Operations Management: Layout Strategies, Inventory Control, and Lean Operations, Exams of Production and Operations Management

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2024 GMS 401 - final exam questions

and answers Toronto Metropolitan

University

Management - Correct answer the process by which objectives are achieved through the use of the resources operations - Correct answer those activities within an organization that are directly related to providing goods or services by transforming inputs into outputs What operations managers do - Correct answer -planning -organizing -staffing -leading -controlling Three basic functions - Correct answer 1. operations

2. finance
3. marketing Pareto Phenomenon - Correct answer 80% of the consequences come from 20% of the causes Quantitive approaches - Correct answer -linear programming -queuing techniques -project techniques -statistical techniques

-inventory techniques Competitiveness - Correct answer how effectively an organization meets the wants and needs of customers relative to others that offer similar goods and services Producitivity - Correct answer outputs (goods & services) / inputs (labour, capital, or management) Why productivity matters - Correct answer -it is linked to high standards of living -relative to the competitions leads to competitive advantage in the marketplace Productivity paradox - Correct answer despite massive investment in computers the rate of the productivity growth is now lower than it was before computers were introduced Factors affecting productivity - Correct answer 1. capital

2. quality
3. technology
4. management standardization - Correct answer the more you do the better you get, don't think about the process just execute quality - Correct answer repairing a product doesn't make you money Competing on Response - Correct answer - Flexibility is matching market changes in design innovation and volumes

• Reliability is meeting schedules

• Timeliness is quickness in design, production, and delivery competitive advantage - Correct answer implies the creation of a system that has a unique advantage over competitors Mission - Correct answer -we define organizations mission as its purpose- what it will contribute to society -they provide boundaries and focus on organizations and the concept around which the firm can rally Strategy - Correct answer is an organizations action plan to achieve the mission key strategies for operations - Correct answer 1. quality - focuses on satisfying the customer by integrating quality into all phases of the organization

2. time - gain competitive advantage by performing certain activities more quickly than competitors
3. vertical integration + outsourcing - make vs. buy and strategic alliances
4. supply chain management - suppliers, manufacturers, distribution channels, retailers, and customers all viewed as one integrated system what speed to people usually work at - Correct answer people work at 70% productivity, a good process and set up keep the workers going how to make money - Correct answer cut costs and sell more! cut costs by optimization - having a good process and set up, a good set-up contributes to productivity Single-factor productivity - Correct answer labour, materials, capital, time

multi-factor productivity - Correct answer labour + materials in $$ How to increase productivity - Correct answer through learning - the more you learn something the better you get (save time and money) Reliable - Correct answer trusty, authentic, consistent, infalliable Reliability - Correct answer happens by... -improving individual components -proving redundancy normal operating conditions - Correct answer The set of conditions under which an item's reliability is specified Failure - Correct answer situation in which a product, part, or system does not perform as intended Quantifying Reliability - Correct answer -reliability is probability -if a component or item has a reliability of 0.8 it means it has an 80% chance of functioning as intended and a 20% chance of failing Redundancy - Correct answer the use of backup components to increase reliability Reliability is probability - Correct answer probability that the system or function will, function when activated or function for a given length of time Independent events - Correct answer events whose occurrence or non-occurrence do not influence each other

Bathtub curve - Correct answer the typical failure rate of a product over time "failure rate as a function of time" Product design - Correct answer the objective of the product decision is to develop and implement a product strategy that meets the demands of the marketplace with a competitive advantage Product development - Correct answer a process to generate concepts, design, and plans for services and goods that an organization can provide to its customers Product / service designs directly affect: - Correct answer - product / service quality

• product / delivery costs
• customer satisfaction Managing product development projects - Correct answer about 5% or less of all new product ideas survive to production and only about 10% of these are successful The Kano Model - Correct answer customer satisfaction/needs measured
• excitement -expected -must have Designing for ease of production - Correct answer Ease for production (manufacturability) -specifications -tolerance -standardization -simplification

specifications - Correct answer precise information about the characteristics of the product tolerance - Correct answer minimum and maximum limits on a dimension that allows the item to function as designed standardization (ease for production) - Correct answer reduce variety among a group of products or parts Simplifcation - Correct answer reduce or eliminate the complexity of a part of product Quality Function Deployment (QFD) - Correct answer an approach that integrates the "voice of the customer" into the product and service development process Reverse Engineering - Correct answer is the dismantling and inspecting of a competitors product to discover product improvement process selection - Correct answer deciding on the way production of goods or services will be organized major implications -capacity planning -layout of facilities -equipment -design of work systems process strategy - Correct answer the objective of a process strategy is to build a production process that meets customer requirements and product specifications within cost and other managerial constraints

