of lean supply networks?

<p>They prioritize efficiency (D)</p> Signup and view all the answers

Which type of products requires agile supply chain management?

<p>Innovative products (D)</p> Signup and view all the answers

What is the primary focus of supply chain management?

<p>Optimizing interconnections between organizations producing value (D)</p> Signup and view all the answers

How can you assess if a process is centered between its specification limits?

<p>Calculating CPK using mean and standard deviation (A)</p> Signup and view all the answers

Which of the following describes the implications of using different supply chain policies?

<p>Different policies align with market requirements of functional and innovative products (B)</p> Signup and view all the answers

What does Safety Stock (SS) depend on?

<p>Lead Time and Demand Variance (A)</p> Signup and view all the answers

Which equation correctly represents the Total Cost (TC)?

<p>TC = d × P + D × C + n × S + (SS) × i ∙ C (C)</p> Signup and view all the answers

What does the Order Quantity (Q) represent?

<p>The target units minus inventory on hand (B)</p> Signup and view all the answers

What does the Lead Time (L) influence in inventory management?

<p>The time required to replenish inventory (A)</p> Signup and view all the answers

The Master Production Schedule (MPS) outlines what kind of information?

<p>Planned quantities and timing of product builds (B)</p> Signup and view all the answers

Which component is NOT a part of the Total Cost formula?

<p>Buying Price (A)</p> Signup and view all the answers

What is the primary goal of Master Requirements Planning (MRP)?

<p>Minimize stock levels while preventing shortages (C)</p> Signup and view all the answers

What does the Bill of Materials (BOM) describe?

<p>The relationship between different materials and quantities (A)</p> Signup and view all the answers

How is Holding Cost per Unit (H) calculated?

<p>H = i × C (B)</p> Signup and view all the answers

What does the term Time Between Orders (TBO) calculate?

<p>The time required to replenish inventory (C)</p> Signup and view all the answers

What is the purpose of dummy activities in an Activity on Arrow (AOA) diagram?

<p>To maintain the logic of a network (A)</p> Signup and view all the answers

In the Critical Path Method (CPM), how is Early Finish (EF) calculated?

<p>EF = ES + t (D)</p> Signup and view all the answers

What does Late Start (LS) represent in project management?

<p>The latest time an activity can begin without delaying the project (D)</p> Signup and view all the answers

Which method is commonly used to determine the order of activities in a project?

<p>Critical path method (CPM) (A)</p> Signup and view all the answers

What is assumed about the duration of tasks in the Critical Path Method?

<p>The amount of time needed to finish a task is known with certainty (D)</p> Signup and view all the answers

In computing Late Finish (LF), which value is associated with the last activity on the critical path?

<p>EF = LF (D)</p> Signup and view all the answers

How do you determine the Early Start (ES) of an activity with multiple preceding activities?

<p>Consider the longest duration or earliest finish of preceding activities (A)</p> Signup and view all the answers

What does backward induction/movement refer to in project management?

<p>Working backwards from the last activity to determine scheduling (A)</p> Signup and view all the answers

Flashcards

Deviation from the Line of Fit

A strategic risk that arises when a company's capabilities don't match market expectations.

Performance Matrix

A tool that helps companies identify areas needing improvement by comparing the importance of competitive factors to the company's performance in those areas.

Concept Generation

The process of turning a product/service idea into a detailed concept, outlining its features and specifications.

Customer-Centric Design

The focus should be on meeting customer needs and desires. If their preferences change, product design must adapt.

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Constraints in Innovation

Limitations like finances, manpower, or technology can delay the introduction of new products or services.

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Assessing Competitive Factors

Involves assessing how important each competitive factor is to the market and how well the company performs in each area.

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Innovation, Design, and Creativity

Means incorporating creative ideas and innovative solutions to create new products or services.

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1-9 Scale

A scale used to measure the importance and performance of each competitive factor. Ranges from 1 (least) to 9 (most important/highest performance).

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Design Capacity

The maximum theoretical output of a process or resource, as designed by engineers.

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Actual Output

The actual rate of output achieved in a given time period.

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Utilization Rate

The ratio of actual output to design capacity. It measures how well the process utilizes its potential.

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Efficiency Rate

The ratio of actual output to effective capacity. It measures how efficiently the process operates.

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Constraint

Any factor that limits a process's performance and prevents it from achieving higher output.

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Bottleneck

A resource whose capacity is less than the demand placed upon it, creating a bottleneck in the process.

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Capacity-Constrained Resource (CCR)

A resource whose utilization is close to its capacity, potentially becoming a bottleneck if not managed carefully.

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Synchronous Manufacturing

A manufacturing strategy where all stages of production work together synchronously to achieve company goals.

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Inventory Level Increase

The amount of inventory increases when the rate of receiving work-in-process is faster than the rate of delivering output or finished goods to the market or next department.

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Customer Satisfaction vs Cost to Serve

The need to balance the satisfaction of customers (internal and external) with the costs associated with serving them.

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Inventory Costs vs Cost of Stock Outs

The challenge of managing the cost of holding inventory versus the risk of running out of stock and potentially losing sales or production efficiency.

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Transportation Costs vs Fulfilment Speed

The trade-off between minimizing transportation costs and ensuring swift delivery of goods to fulfill customer needs.

