Operations Management book summary and important keywords for mcq plus descriptive answer

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Book summary of Operation Management

Operations Management is the management of an organisation’s productive resources or its production system, which converts inputs into the organisation’s products and services.
Production may be defined as the conversion of inputs – men, machines, materials, money, methods and management (6 Ms) into output through a transformation process.
Production is a primary business function along with marketing and finance, other management areas being HRD (Personnel & Industrial Relations) and Materials Management, etc.
The major objective of production management is to produce quality goods and services.
Production management is viewed as a continuous process of planning, organising and controlling.
Automation is the self-controlling operation of machinery that reduces or dispenses with human communication or control when used in normal conditions.
Operations Management is fundamental to an organization’s achievement of its mission and competitive goals.
Products can be tangible or intangible. Tangible products are called ‘goods’ or ‘manufacturing’, while intangible products include ‘services’.
Customer contact is a key characteristic of services. A high quality of customer contact is characteristic of a good service organization.
“Productivity” relates output to the quantity of resources or inputs used to produce them. It is basically concerned with how efficiently a certain output of goods and services is produced, and the value created by the production process.
There are several concepts of productivity. In addition to the single factor measure of productivity there are also multifactor productivity measures.
Productivity is also used at the national level. Productivity typically is measured as the rupee value of output per unit of labour.
Productivity is linked to the competitive strategy of the organisation. Corporate strategy and objectives have a major impact in determining the different operational parameters at the corporate level.
There are two basic types of competitive advantage a firm can possess: low cost or differentiation.
Effectiveness of production management is measured by the efficiency through which the inputs are converted into outputs, i.e., effectiveness of outputs and inputs.
Customer satisfaction, functionality of the product, cost considerations, ease of production and maintenance are some of the major considerations while designing any product or service.
The legal issues involved in designing products and services are- patents, trademarks, copyrights, product liability and Uniform Commercial Code whereas the Environment Protection Act governs the issues relating the environment.
The product lifecycle model is a simple representation of the cumulative impact of changes in the business environment on the life of a manufactured product.
Statistical regularities show that the product lifecycle can be used to forecast the way the product attributes, demand, production and competition will change as the product matures.
A mature industry can continue indefinitely. Competitors with more abundant resources, cheaper labour or subsidized capital can obtain a competitive advantage.
The length and pattern of the Product Lifecycle can vary significantly. There is no reason to believe that all products inevitably pass through all four stages, e.g., fad items, consumer resistance, and introduction of superior new product.
Without products, there would be no customers. Without customers, there would be no revenue. Developing a new product is a major activity.
Organizations are more concerned about being the first to develop an idea or design a product so that they can protect their markets. Being able to design, develop, and introduce a new product quickly gives a firm fast to market’ capabilities.
The basis for concurrent engineering is the significant overlap among the different phases of product development.
Delayed differentiation concept suggests that producers should add options or make differentiating changes to the product close to the time of purchase by the end use customer.
Commonality of components used to manufacture similar products is essential to reduce the number of components to be held in stock to cater to all possible combinations of a customer’s customization spree.
The concept of mass customisation is built on the concept of postponement. This is the extreme form of postponement as the product is subject to the final configuration as and when the customers’ specific order is known.
Standard end products enable manufacturers to use ‘make to stock’ market orientations, thereby decoupling manufacturing decisions from market transactions.
DFM is the process of designing a product for efficient production while maintaining the highest level of quality.
Services can be classified on the basis of the degree of contact with the customer. The extent of customer contact can be defined as the percentage of time the customer must be in the system relative to the time it takes to perform the customer service.
Reliability serves as a measure of quality of the product and service design. The quality associated with a product often increases with the dependability of the product customer experience.
There are two suggested approaches for improving the reliability of a system: fault avoidance and fault tolerance. Fault avoidance is achieved by using high-quality and high-reliability components and is usually less expensive than fault tolerance.
When running virtual tests using CAD, alterations to the design can be made quickly and easily, so new designs can be tested and retested until the problem is resolved.
