Test 1 Review Guide
Check List:
Did you read each chapter 1- 4?
Do you understand and know the Key Terms from each chapter?
Do you know the key terms/concepts from the provided videos and Chapter PPT’s?
Understand and know the following:
Chapter 1
1. Operations as one of the three main functional concerns of most organizations.
a. Operations is responsible for producing goods and/or services
b. 3 basic functions of business organizations:
i. Finance
ii. Operations
iii. Marketing
2. The role and job of the operations manager as a planner and decision-maker.
a. To guide the system by planning and making decisions affecting the design or operation of the system
b. Cists (budget, quality, schedules (time)
3. Different ways of classifying (and understanding) production systems.
4. System design versus system operation.
- System design (strategic)- decisions that relate to system capacity, the geographic location of facilities, the
arrangement of departments and the placement of equipment within physical structures, product and service
planning, and the acquisition of equipment
- System operation (tactical and operational)- management of personnel, inventory planning and control,
scheduling, project management, and quality assurance
5. Major characteristics of production systems.
6. Contemporary issues in operations management.
- Chief Issues: economic conditions, innovation, quality problems, risk management, cubersecurity, competing in a global
economy, environmental concerns (sustainability), ethical conduct,
- e-business, e-commerce, technology ()product and service technology, process technology, and information
technology (IT)
- Six sigma process- a process for reducing costs, improving quality, and increasing customer satisfaction
- Agility- the ability of an organization to respond quickly to demands or opportunities
- Lean systems- systems that use minimal amounts of resources to produce a high volume of high-quality goods with
some variety
7. Operations as managerial (planning, staffing, etc.)
- Forecasting
- Capacity planning
operations
functions: purchasing industrial engineering, distribution, maintenance
- manufacturing operations: tangible output, low customer contact, low labor content, high uniformity of input, easy
measurement of prod
10. The need to manage the supply chain.
- managing the supply chain achieves schedule, cost, and quality goals
1. the need to improve operations
2. increasing levels of outsourcing
3. increasing transportation costs
4. competitive pressures
5. increasing globalization
6. increasing importance of e-business
7. the complexity of supply chains
8. the need to manage inventories
9. the need to deal with trade wars
10. the need to have sufficient data and use specific analytics
*Pareto phenomenon- a few factors account for a high percentage of the occurrence of some events
* supply chain- a sequence of organizations that are involved in producing and delivering a product or service
Chapter 2
1. List several ways that business organizations compete
a. Price, delivery time, product or service differentiation
2. Marketing influences competitiveness in several ways including:
a. Identifying consumer wants and/or needs
b. Price and quality
c. Advertising and promotion
3. Name several reasons that business organizations fail
oNeglecting operations strategy
oFailing to take advantage of strengths and opportunities, and/or failing to recognize competitive threats
oPutting too much emphasis on short-term financial performance at the expense of research and
development
oPlacing too much emphasis on product and service design and not enough on process design and
improvement
oNeglecting investments in capital and human resources
oFailing to establish good internal communications and cooperation among different functional areas
oFailing to consider customer wants and needs based on historical and other data
4. Define the terms mission and strategy and explain why they are important
a. Mission- the reason for the existence of an organization
i. Mission statement serves as the basis for organizational goals
b. Plans for achieving organizational goals
5. Discuss and compare organization strategy and operations strategy, and explain why it is important to link the
two
a. Organizational strategies are broader in scope and relate to the entire organization
b. Functional strategy relates to each functional area of the organization
c. Operations strategy- narrower in scope, used to guide the operations function
6. Define the term productivity and explain why it is important to organizations and to countries
a. A measure of the effective use of resources, usually expressed as the ratio of output to input
7. Describe the factors that affect productivity
a. Methods- processes
b. Capital- investment, budget, money
c. Quality- continuous improvement
d. Technology- effectiveness
e. Management- leadership, education, training
8. Balance scorecard
a. Areas: financial, customer, internal process, learning and growth
b. Initiative
c. Measure
d. Target
e. Owner
**CALCULATIONS**
Calculate: Single Factor Productivity, Multi-Factor Productivity, and Productivity Change.
