Module 7 Part B: Replenishment and Order Management

Logistics Capacity Plan

A DRP output to master scheduling is the ______, where: 1. Planning is at the item level as opposed to the product family level. 2. Planning is often on a weekly rather than monthly basis. 3. The timing of transportation capacity and warehouse space availability that is determined on a monthly basis during LRRP might not align with week-to-week availability changes during the master production schedule planning horizon. 4. Last-minute changes in planned order releases from material requirements planning (MRP) require quick logistics solutions to problems of resource availability and costs.

Time-phased order point

A crucial concern for planners is when to decide to place an order. There are a number of reorder methodologies that can be adopted. One of the more common methods used by distribution requirements planning is the _______: MRP-like time planning logic technique for independent demand items, where gross requirements come from a forecast, not via explosion. When used in distribution environments, the planned order releases are input to the master schedule dependent demands.

Base Stock System

A method of inventory control that includes most of the systems in practice as special cases. In this system, when an order is received for any item, it is used as a picking ticket, and duplicate copies, called replenishment orders, are sent back to all stages of production to initiate replenishment of stocks.

Aggregate Plan

A plan that includes budgeted levels of finished goods, inventory, production backlogs, and changes in the workforce to support the production strategy. Aggregated information (e.g., product line, family) rather than product information is used.

Planned orders

A planned resupply order release schedule window is another output. Planners must release _____ to become actual resupply orders for any items that have a value greater than zero.

Square Root Law

Another method, called the ______, estimates safety stock (SS) requirements when an organization is considering increasing or decreasing the total number of distribution centers (DCs). In general, adding DCs will decrease the safety stock requirement per DC but will increase the total level of safety stock overall, since this is what will be required to maintain the same customer service level based on root mean squared error calculations (a variant of standard deviation used to calculate safety stock levels based on the forecast error rate). The method assumes that the total level of demand will remain the same. The square root law is calculated as follows (using an example of moving from one to three DCs and a current level of 100 units of safety stock providing the targeted level of customer service when one DC is used).

Decrease Increase

Another method, called the square root law, estimates safety stock (SS) requirements when an organization is considering increasing or decreasing the total number of distribution centers (DCs). In general, adding DCs will _____ the safety stock requirement per DC but will ____ the total level of safety stock overall, since this is what will be required to maintain the same customer service level based on root mean squared error calculations (a variant of standard deviation used to calculate safety stock levels based on the forecast error rate).

Logistics Capacity Planning

As a result, _____ is a much more dynamic process than LRRP and is driven by current operations. For example, there is a heavy dependence on the use of DRP software's planning and simulation capabilities to be able to: 1. Maximize the use of truckload capacity 2. Expedite shipments to replace those that are canceled or delayed 3. Plan the use of resources over a horizon of several periods to make optimal use of transportation and storage resources 4. Review warehouse space availability to accommodate changes in production schedules 5. Constantly assess the financial impacts of transportation and warehousing decisions.

Reorder Point Economic Order Quantity ROP/EOQ Systems

At the ______, an order matching the _______ quantity can be placed. _____ systems are decentralized, so decisions are made at the distribution center level. An advantage is that the decisions are made closest to customer demand, which should be more accurate and in tune with customer desires. A disadvantage is that the central organization may receive only limited information. The central organization may not know why orders were placed (e.g., actual demand versus additional safety stock) and may not receive advance notice of any modifications to orders

Pull System

Authority to initiate replenishment: At the warehouse level inventory planning: at warehouse level customer service: measured at warehouse level reorder point: standard order point, min/max, periodic review; at signal - customer order pulling from stock, kanban signal system-wide safety stock: High; safety stock carried at each location and level in the distribution network organizational implications: downstream inventory requirements not visible

Make to Stock

Common measurements of customer service for _____ organizations are Percent of items demanded in a period that were fulfilled from stock Percent of demand satisfied from stock during the reorder cycle (This gives the organization an idea of exposure to stockouts.) Percent of line items in an individual customer order that have been filled out of inventory Percent of customers for whom all line items were filled from inventory.

Service

Create customer value through agile and flexible operations to configure mix of products and services. Meet unique customer needs. Metric: Order fulfillment cycle time

Exception Reporting Exceptions

DRP output: ______: The results of DRP can be viewed by planners in online displays, reports, or dashboards. Depending on the sophistication of the DRP report, the volume of output can be overwhelming. Selecting the _____ decreases the volume of output and allows planners to focus their attention where it is most needed.