Capacity planning should be solely based on the principle of maximizing the value delivered to the customer.
Theoretical capacity is what can be achieved under ideal conditions for a short period of time. Under these conditions, there are no equipment breakdowns, maintenance requirements, set up times, bottlenecks, or worker errors.
Normal Capacity describes the maximum producible output when plants and equipment are operated for an average period of time to produce a normal mix of output.
Top management often finds it desirable to express addition to new capacity in terms of money value of sales.
No matter how broadly we may define capacity, in the final analysis, in manufacturing, it has to come down to capacity of individual machines.
To estimate Capacity, you must first select a yardstick to measure it. The first major task in Capacity Measurement is to define the unit of output.
Whatever the measure, the Capacity decision is critical to the management of an organization because everything from cost to customer service is measured on the basis of the Capacity of the process, once the Capacity is determined.
Capacity planning has to address the external environment of the firm. One needs to assess the company’s situation and think about why the decision to alter capacity should be considered.
The timing and sizing of expansion are related. Capacity gap analysis is essential in determining when demand will exceed Capacity and by how much
When capacity exceeds demand, the firm may want to simulate demand through price reductions or aggressive marketing, or accommodate the market through product changes.
Decision Trees are most commonly used in capacity planning. They are excellent tools for helping choose between several courses of action.
Processes underlie all activities and hence are found in all organizations and functions. In addition, processes create an inter-connected set of linkages, which connect the external and internal linkages.
Despite their differences, the concepts of determining system capacity and finding bottlenecks apply to service as well. The principles are the same but in some cases the application is different.
Cost-volume-profit (CVP) analysis is a technique that examines changes in profits in response to changes in sales volumes, costs, and prices.
Process technology decisions relate to organizing the process flows, choosing an appropriate product-process mix, adapting the process to meet strategic objectives, and evaluating processes.
Each process is a single activity or a group of activities that are linked together in different patterns to produce the final product. Processes need to be categorized to describe the patterns that are formed when they are linked together.
There are many ways in which processes can be categorized. They can be categorized on the basis of their orientation, e.g., market orientation or manufacturing processes; they may also be categorized on the basis of the production methodology or customer involvement.
A typical flexible manufacturing system can completely process the members of one or more part families on a continuing basis without human intervention.
Flexibility in manufacturing is the ability of a manufacturing system to respond at a reasonable cost and at an appropriate speed, to planned and unanticipated changes in external and internal environments.
Computer Integrated Manufacturing, known as CIM, is the phrase used to describe the complete automation of a manufacturing plant, with all processes functioning under computer control and digital information tying them together.
The Facility Layout plan institutionalizes the fundamental organizational structure. Facility layout can be categorized into four major types: process layout, product or line layout, fixed layout and group layout.
In process layouts, one of the principles of paramount importance is that centers between which frequent trips or interactions are required should be placed close to one another.
Process Layout is best suited for non-standardized products; where there is a low volume, high variety manufacturing environment; where the market requires frequent change in product design.
A product layout is also called a line layout. In this type of arrangement, the various facilities, such as machine, equipment, work force, etc., are located based on the sequence of operation on parts.
An ideal assembly line would be one where tasks are assigned to different workstations in such a way that the total processing times at each workstation is equal. If every station used up an equal amount of task time, no time would be idle time.
Fixed Position Layout is essential when the products are difficult to move. Need for such type of layouts arises in case of extremely large and heavy products.
The group technology principle suggests that parts which are similar in design or manufacturing operations are grouped into one family, called a part-family. For each part-family, a dedicated cluster of machines (called ‘machine cells) are identified.
With increasing pressure on manufacturing flexibility to meet customer needs, there has been a move towards new forms of assembly lines, e.g., mixed model lines.
There are a few other service layouts which are prevalent and some are fast emerging: warehouse layout, retail layout and office layout.
After a layout is chosen and designed and activities are defined and their requirements, developed, the next step is to define the relationships between activities which is called closeness rating.
Facilities location may be defined as selection of suitable location or site or place where the factory or plant or facilities to be installed, where plant will start functioning.
