Operations and Supply Chain
110 flashcards by MentisLibrary
Inventory formulas, lean and six sigma, forecasting, and the logistics vocabulary that moves goods across the world. Includes the Toyota Production System terms in the original Japanese and what each one actually means on a factory floor.
- What is operations management?
- The design, execution, and improvement of the processes that transform inputs into goods and services
- What is a supply chain?
- The network of organizations, people, activities, and resources involved in moving a product from raw material to end customer
- What is the difference between logistics and supply chain management?
- Logistics is the movement and storage of goods; supply chain management is the broader coordination of sourcing, production, logistics, and demand across organizations
- What is the bullwhip effect?
- The amplification of demand variability as orders move upstream in a supply chain
- What causes the bullwhip effect?
- Demand forecast updating, order batching, price fluctuation and promotions, and rationing or shortage gaming
- How is the bullwhip effect reduced?
- Sharing point of sale data upstream, reducing order batch sizes, stabilizing pricing, and allocating on past sales rather than current orders
- What are the three main categories of manufacturing inventory?
- Raw materials, work in process, and finished goods
- What is safety stock?
- Extra inventory held to protect against variability in demand or supply lead time
- What is a reorder point?
- The inventory level at which a replenishment order should be placed
- What is economic order quantity, or EOQ?
- The order size that minimizes the total of ordering cost and holding cost
- What assumptions does EOQ rely on?
- Constant known demand, constant lead time, no quantity discounts, instantaneous replenishment, and no stockouts
- What is carrying or holding cost?
- The cost of keeping inventory: capital tied up, warehousing, insurance, obsolescence, and shrinkage
- What is stockout cost?
- The cost of not having inventory when demanded: lost sales, expediting fees, and lost customer goodwill
- What is inventory turnover?
- How many times inventory is sold and replaced over a period
- What is days inventory outstanding, or days of supply?
- The average number of days inventory is held before being sold
- What is ABC analysis in inventory?
- Classifying inventory items by value contribution so control effort matches importance: A items are few but high value, C items are many but low value
- What is cycle counting?
- Counting a subset of inventory on a rotating schedule rather than shutting down for a full physical count
- What is just in time, or JIT?
- Producing or receiving material only as it is needed, minimizing inventory between steps
- What is the risk of just in time?
- Very low buffer means a single supply disruption stops production immediately
- What is the Toyota Production System?
- An integrated manufacturing philosophy built on just in time and jidoka, aiming to eliminate waste while building in quality
- What is lean manufacturing?
- A production philosophy that maximizes customer value while systematically eliminating waste
- What are the seven wastes, or muda, in lean?
- Transport, inventory, motion, waiting, overproduction, overprocessing, and defects
- What is the eighth waste often added to lean?
- Unused talent or underutilized human potential
- What is overproduction and why is it called the worst waste?
- Making more than is needed or earlier than needed; it is worst because it creates inventory, hides defects, and consumes capacity
- What are muda, mura, and muri?
- Waste, unevenness, and overburden: the three types of deviation lean aims to eliminate
- What is kaizen?
- Continuous incremental improvement involving everyone in the organization
- What is a kaizen event or rapid improvement workshop?
- A focused short term effort, typically three to five days, where a cross functional team analyzes and improves a specific process
- What is kanban in manufacturing?
- A signaling system that authorizes production or movement of material based on actual consumption downstream
- What is a pull versus a push production system?
- Pull produces in response to actual downstream demand; push produces to a forecast and moves output forward regardless of demand
- What is takt time?
- The rate at which units must be produced to meet customer demand