Supply chain 1

The service industry does not maintain any inventory, because services cannot be inventoried

False

Inventory costs which are independent of the output quantity are called?

Fixed Costs

Which of the following is Not an example of an ordering cost for products purchased from a supplier?

The opportunity cost of not ordering from a least cost supplier

Strategic Sourcing

A comprehensive approach for locating and sourcing key suppliers, includes a focus on developing long term relationships

Work in Process

A good or goods in various stages of completion through 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.

Every Link (i.e., company) in the Supply Chain is both a:

Customer of their suppliers and a supplier to their customer

Supply Chain Planning

Element of supply chain management responsible for determining how best to satisfy the requirements created by the demand plan

The lowest inventory level at which a new order must be placed to avoid a stockout is known as the Replenishment Threshold

False

When a company utilizes a "make to stock" strategy, the company is also said to be using a "pull" business model

False

Economic Order Quantity Model

Fixed order quantity model. Quantitative decision model based on the trade-off between annual inventory order costs and annual inventory carrying costs

1950 and 60s drawbacks

High investment in facilities and equipment, production throughput limited by the slowest operation, breakdown of one machine will stop an entire production line

1950 and 60s advantages

Higher output and more productivity, reduced cycle time. lower in process inventories

Which of the following forecasting methodologies is considered a qualitative forecasting technique?

Historical Analogy

Which of the following is NOT one of the advantages of MRP?

Ignores Capacity. Focuses on what is needed and when, regardless of capacity.

Order costs

Incurred each time an order is placed

Chase Production Strategy

Adjusts the production rate and capacity to exactly match demand. make to order

Forecast Bias

Consistent Deviation from the mean in one direction.

Dependent Demand

Demand for an item that is directly related to other items or finished products, such as a component or material used in making a finished product. (Demand for these items is calculated) Bicycle Part

Independent Demand

Demand for an item that is unrelated to the demand for other items, such as a finished product, a spare part, or a service part. (Demand for these items is forecasted) Bicycle

Tier 1 Supplier and Tier 1 Customer

Direct Relationship

2010s and Beyond

Focusing on building their own core competencies

Planned Time Period

From the end of the firmed time period to the end of the planning horizon

Enterprise Requirements Planning Systems

Information System connecting all the functional areas and operations of an organization via common software infrastructure and database. Provides real time integrated management of the main business processes necessary to plan and control organization.

Safety Stock

Inventory buffer. less information extends the need

Periodic Review System

Inventory levels are reviewed at a set frequncy

Maintenance, Repair, And operating

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.

1950s and 60s Summary

Limited to Material Management and Logistics. Produce as quickly as possible at the lowest possible cost. Internal focused on maximizing their own internal operations. Focus on mass production techniques as their principal cost reduction and productivity improvement strategies.

The detailed plan that shows the exact end items to be produced in a specific time frame is known as what?

Master Production Schedule (MPS)

Mean Absolute Percent Error

Measures the size of the error in percentage terms. ∑ ((|A - F|)/ A)) / n

As the supply chain continues to evolve, it's critical for companies to

Outsource their non-core competencies to trading partners that they can trust

Just In time

Philosophy of manufacturing based on the planned eliminate of all waste and continuously productive productivity improvement.

Single integrator Solution

Pick all the desired applications from a single vendor

Best of Breed

Pick the best application for each individual function.

Bin system

Inventory system that uses either one or two bins to hold a quantity of the item being inventoried

Make to Order

Producing finished products in response to actual demand after order is received. PULL

Seasonal Variations

Repeating patterns of demand. Pattern of variation within one single year. (halloween)

Capacity

Maximum amount of work that an organization is capable of completing in a given period

Raw Materials

Purchased items or extracted materials that are converted via the manufacturing process into components and products

Which of the following would be considered an independent demand item?