The development of a location strategy depends upon the type of firm being considered. Industrial location analysis decisions focus on minimising costs; retail and professional service organisations typically have a focus of maximising revenue.
One of the major reasons for new facilities is the global economic boom that has been accompanied by an enhancement of capacity worldwide.
Well-planned facilities enable an organization to function at its most efficient and effective level, offering real added value improvements to the organization’s core business.
Manufactured products differ from many service products as production may take place at a location, and then the goods are distributed to the customer. Often the source of raw materials is an important factor in deciding locations.
Locating plants and facilities near the market for a particular product or service may be of primary importance for many products in the sense that location may impact the economics of the manufacturing process.
For companies that produce or buy heavy and bulky low-value-per-ton commodities as are generally involved in import and export activities, shipping and location of ports may be a factor of prime importance in the plant location decision.
In service, the capacity to deliver the service to the customer must first be determined; only then can the service be produced.
When the site selection process is initiated, the pool of potential locations for a manufacturing facility is, literally, global. Since proximity to customers is not normally an important location factor for a manufacturing plant, countries around the world become potential sites.
At macro level, the plans of the site are developed. These plans should include number, size, and location of buildings. It should also include infrastructure such as roads, rail, water, and energy.
Facility master planning strategy involves examining the existing facilities; the sizing of future facilities and site amenities; the integration of these facilities into the site; traffic flow and circulation; and the analysis of any impact that this development will have on the site with respect to environmental issues.
Facility planning at the micro level involves decisions about the functional layout and physical arrangement of economic activity centers.
There are a few techniques using which locational analysis is done: factor rating method, centre of gravity method and least cost method.
Quality Control implies working to a set standard of quality which is achievable and which has a ready market. Thus Quality Control means adherence to a standard or prevention of a change from the set standard.
Quality control has the objective of coordinating the quality maintenance and improvement efforts of all groups in the organisation with a view to providing full consumer satisfaction. Statistical quality control enables these objectives to be attained most economically reducing scrap and rework, reducing machine downtime and minimising inspection.
Objective decisions in quality management can be built only on facts. The decisions naturally would be as good or as bad as the data on which they are based. Thus, it is important to build that base of sound lines.
When data are examined, it will normally be found that a few values will be extremely high or extremely low and most of the values tend to be concentrated within a region which is somewhere between the two extremes. This phenomenon is known as central tendency.
The Process Capability may be defined as the capability of a process. This can be evaluated from the data which is free from assignable causes and hence the extent of variation exhibited by it is only under the influence of the chance causes alone.
ISO stands for International Organisation for Standards. ISO: 9000 is a series of international standards for quality systems. It is a practical standard for quality applicable both to the manufacturing and service industry.
Statistical Quality Control is the application of statistical techniques to determine how far the product confers to the standards of quality & precision and to what extent its quality deviates from the standard quality.
Acceptance Sampling can be described as the post-mortem of the quality of the product that has already been produced. The term Acceptance Sampling relates to the acceptance of a consignment/batch of items on the basis of its quality.’
TQM is a quality-focused customer-oriented integrative management method that emphasises continuing and cumulative gains in quality, productivity and cost reduction.
Six sigma is a major part of the TQM programme. It is defined as 3 to 4 defects per million. It stresses that the goal of zero defects is achievable. The concept and method of six sigma is applicable to everyone and to all functions, ie., manufacturing, engineering, marketing, personnel, etc.
Kaizen is a group activity and it employs small groups for initiating improvements usually in small increments over a longer period of time.
The world’s markets and industry structures are in flux because the global forces at work are lowering the barriers to interaction. As interaction costs fall around the world, new economies of specialization, scale, and scope are being created-innovative companies have an abundance of opportunities to earn high rewards for the risks taken. Factories of the future are already in the making. FMS, CAD and CAM are cornerstones of the factory of the future.
Typically, the CAM system is linked to CAD so that the product specifications drive the manufacturing specifications. The demand for CAM has grown rapidly because flexibility is required to meet the ever-changing competition and customer demand.
