Chapter 7 Process Strategy 1.

Define process (transformation) strategy and describe its effect on firm strategy- organizations approach to transforming resources into goods and services and much of a firms op. strategy is determined at the time of this decision 2. Process= low-volume high variety, repetitive=uses modules, product=high-volume low variety, mass customization=rapid low-cost production that caters to unique customer desire 3. Calculate and interpret a crossover analysis for process selection- set them equal to each other (a is economical up to v1) 4. Construct the Service Process Matrix relative to degrees of customization and labor- chart at bottom 5. flow diagrams-analyzes movement of material and people, value stream mapping-helps understand how to add value in the flow of material and information through the entire production process, service blueprintingfocus on the customer and the providers interaction with the customer 6. service process design relative to the degree of labor and customization- chart at bottom 7. process redesign-the fundamental rethinking of business processes to bring about dramatic improvements in performance Supplement 7 Capacity Planning 1. design cap- the theoretical maximum output of a system in a given period under ideal conditions effective cap- the cap a firm can expect to achieve given its product mix 2. Define and calculate utilization-actual output as a percent of design cap. Actual output divided by design cap 3. Define and calculate efficiency- actual output as a percent of effective cap.. actual output divided by effective cap. 4. Describe approaches for managing demand- curtail demand by raising prices, scheduling long lead times, increase capacity- price reductions, aggressive marketing, product changes, plant closings and layoffs- offer products with complementary demand patterns 5. Describe different approaches for capacity expansion- changes in staff 6. Define fixed costs-costs that continue even if no units are produced ie taxes, debt variable costs-costs that vary with the volume of units produced ie labor and materials 7. Conduct a breakeven analysis (single-product case) break-even in units= total fixed cost divided by (price variable cost) break-even in dollars= total fixed cost divided by (1 (variable cost divided by selling price)) 8. Describe net present value for assessing capacity investments- present value= future value divided by (1+interest rate) raised to number of years or future value= present value x(1+intrest rate)raised to number of years 9. Explain the cash-to-cash cycle and the impact of OM on this cycle-calculates the time operating capital (cash) is out of reach for use by your business. The speedier your cash-to-cash cycle, the fewer days your cash is unavailable for use in propelling your value stream. You can use this metric to gauge whether you are operating "lean" with regard to cash Chapter 9 Layout Strategy 1. Recognize key considerations of layout design-higher utilization of space, equipment, and people, improved work flow of info, ppl, improved morale, improved customer/client interaction, flexibility 2. Describe office layout considerations- position workers equip and spaces to provide movement 3. Describe retail layout considerations, including servicescapes- allocates shelf space and responds to customer behavior and servicescapes include the surroundings in which a service takes place 4. Describe warehousing and storage layout approaches-design that attempts to minimize total cost by addressing trade-offs btwn space and material handling 5. Describe a fixed-position layout-system that addresses the layout of requirements of stationary projects 6. Process layout-a layout that deals with low-volume, high-variety production and product layout- organized around products or families of similar low variety products 7. Design a process oriented layout-low volume high variety 8. work cell- arrangement of machines and personnel that focuses on making a single product or family of related products- three advantages- reduced work-in-process inventory, less floor space, reduced direct labor costs 9. objective of assembly line balancing-production delay is minimized Chapter 4 Forecasting 1. forecasting- art and science of predicting future events Relate forecasting to short (up to 1 year less than 3 months), medium (3 months to 3 years), and long range(3 years or more) 2. Recognize and describe forecasting time horizons (see above) 3. Qualitative-intuition, emotions, personal experience and values..quantitative-one or more mathematical models that rely on historical data. Recognize qualitative methods. Jury of executive opinion, Delphi methoddecision makers, staff personnel, respondents 4. List and define the four components of a time series- trend= gradual upward or downward movement of the data over time, seasonality=data pattern that repeats itself after a period of days, weeks, months, or quarters, cycles=patterns in the data that occur every several years, random variations=unusual situations 5. Calculate and interpret a forecast using a moving average-take first 3 months average (or 4 depending on moving average) 6. Calculate and interpret a forecast using exponential smoothing- new forcast=previous periods forecast+smoothing constant x(previous periods actual demand-previous period forecast) 7. Calculate and interpret mean absolute deviation (MAD)-sum of individual forecast errors and dividing by the number of periods and mean-squared error=average of the squared differences between the forecasted and observed values= Sum(forecast errors)^2 divided by n

Problem 7, page 203. Calculate also the crossover point between the Hp software and Sp software. CAD Software decision. (5)($3,000) + $200x = (6)($2,000) + $240x $15,000 + $200x = $12,000 + $240x 3,000 = 40x 75 = x = cross-over in no. of drawings Since the projected volume of 80 is above the crossover point, he should rent the HP Software.

4.1 (a)
(b)

374 + 368 + 381 374.33 pints 3

Weighted Week of August 31 September 7 September 14 September 21 September 28 October 5 Pints Used 360 389 410 381 368 374 Forecast 372.9 (c) 381 .1 = 38.1 368 .3 = 110.4 374 .6 = 224.4 372.9 Moving Average

Week of August 31 September 7 September 14 September 21 September 28 October 5 The forecast is 374.26.

Pints 360 389 410 381 368 374

Forecast 360 360 365.8 374.64 375.912 374.3296