The decorated birthday cake

Forecast Error

The difference between the actual demand and the forecast demand. Absolute value or percentage. ((A-F)/A)

Exponential Smoothing

Time Series. More sophisticated version of the weighted moving average. (A1*S) + (F1+(1-S))

Naive Forecasting

Time Series. Sets the demand for the next time period to be exactly the same as the demand in the last time period. mature products

Which one of the following is not a function of inventory?

To increase cash flow

Are customers more directly involved in services or physical product?

Services. While the service itself is not tangible, it frequently involves work on a tangible item provided by the customer

Hybrid Production Strategy

Sets a baseline production rate based on a stable core workforce, and then uses other short-term means, such as overtime, subcontracting and part-time labor to manage short-term fluctuations in demand

SCOR: Plan

Step 1. Establishes the parameters within which the supply chain will operate. companies need strategy for managing all of the resources necessary to address how a product or service will be created and delivered to meet the needs of their customer. Includes determination of marketing and distribution channels, promotions, quantities, timing, inventory and replenishment policies, and production policies

Based on the diagram, which of the following correctly identifies the Manufacturer's Tier 1 supply chain partners?

Supplier C and Customer C

Supply Chain Flow

Suppliers to Manufacturers to Customers

Firmed Time Period

The current date out several weeks into future

Weighted Moving Average Forecasting

Time Series. Similar to a simple moving average except that not all time periods are valued/weighted equally. (M1 *W1) + (M2*W2) *(M3 *W3) + (M4* W4)

Material Requirements Planning

computer based materials management tool that calculates the exact quantities, needs dates, and planned order leases for all component parts and materials required to manufacture a product.

Collaborative Planning Forecasting and Replenishment

process whereby supply chain trading partners can jointly plan key SC activities from production and delivery of raw materials to production and delivery of final product to end customers

Planning Systems

the process and tools used to manage a company's resources to achieve the company's goals

Compute the sales forecast for the month of January using the 3-month simple moving average forecasting technique and the following data: Monthly sales for the RUOK Company for the last 6 months are as follows: July = 27000 August = 33000 September = 24000 October = 27000 November = 30000 December = 36000

31000

Supplier Relationship Management

A comprehensive approach to managing an enterprise's interactions with the organizations that supply the goods and services the enterprise uses. The goal of SRM is to streamline and make more effective the processes between an enterprise and its suppliers. SRM is often associated with automating procure-to-pay business processes, evaluating supplier performance, and exchanging information with suppliers. An e-procurement system is often an example of an SRM family of applications.

Material Requirements Planning

A time phased method of determining what materials are needed and when they are needed to support the production plan.

Which inventory system classifies inventory based on the degree of importance in order to determine which inventories should be counted and managed more closely?

ABC system

Bull whip effect

Absence of any other information or visibility, individual supply chain participants are second guessing what is happening with ordering patterns and potentially over reaching

Two main reasons companies implement supply chain management are to

Achieve cost savings and better coordinate resources

Collaborative Planning, Forecasting, and Replenishment

Business practice that combines the intelligence of multiple trading partners who share their plans, forecasts, and delivery schedules with one another in an effort to ensure a smooth flow of goods and services across a supply chain.

Old paradigm

Company's gained synergy through vertical integration encompassing the ownership and coordination of all supply chain activites

Responsive Model

Configured to be fast and flexible to respond quickly to dynamic market demand and new product launches. Innovative products

Finished Products

Manufactured, tested, packaged, and scheduled for delivery.

Mean Absolute Deviation

Measures the size of the forecast error in units. It is calculated as the average of the unsigned, absolute errors over a specific period of time.

Functions of Inventory

Meet customer demand, buffer against uncertainty in demand and/or supply, decouple supply from demand, decouple dependencies in the supply chain.

Trend Variations

Movement of a variable over time. Common starting point

Time Series

Quantitative. Based on the assumption that the future is an extension of the past. Collect and study the past data of a given time series in order to generate probable future value for the series. Forecasts for future demand rely on understanding past demand.

