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Chapter 14
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assemble-to-order operation
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manufacturing operation that divides manufacturing processes into separate parts or modules that are combined to create semi-customized products
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average aggregate inventory
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average overall inventory during a particular time period
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batch production
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manufacturing operation that produces goods in large batches in standard lot sizes
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component parts inventories
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the basic parts used in manufacturing that are fabricated from raw materials
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continuous improvement
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an organization’s ongoing commitment to constantly assess and improve the processes and procedures used to create products and services
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continuous-flow production
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manufacturing operation that produces goods in a continuous, rather than a discrete, rate
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customer focus
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an organizational goal to concentrate on meeting customers’ needs at all levels of the organization
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customer satisfaction
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an organizational goal to provide products or services that meet or exceed customers’ expectations
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dependent demand system
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inventory system in which the level of inventory depends on the number of finished units to be produced
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economic order quantity (EOQ)
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a system of formulas that minimizes ordering and holding costs and helps determine how much and how often inventory should be ordered
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finished goods inventories
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the final outputs of manufacturing operations
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holding cost
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the cost of keeping inventory until it is used or sold, including storage, insurance, taxes, obsolescence, and opportunity costs
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independent demand system
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inventory system in which the level of one kind of inventory does not depend on another
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inventory
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the amount and number of raw materials, parts, and finished products that a company has in its possession
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inventory turnover
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the number of times per year that a company sells or “turns over” its average inventory
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ISO 9000
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a series of five international standards, from ISO 9000 to ISO 9004, for achieving consistency in quality management and quality assurance in companies throughout the world
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job shops
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manufacturing operations that handle custom orders or small batch jobs
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just-in-time (JIT) inventory system
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inventory system in which component parts arrive from suppliers just as they are needed at each stage of production
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kanban
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a ticket-based system that indicates when to reorder inventory
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line-flow production
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manufacturing processes that are pre-established, occur in a serial or linear manner, and are dedicated to making one type of product
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make-to-order operation
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manufacturing operation that does not start processing or assembling products until a customer order is received
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make-to-stock operation
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manufacturing operation that orders parts and assembles standardized products before receiving customer orders
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manufacturing flexibility
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degree to which manufacturing operations can easily and quickly change the number, kind, and characteristics of products they produce
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materials requirement planning (MRP)
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a production and inventory system that determines the production schedule, production batch sizes, and inventory needed to complete final products
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multifactor productivity
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an overall measure of performance that indicates how much labour, capital, materials, and energy it takes to produce an output
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operations management
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managing the daily production of goods and services
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ordering cost
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the costs associated with ordering inventory, including the cost of data entry, phone calls, obtaining bids, correcting mistakes, and determining when and how much inventory to order
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partial productivity
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a measure of performance that indicates how much of a particular kind of input it takes to produce an output
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productivity
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a measure of performance that indicates how many inputs it takes to produce or create an output
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project manufacturing
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manufacturing operations designed to produce large, expensive, specialized products
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quality
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a product or service free of deficiencies, or the characteristics of a product or service that satisfy customer needs
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raw material inventories
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the basic inputs in a manufacturing process
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service recovery
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restoring customer satisfaction to strongly dissatisfied customers
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setup cost
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the costs of downtime and lost efficiency that occur when changing or adjusting a machine to produce a different kind of inventory
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stockout
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situation in which a company runs out of finished product
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stockout costs
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the costs incurred when a company runs out of a product, including transaction costs to replace inventory and the loss of customers’ goodwill
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teamwork
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collaboration betw een managers and nonmanagers, across business functions, and between companies, customers, and suppliers
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total quality management (TQM)
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an integrated, principle-based, organization-wide strategy for improving product and service quality
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variation
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a deviation in the form, condition, or appearance of a product from the quality standard for that product
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work-in-process inventories
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partially finished goods consisting of assembled component part
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