Supply Chain Management: Chapter 3 &4
Scheduled Receipt
A committed order awaiting delivery for a specific period
The system feeds back information about completed manufacture and materials on hand into the MRP system, so that these plans can be adjusted according to capacity and other requirements is called
Closed Loop MRP
Inventory that a company builds to satisfy its' immediate demand is called
Cycle Stock
the internal demand for items that are assembled or combined to make up the final product (e.g., component parts).
Dependent Demand
Relies on a constant output rate while varying inventory and backlog according to fluctuating demand is the process known as
Level Production Strategy
are "a series of alternating bars and spaces printed or stamped on parts, containers, labels, or other media, representing encoded information that can be read by electronic readers
Linear Bar Codes
Supply chain planning is usually hierarchical and can be divided into three broad categories:
Long Range, Intermediate-Range, Short-Range
order size for MRP logic
Lot Size
The process of converting a parent item's planned order releases into component gross requirements
MRP Explosion
Items used in support of general operations and maintenance such as maintenance supplies, spare parts, and consumables used in the manufacturing process and supporting operations are called
Maintenance, Repair, and Operating
assembly instructions encoded on RFID tag provide information to computer controlled assembly devices
Manufacturing
A detailed disaggregation of the aggregate production plan (APP), listing the exact end items to be produced by a specific period is called a :
Master Production Schedule
A computer-based materials management system that calculates the exact quantities, need dates, and planned order releases for subassemblies, component parts and materials required to manufacture a final product is called
Material Requirements Planning
goods automatically counted and logged as they enter the supply warehouse
Materials Mangement
Maintains stable core workforce while using other short-term means, such as overtime, subcontracting and part time helpers to manage short-term demand is known as
Mixed Production Strategy
Inventory items that have met the obsolescence criteria established by the company. It is stock that is expired, damaged, or no longer needed
Obsolete Inventory
costs that are incurred each time an order is placed.
Order Costs
labor costs associated with placing an order for inventory and the cost of receiving the order
Order Costs
Relates the gross requirements for a component part to the planned order releases of the parent item, so as to identify the source(s) of the item's gross requirements
Pegging
Inventory in the transportation network and the distribution system. Inventory that is already out in the market being held by wholesalers, distributors, retailers, and even consumers
Pipeline Inventory
The period from the end of the Firmed Time Period to the end of the planning horizon is called
Planned Time Period
Projected On-Hand Inventory
Projected closing inventory at end of a period
Purchased items or extracted materials that are converted via the manufacturing process into components and products are called
Raw Materials
The lowest inventory level at which a new order must be placed to avoid a stockout is known as the
Reorder Point
A long-range capacity planning module used to check whether aggregate resources (i.e., labor and manpower) are capable of satisfying the Aggregate Production Plan is called
Resource Requirement Planning
no check out lines as scanners link RFID tagged goods in shopping cart with buyers credit card
Retail Store
A medium-range capacity planning module used to check the feasibility of the Master Production Schedule is called
Rough-Cut Capacity Planning
Also known as "buffer stock," is inventory that is above and beyond what is actually needed to meet anticipated demand
Safety Stock
A process that brings all the demand and supply plans for the business (sales, marketing, development, production, sourcing, and finance) together to provide management with the ability to strategically direct the business to achieve a competitive advantage is called
Sales and Operations Planning
Intermediate-Range
Shows the quantity and timing of end items
picking all the desired applications from a single vendor is called
Single Integrator Solution
Display of components that are directly used in a parent item, together with the quantity required of each component
Single Level Bill of Materials
a type of inventory system in which inventory is only ordered for a one-time stocking. The objective is to maximize profits
Single-Period Model
Additional inventory beyond cycle and safety stock, generally used for a very specific purpose or future event, and for a defined period of time
Strategic Stock
There are three levels of internal inventory which are :
Strategic Stock, Safety Stock, Cycle Stock
With its long-term focus, it provides the company's direction and objectives for the next two to ten years:
The Business Plan
Why Hold Inventory?
To meet customer demand, to buffer against uncertainty in Demand and/or Supply, to decouple supply from demand, to decouple dependencies in the supply chain
dependent on the unit volume produced vary with output level
Variable Costs
Inventory Policy addresses 3 fundamental questions which are :
When to Review, When to Order, How much to Order
A good or goods in various stages of completion throughout the plant, spanning from raw material that has been released for initial processing up to fully processed material awaiting final inspection and acceptance as finished goods is called
Work-In-Process
Safety Stock
a quantity of stock planned to be in inventory to protect against fluctuations in demand or supply. Over planning supply versus demand can be used to create safety stock
Long-Range
involves planning for actions such as the construction of facilities and major equipment purchase
Supply Chain Planning
is the element of supply chain management responsible for determining how best to satisfy the requirements created by the Demand Plan.