Sales and Operations Plan Master Scheduling

DRP outputs to the _______ include: 1. product family-level channel demand 2. logistics resource requirements plan. DRP outputs to ________ include: 1. item-level channel demand 2. logistics capacity plan.

Multi-echelon

Distribution requirements planning (DRP) is widely used as a scheduling tool in ______ inventory systems to solve the finished goods dispatch problem. Consumer demand is the ultimate factor that drives the DRP solution. Each individual location within the _____ system receives an efficient product flow within the distribution network. The steps involved in the process are as follows: Step 1: Generate the DRP for the selected item from all distribution centers (DCs). Step 2: Use the bill of distribution file to determine the relationship of each DC in the channel to its supplying facility. Step 3: All planned resupply orders for the DCs are loaded directly into the gross requirements of the production plant.

Safety Stock

Distribution requirements planning (DRP) systems can deal with uncertainty through the use of _____. _______protects against instances of unplanned variability in supply and demand. It plays the role of a buffer to prevent the organization from experiencing stockouts. The quantity of ______- is determined by the organization's customer service goals. The higher the goals, the greater the amount of _______ an organization will carry.

Engineer to Order Make to Order

For ______ or ______ environments, the customer service expectations revolve around two questions: Did the organization meet or not meet the promised delivery date? What was the time from order placement until order delivery (including manufacturing and finishing lead time)?

Customer Service

From the supplier's standpoint, _____ measures indicate the distribution system's ability to maintain adequate levels of stock through effective replenishment planning. Maintaining targeted levels is a critical success factor for distribution requirements planning (DRP) so that inventory investment stays at the minimum level required for the given level of ______. These measures, as a group, indicate how well DRP is doing and how reliable it is at ensuring that adequate quantities of the right quality of product are available at the right time and the right place. Some of these measures also apply to the efficiency of warehousing and transportation operations.

Fast Flow Response

Fulfill the delivery requirements of each customer in a timely manner by having agile and flexible channels, driving waste out of processing time, responding to orders rather than forecasts through lean operations. Metric: Order fulfillment cycle time

Future SS = Current SS X sqrt (# DCs in future/ # DCs in present) Safety Stock Per DC = Current SS X sqrt ( new avg. demand per DC / current avg. Demand per DC)

Future Safety Stock = Safety Stock Per DC =

Customer Service

High levels of ______ depend on the coordination of supply chain activities, and distribution is just one link in the chain. Distribution's contribution to the _____ objectives of an organization's order delivery performance can be measured by its role in the: 1. Percentage of orders completely satisfied from stock 2. Percentage of units required filled from stock 3. Percentage of units required delivered on time 4. Percentage of item stockout 5. Percentage of stock cycles without shortages 6. Percentage of months without stockout.

Transportation Management

If the organization decides to own and operate its own fleet, _____ measures consist of: 1. Shipping cost factors Cost per ton-mile; average length of haul; percent less-than-truckload and truckload versus plan; average weight of haul 2. Mix of transport modes Actual percentage of spending by transport modes versus budgeted (land, sea, air) 3. Equipment utilization Empty backhaul mileage percent; second- and third-shift vehicle utilization percent; miles per trailer 4. Routing efficiency Changes over time for customer stops per local driver hour; mileage and time incurred for standard routes 5. Labor efficiency Ton-miles per driver hour worked; weight handled per employee hour 6. Other costs Changes over time for total vehicle operating costs, fuel costs per mile, cargo insurance, etc.

Inventory Accuracy

Improve ______ with improved supplier product labeling, accurate case counts, and correct SKU (stockkeeping unit) labeling.

Stocking/Picking/Packing

Improve velocity of _______ within the DC when the supplier uses best practices such as: Palletized unit loads Consistent use of bar coding, standard radio frequency identification tags, etc. Use of an inventory dashboard to better manage the DC's aggregate inventory and space Commitment to complete, damage-free, and on-time delivery of every order, accompanied by an accurate packing list.

Forecasting Bill of Distribution

In DRP, ______ is used to predict demand for items. The goal is to time replenishment to mirror demand. DRP uses the _____ to trace the inventory flow channel for every item sold. The DRP record is fully visible by manufacturing so they can plan their orders with more stability. The record also enables cross-shipping of products between warehouses. Visibility allows local information to be used in developing forecasts.

