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Durability

length of a products life and its ability to withstand abuse TERM 2

Reliability

DEFINITION 2 how long until the time of first failure, time between failures TERM 3

Conformance

DEFINITION 3 some products have precise specifications that must be met (Features, support, aesthetics, perceived quality) TERM 4

Theory of Constraints

DEFINITION 4

1. Every process has a constraint (bottleneck: limits/constrains the output of a process 2) Every process contains variance that consumes capacity (wait time) 3) Every process must be managed as a system (want to avoid bottlenecks) 4) Performance measures are critical to the processs success 5) Every process must continuously improve TERM 5

Job shop process

DEFINITION 5 flexible process structure for products that require different inputs and have different flows throughout the process (auto dealers, service shops, salons, etc)

Batch process

goods/services produced in groups (batches) and not in a continuous stream (cookies, cakes, car parts, etc). Less flexible. TERM 7

Repetitive process

DEFINITION 7 discrete products flow through the same sequence of activities (cell phones, lunch buffet restaurant, appliances). Limited range of choice. TERM 8

Continuous process

DEFINITION 8 single-flow process used for high-volume commodity products (gasoline, chemicals, detergent, etc). Very little variety. TERM 9

Carrying (holding) cost

DEFINITION 9 several expenses that are incurred due to the fact that inventory is held (opportunity cost, cost of storage space, taxes, insurance, cost of obsolesce/loss). Can be around 25% of cost of inventory. TERM 10

What are some reasons for carrying

inventory?

DEFINITION 10 Uncertainty in demandInventory protects from supply variationQuantity discounts for larger orders for inventory

Inventory turnover

of times per year inventory sells outCOGS/Avg. inv @

selling price TERM 12

Days of supply

DEFINITION 12 Current inventory / Expected rate of daily demand TERM 13

Independent demand inventory systems

DEFINITION 13 inventory management systems used when the demand for an item is beyond the control of the organization. Ex: customer demands for end items or repair parts. TERM 14

Dr. W. Edwards

Deming

DEFINITION 14 Holistic view of quality analysisFocus on top managementVariability is the biggest source of defectsImportance of customerDeadly sins: lack of constancy, concentration on short-term profits, overreliance on performance appraisals, job-hopping, over-emphasis on visible figuresDegrees in Math and Physics TERM 15

Dr. Joseph Juran

DEFINITION 15

• Broadened view of product quality - focus on change management - quality analysis - focus on tactical/operation side of quality

Phillip B.

Crosby

-Absolutes for quality management -Conformance to customer requirements -Prevention: doing it right the first time -Zero defects concept -Price of nonconformance -Quality is free TERM 17

Strategic sourcing process

DEFINITION 17

1. Analyze spending and understand supply markets2) Develop a sourcing strategy3) Identify potential suppliers4) Assess and select suppliers 5) Manage the ongoing supplier relationship TERM 18

Economic regulation

DEFINITION 18 government controls of the entry, rates, and services provided by transportation carriers. Everything is available at a reasonable cost. Most regulations no longer exist at federal levels, some still in states. TERM 19

economy of scale

DEFINITION 19 cost per unit of weight decreases as size of shipment increases TERM 20

economy of distance

DEFINITION 20 cost per unit of distance decreases as distance moved increases

Transportation by Truck

Most consumer goods move by this method at some point. Experienced growth due to highway system, where govt owns and maintains roads, leading to low fixed costs. High variable costs due to labor content. TERM 22

Truckload

DEFINITION 22 full trailer of freight TERM 23

Less than truckload (LTL)

DEFINITION 23 A load less than 15,000 lbs, higher fixed costs TERM 24

Specialty carrier

DEFINITION 24 package hauler such as Fedex/UPS TERM 25

Transportation by rail

DEFINITION 25 moves large shipments over long distances. High fixed costs due to expensive equipment. Low variable costs. Transports bulky, low cost commodities economically. Slow, and low flexibility.

Transportation by

pipeline

moves materials in gaseous, liquid, or slurry form 24/7. Unaffected by weather. Highest fixed costs, lowest variable costs. TERM 27

Transportation by air

DEFINITION 27 newest & least utilized. Fast. High cost, limited size, shapes, and amounts. Least reliable. TERM 28

Market area consolidation

DEFINITION 28 combining several small shipments from one shipper that are going to the same market area into one shipment TERM 29

Pooled delivery consolidation

DEFINITION 29 combines small shipments from different shippers that are going to the same area. Usually happens w/ private shippers like Fedex, UPS, etc. TERM 30

Scheduled delivery consolidation

DEFINITION 30 establishing times when deliveries to customers will be made (deliver 1x/week to avoid small orders)

Warehouse

places products can be stored or created in accordance to customer requirements TERM 32

Distribution

center

DEFINITION 32 strategic role of warehouses in storage and creating assortments that meet customer requirements TERM 33

Transshipment point

DEFINITION 33 products received, sorted, sequenced, and selected into loads consistent w/ customer needs TERM 34

Product support warehouse

DEFINITION 34 production support warehouses store parts & components needed to support a plants operations. Reduces lead time. TERM 35

Break bulk

DEFINITION 35 splitting a large shipment into indiv. orders and arranging for local delivery to customers

Cross docking

combines break bulk and consolidation warehouse activities TERM 37

Public warehouse

ownership

DEFINITION 37 managed by 3rd party, often specialize in certain types of commodities and have their own material handling/storage technology. Offer greater flexibility (firms can choose location, seizes, # of warehouses quickly and easily). BUT lose control over security and operating procedures. TERM 38

Contract warehouse

ownership

DEFINITION 38 firm and contract warehouse operator enter into a long-term agreement to share the cost and risk of building/running a warehouse TERM 39

Demand forecasting

DEFINITION 39 reactive approach where managers predict demand and makeproduction plans accordingly TERM 40

Demand management

DEFINITION 40 proactive approach where managers attempt to influence either the pattern or consistency of demand

Forecast error

"unexplained" component of demandPositive: forecasts are too LOWNegative: forecasts are too HIGH TERM 42

Forecast accuracy

DEFINITION 42 how closely the forecast aligns with the observations over time TERM 43

Forecast bias

DEFINITION 43 Tendency of a forecasting technique to continually over or underpredict demand (MFE, mean forecast error)Positive: forecasts are too lowNegative: forecasts are too high TERM 44

Geographic (logistics)

postponement

DEFINITION 44 stock products in a single (or few) location(s) rather than spread inventory out across a large number of warehouses TERM 45

Geographic (logistics)

speculation

DEFINITION 45 forecast & act where to stock product based on expected demand

Aggregate sales and operations planning

Medium term (3-18 months). Many decisions constrainedmust decide things like # of shifts, product mix, overtime, contracting, layoffs, etc. TERM 47

Level (aggregate planning strategy)

DEFINITION 47 produce at a constant rate. Use changing inventory levels to buffer supply and demand. TERM 48

Chase (aggregate planning strategy)

DEFINITION 48 change production to match demand. Inventory remains relatively stable and low. TERM 49

Six sigma

DEFINITION 49 quality improvement through elimination of defects and variation