Chapter 3
1. List features common to all forecasts
a. Forecasts are not perfect
b. Forecasts for groups of items tend to be more accurate than forecasts for individual items
c. Forecasts accuracy decreases as the time period covered by the forecast
2. Understand why forecasts are generally wrong
a. Unplanned occurrences
3. List elements of a good forecast
a. Timely, accurate, reliable, meaningful units, in writing, simple to understand and use, cost-effective
4. Outline the steps in the forecasting process
1. Determine the purpose of the forecast
2. Establish a time horizon
3. Obtain, clean, and analyze appropriate data
4. Select a forecasting technique
5. Make the forecast
6. Monitor the forecast errors
5. Describe four qualitative forecasting techniques
1. Executive opinions- small group of upper-level managers meet to collectively develop a forecast
2. Salesforce opinions- developed by members of the sales staff or the customer service staff (people with
direct contact with the customers)
3. Consumer surveys- uses sample consumer opinions, helps determine demand, not always cost-effective or
accurate
4. Expert opinions- independent, outside experts are brought in to create a forecast
a. Delphi method- an iterative process in which managers and staff complete a series of
questionnaires, each developed from the previous one, to achieve a consensus forecast
**CALCULATIONS**
Understand, interpret, calculate, or create:
Basic Naïve
Trend-Adjusted Naïve
Seasonally Adjusted Naïve
Moving Average Forecasts (MA)
Weighted-Moving Average Forecasts (WMA)
Exponentially Smoothed Forecasts
Forecast with Linear Trend, Linear Trend Equation
Seasonality
TAF
Simple Linear Regression
Error Measures MAD (Mean Absolute Deviation)
MSE (Mean Squared Error)
MAPE (Mean Absolute Percentage)
Supplemental notes:
What is the smoothing constant Alpha (in Exponential Smoothing)? It can range between 0 and 1.
Alpha is the smoothing constant for the level of the series. The limits of this value are zero and one. Usually, a value
between 0.1 and 0.3 are used. As the value gets closer to one, more and more weight is given to recent observations.
Exponential smoothing is a rule of thumb technique for smoothing time series data using the exponential window
function. Whereas in the simple moving average where past observations are weighted equally, exponential functions
are used to assign exponentially decreasing weights over time.
Whereas in Single Moving Averages the past observations are weighted equally, Exponential Smoothing assigns
exponentially decreasing weights as the observation get older. In other words, recent observations are given relatively
more weight in forecasting than the older observations.
Exponential smoothing: requires less data storage, gives more weight to recent data, and is easier to change to make it
more responsive to changes in demand.
The primary difference between an EMA and an SMA is the sensitivity each one shows to changes in the data used in its
calculation. ... More specifically, the exponential moving average gives a higher weighting to recent data prices, demand,
etc., while the simple moving average assigns equal weighting to all values.
Poor forecasting leads to poor planning. This could result in offering products and services that customers do not want.
Poor forecasting and planning can negatively affect budgeting and planning for capacity, sales, production and
inventory, labor, purchasing, energy requirements, capital requirements, and materials requirements.
There is always going to be a certain amount of random variation about the forecast. The amount of this random
variation about the forecast (actual vs. forecast) will increase as the forecasting horizon is extended.
Chapter 4
1. Explain the strategic importance of product and service design
2. Describe what product and service design does
3. Name the key questions of product and service design
4. Identify some reasons for design or redesign
5. List some of the main sources of design ideas
6. Discuss the importance of legal, ethical, and sustainability considerations in product and service design
7. Explain the purpose and goal of life cycle assessment
8. Explain the phrase “the 3 Rs”
9. What is the House of Quality and the Kano Model?
10. Discuss several key issues in product or service design
11. Discuss the two key issues in service design
12. Name the phases in service design
13. List the characteristics of well-designed service systems
14. List some guidelines for successful service design
Main topics in this chapter include:
1. The reasons, trends, and objectives of Product and Service Design.
a. Customer satisfaction
b. Cost or profit, quality, ability to produce product or provide service, ethics/safety, sustainability
2. The Design Process (Designing for mass customization, reliability, robust design, etc.).
a. Mass customization- a strategy of producing basically standardized goods, but incorporating some
degree of customization
i. Delayed differentiation- the process of producting, but not quite completing, a product or
service until customer preferences are known
b. Reliability- the ability of a product, part or system to perform its intended function under a prescribed
set of conditions
c. Robust design- design that results in products or services that can function over a broad range of
conditions
3. Research and Development- organized efforts to increase scientific knowledge or product innovation
a. basic research, applied research, and development
4. Standardization- extent to which a product, service, or process lacks variety
a. Modular design- a form of standardization in which component parts are grouped into modules that are
