Operation Management and TQM Review PDF

OPERATION MANAGEMENT AND TQM POINTERS TO REVIEW Gross Requirements – Total expected demand for an item or raw material in a time period without regard to the amount on...

OPERATION MANAGEMENT AND TQM POINTERS TO REVIEW Gross Requirements – Total expected demand for an item or raw material in a time period without regard to the amount on hand. For end items, these quantities are shown in the master Low-Level Coding – Restructuring the bill of materials so that schedule; for components, these quantities are derived from multiple occurrences of a component all coincide with the the planned-order releases of their immediate “parents.” lowest level at which the component occurs. Kanban – A manual system used for controlling the movement Gantt Chart – Chart used as visual aid for loading and of parts and materials that responds to signals of the need (i.e., scheduling purposes. demand) for delivery of parts or materials. This applies both to delivery to the factory and delivery to each workstation. CPM (Critical Path Method) – for planning and coordinating large projects. There are two main types of kanbans: 1. Production kanban (p-kanban): signals the need to produce parts. Two of the most widely used techniques for planning and coordinating large-scale projects. 2. Conveyance kanban (c-kanban): signals the need to deliver parts to the next work center. PERT (program evaluation and review technique). Program evaluation and review technique, for Return on Quality (ROQ) – An approach that evaluates the planning and coordinating large projects. financial return of investments in quality. CPM (critical path method). Critical path method, for - Approach focuses on the economics of quality efforts. planning and coordinating large projects. - In this approach, quality improvement projects are viewed as investments, and, as such, they are Capacity Requirements Planning – The process of determining evaluated like any other investment, using metrics short-range capacity requirements. related to return on investment (ROI). Scheduling – Establishing the timing of the use of equipment, Value Stream Mapping – A visual tool to systematically facilities, and human activities in an organization. examine the flow of materials and information involved in bringing a product or service to a consumer. - It relates to the use of equipment, facilities, and human activities. Scheduling occurs in every Distribution Resource Planning (DRP) – also referred to as organization, regardless of the nature of its activities. distribution requirements planning, is a method used for planning orders in a supply chain. Johnson’s Rule – Technique for minimizing makespan for a group of jobs to be processed on two machines or at two work Two different approaches are used to load work centers: centers (sometimes referred to as a two-machine flow shop). It Infinite Loading – Jobs are assigned to work centers also minimizes the total idle time at the work centers. without regard to the capacity of the work center. Muda – Waste and inefficiency. Perhaps the driving philosophy. Finite Loading – Jobs are assigned to work centers Waste and inefficiency can be minimized by using the following taking into account the work center capacity and job tactics. processing times. Order Releases – Authorizing the execution of planned orders. Load Reports – Department or work center reports that compare known and expected future capacity requirements Forward Scheduling – Scheduling ahead from a point in time. with projected capacity availability. - Is used if the issue is “How long will it take to complete Enterprise Resource Planning (ERP) – Department or work this job?” center reports that compare known and expected future - Enables the scheduler to determine the earliest capacity requirements with projected capacity availability. possible completion time for each job and, thus, the amount of lateness or the amount of slack can be - Was the next step in an evolution that began with determined MRP and evolved into MRP II. Like MRP II, it typically has an MRP core. Backward Scheduling – Scheduling backward from a due date. - ERP represents an expanded effort to integrate standardized record keeping that will permit - Used if the issue is “When is the latest the job can be information sharing among different areas of an started and still be completed by the due date?”  organization in order to manage the system more Dependent Demand – Demand for items that are effectively. subassemblies or component parts to be used in the production of finished goods. Scatter Diagram – A graph that shows the degree and direction of relationship between two variables. - When demand for items is derived from plans to make certain products, as it is with raw materials, parts, and Planned-Order Releases – Planned amount to order in each assemblies used in producing a finished product, time period; planned-order receipts offset by lead time. those items are said to have dependent demand. - This amount generates gross requirements at the next Safety Stock – Extra inventory carried to reduce the probability level in the assembly or production chain. of a stockout due to demand and/ or lead time variability. Activity-On-Arrow (AOA) – Network diagram convention in Cycle Stock – The amount of inventory needed to meet which arrows designate activities. expected demand. Process Variability – Natural or inherent variability in a Kaizen – Continuous improvement of the system. There is process. It is measured in terms of the process standard always room for improvement, so this effort must be ongoing. deviation. Holding (carrying) Costs – Cost to carry an item in inventory for Loading – The assignment of jobs to processing centers. a length of time, usually a year. (Relate to physically having Project Champion – A person who promotes and supports a items in storage). project. Work breakdown structure (WBS) – A hierarchical listing of Single-Minute Exchange of Die (SMED) – A system for reducing what must be done during a project. changeover time. Planning reports – Data useful for assessing future material - Enables an