Companies can however, maintain inventory of "facilitating goods," which are those :
items that are used to help facilitate the service being provided
Companies in the service industry do not maintain inventory of services since services are basically :
produced and consumed immediately upon demand
The plan states the company's objectives for:
profitability, growth rate, and return of investment
If capacity is greater than demand the firm might chose :
promotion and advertising in order to increase demand
Supply Chain Planning is a combination of all the planning processes that are used across the supply chain, primarily:
-Aggregate Production Planning (APP) -Master Production Scheduling (MPS) -Materials Requirement Planning (MRP) -Distribution Requirements Planning (DRP) -Capacity Planning
Firmed Planned Order
A planned order that can be frozen in quantity and time so that the MRP computer logic cannot automatically change when conditions change
Planned Order Release
A specific order for a specific item and quantity to be released to the shop or to the supplier
Gross Requirement
A time-phased requirement prior to netting out on-hand inventory and lead-time
This system classifies inventory based the degree of importance by A.Highest Value, B.Moderate Value, and C.Least Valuable
ABC system
The value of the inventory at either its cost or its market value.
Absolute Inventory Value
Hierarchical planning process that translates annual business, marketing plans, and demand forecasts into a production plan for a product family* in a plant or facility is called
Aggregate Production Plan
Business function that provides a response to customer order inquiries, based on resource availability. It generates available quantities of the requested product, and delivery due dates. This process is called
Available to Promise
is an electronic device that can read barcodes and transmit the data to a computer.
Barcode Reader
a type of inventory system that issues an order whenever a withdrawal is made from inventory
Base Stock Inventory
Level Production Strategy, Chase Production Strategy, and Mixed Production strategy are known as the :
Basic Production Strategies
picking the best application for each individual function. Disadvantage - software may not integrate well but this may not be a major issue in future is called
Best-of-Breed
Document that shows an inclusive listing of all component parts and assemblies making up the final product is called
Bill of Materials
Inventory system that uses either one or two bins to hold a quantity of the item being inventoried. It is mainly used for small or low value items.
Bin System
A short-range capacity planning module used to check the feasibility of the Material Requirements Plan is called
Capacity Requirement Planning
costs for physically having inventory on-site and for maintaining the infrastructure needed to store the inventory and to secure and insure it over time
Carrying Cost
costs that are incurred for holding inventory in storage.
Carrying Costs
Adjusts capacity to match demand. Firm hires and lays off workers to match finished output to demand. Finished goods inventory remains constant. Works well for make-to-order firms is the process known as
Chase Production Strategy
Management gathers input from the various organizational functions such as finance, marketing, operations, and engineering in order to :
Develop the business plan.
directly traceable to unit produced (e.g., materials, labor, etc.)
Direct Costs
shipment leaving DC automatically updates ERP to trigger a replenishment order and notify customer for delivery tracking
Distribution Center
A time-phased finished good inventory replenishment plan in a distribution network. The function of determining the need to replenish inventory at branch warehouses. This process is called
Distribution Requirements Planning
A quantitative decision model based on the trade-off between annual inventory carrying costs and annual order costs. Where the sum of the annual order costs & the annual inventory carrying costs is minimized.
Economic Order Quantity
Information system connecting all functional areas and operations of an organization, and in some cases suppliers and customers, via common software infrastructure and database is called
Enterprise Requirements Planning System
Those items on which all manufacturing operations, including final testing, have been completed are called
Finished Goods
The period from the current date out several weeks into future is called
Firmed Time Period
To minimize the impact of changes in the MPS, many companies have adopted a time fencing policy separating the planning horizon into a :
Firmed Time Period and a Planned Time Period
independent of the unit volume produced
Fixed Costs
A continuous inventory review system in which the same order quantity is used from order to order
Fixed-Order Quantity System
Inventory is checked in fixed time periods against a target inventory level
Fixed-Time Period System
The external demand for an item that is unrelated to the demand for other items (e.g., finished product).
Independent Demand
cannot be traced directly to the unit produced (e.g., overhead; MRO items, buildings, equipment, etc.)
Indirect Costs
the quantities of goods and materials that are held in stock is called
Inventory
The number of times that an inventory cycles, or "turns over," during the year
Inventory Turnover
There are four main categories of inventory:
Raw Materials, Work-in-Process (WIP), Finished Goods, and Maintenance, Repair and Operating (MRO)
Net Requirement
The unsatisfied item requirement for a specific time period. Gross requirement for period minus current on-hand inventory
Short-Range
detailed planning process for components and parts to support the master production schedule
The goal of inventory management is to help a company be more profitable by:
lowering the cost of goods sold and/or by increasing sales
If capacity and demand are nearly equal emphasis should be placed on :
meeting demand as efficiently as possible
If capacity is less than demand the firm might consider subcontracting a portion of the work load:
to an outside 3rd party
are a graphical image that stores information both horizontally and vertically.
2D Bar Codes