Push System

In a ______, decision points occur at every reorder. How much should be purchased? How often? A ______ generally has lower costs because shipments are planned globally and stored centrally. However, service levels can suffer if central planning is too far removed from the actual demand. The key to successfully executing a ____ is effective central inventory planning. This type of arrangement can work for goods that are in demand and that may need to be rationed out because capacity is difficult to increase.

Reduction of Operating Variance

In a manufacturing and distribution environment, eliminate variance in any sphere as it affects productivity. metric: perfect order fulfillment

Base Stock

In the ______ model, demand is refilled basically as lot-for-lot to replenish the _____ level. If one item is sold, one additional item is ordered in the next shipment. Warehouse _____ quantities are established to include the maximum expected demand during the lead time to replenish the inventory sold. As a result, the ____ model is most beneficial for supply chains with short replenishment lead times and a wide variety of items to replenish, such as items at a hardware store. ____ decisions may be fully automated by automating the replenishment orders sent back up the supply chain, possibly as part of the point-of-sale system. This leads to decisions being made based on actual data without any amplification (i.e., avoids the bullwhip effect). If central supply does not have sufficient inventory, they choose how to ration out the supply, so in this event, it operates as a push system.

Centralized Inventory Control

Inventory decision making for all stockkeeping units exercised from one office or department for an entire company.

Transportation

KPIs for external ______ services include: 1. On-time delivery—the number of shipments delivered in a timely manner 2. Quality of service—the ability of shipments to meet customer expectations 3. On-time loading—the number of times vehicles arriving at a location at the scheduled appointment time 4. Delivery consistency—the comparison of promised delivery times with actual delivery times 5. Claims for loss and damage—the comparison of the number of claims against the number of actual deliveries 6. Freight bill accuracy—the comparison of the number of accurate freight bills against the total number of freight bills

Minimum Inventories

Maintain levels of inventory necessary to achieve sales and revenue objectives and the supply chain's commitment to customer service. Continually reduce inventory to achieve the lowest cost of logistics. Increase inventory turn velocity. metrics: Cash-to-cash cycle time

Distribution Requirements Planning

Maintaining satisfactory inventory levels in a complex network is difficult to achieve. Managing the ebb and flow of inventory levels across a distribution network is challenging. ______ provides key data to match customer demand with inventories at different stages in the physical distribution system and with the products being manufactured. Using _____, inventory is managed intelligently to ensure maximum efficiency, adequate levels, fulfillment of planned quantities, and adequate timing for replenishment.

Product Life Cycle Support

Meet regulatory requirements and consumer expectations for handling, or reverse logistics, of the challenges posed by product recalls and returns as well as recycling and refurbishment. metrics: Upside supply chain flexibility; upside supply chain adaptability

Metrics

Most organizations build a scorecard using their selected KPIs both to track performance internally and to share that performance with partners so they can self-improve. Every movement in a distribution network can be tracked, and the decision regarding which ____ to track rests with management. However, the most important ______ can be categorized into the following areas: Service Fast Flow Response Reduction of Operating Variance Minimum Inventories Transportation Reduction Quality Management Product Life Cycle Support

Warehouse Operations

Most performance measurements for _____ are focused on decreasing costs and variances in performance and increasing levels of reliability, flexibility, and responsiveness. There are primarily three performance measurement objectives for ______: 1. Providing the quantitative basis for performance standards for warehouse activities 2. Tracking performance against standards 3. Identifying problems

Days of Supply

One method of determining safety stock levels is to use the predetermined number of _____ contained in the master record. ______: 1) Inventory-on-hand metric converted from units to how long the units will last. For example, if there are 2,000 units on hand and the company is using 200 per day, then there are 10 _____. 2) A financial measure of the value of all inventory in the supply chain divided by the average daily cost of goods sold rate.

Distribution Requirements Planning

One of the keys to managing field inventories is visibility. ____ allows for the incorporation of data into the master production schedule system, which extends manufacturing planning and control (MPC) visibility into the distribution system. The DRP system then collects detailed information from the field/customers, summarizes it, and passes it back to the MPC system.

Logistics Resource Requirements Plan (LRRP)

One of the outputs of distribution requirements planning is the _______. The _____ determines intermediate- to long-term distribution resource requirements generated by the inventory replenishment plan and the sales and operations plan (S&OP). This includes: 1. Reviewing the aggregate channel inventory plan (linked to S&OP) 2. Determining the need for distribution resources for the channel inventory plan 3. Providing inputs to S&OP on resource adequacy.