Sampling plans are typically set up with reference to an acceptable quality level, or AQL.
The AQL is the base line requirement for the quality of the producer’s product.
The producer would like to design a sampling plan such that the OC curve yields a high probability of acceptance at the AQL.
On the other side of the OC curve, the consumer wishes to be protected from accepting poor quality from the producer. So the consumer establishes a criterion, the lot tolerance percent defective or LTPD.
Here the idea is to only accept poor quality product with a very low probability. Mil. Std. plans have been used for over 50 years to achieve these goals. SPC is preferred over Acceptance Sampling because it provides near real-time monitoring of the process.
Acceptance sampling ignores the process and focuses exclusively on the output after it has been produced.
The manufacturing business environment, in most cases, is inherently unstable and turbulent. Change is the rule. The solution to minimizing inventory costs lies not in methods to stabilize and freeze the system but rather in an enhancement of the ability to accept change and to respond to it promptly and correctly. MRP systems backed by availability of computers provide just a unique such ability to respond to change. This idea has been incorporated in all ERP packages. These packages allow access to other databases or, ideally, the use of one common database.
Separate databases create problems and delays in appropriate actions. Suppose we need to know the status of an order. The marketing database will probably show only information specific to marketing, such as the date the order was entered. If that order is in production, then production would be able to provide the status because that information would ordinarily not be in the marketing database. If the order has been completed and shipped, the shipping information would be with distribution or logistics.
Because of the separate databases, no one in any area of the company has access to all company information. Another problem with separate databases is that they may contain conflicting information, due to many possible reasons. The purpose of ERP is to avoid these problems by combining all these separate databases into one common database for the entire organization, and possibly even for the entire supply chain.
The advantages that accrue from this approach are that anyone anywhere within the organization has access to all information and there is an increase speed in retrieving information. Extending this idea to an entire supply chain, the advantages become obvious. All members of the supply chain have access to the same information and can utilize the same information for purposes of planning and execution. Not only does this make planning and forecasting simpler, but some companies report reducing inventory levels through to the supply chain by 50 per cent or more.
In the brave new world of networking data, we are moving from point of purchase to point of use, which gets buyers and sellers much closer to what they both want and need. Global manufacturing excellence will soon be measured against anticipation-how early can you know what consumers want? How early can you deliver it? That’s the new demand-driven supply chain, and the global future.
It is often assumed that demand for an item is formed from a large number of smaller demands from individual customers. As a result, the resulting demand is continuous and follows a Normal distribution.
Inventory systems have to cope with uncertainty. You have to decide on when to order and how much to order with a view minimization of costs, maximization of profit, or maximization of service level i.e. the objectives stated by the organization.
The most common way to estimate demand is to collect data about past experience and forecast future demand based on that data.
However, in re-order point models the probability distribution of demand during the lead-time is an important characteristic in inventory management.
In most cases Pareto’s Rule then applies, so that approximately 20% of the items accounts for approximately 80% of the value of the stock held; these items are classified as Class A items. Class B covers the 30% of items that represent the next 10% of value. Class C covers the remaining 50%, which accounts for the remaining 10% of value.
In material requirements planning (MRP), ranking is used to categorize inventory by its impact value, i.e. whether or not production will stop if this item is out of stock.
The VED Classification is based on the criticality of the inventory item. In normal practice, items in the ‘V’ category are often monitored manually; in addition to the computer monitoring that may be in place.
Supply or material management activities focus on the upstream portion of the supply chain and are mainly concerned with suppliers and inbound logistics.
‘Supply Chain Management’ is defined as the integration-oriented skills required for providing competitive advantage to the organization that are basis for successful supply chains.
Supply chain is an integral part of the value chain. The supply chain consists only of the primary activities or the operational part of the value chain. The supply chain, therefore, can be thought of as a subset of the value chain.
Major elements in supply chain are: production, location, inventory, supply, transportation and information.
