MGMT 4000 Exam 2 - UGA - Montgomery with complete
solution
Aggregate operations plan
A plan for labor and production for the intermediate-term with the objective to minimize
the cost of resources needed to meet demand
Sales and operations planning
The process that companies use to keep demand and supply in balance by coordinating
manufacturing, distribution, marketing, and financial plans.
Production planning strategies
Plans for meeting demand that involve trade-offs in the number of workers employed,
work hours, inventory, and shortages.
Pure strategy
A simple strategy that uses just one option, such as hiring and firing workers, for
meeting demand.
Mixed strategy
A more complex strategy that combines options for meeting demand.
Strategic forecasts
Medium and long term forecasts that are used for decisions related to strategy and
aggregate demand.
Tactical forecasts
Short-term forecasts used for making day-to-day decisions related to meeting demand.
Time series analysis
A forecast in which past demand data is used to predict future demand.
Linear regression forecasting
A forecasting technique that fits a straight line to past demand data.
Decomposition
The process of identifying and separating time series data into fundamental
components such as trend and seasonality.
Forecast error
The difference between actual demand and what was forecast.
Mean absolute deviation (MAD)
The average of the absolute value of the actual forecast error.
Mean absolute percent error (MAPE)
The average error measured as a percentage of average demand.
Tracking signal
A measure of whether the forecast is keeping pace with any genuine upward or
downward changes in demand. This is used to detect forecast bias.
Causal relationship forecasting
Forecasting using independent variables other than time to predict future demand.
Collaborative Planning, Forecasting, and Replenishment (CPFR)
An Internet tool to coordinate forecasting, production, and purchasing in a firm's supply
chain.
Moving average
A forecast based on average past demand
,Weighted moving average
A forecast made with past data where more recent data is given more significance than
older data.
Exponential smoothing
A time series forecasting technique using weights that decrease exponentially (1 − α)
for each past period.
Smoothing constant alpha (α)
The parameter in the exponential smoothing equation that controls the speed of
reaction to differences between forecasts and actual demand.
Smoothing constant delta (δ)
An additional parameter used in an exponential smoothing equation that includes an
adjustment for trend.
Qualitative forecasting
forecasting based on opinion and intuition
Short term
forecasting less than 3 months
Medium term
forecasting 3 months to 2 years
Long term
forecasting greater than 2 years
The total average value of inventory
the sum of the value of raw materials, work in process, and finished goods inventory
Inventory turns
the cost of goods sold divided average inventory
Days of supply
the inverse of inventory turns scaled to days
Littles law
there is a long-term relationship among inventory, throughput, and flow time
Shigeo Shingo Model
Analyze separately, design as one
Bottleneck
a stage that limits the capacity of the process
Cycle time
in a repetitive process: average time between completion of successive units
Lead time
time needed to respond to customer orders. Also: the time between the issue of a
replenishment order and the receipt of stock
Throughput rate
output rate that a process is expected to produce over a period of time
Productivity
= output/input
Utilization of resources
time activated/time available
Operation time
set up time + run time. The sum of the setup time and the run time for a batch of parts
that are run on a machine set up time + run time.
, Flow time
average time for a unit to move through the system. Includes the time the unit spends
actually being worked on, together with the time spent waiting in a queue
Value-added time
the time in which useful work is usually being done on the unit
Velocity
= value added time/flow time
Efficiency
= actual output/standard output
Benchmarking
comparing the metrics of one company to another
Run time
the time required to produce a batch of parts
Set up time
the time required to prepare a machine to make a particular item
Buffer
a storage area between stages where the output of a stage is placed prior to being used
in a downstream stage
Blocking
occurs when activities in a stage must stop because there is no place to deposit the
item
Starving
occurs when activities are in a stage must stop because there is no work
Process
any part of an organization that takes inputs and transforms them into outputs
Learning curve
a line displaying the relationship between unit production time and the cumulative
number of units produced
Individual learning
improvement that results when people repeat a process and gain skill or efficiency from
their own experience
Strategic capacity planning
Finding the overall capacity level of capital-intensive resources to best support the firm's
long-term strategy.
Capacity
The output that a system is capable of achieving over a period of time
Focused factory
A facility designed around a limited set of production objectives. Typically, the focus
would relate to a specific product or product group.
Plant within a plant (PWP)
An area in a larger facility that is dedicated to a specific production objective (for
example, product group). This can be used to operationalize the focused factory
concept.