Transaction Control Points

One way inventory control is established is through the use of ______. These control points document the path inventory takes, from the time it enters the organization until it is shipped to the customer. For this to be effective, managers must document inventory flow through the organization, making note of each point where the inventory flows through the distribution channel

Bottom-UP Replanning

One way that pegged data is used is in ______: In MRP, the process of using pegging data to solve material availability or other problems. This process is accomplished by the planner (not the computer system), who evaluates the effects of possible solutions. Potential solutions include compressing lead time, cutting order quantity, substituting material, and changing the master schedule.

DRP

Organizations that spend the time and energy to design or select robust ____ systems see the following benefits: 1. Forecasts are improved due to higher visibility into distribution network. 2. Material supply and demand are closely matched. 3. Inventory can be located and deployed from specific locations to best meet customer service requirements. 4. Quick responses to changes in the market can be made by relocating products to areas where they are in demand. 5. Planners can use the tools from MRP systems to manage inventory items, such as changing lot sizing. 6. The systems assist management in planning for future requirements in the field.

Bills of Distribution

Organizations that use ______ or a distribution network structure are able to: 1. Provide inventory planners with visibility to supply and demand relationships in the distribution channel 2. Clearly establish the relationship between inventory stocking locations at different levels, such as central supply, regional DCs, and satellite DCs 3. Define the resupply path for each item in each stocking location 4. Enable the DRP software application to begin low-level coding at the lowest stocking location in the distribution channel and progress up through each level to the appropriate sources of channel supply.

Quality management

Prevent defects such as incorrect inventories, invalid orders, and late shipments, which require lengthy and costly processes to reverse. metrics: Total cost to serve; perfect order fulfillment

EOQ/ROP

Some organizations use _______ (Q, R) for managing field inventories. As a result, resupply decisions are made independently at the local level. When an item hits the reorder point, the shipping quantity is ordered; the assumption is constant usage. This method produces lumpy demand at the manufacturing facility and no visibility to that demand. It typically shows up as a transfer order as soon as the reorder point is reached at the distribution center.

Order Cycle

The _____ has a number of steps that can be grouped into stages. Note that various organizational functions may be involved in performing these steps, from customer service, to logistics, to accounts receivable. The stages of the ______ are: 1. Order Transmittal 2. Order Processing 3. Order Picking and Packing 4. Order Delivery

Logistics Resource Requirements Plan

The _____ is concerned with four resources: 1. inventory investment 2. transportation planning 3. warehouse storage space 4. labor and equipment. The major inputs are the mid-range channel replenishment forecast and the aggregate channel inventory replenishment plan.

Bill of Distribution

The ______ traces the inventory flow channel for every item sold. The _____ provides the location and flow information that supports the main distribution planning functions: 1. Logistics resource requirements planning (LRRP) in conjunction with sales and operations planning 2. Logistics capacity planning in master scheduling and DRP in conjunction with master scheduling

Time-phased order point method

The _______ allows planners to make amendments to account for dependent demand. provides planned shipment data; Q, R does not. does not assume or require constant consumption. can integrate actual order data, not just planned shipment data.

Forecast Reliability Demand Lead Time

The challenge in calculating safety stock is _____. If the forecast error rates are not stable, any safety stock quantities calculated based on these error rates will be too high in some periods and too low in others. Frequent stockouts or overstocks can result in a loss of credibility for the method. It is important to remember that safety stock is there to protect the organization against fluctuations in _______ and _____, buffering against unexpected occurrences.

Distribution Center Planned Shipments

The demand from each ______ is translated into the forecast requirements for each period. (This replaces the gross requirement in the MRP.) The forecasted requirements are subtracted from the distribution center's on-hand inventories and planned receipts. Net requirements are generated as safety stock levels are reached. After offsetting for lead times, _____ are generated (similar to the planned order releases in MRP) in the shipping quantity.

Distribution Requirements Planning (DRP)

The function of determining the need to replenish inventory at branch warehouses. A time-phased order point approach is used where the planned orders at the branch warehouse level are "exploded" via MRP logic to become gross requirements of the supplying source. In the case of multilevel distribution networks, this explosion process can continue down through the various levels of regional warehouses (master warehouse, factory warehouse, etc.) and become input to the master production schedule. Demand on the supplying sources is recognized as dependent, and standard MRP logic applies. 2) More generally, replenishment inventory calculations, which may be based on other planning approaches such as period order quantities or "replace exactly what was used," rather than being limited to the time-phased order point approach.