Process Strategies - Correct answer Process focus Repetitive focus Product focus Mass customization Changing Processes - Correct answer Difficult and expensive May mean starting over Process strategy determines transformation strategy for an extended period Important to get it right Improving Service Productivity - Correct answer separation, self-serve, layout, and human resources Seperation (improving service productivity) - Correct answer structure service so customers must go where service is offered i.e. bank customers Self-serve (improving service productivity) - Correct answer so customers examine, compare, and evaluate at their own pace Layout (improving service productivity) - Correct answer product exposure, customer education, and product enhancement Human resources (improving service productivity) - Correct answer recruiting and training, impact of flexibility Types of layout - Correct answer 1. office layout

2. retail layout

3. warehouse layout
4. fixed position layout
5. process oriented layout
6. work cell layout
7. product oriented layout Good Layouts Consider - Correct answer Material handling equipment Capacity and space requirements Environment and aesthetics Flow of information Cost of moving between various work areas Office Layout - Correct answer grouping of workers, their equipment and spaces to provide comfort, safety and movement of information Retail Layout - Correct answer objective is to maximize profitability per square foot of floor space, sales and profitability vary directly with customer exposure Five helpful ideas for retail layout - Correct answer 1. locate high-draw items around the periphery of the store
8. use prominent locations for high-impulse and high-margin items
9. distribute power items to both sides of an aisle and disperse them to increase viewing of other items
10. use end-aisle locations
11. convey mission of store through careful positioning and lead-off development Fixed position layout - Correct answer The product remains in one place Workers and equipment come to the site

complicating factors: -limited space a site -different materials required at different stages of the project -the volume of materials needed is dynamic Process-oriented layout (process flow) - Correct answer -Like machines and equipment are grouped together -Flexible and capable of handling a wide variety of products or services -Scheduling can be difficult, set up, material handling, and labour costs can be high -Governed by the shape and parameters of the building the layout of the process, a product will be moved from group to group Product Flow - Correct answer - typically referred to as an assembly line production

• the line is continuous for high volumes, lower, lower customization
• never crisscross the lines you track products as it goes through the lines "C" shaped (product flow) - Correct answer linear pattern or soft "C" shape if the building isn't long enough "U" shaped (product flow) - Correct answer for wider and long buildings Strategic importance of layout decisions - Correct answer the objective of layout strategies is to develop an effective layout that will meet the firms competitive requirements Warehouse layout - Correct answer addresses trade-offs between space and material handling

New trends in manufacturing layouts - Correct answer - designed for quality and flexibility

• ability to quickly shift to different product models or to different production rates
• cellular layout within larger process layouts
• automated material handling
• U-shaped production lines Learning curves - Correct answer - Based on the premise that people and organizations become better at their tasks as the tasks are repeated, they typically follow a negative exponential distribution
• The time to manufacture a product DROPS as more units are produced to a point then the curve levels off Background slide chapter 6 - Correct answer "Rate of learning is greatest at first when ignorance is greatest; rate of learning decreases as ignorance decreases" Learning curve is not useful when; - Correct answer production is sporadic, work is fully automated, rules and regulations limit the production rate, production qualities are very small, and each item produced is significantly different from the preceding item Quality and Strategy - Correct answer an operations managers objective is to build a total quality management system that identifies and satisfies customer needs What is quality? - Correct answer "the quality of a production or service is a customers perception of the degree to which the product or service meets / exceeds his or her expectations" Consequences of poor quality - Correct answer - loss of business
• liability
• productivity

• costs Benefits of Good Quality - Correct answer - enhanced reputation
• ability to command a higher price
• increased market share
• greater customer loyalty
• lower liability costs
• fewer production or service problems
• higher profits Prevention costs (cost of quality) - Correct answer reducing the potential for defects Appraisal costs (cost of quality) - Correct answer evaluating products, parts, and services Internal failure (cost of quality) - Correct answer providing defective parts or services before delivery External costs (cost of quality) - Correct answer defects discovered after delivery Two ways quality improves profitability - Correct answer Sales Gains and Reduced Costs TQM (Total Quality Management) - Correct answer - encompasses entire organization from supplier to customer
• stresses commitment by management having continuing companywide drive toward excellence in all aspects of products and services that are important to the customers Elements of TQM - Correct answer 1. top management commitment and involvement

2. customer involvement
3. design products for quality
4. design production process for quality
5. control production process of quality
6. develop supplier partnerships
7. customer services, distribution, & installation
8. building teams of empowered employees
9. benchmarking and continuous improvement TQM in Services - Correct answer - service quality is more difficult to measure than the quality of goods