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Goal of Inventory Management

The core goal of inventory management is to minimize the costs associated with holding stock while ensuring that customer needs (both internal and external) are met effectively.

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Independent Demand

The demand for a product or service that is independent of the demand for other items. For example, the demand for a finished car is independent demand.

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Dependent Demand

The demand for components, raw materials or subassemblies that is derived from the demand for the final product. For example, the demand for car tires is dependent on the demand for cars.

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Ordering Costs

Costs associated with placing an order with a supplier, including administrative costs, transportation, and handling.

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Process Capability

The capability of a process to meet customer specifications.

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Specification Limits

Values that define the acceptable range of product or service performance.

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Process Capability Index (Cp)

A measure of a process's potential to meet customer requirements, calculated as the difference between upper and lower specification limits divided by six times the process standard deviation.

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Process Capability Index (Cpk)

A measure of a process's actual capability to meet customer requirements, taking into account process centering.

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Supply Chain

A system of organizations and processes involved in producing and delivering goods or services to the end consumer.

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Lean Supply Chain

A supply chain management approach that focuses on efficiency and minimizing waste within the production process.

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Agile Supply Chain

A supply chain management approach that prioritizes flexibility and responsiveness to meet changing market demands.

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Functional Products

Products that are standardized and have predictable demand, suitable for lean supply chain management.

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Innovative Products

Products or services that are innovative, have unpredictable demand, and require agile supply chain management.

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Activity on Node (AON)

A project management technique that represents activities as nodes and dependencies as arrows, showing the sequence and duration of tasks. It emphasizes the importance of activities and their relationships.

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Activity on Arrow (AOA)

A project management technique that represents activities as arrows and dependencies as nodes. It focuses on the relationships between activities and their flow.

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Dummy Activity

An imaginary activity in AOA diagrams that takes no time or resources but helps maintain the logical flow of the network.

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Early Start (ES)

The earliest time an activity can begin, assuming all preceding tasks start at their earliest possible time.

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Late Start (LS)

The latest time an activity can start without delaying the project completion time.

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Early Finish (EF)

The earliest time an activity can be completed, calculated by adding the activity's duration to its early start time.

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Late Finish (LF)

The latest time an activity can be completed without delaying the project completion time.

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Critical Path

The path in a network diagram that takes the longest time to complete, determining the overall project duration.

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Safety Stock

The amount of inventory needed to buffer against uncertainties in demand and lead time. It's calculated using service level, lead time, review period, and demand variance.

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Total Inventory Requirement (T)

The total amount of inventory needed to meet demand during the lead time and review period, plus the safety stock.

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Order Quantity (Q)

The amount of inventory a company plans to order based on its sales forecast and current inventory levels.

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Holding Cost per Unit (H)

The cost of holding a unit of inventory for a specific period, usually expressed as a percentage of the item's cost.

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Master Production Schedule (MPS)

The process of creating a time-phased plan for producing goods or services, taking into account customer demand.

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Master Requirements Planning (MRP)

A system used to manage dependent demand, scheduling the production of components and materials to meet planned production orders.

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Bill of Materials (BOM)

A visual representation that details the components, quantities, and relationships of a product's structure.

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MRP Exploding Process

The process of using a BOM and inventory records to calculate the required quantities of components and materials for a given production schedule.

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Cost of a New Order

The cost of producing a new order, including the setup cost and other ordering expenses.

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Time Between Orders (TBO)

The time period between placing an order and receiving the ordered goods. This can be calculated using the total cost, holding cost, demand, and the cost of a new order.

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Study Notes

Operations Management Notebook 2021/2022

  • Notebook authored by Vasco Ribeiro Tamen
  • Based on Prof. Ana Sofia Costa's slides, Isabel Alvim's notebook, and books by Nigel S., Alistair B., Robert J., and F. Robert Jacobs, Richard B. Chase.

Table of Contents

  • Directing the Operation: Strategic Level (pages 3-17)

    • Introduction to Operations Management
    • Operations Performance
    • Operations Strategy
    • Product and Service Innovation (page16)

  • Designing the Operation: Analysis and Design Levels (pages 18-26)

    • Process Design
    • Layout and Flow
    • Process Types: Project, Jobbing, Batch, Mass, and Continuous

  • Layout Types: Fixed-position, Functional, Cell, Line, Mixed

  • Deliver: Planning and Control (pages 31-43)

    • Planning and Control
    • Sales & Operations Planning
    • Capacity Planning and Control
    • Inventory Planning and Control (Q-Model, P-Model, Comparison)
    • Materials Planning and Control (MRP, BOM)

  • Development: Operations Improvement (pages 52-68)

    • Quality Management (Quality Costs - Prevention, Appraisal, Internal Failure, External Failure; Total Quality Management (TQM) )
    • Statistical Process Control (Variables and Attributes Control Charts)
    • Statistical Process Capability
    • Supply Chain Management
      • Lean vs Agile Supply Networks
      • Supply Chain Vulnerability
    • Project Management
      • Critical Path Method (CPM)
      • Program Evaluation and Review Technique (PERT)
      • Time-Cost Models and Project Crashing

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Description

This quiz explores key concepts related to strategic risk and innovation management within companies. It covers topics such as exceeding market expectations, the importance-performance matrix, and inventory management. Test your understanding of these critical aspects of business strategy.

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