MGT 3900 Exam 2 Graded A+

Product Mix - ANSWER A combination of different flow unit types moving through a process. Total Demand Rate - ANSWER tells us how many flow units need to be processed at resource i across all different flow units. Resource Capacity - ANSWER the process of defining the amount of work that is able to be done by resources at a company. Flow Unit Dependent Processing Times - ANSWER The fact that the processing times can vary across flow unit types. The total demand rate for a resource is the sum of the individual demand rates that need to be processed by the resource. - ANSWER True The resource with the largest total demand rate is the bottleneck. - ANSWER False The implied utilization can never be bigger than 100 percent. - ANSWER False A resource has an implied utilization of 150 percent. This is the highest implied utilization in the process. This means that the resource is the bottleneck. - ANSWER True To find the bottleneck in a process with attrition loss, all we need to do is find the resource with the lowest capacity. - ANSWER False As the attrition loss in a process increases, what happens to the yield? - ANSWER The yield decreases Rework can increase the costs of an operation but has no impact on the capacity of the process. - ANSWER False What is the difference between a process with rework and a process with scrap? - ANSWER Scrap is a special case of rework in which flow units have to repeat all resources in the process up to the defect. In a scrap process, units do not visit a resource multiple times whereas that is possible in a rework process. In a process with rework, we find the bottleneck as the resource with the highest implied utilization. - ANSWER True Forecasting - ANSWER The process of creating statements about outcomes of variables that presently are uncertain and will only be realized in the future. Demand Forecasting - ANSWER The process of creating statements about future realizations of demand. Short-Term Forecasting - ANSWER Forecasts used to support tactical decision making with typical time ranges from hours to weeks. Mid-Term Forecasting - ANSWER Forecasts used to support capacity planning and financial accounting with typical time ranges from weeks to a year. Long-Term Forecasting - ANSWER Forecasts used to support strategic decisions with typical time ranges of multiple years. Automated Forecasting - ANSWER Forecasts that are created by computers, typically with no human intervention. Expert Panel Forecasting - ANSWER Forecasts generated using the subjective opinions of management. Naive Forecasting Method - ANSWER predicts that the next value will be like the last realized value. This is vulnerable to statistical noise. To reduce the effect of noise, we can take averages. Moving Average Method - ANSWER predicts that the next value will be the average of the last realized values. This method assigns an equal weight to all realized values in the forecast window. Exponential Smoothing Method - ANSWER predicts that the next value will be a weighted average between the last realized value and the old forecast, which implicitly assigns a higher weight to more recent data. Mean Absolute Deviation (MAD OR MAE) - ANSWER A measure evaluating the quality of a forecast by looking at the average absolute value of the forecast error. Mean Squared Error (MSE) - ANSWER A measure evaluating the quality of a forecast by looking at the average squared forecast error. Mean Absolute Percentage Error (MAPE) - ANSWER does not look at the forecast error in absolute terms. Demand forecasting is the process of creating statements about _________ of demand that are _________ - ANSWER future realizations, currently uncertain Seasonality is a _________ demand change that constitutes a _________ fluctuation over time. - ANSWER Significant, repetitive Which of the following statements is TRUE regarding the exponential smoothing forecasting method? - ANSWER It corresponds to the naïve method when the smoothing parameter equals one. Which of the following is an input to the forecasting process? - ANSWER Old realizations of demand Old realizations of other variables Subjective opinions about the future Which of the following is TRUE regarding evaluating the quality of a forecast? - ANSWER In the mean squared error evaluation, one single observation can make a very large difference. The moving average forecast corresponds to the naïve forecast when the forecast window is ______ time period(s). - ANSWER One Biases in subjective forecasting include: - ANSWER Overconfidence Anchoring Incentive Alignment Statistical noise in the demand of a process is defined as the amount of demand that is purely a result of ______ and could not have been ______ with the best forecasting method. - ANSWER Randomness, forecasted Raw Material Inventory - ANSWER Inventory that is used as the inputs to a process and has not undergone any transformation in the process (before a process). Work-In-Progress Inventory - ANSWER The material and components used within the process to complete a product (inside a process). Finished Goods Inventory - ANSWER Flow units that have completed processing (after a process). Inventory exists for a number of reasons, and in any situation, there may be multiple reasons present: - ANSWER (1) flow time (it takes time to move something from one place to another), (2) seasonality (predictable periods of high or low demand), (3) batching (fixed ordering costs), (4) buffers (to deal with variability within a process), (5) uncertain demand (unpredictable variations in demand), and (6) pricing (quantity discounts). Stock Out - ANSWER Occurs when a customer demands an item that is not available in inventory. Economic Order Quantity (EOQ) - ANSWER A model used to select an order quantity that minimizes the sum of ordering and inventory holding costs per unit of time. The goal of EOQ is to minimize the sum of ordering and holding costs per unit of time. Economies of Scale - ANSWER Describes a relationship between operational efficiency and demand in which greater demand leads to a more efficient process. Which of the following is a reason for batching? - ANSWER Fixed costs associated with starting the process Expecting the cost of a popular brand of canned soup to increase in the future, a supermarket orders extra cases of the soup. This is an example of holding inventory because of changes in the _________ of the inventory. - ANSWER Value A machine in a production process has been breaking down frequently and affecting downstream resources. Pending the machine problem being addressed, management has been working the machine overtime at the end of each day to build inventory immediately after it so that future breakdowns will not affect the process to such an extent. This is an example of holding inventory for what reason?` - ANSWER Buffers Companies belonging to the same industry segment should have the same inventory turns. - ANSWER False Holding all other parameters fixed, an increase in which of the following parameters in the economic order quantity (EOQ) model will NOT always increase total annual ordering and holding cost? - ANSWER Order Quantity Expanding product variety does not always result in an increase in profit. - ANSWER True Which of the following is NOT a possible complication that prevents a firm from ordering at the economic order quantity level? - ANSWER A supplier charges the fixed cost to place an order. When solving for an optimal order quantity in the presence of a quantity discount, the best approach is to select an order quantity which takes advantage of the discount. - ANSWER False Ordering at a quantity to take advantage of the discount will make sense only if the reduction in total purchase and ordering costs is high enough to compensate for the increase in total holding costs. The sum of ordering and holding costs per period for the economic order quantity becomes a _________ percentage of the purchasing cost as the demand rate _________ - ANSWER Smaller, Increases