organization to quickly convert a machine - Are useful in forecasting future inventory or process to produce a different (but similar) product requirements. They include purchase commitments type. and other data that can be used to assess future - Shigeo Shingo made a very significant contribution to material requirements. lean operation with the development of what is called the single-minute exchange of die (SMED) system. Available-to-promise (ATP) Inventory – Uncommitted inventory. Closed-Loop Supply Chain – A manufacturer controls both the forward and reverse shipment of product. - Knowledge of the uncommitted inventory can enable marketing to make realistic promises to customers - Used to describe a situation where a manufacturer about deliveries of new orders. controls both the forward and reverse logistics. Just-In-Time (JIT) – A highly coordinated processing system in Activities – Project steps that consume resources and/or time. which goods move through the system, and services are Pull System – Replacing material or parts based on demand; performed, just as they are needed. produce only what is needed. - Systems owing to their highly coordinated activities Activity-On-Node (AON) - Network diagram convention in and delivery of goods that occur just as they are which nodes designate activities. needed. Jidoka – Quality at the source (autonomation). A machine Job-Shop Scheduling – Scheduling for low-volume systems automatically stops when it detects a bad part. A worker then with many variations in requirements. stops the line. Also known as autonomation. Heijunka – Workload leveling. Variations in production volume Affinity Diagram – An affinity diagram (sometimes known as lead to waste. The workload must be leveled; volume and an affinity map or affinity chart) is a visual tool that helps you variety must be averaged to achieve a steady flow of work. organize information from a brainstorming session. Channel – A server in a service system. Net-change System – Approach that updates MRP records Master Scheduling – The master schedule is the heart of continuously. (Continuously updated). production planning and control. It determines the quantities Flow-Shop Scheduling – Scheduling for flow systems. (can be needed to meet demand from all sources, and that governs key used in medium-volume systems). decisions and activities throughout the organization. Projects – Unique, one-time operations designed to Cumulative Lead Time – The sum of the lead times that accomplish a specific set of objectives in a limited time frame. sequential phases of a process require, from ordering of parts or raw materials to completion of final assembly. Are a unique aspect of business operations that require a special management approach. Projected on hand – The expected amount of inventory that will be on hand at the beginning of each time period: Network (precedence) Diagram – Diagram of project activities scheduled receipts plus available inventory from last period. that shows sequential relationships by use of arrows and nodes. Lean Operation - A flexible system that uses minimal resources and produces high quality goods or services. - One of the main features of PERT and related techniques is their use of a network or precedence Total quality management (TQM) – A philosophy that involves diagram to depict major project activities and their everyone in an organization in a continual effort to improve sequential relationships. quality and achieve customer satisfaction. ISO 9000 – A set of international standards on quality Two key elements of managing returns management and quality assurance, critical to international business. Gatekeeping Screening – Returned goods to prevent incorrect acceptance of goods. ISO 14000 – A set of international standards for assessing a Avoidance – Finding ways to minimize the number of company’s environmental performance. items that are returned. ISO 24700 – A set of international standards that pertains to Flow System – High-volume system in which jobs all follow the the quality and performance of office equipment that contains same sequence; scheduling in these systems is referred to as reused components. Flow-shop Scheduling. Type I error – Concluding a process is not in control when it Events – The starting and finishing of activities, designated by actually is. nodes in the AOA convention. (Points in time unlike activities, Type II error – Concluding a process is in control when it is not. they consume neither resources nor time). - Type II errors are considered more serious than Type I Net Requirements – The actual amount needed in each time errors. period. Periodic Inventory – Is an accounting inventory method where Pegging – The process of identifying the parent items that have inventory and cost of goods sold are calculated at the end of generated a given set of material requirements for an item. an accounting period rather than on a daily basis. P-Chart – Control chart for attributes, used to monitor the Perpetual Inventory System – Keeps track of inventory proportion of defective items in a process. balances continuously, with updates made automatically C -chart – Control chart for attributes, used to monitor the whenever a product is received or sold. number of defects per unit. Load Chart – A Gantt chart that shows the loading and idle times for a group of machines or list of departments. Fail-safing – Incorporating design elements that prevent incorrect procedures. (Strive to make the process “mistake- proof.”) - Elements are incorporated in product or service design that make it virtually impossible for an employee (or sometimes a customer) to do something incorrectly. The Japanese term for this is pokayoke. Examples include parts that fit together one way only and appliance plugs that can be inserted into a wall outlet the correct way only. ENUMERATION COMMON APPROACHES IN ORDER FULFILLMENT 5S LEAN SYSTEM Order fulfillment – The processes involved in responding to customer orders. Seiri (sort), (suriin) Seiton (set in order), (sinupin) Engineer-to-Order (ETO). With this approach, Seiso (shine), (simutin) products are designed and built