Logistics focuses on the physical movement and storage of goods and materials. This involves evaluating and selecting various transportation options, developing and managing networks of warehouses when needed, and managing the physical flow of materials into and out of the organization.
Logistics decisions are often tightly intertwined with production and inventory decisions, particularly when businesses must decide where to hold inventory in the supply chain.
A critical part in supply chains that involve manufacturing is getting all the required parts and raw materials in the right sequence, the right quantity, the right quality and the right time to the manufacturing and assembly plants.
Electronic Data Interchange (EDI) is the electronic exchange of business information- purchase orders, invoices, bills of lading, inventory data and various types of confirmations-between organizations or trading partners in standardized formats.
E-commerce is usually defined as the conduct of business online, via the Internet. Ecommerce means more choices, convenience and lower prices for consumers. It also provides new ways for businesses to grow and meet customer needs, and important benefits and cost-savings for governments and the people they serve.
Supply chain management allows all the firms in a supply chain to look beyond their own objectives to the objective of maximizing the final customer’s satisfaction.
A firm in the supply chain must initiate the attempt to form partnerships and actively manage the supply chain. Often a firm that has a large amount of market power in the chain will become the leader of the supply chain.
The SCOR model is based on a benchmarking process and used to measure the performance of an existing supply chain and its related processes.
Supply chain management involves proactively managing the two-way movement and coordination (that is, the flows) of goods, services, information, and funds from raw material through end user.
Supply Chain Design is a strategic decision. It reflects the structure of the supply chain over the next several years. It decides what the chain’s configuration will be, how resources will be allocated, and what processes each stage will perform.
A push/pull view of the supply chain is very useful when considering strategic decisions relating to supply chain design. This view forces a more global consideration of supply chain process as they relate to a customer order.
Supply chain performance improves if all stages of the chain take actions that together increase total supply chain profits. A lack of co-ordination can impact the performance.
Supply Chain Optimization is the application of processes and tools to ensure the optimal operation of a manufacturing and distribution supply chain.
JIT is a management philosophy that strives to eliminate sources of manufacturing waste by producing the right part in the right place at the right time. Waste results from any activity that adds cost without adding value such as moving and storage.
A Kanban system is a pull system, in which the Kanban is used to pull parts to the next production stage when they are needed; an MRP system (or any schedule based system) is a push system, in which a detailed production schedule for each part is used to push parts to the next production stage when scheduled.
In spite of the natural differences manufacturing and service, there are possible applications and benefits of JIT techniques in service industries.
Purchasing is responsible for obtaining the materials, parts and supplies and services needed to produce a product or provide a service. Purchases represent about 55 percent of the cost of the finished product.
Though purchasing is a major constituent of the supply chain, it is also important that an organization have an integrated view of the elements within the supply chain.
The purchase department interacts with many departments within the organisation and it interacts with the suppliers which are external to the organisation. There is a two way interaction between various departments and purchasing function.
Purchasing can be both from the internal supply chain and the external supply chain, however, the purchasing department normally is associated with the external supply chain.
Purchasing identifies, selects and evaluates potential suppliers, develops detailed specifications for the products or services needed by a firm, certifies the quality of supplier’s goods and services, negotiates contractual terms and conditions, and develops long-term relationships with key suppliers.
The procurement cycle occurs at the manufacturer/supplier interface and includes all processes necessary to ensure that materials are available for manufacturing to occur according to schedule.
Value Analysis in purchasing refers to the examination of each procurement item to ascertain its total cost of acquisition, maintenance, and usage over its useful life and, wherever feasible, to replace it with a more cost effective substitute. It is sometimes also called value-in-use analysis.
Centralized purchasing means buying and managing purchases from one location for all locations within an organization. This can also be run by a central location buying in to distribution warehouse that feeds smaller warehouses. This is called a hub and spoke system.
Decentralized operation allows any employee to buy what he needs. You can also run this operation with a designated buyer assigned to the site to do the buying.
The purchasing professionals all over the world are required to follow certain code of ethics so that they prove to be an asset for the company and take the company to new heights.

