Operations Management

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MGT 502 Final Review Questions
1. List and explain the three ways to decrease process throughput time. 1) Perform activities in parallel
a. A serial approach results in the throughput time for the entire process being the sum of individual steps plus transport and waiting time between steps. Using a parallel approach can reduce throughput time by as much as 80 percent and produces a better result. 2) Change the sequence of activities

b. Altering the sequence of activities can make the process more efficient. 3) Reduce interruptions
c. Less interruptions means smaller throughput time.
2. Define quality.
Quality – the ability of a product or service to consistently meet or exceed customer expectations 3. Define and explain benchmarking.
Benchmarking involves selecting a demonstrated standard of products, services, costs, or practices that represent the very best performance for processes or activities very similar to your own. The idea is to develop a target at which to shoot and then to develop a standard or benchmark against which to compare your performance. The steps for developing benchmarks are: Selecting best practices to use as a standard for performance a)      Determine to what benchmark

b)      Form a benchmark team
c)       Identify benchmarking partners
d)      Collect and analyze benchmarking information
e)      Take action to match or exceed the benchmark
Typical performance measures used in benchmarking include percentage of defects, cost per unit per order, processing time per unit, service response time, ROI, customer satisfaction rates and customer retention rates. 1. List and explain the consequences of poor quality and their associated costs. Poor quality results in a negative effect on your company’s reputation, increase product liability risk, and reduced ability to compete with competitors.

Associated Costs:
1)Prevention Costs - cost of reducing potential defects
2)Appraisal Costs - cost of evaluating products, parts, and services 3)Internal Failure - cost of producing defective parts or service before delivery
4)External Costs - cost of defects discovered after delivery 2. 5. Who is W. Edwards Deming? What was his contribution to the quality movement? W. Edwards Deming was an American statistician widely credited with teaching top management the principals of Statistical process control, a forerunner of total quality management 6. What is the ISO 9000 series?

ISO 9000 series (Europe/EC)
Common quality standards for products sold in Europe (even if made in U.S.) 7. Define and contrast common (random) variation and assignable variation. Assignable variation – caused by factors that can be clearly identified and controlled Common variation – caused by random factors inherent in the process and cannot be controlled 8. Describe the utility of the process capability index. The capability index shows how well parts being produced fit into design limit specifications. The natural variation of a process should be small enough to produce products that meet the standards required.

9. What is the purpose of a control chart and what are the key concepts that underlie their construction and interpretation? Control chart – can be analyzed to see how a process is operating. The key concepts are to establish a central line and both an upper and lower control limit. These limits are then placed over a # of samples and results are charted. 10. Why is order of observation important in process control? The idea of process control is to monitor the number of samples outside the LCL and UCL in a series of observations. If we get a consecutive series of plots outside the limits or all below/above the central line, the process needs to be investigated for cause of sustained poor performance. 11. Define and contrast variables and attributes.

Attributes – quality characteristics that are classified...
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