Operations Management Student Study Guide Final Examination 1. 12 This is a two-hour, closed book and closed notes test. Therefore, it cannot be a take-home test. Students may use a hand-held calculator during the test provided it does not have features that allow it to take pictures or otherwise store test information other than the current calculation. The calculator cannot have means to communicate via email, instant messenger or any other means. Students are not allowed to use a computer during the test. Students are not allowed to bring extra “scratch” paper to the exam.
They can use the back side of the test for scratch paper if needed. The examination contains twenty multiple choice questions valued at 5 points each (100 points total) and five essay questions valued at 40 points each (200 points total). The total value of the examination is 300 points. Multiple Choice Questions ask the students to relate key operations management concepts that they have learned: 1. The student should review these concepts that relate to Operations Management: a. Transformation process b. Operations Management positions c. Efficient operations d. Effective operations . Supply chains 2. The student should review these concepts that relate to Process Focus Dimensions: a. Process structures: Project, Work Center, Continuous Process, Assembly Line, Manufacturing Cell. b. Focus dimensions: cost, efficiency, quality, capacity, flexibility, delivery speed, reliability. 3. The student should review these concepts that relate to Product Development. a. Steps of the product development process: planning, concept development, system level design, detail design, testing and refinement, production run-up. b. Economic analysis of product development projects . Quality Function Deployment d. Design of services 4. The student should review these concepts that relate to Process Structures: a. Process structures: Project, Work Center, Continuous Process, Assembly Line, Manufacturing Cell. b. Process analysis and process performance c. Selection via product standardization and product volume d. Break even analysis 5. The student should review these concepts that relate to Services versus Manufacturing Operations: a. Customer contact b. Services package c. Inventory characteristics in services d. Services triangle e.
Customer Introduced variability 6. The student should review these concepts that relate to Business Process Reengineering: a. Improvement in quality, speed, innovation, customization and service. b. Principles of business process reengineering. 7. The student should review these concepts that relate to Product Quality: a. Deming: What it takes to achieve outstanding quality b. Six Sigma quality improvement process c. Statistical quality control d. Quality specifications and costs 8. The student should review these concepts that relate to Material Requirements Planning: a.
Master production scheduling b. Bill of materials c. Material Requirements Planning 9. The student should review these other concepts: a. Project networks: CPM, PERT b. The critical path c. Logistics d. Supply chain management Essay questions ask the student to relate core learning concepts to operations management situations and to discuss or define operations management terms. Be certain that you completely understand the following terms and concepts. The student should review concepts that relate to the following and be prepared to write analyses that include: ) Describe what the term “Operations Management” means and be able to apply it within organizations. To define the term operations management, let us consider the two words separately. Operations, at the most general level, are all about the conversion ortransformation of inputs into outputs. Inputs can be traditional resources such as labour, equipment, facilities, raw materials, processed components, time, and non-traditional resources in the form of knowledge, skills, customer relationships and reputation. 2 The outputs can be products, services, nformation and experiences. The transformation of inputs into outputs can be physical conversion or alteration, transportation, storage or inspection when dealing with goods. 3 For services, the change would be more at a personal or even psychological level. From a value perspective, value is created when the value of the outputs is greater than the sum total of the value of inputs. Asforthe word ‘management’, there has been long debate about its meaning. For our purpose, we take the perspective of the functions that managers perform.
The five traditional functions that managers perform are planning, organising, coordinating and controlling of resources. Combining these separate definitions into one, operations management can therefore be defined as the planning, organising, coordinating and controlling of transformation of inputs to outputs. These aspects can be represented in the form of a simple model as shown in Figure 1. 1. b) Describe how focus dimensions affect the selection of a process structure and develop advantages and disadvantages for using each process structure in a specific situation. ) Project; In this arrangement, the product remains in a fixed location and materials are brought to it. Examples are a highway bridge or an airplane. d) Work Center; A work center or job shop layout is where similar machines are arranged together and product flows from one work station to another. Examples are machine shops and auto repair. e) Manufacturing Cell; A dedicated area where typically only one or a limited type of product or subassembly is made. Examples include a fast food kitchen. f) Assembly Line; Progressive steps that all products take as they work their way toward completion.