Inventory Control

The more accurate ____ can be, the less financial drain inventory will be on the organization. Inaccurate _____ leads to more missed shipments, backorders, customer complaints, lost sales, and customer turnover.

Distribution Requirements Planning

The purposes of _______ include: 1. Enabling data capture down to the local level, which facilitates forecast modifications and current inventory reporting 2. Providing data for distribution facility management and consistent communications throughout the supply chain. In ______ forecasts are needed at two levels: 1. The product family level by distribution channel during the sales and operations planning (S&OP) process 2. The item level during the master scheduling process

Safety Stock Per DC

The same formula can be adapted to determine the safety stock per location given information on average demand per DC. _______ = Current SS X sqrt ( new avg. demand per DC / current avg. Demand per DC)

Transportation Management

The second area that influences distribution efficiency is _________. Effective performance metrics enable managers to analyze regions for increased productivity and competitive advantage. Managers should divide _____ performance measurements into those services performed by company-owned equipment and those purchased from for-hire carriers

Action Messages

These messages indicate what actions need to be taken. They generally fall around exception reporting and order maintenance.

Requirements Explosion

This extension of the bill of materials into the field allows the organization to use _____ techniques to link to the other MPC systems. ______: the process of calculating the demand for the components of a parent item by multiplying the parent item requirements by the component usage quantity specified in the bill of material

Pegged Requirements

This output gives the planner the ability to trace items' resupply orders back to the source.

Pull System

This provides more availability for consumers because local management controls the availability of the goods, often by establishing reorder points for the stockkeeping units (SKUs) in the warehouse. However, managing distribution inventory can be difficult, because every order is new to the supplying location as demand flows up the network. This can cause the bullwhip effect. The pull of an order signals the release of that amount from the downstream location. In a _______, you would see a bullwhip effect in response to variability in demand from the customer. As a result, the organization runs the risk of needing to relocate inventory based on poor planning.

Warehouse Replenishment System(s)

This topic looks at ______, including reorder point/economic order quantity, base stock, and distribution requirements planning. Selecting the appropriate _____ is impacted by the organization's replenishment strategy (push/pull/hybrid)

Push Systems

Traits of _______: Authority to initiate replenishment: Centralized (central supply planners) Inventory planning: For total system inventory Customer service: measured on a system wide basis Reorder point: when projected available balance for a future given period is negative or below safety stock level System-wide safety stock: lower: consolidated at one location Organizational implications: central planners assume responsibility; training in forecasting techniques; need accurate demand and supply information

Time Phased Planning Logic

Under ________, it delays releasing part orders until they are needed. Instead of shipping out a steady supply of parts on a predetermined schedule, this process calculates the material requirements and then schedules the supply to meet the demand Purpose: Meet customer demand and maintain warehouse inventory Benefits: - lower costs - fewer inventory overstocks - ability to adjust to changes

Transportation Reduction

Use closer interchannel inventory planning and replenishment, larger shipments over longer distances for economies of scale, and third-party service providers. metric: total cost to serve

Bucketed System

Using this input information, the DRP processor populates each planning grid bucket. Resupply of the planning grid buckets is determined by the item's order policy code. The ____: an MRP, DRP, or other time-phased system in which all time-phased data is accumulated into time periods called buckets. If the period of accumulation is one week, then the system is said to have weekly buckets.

Collaboration Collaborate

What can the supplier do to promote these purposes and better manage stock replenishment? The answer is _____. The following are ways suppliers can _____ with distribution centers (DCs) to improve DRP results. 1. Improve Inventory Accuracy 2. Improve stocking/picking/packing velocity

DRP Record DRP DRP Record

When examining a_____, there are subtle nuances to note: 1. This record is for a product and a specific customer location. 2. The "Forecast requirements" row may not be the organization's unmodified forecast; it can include information on special orders or customer inventory adjustments. 3. The change in forecast in week 5 could be due to local demand or a sales promotion. One of the benefits of _____ is the ability to incorporate demand changes at this level. 4. Lead time indicates the number of periods it takes to load, ship, unload, and store the product. The outcome of the _______ is a plan for upcoming shipments needed to provide the customer with the contracted service level.

