MGT 3900 Final Exam - (With verified answers, guaranteed A grade)

MGT 3900 Final Exam - (With verified answers, guaranteed A grade) _________ __________: Costs related to a mismatch between demand and supply. These usually include the cost of leftover inventory and the opportunity cost of stockouts. Mismatch Costs Two types of mismatch costs: 1) Cost of _________ (too much supply) 2) The _______ cost of stockouts (too little supply) inventory, opportunity The gap between the maximum profit and the expected profit is due to the consequences of demand ________. Uncertainty _________ _____ ________: The ratio of the standard deviation to the mean. Coefficient of Variation (T/F) Higher coefficients of variation are unlikely to occur because in those cases demand is too uncertain to gamble on any level of production. True What influences mismatch costs? Coefficient of variation and critical ratio (T/F) With a high critical ratio, the newsvendor should be able to earn a high percentage of the maximum profit. True For products with a low to medium critical ratio, high demand uncertainty will _______ profits substantially. This equates to _______ mismatch costs. lower; substantial Strategies to manage mismatch costs: 1) Don't sell product 2) Increase _____ _____ (increase Cu) relative to the cost of leftover inventory, thus increasing the ________ _______ (raise price, reduce purchase cost) 3) Reduce demand uncertainty (coefficient of variation) through ________ _______ 4) Develop the capability order more than once (_____ _______ to updated information) 5) Only make a customer's product _______ the customer orders (make to order, mass customization, assemble to order) profit margin, critical ratio; product pooling; quick response; after ________ ________: The strategy to reduce the variety offered to customers by combining, or pooling, similar products. Product Pooling __________: A measure of the interaction between two uncertain events. ______ ranges from -1 to 1. Correlation (x2) _________ __________: when the outcomes tend to have similar magnitudes. If the outcome of one event is "high," then the outcome of the other event tends to be "high" as well. _________ ___________: when the outcomes tend to have dissimilar magnitudes. If the outcome of one event is "high," then the outcome of the other event tends to be "low." ________: when the outcome of one event has no relationship to the outcome of the other event. Positively correlated, negatively correlated, independent Expected Profits= ______ profit - _______ cost max, mismatch Expected pooled demand and st dev of pooled demand equation: 2 x mu; sqr root of [(2x(1+correlation)] x mu Pooling demand is most effective the ______ the correlation between products. Lower _________ _________: A strategy that increases supply flexibility to allow a response to updated information about demand. For example, a firm can obtain additional supply for products that are selling above expectation, thereby reducing the number of stockouts. Quick Response _______ ________: Capacity that allows a firm to react to changes in its demand forecast. Reactive Capacity __________: A mode of operations in which the production of an item occurs before the demand for that item has been identified. Make-to-stock _________: A production system in which an item's production begins after the customer for the item is known. Units are generally delivered to a customer immediately after production is completed, thereby not spending time in inventory. Make-to-Order The Achille's heel of the make-to-order system is that to avoid a long ____ for customers, utilization cannot be too high. However, it is ______ to have low utilization. wait, costly ___________ ____________: A make-to-order system in which each customer's order is unique, customized to his or her exact preferences. ___________: A make-to-order system in which a product is assembled from a set of standardized modular components after an order is received. Mass customization; assemble-to-order Make-to-order systems are most effective in environments where: 1) Customers are ______ 2) Customers have a strong preference for ______ 4) Leftover technology is expensive 3) Production is reasonably ______ patient, variety, quick ________: A set of activities (1) that are required to produce units but (2) for which the time to complete these activities does not depend directly on the number of units produced. Setup Between frosting a cupcake and baking cupcakes, which of these is a setup? Baking the cupcakes, the time to bake does not depend on the number of cupcakes baked ________ _________ (or _________ ________) is a setup time to change production from one type of product to another. changeover time, switchover time A _________ ________ is a repeating sequence of produced units that can include setup time, production time, and idle time. production cycle A ______ is a collection of units. Batch A ________ _________ is a type of production in which units are produced in batches. batch process Capacity Equation: units produced/time to produce units The capacity of a resource with one worker is: 1/processing time Setup changeovers create _______ to constant production output. Therefore, there is a loss of time and it is very ______. interruptions, costly Setup change over cost and time significantly ________ with more product variety being produced through the operational process and offered to the market. Increases Each additional bit of capacity requires a ______ and _______ jump in the batch size. larger (x2) (T/F) Operating with a small batch size can destroy a considerable amount of capacity. True ______ ______: Time not producing and not performing a setup. Idle Time Utilization (with Setups) Equation: Flow Rate/Output Rate when producing can also be flow rate x processing time (T/F) The capacity of a resource with a setup is greater than its "output rate when producing." False, less than Output Rate when producing Equation: 1/processing time With _______ batches, a machine will spend less time with setups, which means it spends a higher fraction of its time producing. Larger Setting up and changing manual oriented processes requires _____ time and cost; however, executing some job tasks and operating processes manually can be very difficult and complex resulting in a long ________ ______. Hence, mechanical resources may be required. little; processing time (T/F) Even though setup changeover time is long and expensive for mechanical resources, they have shorter and faster processing times. True Single Minute Exchange of Dies (SMED