MKT 364 Exam 3

What is process reengineering? what are its key aspects, what is its enabler, what type of processes are appropriate candidates and which are not? how does it differ from process improvement?

Fundamental change that yields dramatic results; Goal: restrict to core processes to gain competitive adv.; step by step, Target - high value, add processes,

How does corporate/business strategy shape the supply chain and supplier selection criteria?

Getting the right goods or services to the right place, at the right time, and in the desired condition at the lowest cost and highest return on investment

What is process improvement? What are its key aspects? What types of processes are an appropriate setting? How does it differ from process reengineering?

Improvement based on evolution -> stepwise or incremental; cost (down), quality (up), output (up); target - any process, CONSERVATIVE

What are the pressures to hold larger inventories?

Increased customer service, lowers ordering cost, setup cost; labor and equipment utilization, transportation costs

What are the 3 costs of logistics? What explains the general shape of the total cost curve associated with logistics?

Inventory costs; Transportation costs; Facilities costs; the general shape is associated with number of facilities and finding the EOQ

What the major sourcing issues and how might those alternatives create benefit for a firm?

Make-or-buy decision: choosing between obtaining products and services externally as opposed to producing them internally Outsourcing: transfer traditional internal activities and resources to outside vendors, efficiency in specialization, focus on core competencies

What are the 6 sourcing strategies and what are the advantages/disadvantages of each?

Many Suppliers: commonly used for commodity products, suppliers compete with one another Few Suppliers: buyer forms longer term relationships with fewer suppliers, cost of changing suppliers is huge, trade secrets and other alliances may be at risk Vertical integration: developing the ability to produce goods or services previously purchased, forward - towards the customer, backwards - towards supplier, risky in industries with rapid technological change Joint ventures: formal collaboration, enhance skills, reduce costs, challenge is to cooperation without diluting brand or conceding competitive adv. Kerietsu networks: middle ground between few suppliers and vertical integration, supplier becomes part of the company coalition, may extend through several levels of the supply chain Virtual companies: rely on variety of supplier relationships to provide services on demand, relationships may be short-or-long-term, exceptionally lean performance, low capital investment, flexibility, and speed

What is the crossover point/point of indifference, what are the components, what is the objective of performing a crossover point analysis

Point where two processes cost the same, FC of A, FC of B, Var cost per unit of A, Var cost per unit of B, Q = (FC of A - FC of B) / (VC of B - VC of A)

What are the 4 process types? where do they place in the matrix, main characteristics of each, Internally, what aspects of a process have to change so that a company could move its process to another region in the matrix

Process Focus: Low Volume, High Variety, generally skilled labor, Hospital, Machine shop Product focus: High Volume, Low variety, low skilled labor, specialized/automated equipment, Gasoline Repetitive focus: Mid Volume, Mid Variety, uses "modules" for limited customization, Car, Motorcycle Mass Customization: High Volume, High Variety, increases modules for customization, starts with product design, postponement = delayed final assembly, Computers

What is the ROP? How is it calculated?

ROP = (demand per day) * (lead time in days)

What are the types of inventories and what are their definitions?

Raw material: steel Finished good: car Work in process: car door, windows Maintenance/repair/operating: welding rods, robot arm

Inventory calculations: EOQ, TC, individual components of TC, and TBO

TBO = (EOQ / D) * working days/year

What is 3PL? Why might companies pursue it?

Third party logistics: may provide warehousing, assembly, testing, shipping, customs; outsourcing logistics can reduce inventory, costs, and improve delivery reliability and speed

What components are in total cost? How is it calculated? Formula will NOT be given on • exam

Total annual cost =(𝑄/2)𝐻 + (𝐷/𝑄)𝑆

What are the 6 modes of shipping? What are the advantages/disadvantages of each?

Trucking: chief adv. is flexibility Railroads: capable of large loads, little flexibility through containers Airfreight: fast and flexible for light loads, may be expensive Waterways: used when shipping cost is more important than speed, used for bulky, low-value cargo Pipelines: used for transporting oil, gas, and other chemical products Multimodal: combines shipping methods, international shipments

What are the dimensions of the product-process matrix

Variety of output (customization), Inefficient and wasteful (not competitive), volume

What are the pressures to hold smaller inventories?

inventory holding cost, cost of capital, storage and handling costs, taxes, insurance, theft

What is the bullwhip effect? What are its causes? What are potential remedies?

occurs when orders are relayed through the supply chain with fluctuations increasing at each step

What is the function of inventory?

stock material used to satisfy customer demand and support production, cost savings, hedge against inflation Costs of inventory - Objective is to MINIMIZE TOTAL COSTS

What is the objective of conducting a process analysis? What tools might be used to achieve that objective?

the tools used to identify opportunities for improvement, document current processes, evaluate processes to find performance gaps, redesign processes, and implement desired changes

What are the dimensions/quadrants of the service process matrix and what is the focus of each quadrant?

Mass Service: Lo customization, High labor; mail delivery, commercial banking Service Factory: low customization, low labor; college class, airline, concert Service shop: high customization, low labor; hospital Professional service: high customization, high labor; lawyer, doctor

When might it be appropriate to pursue forward/backward integration?

Backward - suppliers (raw materials) Forward - customers (finished goods)

The use of technology in processes changes the "traditional" position in the matrix, how? types of technology covered: additive manufacturing, vision systems, flexible manufacturing systems

Changes the variety and variance Additive manufacturing: produces products by adding material (3D printing), increased precision, productivity, and flexibility, reduced environmental impact Vision system: particular aid to inspection with modest cost, automated inspection Flexible manufacturing systems: robots, computer controls both the workstation and the material handling the equipment, enhance flexibility and reduced waste

What is an ABC analysis? What is the objective of such an analysis? What are the rough cutoff values of each category (in Qty and $)?

Divides inventory into 3 classed based on annual dollar volume; Class A: high annual dollar volume Class B: medium annual dollar volume Class C: low annual dollar volume Used to establish policies that focus on the few critical parts and not many trivial ones

What is the EOQ formula? Formula will NOT be given on exam

EOQ (Q*) = √ 𝟐𝑫𝑺 / H

What is the EOQ? What is the objective of calculating this quantity? What are its components (i.e., what data is needed)? What is the relationship between its • components at Q-star/EOQ?

Economic Order Quantity, finding how much to order for the lowest total cost, EOQ = SQRT of 2 * Annual Demand * Ordering Costs / holding costs

What are the 3 dimensions of distribution management?

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