Product Family Forecast

While the item forecast is what the actual replenishment timing and quantity are based on, the aggregate _____ is important for two reasons. First, during S&OP, the ____ is used to ensure that resources are available to transport, handle, and store replenishment inventory within major distribution channels. The process that addresses channel resource needs during S&OP is logistics resource requirements planning. Second, when DRP serves as an input to master scheduling, _____ by channel are disaggregated to the item-mix level and then are allocated down through the bill of distribution to plan the replenishment of inventory stocking locations.

Pull Decentralized/Pull System

With the _____ method, goods move up through the network by fulfilling customer orders. In distribution the ____ is a system for replenishing field warehouse inventories where replenishment decisions are made at the field warehouse itself, not at the central warehouse or plant.

Push (Centralized) Pull (Decentralized)

With the bill of distribution in place, the organization knows where the inventory is flowing to and from. The next question is when to replenish the inventory. There are two basic approaches to replenish distribution inventory: 1. 2.

Transportation Planning Report

____ Addresses transportation requirements necessary to ensure that inventory is available at distribution points Bases costs on transportation unit factors (weight, storage volume, pallets), shipping cost per unit, and typical product family shipping profiles (weight of 32 boxed units on a pallet requiring 64 cubic feet of space)

DRP

____ is a hybrid push/pull system and is often selected because of its use of time-phased projected future usage. This means that the decision of when to ship an order is based on a projected inventory position and so can be proactive rather than simply being reactive as reorder point/economic order quantity and base stock systems are.

Echelon

____: A level of supply chain nodes. For example, a supply chain with two independent factory warehouses and nine wholesale warehouses delivering product to 350 retail stores is a supply chain with three ______ between the factory and the end customer. One ____ consists of the two independent factory warehouses, one ____ consists of the nine wholesale warehouses, and one ____ consists of the 350 retail stores. Each ____ adds operating expense, holds inventory, adds to the cycle time, and expects to make a profit.

Push (Centralized) System

____: a system for replenishing field warehouse inventories where replenishment decision making is centralized, usually at the manufacturing site or central supply facility.

Customer Orders

_____ follow an order cycle, and it is important to know the steps and substeps in this cycle so that planning and inventory management professionals can do their part to keep the process effective and efficient. Your part in managing ____ may include monitoring inventory availability and lead time in support of marketing and customer service goals, monitoring open _____ to meet on-time delivery goals, and expediting past-due ______ considering cost and service tradeoffs.

DRP

_____ ideally combines the service levels of pull with the efficiency of push, but this depends on accurate forecasts and stable processes to be successful. If both of these exist, ____ produces high fulfillment performance with minimal inventory. Companies usually try to hedge their bets by using safety stock, but that can reduce the overall effectiveness of the _____ strategy, resulting in higher inventory levels or shortages.

DRP

_____ is replenishment planning to fulfill demand at local warehouses or retail stores. Firms accomplish ____ through a centralized push system. The dynamic aspect of forecast demand makes use of time-phased planning logic to fulfill requirements - we use a similar time-phased planning grid for MRP or ____ Forecast Demand Scheduled Receipts PAB Net Requirements Planned Order Receipts Planned Order Releases Lot Size, safety stock, lead time are all important

DRP Inputs

_____: Planning horizon length Planning bucket size Item forecast by due date Open customer orders by item Beginning on-hand quantities by item Open purchase orders, interbranch orders, and postponement orders by item by due date Replenishment lead times by item Finishing lead times by item Safety stock by item Order policy code by item Supply sources based on the bill of distribution.

Future SS

______ = current SS X sqrt (# Future DCs/ # DCs in present)

Distribution Efficiency

______ tracks the use of distribution resources such as transportation and warehousing. The goal is to minimize the total of all distribution costs such as land, transportation, wages, physical infrastructure, overhead, and inventory. _____ performance measures are often divided into two categories: warehouse and transportation management.

Disadvantages of a Pull System

______: Requires trained staff Bullwhip effect/lack of upstream visibility of requirements Inventory accuracy Distribution inventory location Needs of other DCs are not considered and the available inventory at central supply may be consumed by the first orders received

Base Stock Model Disadvantages

______: Increased information handling Volume of inventory held Inventory no longer in demand may still be held Backorders Stockout

Warehouse Space Storage Report

______: Determines warehouse space required Uses data from the development of the inventory investment and transportation reports Based on product family storage profiles (typical weight, volume, pallet requirements)

Inventory Investment Report

_______ Addresses the implications and adequacy of financial resources required by the aggregate channel replenishment plan, a plan that corresponds with and is linked to the sales and operations plan Projects aggregate inventory costs over a planning horizon, based on product family-level replenishment and shipping costs and inventory balances

Performance Measurements

_______ can be divided into four areas that are associated with the overall objectives of distribution: 1. Customer service 2. Distribution efficiency (warehouse operations and transportation) 3. Inventory management 4. Overall network performance.

