BA 360 Exam 3 Cheat Sheet
COMPREHENSION
CH 6: Implications of Quality: company reputation, product liability, global implications. Quality improves profitability through
sales gains and reduced costs. Edwards Deming: Quality improvements by reducing uncertainty and variability. Higher quality
leads to higher productivity. 14 points/ plan, do, study, act. Joseph Juran: Wrote Quality Control manual. Quality Trinity: Quality
planning (budget), quality control (cost control), quality improvement (cost reduction). Philip Crosby: Wrote Quality is Free.
Quality means conformance to requirements. No such thing as quality problem. Doing job right first time is always cheaper. Only
performance standard is zero defects. Cost of Quality: Costs associated with avoiding poor quality or those incurred as a result of
poor quality. Appraisal Costs: Costs of activities designed to ensure quality. Prevention Costs: All quality training, planning,
customer assessment, and quality improvement costs to prevent defects. Failure Costs: Costs incurred by defective parts or
faulty services. Internal Failure Costs: Costs incurred to fix problems that are detected before the item is delivered to the
customer. External Failure Costs: Costs incurred to fix problems detected after the item is deliver to the customer. ISO 9000:
International standards on quality management. Total Quality Management: Management of an entire org so it excels in all
aspects that are important to the customer. Manufacturing: Defects per Million Opportunities (DPMO). Should be no more than
3.4 defects per million opportunities. Service: Errors per Million Opportunities (EPMO). 85% of all quality problems are due to
process and material. Just-in-Time: Designed to produce or deliver goods just when they are needed. Improves and cuts cost of
quality; less inventory. Pareto Chart: Graph that identifies and plots problems in descending order of frequency. 80% of
problems attributed to 20% of causes. Common Variation: Variation that is inherent in the process itself. Assignable Variation:
Variation that is caused by factors that can be identified and managed. Type 1 Error (producers risk): Concluding a process is not
in control when it really is. Type 2 Error (consumers risk): Concluding a process is in control when it really isn’t. Continuous
Metric: Calculated from data that is measured as the degree of conformance (length, height, weight, time). Discrete Metric:
Calculated from data that is counted (# of flaws, years, students).
MOD B: Essential Conditions for LP: Seek to maximize or minimize some quantity, presence of restrictions or constraints,
alternative courses of action to chose from, objectives and constraints must be expressed in terms of linear equations. Decision
Variables: Controllable input variable that represents key decisions a manager must make to achieve objectives, must be greater
than 0 (x1, x2, x3). Objective Function: Evaluation criteria (maximizing profit or minimizing cost). Feasible Solutions: Solutions
that satisfy all constraints. Optimal Solution: Feasible solution that optimizes objective function. Binding Constraint: Constraint
that forms the optimal corner point of the feasible solution space. Range of Optimality: Range of values for the coefficients in
the objective function over which the solution of the decision variables remain the same. Range of Feasability: Range of values
for the right-hand-side of a constraint over which the shadow price remains the same. Shadow Price: Amount by which the value
Internal: Activities that can only be done while the machine is stopped. External: Activities that don’t require stopping the
machine. Group Technology: Similar parts are grouped into families and processes required to make the parts are arranged in a
manufacturing cell. Total Productive Maintenance: Ensuring that operating systems will perform their intended function reliably.
Works to prevent and predict equipment failures. Benefits of lean systems: increased productivity and equipment utilization,
decreased lead times, inventory, scrap, space requirements, need for indirect labor.