Important Keywords from operation management

ABC Classification: The ABC classification is based on focusing efforts where the payoff is highest; i.e., high-value, high-usage items must be tracked carefully and continuously.
Acceptable Quality Level (AQL): The AQL is a percent defective that is the base line requirement for the quality of the producer’s product.
Acceptance Sampling: The acceptance of a consignment of items on the basis of its quality.
Analytic Processes: An analytic process breaks down a raw material into its constituent parts. An example is refining crude.
Assemble to Order (ATO): Assemble to order products are standard items that are assembled from in-stock subassemblies.
Assembly Line: Production follows in a predetermined sequence of steps, which are continuous rather than discrete.
Automation: Act of converting the controlling of a machine or device to a more automatic system.
Average Outgoing Quality (AOQ): A common procedure, when sampling and testing is non- destructive, is to 100% inspect rejected lots and replace all defectives with good units.
Batch Production: Production is in discrete parts that are repeated at regular intervals.
CAD: Use of computer software to design and create 2D and 3D virtual models of goods and products for the purposes of testing.
Capacity: Maximum output of a system in a given period under ideal conditions.
Cell: Self-sufficient unit in which all operations required to make components or complete products can be carried out.
Centralized Purchasing: Buying and managing purchases from one location for all locations within an organization.
Centre of Gravity: Location based on the proximity to warehouse or other major place of interest.
Christmas Tree Problem: This type of problem occurs where demand is probabilistic. In such cases policies are based on the probability of the occurrence of the particular event rather than actual costs.
CIM: Complete automation of a manufacturing plant
Closeness Rating: Relationships between activities in a layout.
Commonality: Used to manufacture similar products.
Concurrent Engineering: Involves the parallel completion of product phases based on overlap among different phases of business development.
Contribution Margin: Total revenue minus total variable costs.
Control Chart: A graphical representation between the order of sampling along x-axis and statistics along the y-axis.
Cost Leadership: A firm attempts to gain competitive advantage by reducing its economic costs below that of its competitors.
CRAFT: Computerized Relative Allocation of Facilities Technique
Customization: Product is subject to the final configuration as and when the customers’ specific order is known.
CVP Analysis: Technique that examines changes in profits in response to changes in sales volumes, costs, and prices.
Cycle Time: Time period after which completed units come off the assembly line. Fixed Position Layout: Material remains fixed and tools, machinery and men are brought to the location of the material.
Decentralized Purchasing: It allows any employee to buy what he needs
Decision Tree: Provide highly effective structure within which you can lay out options and investigate the possible outcomes of choosing those options.
Delayed Differentiation: Adding differentiating changes to the product close to the time of purchase by the end use customer.
Design for Manufacturability: Process of designing a product for efficient production maintaining highest level of quality.
Design for Reliability: It refers to the process of designing reliability into products.
Differentiation: Firm seeks to be unique in its industry along some dimensions that are widely valued by buyers.
Dispersion: The extent to which the data are scattered about the zone of central tendency.
E-banking: banking transaction carried out on the internet
E-commerce: defined as the conduct of business online, via the Internet
Ecological Footprints: Impact of the facility on the environment.
Economic Order Quantity (EOQ) Models: The basic approach to determining fixed order sizes- are the Economic Order Quantity (EOQ) models. The basic EOQ model is concerned primarily with the cost of ordering and the cost of holding inventory.
EDI: Electronic exchange of business information
EDIFACT: Electronic Data Interchange for Administration Commerce and Transport
Effective Capacity: Capacity, which a firm can expect to achieve, given its product mix, methods of scheduling, maintenance, and standards of quality.
Efficiency: Measure of actual output over effective capacity.
Engineer to Order (ETO): Engineer to order is to provide unique products that have not been previously engineered.
Expansionist Strategy: It involves large, infrequent jumps in capacity.
Expediting: Monitoring of supplier deliveries of materials that in some way have become critical for the customer.
External Supply Chain: It includes the key suppliers and customers, portion outside firm
Facility Location: Selection of suitable location or site or place where plant or facilities to be installed.
