MGSC 395 Exam 2 Questions with Complete Verified Solutions 2024/2025, Exams of Business Administration

Download MGSC 395 Exam 2 Questions with Complete Verified Solutions 2024/2025 and more Exams Business Administration in PDF only on Docsity! MGSC 395 Exam 2 Questions with Complete Verified Solutions 2024/2025 Capacity The max rate of output of a process or system What do long-term capacity plans involve? Investments in new facilities and equip at the organizational level, and require top mgmt participation and approval bc they are not easily reversed When choosing a capacity strategy, what do managers need to consider? How much of a cushion is needed for variable demand & should we expand capacity ahead of demand or wait until demand is more certain 2 ways capacity can be expressed 1. output measures 2. input measures When are output measures of capacity best utilized? When applied to individual processes within the firm or when the firm provides a relatively small number of standardized services or products When are input measures of capacity best utilized? Low volume, flexible processes What is the problem w/ input measures? Demand is invariably expressed as an output rate Utilzation The degree to which a resource such as equipment, space, or the workforce is currently being used Utilization formula U= Average output rate / Max capacity * 100% Deciding on the best level of capacity involves consideration for the __ of ___ Efficiency of operations Economies of scale States that the average unit cost of a service or good can be reduced by increasing its output rate 4 reasons why economies of scale can drive costs down when output increases 1. fixed costs are spread over more units 2. construction costs are reduced 3. costs of purchased materials are cut 4. process advantages are found Diseconomies of scale Occurs when the average cost per unit increases as the facility's size increases 3 dimensions of capacity strategy 1. sizing capacity cushions 2. timing and sizing expansion 3. linking process capacity and other operating decisions Capacity cushion The amount of reserve capacity a process uses to handle sudden increases in demand or temporary losses of production capacity Capacity cushion formula CC= 100% - Average Utilization Rate % In a capital intensive industry, a capacity cushion of __ % is preferred 10% or under In less capital intensive industries, the capacity cushion should be around __ % 30-40% Businesses find large capacity cushions appropriate when ___ varies demand 2 extreme strategies for expanding capacity 1. expansionist strategy (large, infrequent jumps in capacity) 2. wait & see strategy (smaller. more frequent jumps) A ___ approach is needed for long term capacity decisions systematic 4 steps for a sound capacity decision (assuming mgmt already determined existing capacity & whether current capacity cushion is appropriate) 1. estimate future capacity requirements 2. identify gaps by comparing requirements w/ available capacity 3. develop alt plans for reducing the gaps 4. evaluate each alt, both quant and qual, and make a final choice Capacity requirements What a process's capacity should be for some future time period to meet the demand of customers (ext or int) given the firm's desired capacity cushion 2 ways capacity requirements can be expressed 1. output measure 2. input measure 4 potential foundations for the estimate of capacity requirements 1. forecasts of demand 2. productivity Determines which customer to serve next priority rule preemptive discipline A rule that allows a customer of higher priority to interrupt the service of another customer The sources of variation in waiting line problems comes from 2 things: 1. random arrivals of customers 2. variations in service times interarrival times The time between customer arrivals Op mgrs should be concerned with these operating characteristics of a system: 1. line length 2. number of customers in the system 3. waiting time in line 4. total time in system 5. service facility utilization 3 models that show how waiting-line models can help op mgrs make decisions 1. single-server 2. multiple-server 3. finite-source models After analyzing a waiting-line problem, mgmt can approve the service system by making changes in one of the 7 following service areas 1. arrival rates 2. number of service facilities 3. number of phases 4. number of servers per facility 5. server efficiency 6. priority rule 7. line arraignment Theory of Constraints (TOC) A systematic mgmt approach that focuses on actively managing those constraints that impede a firm's progress toward its goal of maximizing profits and effectively using its resources How do TOC methods increase the firm's profits? By focusing on making materials move rapidly through the entire system. Looks at the big picture. What is the main concept behind the TOC? The bottlenecks should be scheduled to maximize their throughput of services or products while adhering to promised completion dates What is the underlying assumption of TOC? Demand is greater or equal to the capacity of the process that produces the service or product, otherwise marketing must work toward increasing demand 7 key principles of the Theory of Constraints 1. The focus should be on balancing flow, not on balancing capacity 2. Maximizing output and efficiency of every resource may not maximize throughput of the entire system 3. An hour lost at a bottleneck or constrained resource is an hour lost for the whole system (an hour saved at bottleneck doesn't improve system) 4. Inventory is needed only in front of the bottlenecks in order to prevent them from sitting idle. Building inventories elsewhere should be avoided 5. Work (materials, info, customers) should be released into the system only as frequently as the bottlenecks need it 6. Activating a nonbottleneck resource cannot increase throughput 7. Every capital investment must be viewed from the perspective of its global impact on overall throughput, inventory, & operating expenses Practical application of the TOC involves the implementation of these 5 steps 1. Identify the system bottlenecks 2. Exploit the bottlenecks 3. Subordinate all other decisions to step 2 4. Elevate the bottlenecks 5. Do not let inertia set in Throughput time Total elapsed time from the start to finish of a job or a customer being processed at one or more workcenters 2 ways to identify a bottleneck 1. it has the highest time per unit processed 2. it has the highest average utilization and total workload What is the problem w/ the traditional method (looking at the contribution margin)? The firm's actual throughput and overall profitability depend more upon the contribution margin generated at the bottleneck than by the CM of each individual product produced Drum-Buffer-Rope A planning and control system based on the theory of constraints that is often used in manufacturing firms to plan and schedule production. It regulates the flow of WIP materials at the bottleneck or the capacity constrained resource What does buffer management monitor? The execution of incoming bottleneck work When can DBR be an effective system? When the firm the product produces is relatively system and the production process has more line flows Line balancing The assignment of work to stations in a line process so as to achieve the desired output rate with the smallest number of workstations What separates line balancing from the theory of constraints? It creates workstations with workloads as evenly balanced as possible, instead of taking on new orders or scheduling so bottleneck resources are conserved. Also it only applies to line processes In what 3 scenarios must line balancing be performed? 