Business Management Operations Flashcards

Question 1

What is the basic purpose of operations management within a business?

Accepted Answer

Operations management is the discipline that designs, directs, and improves the processes a business uses to create goods and services. Its central task is converting inputs such as labor, materials, equipment, and information into outputs that meet customer needs efficiently and reliably.

Question 2

What is the difference between goods and services in operations terms?

Accepted Answer

Goods are tangible products that can be stored before sale, while services are intangible activities delivered at the time the customer receives them. Because services are often produced and consumed at once, operations managers must plan capacity around demand and cannot easily build inventory.

Question 3

What does the term productivity mean in an operations context?

Accepted Answer

Productivity is the ratio of outputs produced to inputs consumed over a period of time. Managers raise productivity by producing more output with the same resources or by using fewer resources to produce the same output. Higher productivity usually lowers unit cost and frees resources for other uses.

Question 4

What is meant by a transformation process in operations management?

Accepted Answer

A transformation process is the system of activities that changes inputs into outputs with greater value than the inputs alone. Transformation can be physical, such as assembling a car, locational, such as shipping goods to a store, or informational, such as processing an insurance claim.

Question 5

What is the difference between effectiveness and efficiency?

Accepted Answer

Effectiveness means doing the right things, meaning the outputs achieve the goals customers and the organization care about. Efficiency means doing things well with minimal waste of time, money, and materials. A process can be efficient yet ineffective if it produces exactly what nobody wants.

Question 6

What is a value chain and why does it matter to operations?

Accepted Answer

A value chain is the full set of activities a firm performs to bring a product or service from concept through delivery and support. It matters to operations because each link, from sourcing to after-sales service, adds value or cost, and managers can find improvements by examining how the links connect.

Question 7

What is the difference between a make-to-stock and a make-to-order strategy?

Accepted Answer

A make-to-stock strategy produces goods in advance based on forecasts and holds them as finished inventory until customers buy. A make-to-order strategy begins production only after a customer order arrives, which reduces inventory but usually lengthens delivery time. Many firms combine both approaches, using stock for common items and orders for custom ones.

Question 8

What are the main process types used in manufacturing?

Accepted Answer

The main process types are project, job shop, batch, assembly line, and continuous flow, arranged roughly from low volume with high variety to high volume with low variety. Each type trades flexibility against cost efficiency, so a firm choosing a process should match it to product volume and variation.

Question 9

What is a process flow diagram used for?

Accepted Answer

A process flow diagram is a visual map showing the sequence of steps, decisions, inputs, and outputs in a process. Analysts use it to spot unnecessary steps, handoffs, and delays, creating a shared picture that teams can examine and improve together.

Question 10

What is cycle time and how is it different from throughput time?

Accepted Answer

Cycle time is the interval between completing successive units at a workstation or process, which determines the pace of output. Throughput time is the total elapsed time a single unit spends moving through the entire process, including waiting. Managers reduce throughput time mainly by cutting waiting, which often makes up most of it.

Question 11

What is a bottleneck, and why does it limit the output of a whole process?

Accepted Answer

A bottleneck is the step with the lowest effective capacity in a process, so it sets the maximum rate at which the entire process can deliver output. Work upstream of the bottleneck piles up as queues, while downstream steps sit partly idle, so improving any other step does little for total output.

Question 12

What is value-added time, and how does it differ from non-value-added time?

Accepted Answer

Value-added time is the portion of process time spent on activities that change the product or service in a way the customer is willing to pay for. Non-value-added time covers waiting, inspection, rework, moving, and storage, which consume resources without increasing what the customer receives.

Question 13

What is process layout, and what are the common layout types?

Accepted Answer

Process layout is the physical arrangement of workstations, equipment, and storage. Common types include functional layout, where similar machines are grouped together; product layout, where equipment follows one product's sequence; cellular layout, where machine groups serve families of similar parts; and fixed-position layout, where the product stays in place.

Question 14

What is a Pareto chart and when would an analyst use one?

Accepted Answer

A Pareto chart is a bar graph that orders problem categories from most to least frequent, often with a cumulative line. Analysts use it to identify the vital few causes responsible for most defects or delays, so improvement effort targets the largest sources first.

Question 15

How does a cause and effect diagram help teams analyze a process problem?

Accepted Answer

A cause and effect diagram, also called a fishbone diagram, organizes possible causes of a problem into categories such as methods, machines, materials, people, measurement, and environment. Teams brainstorm within each category, which encourages broad thinking before they test the most likely causes with data.

Question 16

What is the purpose of a time study, and what does standard time include?

Accepted Answer

A time study measures how long a trained worker takes to complete a defined task, usually with a stopwatch or video, to set a baseline for planning and pay. Standard time is the normal time for a qualified worker at a sustainable pace, adjusted with allowances for fatigue, personal needs, and unavoidable delays.

Question 17

What is inventory, and what are the main reasons businesses hold it?

Accepted Answer

Inventory is the stock of raw materials, work in process, and finished goods a business holds at a given time. Firms hold it to buffer against demand uncertainty, supply delays, seasonal patterns, and to take advantage of quantity discounts or smooth production.

Question 18

What are the three main categories of inventory by stage of production?

Accepted Answer

The three main categories are raw materials, which are inputs not yet processed; work in process, which is partly finished goods moving through production; and finished goods, which are completed products waiting for sale or shipment. Each category ties up cash and requires different storage and tracking methods.

Question 19

What is the economic order quantity, and what two costs does it balance?

Accepted Answer

The economic order quantity is the order size that minimizes the combined annual cost of ordering and holding inventory. It balances ordering costs, which fall as order size grows because fewer orders are placed, against holding costs, which rise as larger average stock sits in storage.

Question 20

What is the reorder point, and how is it calculated in a basic model?

Accepted Answer

The reorder point is the inventory level at which a new order should be placed so that stock arrives before it runs out. In a basic model with constant demand and lead time, it equals average daily demand multiplied by the lead time in days, often with safety stock added for uncertainty.

Question 21

What is ABC analysis, and how do managers use it?

Accepted Answer

ABC analysis sorts inventory items into three groups by annual dollar value, with A items representing a small share of units but most of the value. Managers give A items the tightest control, frequent review, and careful forecasting, while C items receive simpler controls such as periodic counts or larger order quantities.

Question 22

What is the bullwhip effect in a supply chain?

Accepted Answer

The bullwhip effect is the amplification of demand variability as orders move upstream from retailers to wholesalers, manufacturers, and suppliers. Small changes in customer demand can produce large swings in orders at each upstream stage, often because of forecast updates, batch ordering, price fluctuations, and shortage gaming.

Question 23

What is the difference between push and pull production systems?

Accepted Answer

A push system produces and moves goods according to forecasts and schedules, regardless of current downstream demand. A pull system releases work only when a downstream step signals a need, which limits work in process and exposes problems quickly. Kanban cards are a common tool for signaling pull.

Question 24

What is safety stock, and what factors increase the amount a firm should hold?

Accepted Answer

Safety stock is extra inventory held above expected demand during lead time to protect against unexpected demand or late supply. The amount rises with greater variability in demand, longer or less reliable supplier lead times, and higher service level targets, since a firm wanting fewer stockouts must carry more buffer.

Question 25

What does the term quality mean in operations management?

Accepted Answer

In operations management, quality means how well a product or service meets or exceeds customer requirements and expectations. It is commonly described through dimensions such as performance, reliability, durability, serviceability, aesthetics, and perceived value, which may matter differently to different customers.

Question 26

What is the difference between quality of design and quality of conformance?

Accepted Answer

Quality of design refers to how well a product's intended features and specifications meet customer needs and price targets. Quality of conformance refers to how consistently production delivers products that match those specifications, with no defects or variation. A product can be well designed yet poorly made, so both matter.

Question 27

What is statistical process control, and what is its main purpose?

Accepted Answer

Statistical process control uses sample data and control charts to monitor a process and detect whether it is operating within expected variation. Its main purpose is to catch unusual variation early, so workers can correct a process before it produces defective output rather than inspecting defects after the fact.

Question 28

What is the difference between common cause and special cause variation?

Accepted Answer

Common cause variation is the natural, random variation built into a stable process, and reducing it usually requires changing the system itself. Special cause variation comes from an identifiable, assignable source such as a worn tool or a new untrained operator, and it can often be found and removed locally.

Question 29

What is the cost of quality, and what four categories does it include?

Accepted Answer

The cost of quality is the total expense a firm incurs to prevent, detect, and correct defects, including failure costs. The four commonly taught categories are prevention costs, such as training; appraisal costs, such as inspection; internal failure costs, such as scrap; and external failure costs, such as warranty claims and returns.

Question 30

What is Six Sigma, and what is its core approach?

Accepted Answer

Six Sigma is a data-driven improvement methodology that aims to reduce process variation and defects to very low levels. Its core approach, often summarized as DMAIC, moves through defining the problem, measuring current performance, analyzing causes, improving the process, and controlling the gains so they last.

Question 31

What is total quality management, and what principles does it emphasize?

Accepted Answer

Total quality management is a management philosophy that makes quality the responsibility of everyone in the organization, not only the inspection department. Its principles commonly include customer focus, continuous improvement, employee involvement, process-based management, and decisions based on data. Leaders set direction, while front-line workers identify and solve problems.

Question 32

How does acceptance sampling differ from inspecting every unit?

Accepted Answer

Acceptance sampling inspects a random sample from a lot and uses the results to accept or reject the entire lot, while 100 percent inspection checks every unit. Sampling is cheaper for large lots and essential for destructive tests, but it carries risk that defective units pass, a risk full inspection reduces at higher cost.

Question 33

What is capacity in operations management, and how is it usually measured?

Accepted Answer

Capacity is the maximum rate at which a process, facility, or system can produce output over a period under normal conditions. It is measured in units per hour, shifts, or other output measures, and firms distinguish design capacity, the theoretical maximum, from effective capacity, which accounts for breaks, maintenance, and scheduling losses.

Question 34

What is utilization, and how is it calculated?

Accepted Answer

Utilization is the percentage of available capacity that is actually used to produce output during a period. It is calculated by dividing actual output or time used by the capacity available, then multiplying by 100, so a machine running 6 hours of an 8 hour shift has 75 percent utilization.

Question 35

What is efficiency in the context of capacity, and how does it differ from utilization?

Accepted Answer

Efficiency compares actual output with standard output expected for time worked, showing how well the process performs while running. Utilization compares time or output used with total available capacity, so it shows how much capacity is used. A process can be highly efficient but poorly utilized if it is idle much of the shift.

Question 36

What is takt time, and why do lean producers use it?

Accepted Answer

Takt time is the available production time divided by customer demand over the same period, giving the pace at which units must be completed to match sales. Lean producers use it to design balanced workstations, so each station's cycle time aligns with customer demand and no station is overloaded or idle for long.

Question 37

How does a first come first served rule compare with shortest processing time for scheduling?

Accepted Answer

First come, first served processes jobs in arrival order, which is simple and fair but can leave short jobs waiting behind long ones. Shortest processing time selects the job with the smallest processing time next, which generally reduces average flow time, though it can delay long jobs and requires reliable time estimates.

Question 38

What is a Gantt chart, and what does it show in scheduling?

Accepted Answer

A Gantt chart is a horizontal bar chart that shows tasks or jobs plotted against time, with each bar's length representing duration and its position showing start and end times. It shows scheduled activities, dependencies, and overlaps at a glance, which helps managers spot conflicts, idle resources, and whether a project is on track.

Question 39

What is the difference between a leading and a lagging performance indicator?

Accepted Answer

A leading indicator predicts future performance by measuring activities that drive results, such as training hours completed or preventive maintenance performed on schedule. A lagging indicator reports results after they occur, such as monthly revenue, total defects, or customer complaints, so it confirms outcomes but gives less time to react.

Question 40

What is on-time delivery, and why is it a useful operations metric?

Accepted Answer

On-time delivery is the percentage of orders shipped or delivered by their promised date, calculated by dividing on-time orders by total orders and multiplying by 100. It is useful because it links operations to customer satisfaction and reveals problems in scheduling, capacity, and supply, though managers should also track how late orders are.

Business Management Operations Flashcards

1Operations management fundamentals

2Process design and analysis

3Inventory and supply chain

4Quality management principles

5Capacity, scheduling, and performance

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