Facility Master Plan: Helps plan the right services consistent with firm’s mission.
Facility Planning: Providing physical capability to add value to the organisation.
Factor Rating Method: Very simple method to relate factors and their salience to facility location decisions.
Fixed Order Quantity Systems: These are multiple period inventory models that are “event triggered”, at an identified level of the stock the fixed-order quantity model initiates an order.
Fixed Time Quantity Systems: These systems are “time triggered”, at an identified fixed time the fixed-time quantity model initiates an order to replenish the stock.
Flexible Manufacturing System: Flexible manufacturing system is a manufacturing system that consists of a number of CNC machine tools and a materials handling system that is controlled by one or more dedicated computers.
Flexible Manufacturing: Ability of a manufacturing system to respond at a reasonable cost and at an appropriate speed.
Focus Strategy: Choice of a narrow competitive scope within an industry.
FTP: File Transfer Protocol
Functions of Inventory: It is essential to keep some inventory in order to promote smooth and efficient running of business.
Green Productivity: It signifies a new paradigm aimed at the pursuit of productivity growth while protecting the environment.
Group Layout: Combination of both process and product layout and incorporates the strong points of both of these.
Heavy Industries: Plants that are relatively large and require a lot of space.
HML: The HML reflects a classification based on the unit price of the item.
Impact Planning: Integration of commercial and practical environmental objectives to produce optimum benefits for business and environment.
Input Measures: Generally used for low-volume, flexible processes.
Internal Supply Chain: The portion of a given supply chain that occurs within an individual organization
Inventory Holding Costs: Costs involved in holding inventory, i.e., storage, handling, interest, breakage and pilferage etc., are called inventory-holding costs.
ISO: International Standards Organisation
JIT: It strives to eliminate sources of manufacturing waste by producing the right part in the right place at the right time
Kanban: It is a visual aid to convey the message that action is required
Labour Productivity: Quantity of output produced by one unit of production input in a unit of time.
Lead Time: It is the interval between the start and end of an activity or series of activities. It measures the firm’s responsiveness, quickness, and reliability.
Least Cost Location: A site is chosen for industrial development where total costs are theoretically at their lowest.
Light Industries: Perceived as smaller, cleaner plants that produce electronic equipment and parts used in assemblies, or assembled products.
Logistics: It focuses on the physical movement and storage of goods and materials
Lot Tolerance Percent Defective (LTPD): The LTPD is a designated high defect level that would be unacceptable to the consumer. The consumer would like the sampling plan to have a low probability of accepting a lot with a defect level as high as the LTPD.
Make to Order (MTO): Make to order products are made from previously engineered designs, but only are made after an order has been received.
Make to Stock (MTS): Make to Stock is when a seller stocks inventories of previously made products for purchase whenever the customer arrives.
Manufacturing Cell: Manufacturing cell is a self-sufficient unit, in which all operations to make a ‘family’ of parts, components or complete products can be carried out.
Manufacturing Flexibility: Manufacturing flexibility is the ability of a manufacturing system to respond, at a reasonable cost and at an appropriate speed, to planned and unanticipated changes in external and internal environments.
Manufacturing: Tangible items that are usually produced in one location and purchased in another.
Measure of Central Tendency: A parameter in a series of statistical data which reflects a central value of the same series.
Mixed Layout: Produces several items belonging to the same family.
Modifying Processes: These processes modify the physical characteristics of materials upon which labor or operations are performed.
Modular Design: System that allows pre-engineered sub-assemblies to meet a customer’s need.
Multiple Sampling Plans: This is an extension of the double sampling plans where more than two samples are needed to reach a conclusion. The advantage of multiple sampling is smaller sample sizes.
Normal Capacity: Maximum producible output when plants and equipment are operated for an average period of time to produce a normal mix of output.
Office Layout: Based on the interrelationships among employees, flow of work through the various work units, and equipment.
Operating Characteristic (OC) Curve: This curve plots the probability of accepting the lot (Y-axis) versus the lot fraction or percent defectives (X-axis). The OC curve is the primary tool for displaying and investigating the properties of a LASP.