Inventory

Quantities of goods and materials that are held in stock. asset

Demand Planning Process

Requires a holistic process

MRP requires all of the following except

The Rough-cut capacity planning information

Inventory management

The activities and techniques used to plan and control the desired levels of items needed to support prodiction

The Qualitative forecasting method is based on opinion and intuition

True

The four broad categories of inventory are raw materials, work-in-process, MRO, and finished goods

True

The goal of Supply chain management is to increase customer service while decreasing inventory and reducing costs

True

The key disadvantages of the MRP system include; loss of visibility, and the fact that MRP ignores capacity and shop floor conditions.

True

Single Period Inventory Model

Type of inventory system in which inventory is only ordered for a one time stocking. maximize profits

Base Stock Level System

Type of inventory system that issues an order whenever a withdrawal is made from inventory

Quantitative

Uses mathematical models and historical data to make forecasts

Process Management

Using lean manufacturing to improve flow of materials and eliminate waste in the process, and using 6 sigma to improve quality compliance across all suppliers

First Step in Understanding the Supply Chain

Visualize the flow of materials from beginning to end

Cyclical Variations

Wavelike patterns that last longer than 1 year and can extend over multiple years

ABC system

classifies inventory based on the degree of importance

short range

detailed planning process for components and parts to support the master production schedule. operations manager supervisor

Successful modern supply chain management typically includes the practice of?

Collaborating and sharing information between supply chain partners

Production Planning

Process to determine the overall level of manufacturing output to best satisfy the planned level of sales while meeting the company's profitability objectives

Sales and Operations Planning

Process to develop tactical plans that provide management the ability to strategically direct the business to achieve a competitive advantage by integrating customer focused marketing plans with the management of the supply chain

Running Sum of Forecast Errors

Provides a measure of forecast bias. Positive means too low, underestimate demand. negative means too high, overestimate demand.

The Chase production Strategy sets a baseline production rate based on a stable core workforce, and then uses other short-term means, such as overtime, subcontracting, and part-time labor to manage short-term fluctuations in demand.

False

Total Market Stockout

When all remaining inventory is sold out

Demand

the need for a particular product or component

Sales and Operation Planning is 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

True

Supply Chain Planning is the element of Supply Chain Management responsible for determining how best to satisfy the requirements created by the Demand Plan.

True

long range

involves planning for actions such as the construction of facilities and major equipment purchase. top management.

Which inventory stock level is carried above and beyond what is actually needed to meet anticipated demand? It represents a quantity of stock planned to be in inventory to protect against fluctuations in demand or supply.

Safety Stock

Available to Promise

A calculation to provide a response to customer order inquiries, based on product availability.

Which supply chain planning process is defined as a hierarchical planning process that translates annual business plans, marketing plans, and demand forecasts into a production plan for a product family in a plant or facility?

Aggregate Production Planning (APP)

Qualitative

Based on Opinion and Intuition. Generally used when data is limited, unavailable, or not currently relevant.Long-range forecasts and new products. Personal insight, jury of executive opinion, Delphi method, historical analogy, customer survey

Poor communication and inaccurate forecasts along the supply chain can result in the:/In the absence of any other information or visibility, individual supply chain participants can begin second guessing what is happening with ordering patterns, and potentially start over reacting. This is known as?

Bullwhip effect

Intangible Products

Cannot be physically touched, service. Customers are paying for labor and intellectual property.

Simple Linear Regression

Cause and Effect. Attempts to model the relationship between a single independent variable and a dependent variable (demand) by fitting a linear equation to the observed data

Multiple Linear Regression

Cause and effect. Attempts to model the relationship between two or more independent variables and a dependent variable (demand) by fitting a linear equation to the observed data.

How Bullwhip Effect can be Alleviated

Collaboration, Synchronizing the supply chain, reducing inventory. Reduction of safety stocks within and across the trading partners in a supply chain

Efficient Model

Configured to produce a large volume of a product as quickly as possible with lowest cost. Ideal for functional products

Bill of Materials

Document that shows an inclusive listing of all raw materials, component parts, and assemblies making up the final product. Single Level or Multilevel.