Independent Customer Demand

_______ has a direct impact on the forecast in the distribution requirements planning (DRP) record. This drives the question of how an organization facilitates the transfer of demand for the product from the point of customer demand at the lowest-level satellite warehouses or regional distribution centers (DCs), upward through the distribution channel, to the central supply source. The answer is the bill of distribution (BOD) or distribution network structure, which specifies replenishment planning parameters.

Disadvantages ROP/EOQ Method

_______: 1. Upstream stocking locations, regional distribution centers, and central supply may not have access to the forecasts made by local distribution centers. 2. Demand arrives unpredictably and in a lumpy pattern. 3. Orders released are not coordinated with regional distribution centers replenishment schedules or factory production schedules. 4. Overall, upstream visibility of downstream forecasts and inventory levels is poor

Order Cycle Steps

_______: information request order placement receipt inventory reserve consolidation load building routing shipments using routing guides picking loading customer receiving install invoice/pay.

Labor and Equipment Report

_______: Determines aggregate manpower and timing and equipment needs at warehouses in the distribution channel Based on aggregate labor and equipment processing work standards per product family for, for example, unloading, put-away, picking, packing, and loading

Advantages ROP/EOQ Method

________ : Demand data used to determine replenishment may be more timely and accurate. Local distribution centers are closer to the source of demand.

Advantages of a Pull System

________: DCs have autonomy DCs can order or not order based on their knowledge of local demand Reduced expense for maintaining communications with other supply chain partners Performance measurement Cost reductions Safety stock control

Push System Disadvantages

________: - Local information on demand may not be gathered sufficiently or in a timely manner - Service errors are more likely to occur - Inventory carrying costs - Deficiencies in information flow -Requires distribution centers (DCs) to surrender ordering control, so often only for owned DCs

Base Stock Model Advantages

________: Decentralized, automated orders with central decision making Better coordination of central inventory resources Decisions made on data without amplification

Distribution Network Structure

________: The planned channels of inventory disbursement from one or more sources to field warehouses and ultimately to the customer. There may be one or more levels in the disbursement system.

DRP Distribution System

_________ coordinates materials flow through the physical distribution system. It addresses when, where, and how much inventory is needed at distribution centers within a manufacturer's distribution network in order to fulfill customer orders. It also shapes what resources are needed and when to ensure that replenishment inventory can be delivered, handled, and stored according to replenishment plans. The goal of a _____ is efficient, timely service with minimal inventory investment. The organization should effectively manage the flow of goods and inventories between itself and its customers.

Warehouse Operations

_________ performance measures include: 1. Throughput percent Volume of product storage and retrieval per unit of time against planned 2. Order filling percent Lines and orders filled without error; orders filled on time 3. Shipping accuracy percent Lines packed accurately; orders packed completely; orders packed and shipped on time; incidence of packing damage 4. Inventory record accuracy percent Percent deviation of recorded inventory from counted inventory (target values are usually 95% to 99%, depending on the value of the item); use of cycle counting is recommended 5. Storage utilization percent Actual utilization versus available capacity; ratio of cubic storage capacity of storage space divided by total cubic volume of portion of building occupied by storage

Push System Advantages

_________: - Total distribution inventory levels can be controlled carefully -Inventory levels are communicated to central planning so they can replenish the inventory that is used - The organization will include planned promotions and seasonality in forecasts - Planning simplicity - Turnover - Overhead cost reduction - Use of reorder point and DRP ordering techniques

Decentralized Inventory Control

_________: Inventory decision making exercised at each stocking location for SKUs at that location. DC Demand pulls inventory from suppliers. This is usually orders that are pulling inventory, not ultimate customer demand.

Time Phased Order Point

a planning logic for independent demand items where the planned order releases are input to the master schedule

Distribution Requirements Planning

is a time-phased order point approach where the planned orders at the branch warehouse level are combined to become the gross requirements of the supplying source. From there they are then "exploded" via material requirements planning (MRP) logic. It starts as close to the final marketplace or customer as possible