OTM final exam questions and answers well elaborated.

materials requirements planning - correct answers a means for determining the number of parts, components and materials needed to produce a product; provides time scheduling information specifying when each of the materials, parts and components hsould be ordered or produced, dependent demand drives this master production schedule - correct answers an anticipated build schedule for manufacturing end items time bucket - correct answers the smallest period of time for which a detailed master production schedule and material requirements plan is developed (typically one week) fundamental MRP equation - correct answers gross requirements - available balance - scheduled receipts = net requirements three key MRP inputs - correct answers master production schedule, bills of materials, inventory status file master production schedule - correct answers specifies planned production schedules for independent demand items (end items); difficult to change in the short term; more flexibility further into the future bill of materials - correct answers list of all items required for each end item, must be structured to reflect the production sequence inventory status file - correct answers on-hand inventory for each item, quantities on order for each item, lead times for each item, lot sizing rules for each item fixed order quantity - correct answers order same amount every time lot-for-lot - correct answers just order as much as you need for that period and don't look any further; makes sense if fixed order cost is low typical MRP output reports - correct answers planned orders, order release notices, changes in due dates, cancellations or suspensions, inventory status data MRP II - correct answers early 1980s; ties together materials planning, purchasing, production scheduling, accounts payable, etc enterprise resource planning (ERP) - correct answers software used to manage information in most functional areas of an organization; helps manage business processes using a common database and shared management reporting tools why companies undertake ERP installations - correct answers integrate financial information, integrate customer order information, standardize and speed up manufacturing processes, reduce inventory, standardize HR information modular design - correct answers allows companies to pick and choose the parts they want to use, or to implement the various parts incrementally over a period of time configuration - correct answers the process of tailoring ERP software by selecting functionality that best matches organizational processes; doesn't involve changes to underlying source code; sometimes called customizing development - correct answers modifying existing source code; creating new source code hidden costs of ERP installation - correct answers training costs are usually underestimated; costs of linking to other company software systems; customization costs; costs of data conversion reasons why ERP installations might fail - correct answers customization can make the software's performance less predictable; user resistance to the new system and new ways of doing things (change management) Change management - correct answers communicating a vision for change; the heart of change; dealing with resistance to change quality - correct answers fitness for use design quality - correct answers choices that are made regarding maintenance, ease of use; about making the right choices conformance quality - correct answers degree to which the actual product/service matches its intended design five key concepts to improve org quality - correct answers quality defined by the customer, prevention orientation, focus on continuous improvement, emphasis on supplier-customer line, quality at the source six sigma - correct answers statistical term, problem solving methodology, business strategy ways to improve a process - correct answers mean improvement and variation reduction common cause variation - correct answers variation expected when the process is operating normally special cause variation - correct answers variation due to some disturbance in normal operation in process key processes in six sigma - correct answers lead generation, customer acquisition,order fulfillment, customer maintenance, employee development process improvement - correct answers occurs if the mean time is reduces or if the variation is reduced problem-solving methodology - correct answers define, measure, analyze, improve, control control variables - correct answers set to a certain value, maintain within a specified range noise variables - correct answers uncontrollable measure stage - correct answers understand the current process improve stage - correct answers see if improvement has been made seven basic quality tools - correct answers opportunity flow diagram, checksheet, pareto diagram, histogram, cause-and-effect diagram, run chart, scatter diagram opportunity flow diagram - correct answers shows the detailed sequence of steps performed in a process; useful for identifying possible failure points and areas for improvement checksheet - correct answers gather data on the spot parety diagram - correct answers way to present data, 80-20 rule, separate the vital few problem sources from the trivial many histogram - correct answers graphical représentation of the variation in a data set; point is to look at shape of distribution cause-and-effect diagram - correct answers used to identify and organize the causes of problems, also referred to as a fishbone or ishikawa diagram runchart - correct answers plot levels of a single characteristic or dimension over time scatter diagram - correct answers plots the relationship between two variables costs of conformance - correct answers appraisal costs, prevention costs costs of non-conformance - correct answers internal failure costs, external failure costs continuous improvement/zero defects in view - correct answers focus on costs of non-conformance-in the long run, overall costs will always be decreased by improving quality acceptance sampling - correct answers acceptance, uses statistical sampling techniques to the decision whether to accept or to reject a production lot; random sampling types of error - correct answers accept a bad lot, reject a good lot statistical process control - correct answers control