Economies of scope
When multiple products can be produced at lower cost in combination than they can be
separately.
solution
Aggregate operations plan
A plan for labor and production for the intermediate-term with the objective to minimize
the cost of resources needed to meet demand
Sales and operations planning
The process that companies use to keep demand and supply in balance by coordinating
manufacturing, distribution, marketing, and financial plans.
Production planning strategies
Plans for meeting demand that involve trade-offs in the number of workers employed,
work hours, inventory, and shortages.
Pure strategy
A simple strategy that uses just one option, such as hiring and firing workers, for
meeting demand.
Mixed strategy
A more complex strategy that combines options for meeting demand.
Strategic forecasts
Medium and long term forecasts that are used for decisions related to strategy and
aggregate demand.
Tactical forecasts
Short-term forecasts used for making day-to-day decisions related to meeting demand.
Time series analysis
A forecast in which past demand data is used to predict future demand.
Linear regression forecasting
A forecasting technique that fits a straight line to past demand data.
Decomposition
The process of identifying and separating time series data into fundamental
components such as trend and seasonality.
Forecast error
The difference between actual demand and what was forecast.
Mean absolute deviation (MAD)
The average of the absolute value of the actual forecast error.
Mean absolute percent error (MAPE)
The average error measured as a percentage of average demand.
Tracking signal
A measure of whether the forecast is keeping pace with any genuine upward or
downward changes in demand. This is used to detect forecast bias.
Causal relationship forecasting
Forecasting using independent variables other than time to predict future demand.
Collaborative Planning, Forecasting, and Replenishment (CPFR)
An Internet tool to coordinate forecasting, production, and purchasing in a firm's supply
chain.
Moving average
A forecast based on average past demand
,Weighted moving average
A forecast made with past data where more recent data is given more significance than
older data.
Exponential smoothing
A time series forecasting technique using weights that decrease exponentially (1 − α)
for each past period.
Smoothing constant alpha (α)
The parameter in the exponential smoothing equation that controls the speed of
reaction to differences between forecasts and actual demand.
Smoothing constant delta (δ)
An additional parameter used in an exponential smoothing equation that includes an
adjustment for trend.
Qualitative forecasting
forecasting based on opinion and intuition
Short term
forecasting less than 3 months
Medium term
forecasting 3 months to 2 years
Long term
forecasting greater than 2 years
The total average value of inventory
the sum of the value of raw materials, work in process, and finished goods inventory
Inventory turns
the cost of goods sold divided average inventory
Days of supply
the inverse of inventory turns scaled to days
Littles law
there is a long-term relationship among inventory, throughput, and flow time
Shigeo Shingo Model
Analyze separately, design as one
Bottleneck
a stage that limits the capacity of the process
Cycle time
in a repetitive process: average time between completion of successive units
Lead time
time needed to respond to customer orders. Also: the time between the issue of a
replenishment order and the receipt of stock
Throughput rate
output rate that a process is expected to produce over a period of time
Productivity
= output/input
Utilization of resources
time activated/time available
Operation time
set up time + run time. The sum of the setup time and the run time for a batch of parts
that are run on a machine set up time + run time.
, Flow time
average time for a unit to move through the system. Includes the time the unit spends
actually being worked on, together with the time spent waiting in a queue
Value-added time
the time in which useful work is usually being done on the unit
Velocity
= value added time/flow time
Efficiency
= actual output/standard output
Benchmarking
comparing the metrics of one company to another
Run time
the time required to produce a batch of parts
Set up time
the time required to prepare a machine to make a particular item
Buffer
a storage area between stages where the output of a stage is placed prior to being used
in a downstream stage
Blocking
occurs when activities in a stage must stop because there is no place to deposit the
item
Starving
occurs when activities are in a stage must stop because there is no work
Process
any part of an organization that takes inputs and transforms them into outputs
Learning curve
a line displaying the relationship between unit production time and the cumulative
number of units produced
Individual learning
improvement that results when people repeat a process and gain skill or efficiency from
their own experience
Strategic capacity planning
Finding the overall capacity level of capital-intensive resources to best support the firm's
long-term strategy.
Capacity
The output that a system is capable of achieving over a period of time
Focused factory
A facility designed around a limited set of production objectives. Typically, the focus
would relate to a specific product or product group.
Plant within a plant (PWP)
An area in a larger facility that is dedicated to a specific production objective (for
example, product group). This can be used to operationalize the focused factory
concept.
Economies of scope
When multiple products can be produced at lower cost in combination than they can be
separately.