1. When a line is setup initially 2. When a line is rebalanced to change its hourly output rate 3. When a product or process is changed Work elements The smallest units of work that can be performed independently Immediate predecessors Work elements that must be done before the next element can begin Precedence diagram A diagram that visualizes immediate predecessors better; work elements are denoted as circles Cycle time The max time allowed for work on a unit at each station Theoretical minimum A benchmark/goal for the smallest number of stations possible Balance delay The amount by which efficiency falls short of 100% 5 managerial concerns 1. Line balancing 2. pacing 3. behavioral factors 4. number of models produced 5. different cycle times Pacing The movement of product from one station to the next as soon as the cycle time has elapsed What does pacing allow for? Materials handling to be automated and requires less inventory storage area What is the most controversial aspect of line-flow layouts? Behavioral response Mixed-model line A production line that produces several items belonging to the same family 2 positives and 2 negatives to the mixed-model line Simplex method An iterative algebraic procedure for solving linear programming problems Lean systems Operations systems that maximize the value added by each of a company's activities by removing waste and delays from them just-in-time (JIT) philosophy The belief that waste can be eliminated by cutting unnecessary capacity or inventory and removing non- value-added activities in operations 8 main types of waste that occur, and must be eliminated in lean systems 1. Overproduction (harder to find defects) 2. Inappropriate processing (expensive equip when cheaper would be fine) 3. Waiting (wasting time not moving a product) 4. Transportation (can cause damage) 5. Motion (unnecessary effort, can damage product) 6. Inventory (hides problems, space, adds to lead time) 7. Defects (rework) 8. Underutilization of employees JIT system A system that organizes the resources, information flows, and decision rules that enable a firm to realize the benefits of JIT principles 2 characteristics of lean systems that are related to flows of a supply chain 1. close supplier ties 2. small lot sizes JIT II system The supplier is brought into the plant to be an active member of the purchasing office of the customer. It provides the org structure needed to improve supplier coordination by integrating the logistics, production, and purchasing processes together Lot A quantity of items that are processed together What is the advantage of small lots? They reduce the average level of inventory relative to large lots because they don't keep materials waiting It's also easier to spot defects and utilize space What is the disadvantage to small lots? There's an increased setup frequency setup The group of activities needed to change between successive lots of items Single digit setup The goal of having a setup time of less than 10 minutes Most firms using lean operations use the ___ method, in which customer demand activates the production of a good or service pull method The method often used in conventional systems which involves using forecasts of demands and producing the item before the customer orders it push method Quality at the source A philosophy whereby defects are caught and corrected where they are created Jidoka Automatically stopping the process when something is wrong and then fixing the problems on the line itself as they occur Poka-yoke Mistake-proofing methods aimed at designing fail-safe systems that minimize human error Andon A system that gives machines and machine operators the ability to signal the occurrence of any abnormal condition such as tool malfunctions or shortage of parts. A lean system works best if the daily load on individ workstations is ____ uniform takt time Cycle time needed to match the rate of production to the rate of sales Heijunka The leveling of production load by both volume and product mix (the same amount is produced each day) 2 possible heijunka methods 1. mixed-model assembly (small lots) 2. one lot mixed-model assembly A type of assembly that produces a mix of models in smaller lots Five S (5S) A methodology consisting of 5 workplace practices that are conductive to visual controls and lean production 5 practices in the 5S 1. sorting 2. straightening 3. shining 4. standardizing 5. sustaining Sort Separate needed items from unneeded items Total Preventative Maintenance (TPM) Reduces the frequency and duration of machine downtime 4 principles of the Toyota Production System 1. All work must be completely specified 2. Every customer-supplier relationship must be direct 3. The pathway for every service and product must be simple and direct 4. Any improvement to the system must be made in accordance with the scientific method Why are line flows are recommended in designing lean system layouts? Because they eliminate waste by reducing the frequency of setups one-worker, multiple machines (OWMM) cells A one-person cell in which a worker operates several different machines simultaneously to achieve a line flow Group technology (GT) An option for achieving line-flow layouts with low volume processes; this technique creates cells not limited to just one worker and has a unique way of selecting work to be done by the cell Value stream mapping A qualitative lean tool for eliminating waste or "muda" that involves a current state drawing, a future state drawing, and an implementation plan 6 operating rules for the single-card system 1. Each container must have a card 2. The assembly line always withdraws materials from the fabrication cell 3. Containers of parts must never be removed from a storage area without a kanban first being posted on the receiving post 4. The containers should always contain the same number of good parts 5. Only nondefective parts should be passed along to the assembly line 6. Total production should not exceed the total amount authorized on the kanbans in the system 3 kanban signals 1. cards 2. container system 3. containerless system Container system An empty container signals a need to fill it Containerless system When containers aren't needed and workers keep parts at their station signaling other workers for when they're finished