• service quality perceptions depend on
• intangible difference between products and services
• intangible expectations customers have of those products and services Deming's 14 points - Correct answer 1. Create constancy of purpose

2. Adopt a philosophy of prevention
3. Cease mass inspection
4. Select a few suppliers based on quality
5. Constantly improve system and workers
6. Institute worker training
7. emphasize leadership
8. Eliminate fear among employees
9. Eliminate barriers between departments
10. Stop haranguing workers --> don't have supervisors standing over workers while working
11. support, help, and improve

12. remove barriers to pride in work
13. Institute vigorous training and education programs
14. put everyone to work on the transformation Tagunchi concept - Correct answer engineering and experimental design methods to improve product and process design, identify key components and process variables affecting product variation Quality Robustness (Taguchi) - Correct answer the ability to produce products uniformly and adverse manufacturing and environment conditions
    • remove the effects of adverse conditions
    • small variations in materials and process don't destroy product quality Tools of TQM - Correct answer check sheets scatter diagrams cause-and-effect diagrams Pareto charts flowcharts histograms statistical process control (SPC) 7 concepts of TQM - Correct answer 1. Continuous improvement
15. Six Sigma
16. Employee empowerment
17. Benchmarking
18. Just-in-time (JIT)
19. Taguchi concepts

7. Knowledge of TQM tools Six Sigma Programs - Correct answer - a program designed to reduce defects, lower costs, and improve customer satisfaction

• statistical definition a process that is 99.9997% capable defects per million opportunities Quality control - Correct answer is an activity that evaluates quality characteristics relative to a standard, and takes corrective action when they do not meet standards How is quality control accomplished - Correct answer by monitoring and inspecting the product during process Statistical process control - Correct answer statistical evaluation of the output of a process during production control process
• define
• measure
• compare to a standard
• take corrective action
• evaluate corrective action Random variations (variations & control) - Correct answer natural variations in the output process created by countless minor factors assignable variation (variations & control) - Correct answer a variation whose sources can be identified Control Chart - Correct answer purpose: to monitor process output to distinguish between random and assignable variables

• Upper and Lower control limits define the range of acceptable variation Control Charts for Attributes - Correct answer p-charts are used to monitor the proportion of defectives in a process c-charts used to monitor the number of defects per unit Use P-Charts - Correct answer when observations can be placed into two categories
• good or bad
• pass or fail
• operate or don't operate
• when data consists of multiple samples of several observations each Use C-Charts - Correct answer only when number of occurrences per unit of measure can be counted: non-occurrences cannot be counted Process Capability - Correct answer - design specifications (aka tolerance)
• process variability: natural variability in process
• process capability: process variability relative to specification Improving Process Capability - Correct answer Simplify Standardize Mistake proof Upgrade equipment Automate Quality assurance - Correct answer 1. acceptance sampling

2. process control - take corrective action during production
3. continous Supply chains - Correct answer all facilities, functions, and activities associated with flow and transformation of goods and services from raw materials to customer, as well as the associated information flow

• an integrated group of process to "source" "make" and "deliver" products Supply Chain for Service Providers - Correct answer -More difficult than manufacturing -Does not focus on the flow of physical goods -Focuses on human resources and support services -More compact and less extended Supply chain 2.0 - Correct answer - always negotiate price before terms
• the objective is to build a chain of suppliers that focuses on maximizing value to the ultimate customer Important activities - Correct answer 1. transportation vendors

2. credit and cash transfers
3. suppliers
4. distributors
5. accounts payable and receivable
6. warehousing and inventory
7. order fulfilment
8. sharing customers, forecasting, and production information supply chain risk - Correct answer -more reliance on supply chain means more risk

-fewer suppliers increase dependence -compounded by globalization and logistical complexity -vendor reliability and quality risks -political and currency risks Duties of purchasing - Correct answer Identifying sources of supply Negotiating contracts Maintaining a database of suppliers Obtaining goods and services Managing suppliers Issues in an Integrated Supply Chain - Correct answer local optimization - focusing on local profit or cost minimization based on limited knowledge incentives - scale incentives quantity discounts, quotas, and promotions (push merchandise prior to sale) large lots- low unit cost but do not reflect sales bullwhip effect - Correct answer Demand/order variability gets progressively larger the further back in a supply chain the company is What is inventory - Correct answer - stock of items kept to meet future demand

• decisions of inventory management (how many units to order, when to order) Types of Inventory - Correct answer - raw materials + purchased parts
• partially completed items called work in process (WIP)
• finished goods or merchandise
• spare parts, tools, and supplies

Functions of Inventory - Correct answer - to wait while in transit

• to protect against stock-outs
• to take advantage of quality discounts
• to smooth production requirements
• to decouple operations
• to hedge against price increases objective of inventory control - Correct answer to achieve satisfactory levels of customer services while keeping inventory costs within reasonable bounds periodic counting - Correct answer a physical inventory is taken periodically, usually annually Perpetual counting - Correct answer keeps track of removals and additions to inventory continously Why hold inventory? - Correct answer 1. to decouple workcentres

2. to meet variations in demand
3. to allow flexible production schedules
4. as a safeguard against variations in delivery time
5. to get a lower price fixed order quantity / reorder point model - Correct answer an order of a fixed size is placed when the mount on hand drops below minimum quality called the reorder point two-bin system - Correct answer 2 containers of inventory; reorder when first is empty

Bar code - Correct answer A number assigned to an item or storage location, made of a group of vertical bars of different thickness that are readable by a scanner Radio Frequency Identification (RFID) - Correct answer technology that uses a RFID tag attached to the item that emit radio waves to identify items Economic Order Quantity (EOQ) - Correct answer the optimal order size to minimize the sum of ordering, carrying, and stockout costs Independent Demand - Correct answer for final end-products not related to other products - finished products Dependent Demand - Correct answer derived demand items for component parts subassemblies, raw materials, etc. - component parts lead time - Correct answer time interval between ordering and receiving the order holding (carrying) costs - Correct answer cost to carry an item in inventory for a length of time, usually a year ordering costs - Correct answer costs of ordering and receiving inventory shortage costs - Correct answer costs when demand exceeds supply ABC classification - Correct answer classifying inventory according to some measure of importance and allocating control efforts accordingly A - very important B - moderately important

C- least important Reorder point - Correct answer when the quality on hand of an item drops to this amount, the item is reordered Safety stock - Correct answer stock that is held in excess of expected demand due to variable demand rate/ and or lead time Service level - Correct answer probability that demand will not exceed supply during lead time Lean operations - Correct answer - running an organization by focusing on providing greater customer satisfaction while using as few resources as possible

• creating value for customers and eliminating waste companies that use lean operations are highly concerned with efficiency Just-in-time inventory systems (JIT) - Correct answer - management strategy that aligns raw material orders from suppliers directly with product schedules
• producers hold sufficient inventories to have enough product to absorb maximum market demand Toyota production systems (TPS) - Correct answer - integrated socio-technical systen
• comprise its management philosophy and practices
• organizes manufacturing and logistics for the automobile manufacturer, including interaction with suppliers and customers The 5Ss - Correct answer - workplace organization method that uses a list of 5 Japanese words

1. sort/segregate - when in doubt throw it out
2. simplify/straighten - method analysis tool
3. shine/sweep - clean daily

4. standardize - remove variations from process
5. sustain/self-discipline - review work and reorganize the process TWO additional Ss safety - build in good practices support/maintenance - reduce variability and unplanned downtime Ohnos seven wastes (TPS theory) - Correct answer - overproduction

• queues
• transportation
• inventory
• motion
• overprocessing
• defective processing Sources of Variability - Correct answer 1. incomplete or inaccurate drawings or specifications

2. poor production processes resulting in incorrect quantities, late, or non-conforming units
3. unknown customer demands Concerns of Suppliers - Correct answer diversification scheduling lead time quality lot sizes Lean layout - Correct answer group technology, quality at the source, JIT production

lean layout tactics - Correct answer - build work cells for families of products

• include a large number of operations in a small area
• minimize distance
• design little space for inventory
• improve employee communication
• use poka-yoke devices
• cross-train workers to add flexibility Distance reduction - Correct answer large lots and long production lines with single purpose machinery are being replaced by smaller flexible cells, often using "U" shaped for shorter paths and improved communication and often using group technology concepts Increased Flexibility - Correct answer Cells designed to be rearranged as volume or designs change Applicable in office environments as well as production settings Facilitates both product and process improvement breakdown maintenance - Correct answer reactive approach; dealing with breakdowns or problems when they occur preventitive maintenance - Correct answer proactive approach; reducing breakdowns through a program of lubrication, adjustment, cleaning, inspection, and replacement of worn parts maintenance reasons - Correct answer reasons for keeping equipment running
• avoid production disruptions
• not add to production costs
• maintain high quality

• avoid missed delivery dates breakdown consequences - Correct answer - production capacity reduced
• no production
• quality issues
• safety issues Predictive Maintenance - Correct answer An attempt to determine when best to perform preventive maintenance activities. Reliability centred maintenance - Correct answer - an approach that reduces the effect of each major cost of failure for equipment
• redesign item in order to prevent failures from occurring
• for each equipment

1. identify major functions
2. determine major possible failures
3. identify major causes of each failure
4. identify ways to reduce effect of each major cause What is a project? - Correct answer