Example is Automobile assembly. g) Continuous Process; flow is continuous as compared to the steps in an assembly line. Example is an oil refinery. One approach used to choose between the five work flow arrangements is the Break Even Analysis. A break even analysis visually presents alternative profits and losses based upon the number of units produced or sold. h) Distinguish between operations management duties, activities, and requirements in service organizations and manufacturing organizations. There are two primary distinctions between these categories.
First,manu-facturing organizations produce physical,tangible goods that can be stored ininventory before they are needed. By contrast,service organizations produce intangi-ble products that cannot be produced ahead oftime. Second,in manufacturing orga-nizations most customers have no direct contact with the operation. Customercontact is made through distributors and retailers. For example,a customer buying acar at a car dealership never comes into contact with the automobile factory. How-ever,in service organizations the customers are typically present during the creationofthe service.
Hospitals,colleges,theaters,and barber shops are examples ofserviceorganizations in which the customer is present during the creation ofthe service i) Explain the term “materials requirement planning” and develop an MRP plan. MRP: is a Planning Procedure through which, the Supply Plan (Production Plan for Parts that made in-house, or Procurement Plan for Purchased Materials) for all Materials (RM/Parts/Subassembly. ) that required to produce End Product are Determined, in terms of Timing and Quantity based on the Information from MPS/BOM/Inventory to achieve desired objectives. Three Major Inputs to MRP: 1. MPS2. Inventory Status Record3.
BOM Two Major Outputs from MRP: 1. Planned Order Report: When/How Much/Releasing/Receipt 2. Exception Report: Orders to be Expedite/Deferred/Canceled. 3. A MRP or Materials Requirements Planning process is more than an inventory control system. It is a key piece of logic that ties the production functions together by managing the materials flows and inventories. 4. MRP is based on the control of dependent demand. Dependent demand is caused by the demand for a higher-level item. 5. The master production schedule or MPS is the time based plan that specifies when, where, and how many of each end item that the firm plans to assemble or produce.
The MPS feeds the MRP program that calculates and schedules all raw materials, parts, supplies, sub assemblies, and other resources needed to make the products in the MPS. j) Describe how supply chain management can affect manufacturing and services organizations. The central idea of supply chain management is to apply a total system approach to managing the flow of information, materials, and services from raw material suppliers through factories and warehouses to the end customer. k) Know how the product development process is organized and how to use it to develop service and manufactured products. ) Planning: A consideration of technology and market objectives generates the project mission statement which includes target markets, business goals, key assumptions, and constraints. m) Concept Development: Target market needs are further developed and alternative product concepts are reviewed. A single product concept is approved for future development with its specifications and economic justification. n) System Level Design: This design phase includes definition of the product architecture and the breakdown of the product into systems and subsystems with its assembly scheme.
The output of this step includes the the functional specifications along with a preliminary process flow diagram. o) Design Detail: The complete specification of the product complete with parts specifications. An assembly process plan is defined with specifications of tooling and machine requirements. p) Testing and Refinement: generation of preproduction versions of the product that are evaluated as prototypes. Modifications are made as necessary. q) Production and Ramp-up: The product is produced via its intended production process while testing out the equipment and training employees.
The products produced undergo extensive post production testing and at some point the product is launched and becomes available for distribution. r) Discuss how to apply quality management programs to achieve improved quality. Total Quality Management is managing the entire organization so that it excels on all dimensions of products and services that are important to the customer. It has two fundamental goals; Careful design of the product or service, and ensuring that the organizations systems can consistently produce the design.