according to Seiketsu (standardize), (siguruhin) customer specifications. Shitsuke (sustain), (sariling kusa0029 Make-to-Order (MTO). With this approach, a standard product design is used, but production of the final product is linked to the final customer’s TOYOTA APPROACH IN PRODUCTION specifications. Muda – Waste and inefficiency. Assemble-to-Order (ATO). With this approach, Pull system – Replacing material or parts based on products are assembled to customer specifications demand. from a stock of standard and modular components. Kanban – A manual system that signals the need for Make-to-Stock (MTS). With this approach, production parts or materials. is based on a forecast, and products are sold to the customer from finished goods stock. Heijunka – Workload leveling. Kaizen – Continuous improvement of the system. Jidoka – Quality at the source (autonomation). Team concept – Use small teams of workers for PROJECT LIFE CYCLE (in order) process improvement. Definition Planning Execution METHODS OF INVENTORY COSTING Termination FIFO – First In, First Out. LIFO – Last In, First Out. MAC – Moving Average Cost. ELEMENTS OF PRODUCTIVE SYSTEM WASTES IN LEAN PHILOPHY Inventory — beyond minimal quantities, an idle resource, takes up floor space, and adds to cost. Overproduction — involves excessive use of manufacturing resources. Waiting time — requires space, adds no value. Unnecessary transporting — increases handling, increases work-in-process inventory. Processing waste — makes unnecessary production steps, scrap. Inefficient work methods — reduce productivity, increase scrap, increase work-in-process inventory. Product defects — require rework costs and possible lost sales due to customer dissatisfaction. STEPS IN CREATING A SUPPLY CHAIN (In order) Plan FORMS OF BUSINESS ORGANIZATION Source Make Sole-proprietorship Deliver Partnership Manage Returns Corporation  DIFFERENT TYPES OF INVENTORIES TRUE STATEMENT Raw Materials o An inventory record file needs to be maintained in Work In Progress MRP for every raw material, component, assembly, Finished Goods subassembly or end item. o Queuing theory is a mathematical approach to the analysis of waiting lines. o Sales and operations planning are intermediate-range decisions that balance supply and demand, BUSINESS CYCLE integrating financial and operations planning. o Backward scheduling is a backward scheduling ahead from a due date. o Simulation models are computerized models that can be tested under different scenarios to identify acceptable solutions to problems. o A periodic inventory system that involves physical counting of inventory at specific intervals. o Inventory records is one of the three primary inputs in MRP; includes information on the status of each item- by-item period. o Virtual project teams are team wherein some or all of the team members are not geographically separated. o Preventive maintenance is the maintaining of equipment in good operating condition and replacing parts that have a tendency to fail before they actually do fail. o To hedge against price escalation is one of the function inventories. o The cost of 100% inspection may outweigh the benefits of this total inspection. o Infinite source is a situation wherein customer arrivals are restricted. WHERE TO INSPECT IN THE PROCESS o All processes generate output that exhibits some Raw materials and purchased parts. degree of variability. Finished products o Schedule chart is a Gantt chart that shows the orders Before a costly operation or jobs in progress and whether they are on schedule. Before an irreversible process o Value stream mapping is a visual to systematically Before a covering process. examine the flow of materials and information. o As the sample size gets larger, the control limits move closer to the true process mean. o Scheduling is primarily concerned with the timing and assignment of operations. o The theoretical basis for a control chart is a sampling distribution with central tendencies and dispersion. o Master schedule one of three primary outputs in MRP; state which end items are to be produced, when these are needed, and in what quantities. o EOQ models identify the optimal order size and order frequency. TRUE STATEMENT o Safety stock is additional inventory maintained to protect against fluctuations in demand, supply delays, or forecast errors. o A kanban approach to managing inventory levels is simpler than MRP II. o Early in project’s life cycle, risk occurrence has a high probability but a low cost. o There can be two or more parallel critical paths, all having exactly the same completion time. o Project champions are people who promote and support projects. o In PERT, if the scheduled project completion time and sum of the average completion times for critical path activities are the same, the probability of completing the project on schedule is estimated at 50%, assuming no other paths are near-critical. o Lead time is the amount of time it takes for an order to be delivered after it has been placed. o Just-in-time inventory management aims to minimize inventory holding costs by receiving materials just as they are needed in the production process. show precedence relationships - A major limitation of Gantt charts in project in project management is that they do not: customer - Which of these groups would be least likely to resist conversion from a ROP/EOQ inventory management system to a JIT system? Product -structure tree - Which phrase or term is most clearly associated with the acronym BOM? inventory record, master schedule, BOM, MRP computer program - The principal input files and programs that are incorporated into a computerized MRP system are: show precedence relationships - A major limitation of Gantt charts in project management is that they do not: one unit - In the JIT philosophy, the ideal lot size is: a bill of materials - A list of all parts and materials needed to assemble one unit of a product is called: Concerning PERT and CPM: These are two different names for essentially the same technique the bullwhip effect - A system is a set of things working together as part of a mechanism or an interlocking network: