Flashcards in Exam 2 Material 3, 5, 11, 14, 17 Deck (62)
What is a forecast?
a statement about the future value of a variable of interest
What are two important aspects of forecast?
1. expected level of demand
Explain time-series forecast
a time-ordered sequence of observations taken at regular time intervals
5 time series behaviors
4. irregular variations
5. random variation
a long-term upward/downward movement in data
wavelike variations lasting more than one year
uses a single previous value of a time series as the basis for a forecast
Explain moving average
averages a number of the most recent actual values in generating a forecast
Explain weighted moving average
most recent values in a time series are given more weight in computing a forecast
Explain exponential smoothing
based on previous forecast plus a percentage of forecast error
What is capacity?
The upper limit or ceiling on the load that an operating unit can handle
What is design capacity?
max output rate or service capacity of an operation, process or facility it is designed for
What is effective capacity?
design capacity-allowance such as personal time and maintenance
What is efficiency?
What is utilization?
build capacity in anticipation of future demand increases
build capacity when demand exceeds current capacity
Add capacity in relatively small increments to keep pace with increasing demand
Short term considerations relate to ____ in capacity requirements
long term considerations relate to ______ in capacity requirements
Name 3 challenges related to service capacity
1. need to be near customers
2. inability to store services
3. degree of demand volatility
Name strategies used to offset capacity limitations and that intended to achieve a closer match between supply and demand
pricing, promotion, discounts
What is a bottleneck operation?
an operation in a sequence of operations whose capacity is lower than that of the other operations
Explain economies of scale
if output rate is less than optimal level, increasing the output rate results in decreasing average per unit costs
Explain diseconomies of scale
if output rate is less than optimal level, increasing the output rate results in increasing average per unit costs
What is the break even point?
the volume of output at which total cost and total revenue are equal
What is aggregate planning?
production plan that will effectively utilize the organization's resources to satisfy demand
What are aggregated planners concerned with?
demand quantity and timing of demand
What does aggregate planning project levels of?
inventory, output, employment, subcontracting, backordering