Developing quality specifications for products and processes is fundamental to the quality system. Design quality refers to the value of the product in the marketplace and thus is a strategic decision of the firm. Conformance quality is the degree by which a product or service’s specifications are met. A quality program will cost the firm a substantial amount so a great deal of justification has been generated that is based upon the cost of quality. The costs of quality are generally classified into four types: • Appraisal costs: Costs of inspection. Prevention costs: The total of all costs to prevent defects. • Internal failure costs: Cost for failures incurred within the system. • External failure costs: Costs for defects that pass through the system to the customer. Six Sigma refers to a philosophy used by major manufacturers used to eliminate defects in their products and processes. One of the benefits of six sigma thinking is that it allows managers to readily describe the performance of a process in terms of its variability and to compare multiple processes with a common metric. This metric is defects per million opportunities (DPMO).
DPMO = [Number of defects / (Number of opportunities X Number of Units)] X 1,000,000 The six sigma process includes Define, Measure, Analyze, Improve, and Control activities. The analytical tools and methods used for six sigma and continuous improvement programs include flowcharts, run charts, pareto charts, checksheets, cause-and-effect diagrams, opportunity flow diagrams, control charts, failure mode and effect analysis, and design of experiments (DOE). ISO 9000 and ISO 14000 are international standards for quality management and assurance.
These standards help companies demonstrate and document that they are maintaining an efficient quality system. 1. Transformation process ? 2. Operations Management positions Planning, Sourcing, Making, Delivering, and Returning 3. Efficient operations Doing something at the lowest possible cost. 4. Effective operations Creating the most value for the company. 5. Supply chains Efficient, Risk-hedging, Responsive, and Agile 6. Project Layout Product remains in a fixed location while the equipment moves to it. 7. Work Center Job shop, similar equipment are grouped together. . Continuous Process Similar to an assembly line except flow is continuous often one machine 9. Assembly Line Processes are arranged in a sequence of progressive steps 10. Manufacturing Cell Products with similar processing requirements are grouped together. 11. Focus dimensions: cost, efficiency, quality, capacity, flexibility, delivery speed, reliability. 12. Steps of the product development process: planning, concept development, system level design, detail design, testing and refinement, production run-up. 13. Economic analysis of product development projects
Useful in Go/No-go milestone and operationala design and development decisions 14. Quality Function Deployment Uses interfunctional teams from marketing, design engineering, and manufacturing. Created by Toyota 15. Design of services Service experience fit, Operational fit, and Financial impact. 16. Process analysis and process performance Efficiency, run time, setup time, operation time, flow time, throughput rate 17. Selection via product standardization and product volume ? 18. Break even analysis Shows the break- even point and helps to choose between alternative pproaches. 19. Customer contact Physical presence of the customer in the system 20. Services package Bundle of goods and services that is provided in some environment. Supporting facility, facilitating goods, information, explicit services, implicit services. 21. Inventory characteristics in services Services can? t be held in inventory 22. Services triangle The service strategy, employees, and support systems all focus on the customer. 23. Customer Introduced variability The higher the customer contact the more variability being introduced. 24.
Improvement in quality, speed, innovation, customization and service. ? 25. Principles of business process reengineering. Organize around outcomes-not tasks, have those who use the output of the process perform the process, merge information-processing work into the real work that produces information, treat geographically dispersed resources as though they were centralized, link parallel activities instead of integrating their results, put the decision point where the work is performed and build control in the process, and capture informaction once at the source. 6. Deming: What it takes to achieve outstanding quality Breakdown barriers between departments, eliminate goals without methods, continuous improvement 27. Six Sigma quality improvement process Define, Measure, Analyze, Improve, and Control 28. Statistical quality control Acceptance sampling and process control 29. Quality specifications and costs Design quality, conformance quality. Cost is production of quality that is not 100% perfect. 30. Master production scheduling How many and when the firm plans to build each end item. 31. Bill of materials
Contains complete product descriptions lists materials parts and components as well as sequence in which product is created. 32. Material Requirements Planning Ties production functions together from a material planning and control view. 33. Project networks: CPM, PERT Critical path method, and program evaluation and review tequnique 34. The critical path The longest path, also has zero slack time. 35. Logistics The art and science of obtaining, producing, and distributing material and product in the proper place and in proper quantities.