process parameters and the product will take care of itself; prevention rather than detection; more timely feedback; inspection is a non-value-adding activity, but it costs a firm time and money sources of special cause variation - correct answers equipment, material, environment, operator variables data - correct answers a precise measurement of some physical dimension is taken of a product, mean and R charts, mean and s charts attributes data - correct answers the number or proportion of units with some characteristic is tracked; p charts and c charts process capability - correct answers acceptable variation / actual variation key innovations leading to mass production - correct answers division of labor, use of interchangeable parts, scientific management, moving assembly line continuous improvement - correct answers worker responsibility; root cause; solve problems permanently; failsafing; team approach worker responsibility - correct answers quality at the source root cause - correct answers can only fix problem if you know root of problem solve problems permanently - correct answers don't just put a bandaid on the problem, fix it permanently failsafing - correct answers building safeguards into system; think of mistakes that might go wrong and find a way to avoid it respect for people - correct answers employees are treated as knowledge workers; employees are empowered-more challenging jobs, more decision-making; employee suggestion programs; cooperative management-employee relations; employee training encouraged and supported standard work practices - correct answers rigorous, agreed upon, document procedures; use the 5S system 5S system - correct answers sort, simplify, shine, standardize, sustain synchronization - correct answers key is to reduce variability in the process; what is needed, how much is needed, when is it needed, where it is needed 7 forms of waste in the process - correct answers overproduction, waiting time, material movement, inventory, over processing, worker movement, defective products specify value - correct answers identify the value of a product from the customers perspective identify the value stream - correct answers 1. steps that create value 2. steps that create no value but are unavoidable with current technologies and production assets 3. non value-adding steps that can be eliminated create flow - correct answers make work elements flow continuously with minimal waiting, rework, and stoppages establish pull - correct answers deliver only what is wanted by your customer and when they want it seek perfection - correct answers continuous improvement lean is... - correct answers a management philosophy that can be adopted throughout any enterprise networks of responsive suppliers - correct answers long-term relationships-help them develop superior capabilities; shorter, more precise lead times; more frequent deliveries of smaller quantities; quality at the source; coordination of production and shipment schedules; tightly integrated information system simplify the supplier/customer relationship - correct answers eliminate unnecessary activities and paperwork-more e-procurement; reduce in-transit inventory and lead times by locating nearby; use of consignment inventory resource perspective - correct answers a cell is a small group of resources- human and technical - dedicated to the processing of a set of similar products spatial perspective - correct answers a cell is a group of resources located in close proximity within clear physical boundaries transformation perspective - correct answers a cell is a system designed to perform multiple and consecutive process steps on a family of products benefits of successful lean production implementation - correct answers streamlined flow of materials from raw materials to the final customer; reduced investment in inventories; decreased cash-to-cash cycle; more predictable, better controlled processes; reduced levels of product defects; more reliable suppliers; improved responsiveness to changing markets and customer requirements average total value - correct answers retailer adds up value of inventory, can add up over a period of time runout time - correct answers how long does it take to run out of the average inventory; want to see this number small inventory turns - correct answers inverse of runout time, over the course of the year how any times do you go through your inventory fixed-order quantity models - correct answers event triggered; order the same amount every time; something happens that says it is time to order fixed-time period models - correct answers orders only placed at regular time intervals; quantity may vary economic order quantity model assumptions - correct answers demand for the product is constant and uniform throughout the period, lead time is constant, price per unit of product is constant; inventory holding cost is based on avg inventory, ordering or setup costs are constant (fixed), all demands for the product will be satisfied basic fixed order quantity formula - correct answers total annual cost=annual purchase cost + annual ordering cost + annual holding cost service profit chain - correct answers internal quality-employee satisfaction-retention and productivity-service value-customer satisfaction-profitability and growth service quality - correct answers reliability, responsiveness, assurance, empathy, tangibles expectations exceeded (quality surprise) - correct answers expected service perceived service expectations met (satisfactory quality) - correct answers expected service = perceived service expectations not met (unacceptable quality) - correct answers expected service perceived service gap one - correct answers difference between expected service and perceived service gap two - correct answers difference between management perceptions of consumer expectations and translation of perception into service quality specifications gap three - correct answers difference between translation of perceptions into service quality specifications and service delivery gap four - correct answers difference between service delivery and external communications to consumers gap five - correct answers difference between expected service and perceived service apostles - correct answers when a problem occurs and it is fixed well and customer is satisfied and tells friends