Analysis of Social Sentiment can be used to

Evaluate the health of a brand, improve demand prediction, address a crisis, research the competition

Cumulative Effort of multiple organizations

Every product that reaches an end user

Collaborative Planning, Forecasting, and Replenishment is the process of combining statistical forecasting techniques and judgment to construct demand estimates for products or services.

False

Companies in the Service Industry do not actually have a real supply chain because they offer intangible products

False

If you choose to pick your desired Enterprise Resource Planning applications from the top vendor of each individual application, you are using the single integrator approach to selecting your ERP system

False

Service Firms offer intangible products (meaning products that cannot be physically touched) therefore, they do not have a supply chain.

False

The goal of Supply Chain Management is to increase customer service while increasing inventory and reducing costs.

False

New paradigm

Focusing on their area of specialization and entering into voluntary trust based relationship with their suppliers and customers by outsourcing non core competencies

Random Variations

Instability in the data caused by random occurrences (generally very short term and can be unexpected by unpredictable events such as weather or war). Abnormal demand

Which one of the following would be considered an inventory holding or carrying cost?

Insurance costs

Aggregate Production Plan

Hierarchical planning process that translates annual business plans, marketing plans, and demand forecasts into a production plan for a product family in a plant or facility. Establish production rates that will achieve management's objective of satisfying customer demand by maintaining, raising, or lowering inventories while attempting to keep the workforce relatively stable.

Goals of Supply Chain Management

Increase Customer Service while simultaneously reducing inventory and operating expenses

Carrying Costs

Incurred for holding inventory

1970s and 80s

Introduction of new computer technologies lead to development of newer and better planning techniques. production planning, Material Requirements Planning, Manufacturing Resource Planning. Companies began to look beyond their four walls and incorporate their supply chain partners into their planning activities

1990s and 2000s

Introduction of new concepts, methodologies, and processes to enhance planning and control. JIT TQM BPR CPFR S&OP

Mean Squared Error

Magnifies the errors by squaring each one before adding them up and dividing by the number of forecast periods ∑ (A-F) ² / n

Level Production Strategy

Maintains a constant production rate and allows inventory and backlog to vary according to fluctuating demand. make to stock

Total Quality Management

Management approach to long term success through customer satisfaction based on the participation of all numbers of an organization in improving processes, goods, services, and the culture in which they work.

Integration

Managing all of the enabling systems necessary to facilitate the complete integration of this operation

Logistics Management

Managing all of the movement and storage of products and materials within the supply chain, can be forward or reverse

Operations management

Managing internal resources

How supply chain management creates value

Managing the processes of all of those independent trading partners so that they can collaborate with one another in an efficient, effective, and cost conscious way.

Advanced Planning and Scheduling

Manufacturing management process by which resources and capacity are optimally allocated to meet demand

Manufacturing Resource Planning

Method for the effective planning of all resources of a manufacturing company through business planning, production planning, master production scheduling, material requirements planning, capacity requirements planning, and the execution support systems all linked together.

Service Supply Chain

More about managing the relationships between the trading partners than it is about managing the chain of supply

Which of the following is not a type of qualitative forecasting

Naive Method/Linear Trend

SCOR Model: Enable

Not sequential. Facilitates a company's ability to manage the supply chain and spread throughout every stage. Enable our capabilities.

Inventory Turnover

Number of times that an inventory cycle, or "turns over" during the year

The Supply Chain Operations Research (SCOR) Model is?

Plan, source, make, deliver/return, and enable

Business process Reengineering

Procedure that involves the fundamental rethinking and radical redesign of business processes to achieve dramatic organizational improvements in such a critical measures of performance as cost, quality, service, and speed.

Forecast and Demand Planning

Process of forecasting the demand for a product or service so it can be produced and delivered more efficiently and satisfy customer needs

Make to Stock

Producing finished products on the basis of anticipated demand before receipt of actual customer order. PUSH

Personal Insight

Qualitative. Based on the insight of the most experienced, knowledgable, or most senior person available.