easily replaced or interchanged
5. Product Design (concurrent engineering, computer aided design, remanufacturing).
a. Phases:
i. Feasibility analysis
ii. Product specifications
iii. Process specifications
iv. Prototype development
v. Design review
vi. Market test
vii. Product introduction
viii. Follow-up evaluation
b. Concurrent engineering- bringing engineering design and manufacturing personnel together early in the
design phase
c. Computer aided design (CAD)- product design using computer graphics
d. Design for manufacturing (DFM)- the designing of products that are compatible with an organization’s
capabilities
e. Design for assembly (DFA)- design that focuses on reducing the number of parts in a product and on
assembly methods and sequence
f. Manufacturability- the capability of an organization to produce an item at an acceptable profit
6. Service Design.
a. Something that is done to or for a customer, created and delivered simultaneously
b. Phases:
i. Conceptualize:
1. Idea generation
2. Assessment of customer wants/needs (marketing)
3. Assessment of demand potential (marketing)
ii. Identify service package components needed (operations and marketing)
iii. Determine performance specifications (operations and marketing)
iv. Translate performance specifications into design specifications
v. Translate design specifications into delivery specifications
c. Service blueprint- a method used in service design to describe and analyze a proposed service
7. Quality Function Deployment (QFD)- an approach that integrates the “voice of the customer” into both
product and service development
8. Kano Model- a framework for prioritizing product features based on how likely they are to satisfy customers
Supplemental notes/comments:
Organizations redesign their products and services for a variety of reasons. Among them are customer dissatisfaction,
government regulation, competition, liability claims, technological innovation (products and methods), and changes in
costs and availability of such inputs as materials, labor, and energy.
The main advantages of Standardization are:
a. Less variety of parts to deal with.
b. Permits standardized training, purchasing, inspection, and material handling. It may also permit automation.
c. Enables production to stock, which allows filling orders from inventory, and potentially long production runs.
Among the main disadvantages of standardization are the following:
a. Designs may be “frozen” with too many imperfections remaining.
b. The high cost of design changes increases resistance to improvement.
c. Decreased variety may lessen consumer appeal.
Modular design refers to viewing a product (and sometimes a service) as being composed of a number of “chunks” or
sections instead of a collection of individual parts. In effect, it is one form of standardization. Among the advantages of
modular design are ease of diagnosis and repair of failures; standardization of manufacturing; and more routine
purchasing, inventory control, and training. The disadvantages of modular design include a decrease in possible variety
of the product, the possibility of not being able to disassemble a module to replace a faulty part, and possible resistance
to design improvements, particularly minor ones, if they cannot be readily incorporated into an existing configuration.
Some of the competitive advantages of Concurrent Engineering are:
a. Manufacturing personnel are able to identify production capabilities and capacities. Very often, they have some
latitude in design in terms of selecting suitable materials and processes. Knowledge of production capabilities can help in
the selection process. In addition, cost and quality considerations can be influenced greatly by design, and conflicts
during production can be reduced greatly.
b. Early opportunities for design or procurement of critical tooling, some of which might have a long lead-time. This
can result in a major shortening of the product development process, which could be a key competitive advantage.
c. Early consideration of the technical feasibility of a particular design or a portion of a design. Again, this can avoid
serious problems during production.
d. More effective resource allocation.
e. The emphasis can be on problem resolution instead of conflict resolution.
Differences between service design and product design:
a. Products are generally tangible; services are generally intangible. Consequently, service design often focuses
more on intangible factors (e.g., peace of mind, ambiance) than does product design.
b. Services are often produced and received at the same time (e.g. a haircut, a car wash). Thus, there is less
latitude in finding and correcting errors before the customer has a chance to discover them. Consequently, training,
process design, and customer relations are particularly important.
c. Services cannot be inventoried. This poses restrictions on flexibility and makes capacity design very important.
d. Services are highly visible to consumers and must be designed with that in mind; this adds an extra dimension to
process design, one that usually is not present in product design.
e. Some services have low barriers to entry and exit. This places additional burden on service design to be
innovative and cost-effective.
f. Location is often important to service design, with convenience as a major factor. Hence, design of services and
choice of location often are closely linked.
Quality function deployment (QFD) is a structured approach for integrating the “Voice of the Costumer” into the
product development process. The purpose is to ensure that customer requirements are factored into every aspect of
the process from product planning to the production floor. Listening to and understanding the customer is the central
feature of QFD
Reverse engineering is dismantling and inspecting a competitor’s product to discover product improvements. Yes, it is
ethical to look but not to copy, in most cases.
The 3 R’s are reduce (through value analysis), reuse (through remanufacturing), and recycle. They relate to sustainability
by avoiding or reducing the impact on the environment that would accompany new production or, in the case of
recycling, a reduction in the waste stream.
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