Operations Management: Management of an organisation’s productive resources or its production system.
Output Measures: Usual choice for high-volume processes.
Part Family: Manufacturing operations grouped into one family.
Price-Break Models: When item cost varies with volume ordered, the result is a modified simple lot size situation called the quantity volume case or price break model.
Price-Break Models: When item cost varies with volume ordered, the result is a modified simple lot size situation called the quantity volume case or price break model.
Process Improvement: Process improvement is the systematic study of the activities and flows of each process to improve it.
Process Layout: Similar machines or similar operations are located at one place as per the functions
Process: A process is any part of an organization that takes inputs and transforms them into outputs.
Procurement Cycle: It occurs at the manufacturer/supplier interface and includes all processes necessary to ensure that materials are available for manufacturing
Product Architecture: Establishes functional capabilities of the product, its features and post sale servicing needs.
Product Layout: Facilities are located based on the sequence of operation on parts.
Product Lifecycle: Simple representation of impact of changes in business environment on products.
Production: Conversion of inputs – men, machines, materials, money, methods and management (6 Ms) into output through a transformation process
Productivity: Output/input
Pull View: It processes that are initiated by a customer order
Purchasing Cycle: The process of purchasing materials
Purchasing Interfaces: Interaction of the purchasing and other aspects of the firm like legal, operations etc.
Purchasing: It is responsible for obtaining the materials, parts and supplies and services needed to produce a product or provide a service
Push View: It processes that are initiated and performed in anticipation of customer orders.
QFD: Quality Function Deployment
Quality Circles: Voluntary groups engaged in managing quality.
Quality Control: Working to a set standard of quality which is achievable and which has a ready market.
Quality Function Deployment. represents a comprehensive analytic schema or framework for quality.
Rated Capacity: Measure of the maximum usable capacity of a particular facility.
Re-order Level: The inventory level at which the order is released is known as the reorder level.
Recycling: Recovering of materials or components for future use.
Reliability: It serves as a measure of quality of the product and service design.
SCOR Model: It is based on a benchmarking process and used to measure the performance of an existing supply chain and its related processes
Sequential Sampling Plans: This is the ultimate extension of multiple sampling where items are selected from a lot one at a time and after inspection of each item a decision is made to accept or reject the lot or select another unit.
Services: Intangible products that are consumed as they are created.
Single-Period Inventory Models: Single-period inventory models are a special case of periodic inventory systems based on how much risk we are willing to take for running out of inventory. These models are useful for a wide variety of service and manufacturing applications.
Skip lot Sampling Plans: Skip lot sampling means that only a fraction of the submitted lots are inspected.
Standardization: Maintaining a standard quality and features for all designs.
Statistical Quality Control: The application of statistical techniques to determine how far the product confers to the standards of quality and precision and to what extent its quality deviates from the standard quality.
Supply Chain Management: The active management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage
Supply Chain: This includes all the elements right from procurement of materials till end customer
Synthetic Processes: A synthetic process combines basic parts into larger products e.g. manufacture of automobiles, radios, televisions, etc.
Taguchi Methods: They provide a powerful means for isolating critical product design parameters that need to be controlled in the manufacturing process.
Technology Lifecycle: It is used to forecast the way demand, production and competition will change as product matures.
Theoretical Capacity: That can be achieved under ideal conditions for a short period of time.
Total Factor Productivity: Year-by-year change in the output where a number of factors are taken into consideration.
Total Quality Management: A quality focused customer oriented integrative management method that emphasizes continuing and cumulative gains in quality, productivity and cost reduction.
Value Analysis: Examination of each procurement item to ascertain its total cost of acquisition, maintenance, and usage over its useful life.
VAN: Value Added Network
VED Classification: The VED Classification is based on the criticality of the inventory item. In normal practice, items in the ‘V’ category are often monitored manually; in addition to the computer monitoring that may be in place.
Wait-and-see strategy: Involves smaller, more frequent incremental jumps.
Wastivity: 1/productivity

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