Delphi Method

Qualitative. Basically the same as the Jury of Executive Opinion except that the input of each of the participants is collected separately so that people are not influenced by one another. time consuming

Customer Survey

Qualitative. Customers are directly approached and asked to give their opinions about a particular product.

Historical Analogy

Qualitative. Judgmental forecasting technique based on identifying a sales history that is comparable to a present situation, such as the sales history of a similar product.

Jury of Executive Opinion

Qualitative. People who know the most about the product and marketplace would likely form a jury to discuss and determine the forecast. Series of forecasting meetings

Cause and Effect

Quantitative. Assumes that one or more factors predict future demand

Master Production Scheduling

Represents what the company plans to produce expressed in specific product configurations, quantities, and dates. statement of production. what a business plans to achieve.

Demand Planning

Second step which is the process of combining statistical forecasting techniques and/or judgment to construct demand estimates for products or services

Can service products be produced in advance or inventoried?

Service products ca not be produced in advance or inventoried. They are typically produced + consumer simultaneously. Most services require the use of facilitating goods (tangible elements)

SCOR: Source

Step 2. The process of identifying the suppliers that provide the materials and services needed for the supply chain to deliver the finished products desired by the customers. Identifying reliable suppliers but also building a strong relationship with those suppliers. Supply Chain managers must also develop pricing, shipping, delivery, and payment processes with suppliers and create metrics for monitoring and improving the performance

SCOR Model: Make

Step 3. Series of operations performed to convert materials into finished products.Quality management. Most metric-intensive portion of the supply chain.

SCOR Model: Deliver/Logistics phase

Step 4. Oversees the planning and execution of the forward flow of goods and related information between various points in the supply chain to meet customer requirements. Coordinate receipt of orders from customers, develop a network of warehouses, pick carriers to transport products to customers, and set up invoicing system to receive payment among other aspects

SCOR Model: Return/reverse logistics

Step 4. Part of supply chain management that deals with planning and controlling the process of moving goods specifically from the point of consumption back to point of origin for repair, reclamation, remanufacture, recycling, or disposal. Goes against normal outbound flow. SC managers need to create responsive and flexible network for receiving defective and excess products back from their customers and supporting customers with Questions

Obsolete Inventory

Stock that is expired, out-of-date, or no longer needed. Inventory items that have met the obsolescence criteria established by the company

A supply chain consists of?

Suppliers, manufacturers, and customers facilitated through the use of logistics

Supply Chain Management

The coordination of the network of otherwise independent trading partners who are creating a desired product or service, and then moving it through the supply chain out to customers, when and where the customer wants it. It is the way business gets done. Active Management of supply chain activities to maximize customer value and achieve a sustainable competitive advantage. Wolfgang Partsch

Two important considerations about a forecast

The forecast will be inaccurate but still useful. The forecast is the basis for most "downstream" supply chain planning decisions, so it is critical to be as accurate as possible.

Absolute Inventory Value

The value of the inventory at either its cost or its market value

Finished Goods

Those items on which all manufacturing operations, including final testing have been completed. These products are available for sale and/or shipment to the customer.

Linear Trend Forecasting

Time Series. Imposing a best fit line across the demand data of an entire time series. Used as the basis for forecasting future values by extending the line past the existing data and out into the future while maintaining the slop of the line

Simple Moving Average Forecasting

Time Series. Uses a calculated average of historical demand during a specified number of the most recent time periods to generate the forecast.

Distribution Requirements Planning

Time phased finished good inventory replenishment plan in a distribution network. determining how and where to deploy the finished goods inventory that is produced

Cause and Effect Forecast models use the historical relationship between an independent variable(s) and a dependent variable to predict the future values of the dependent variable

True

Companies that adjust the production rate and capacity to exactly match demand by increasing or decreasing labor, materials, or necessary resources, is using the Chase Production Strategy

True

Inventory is an asset that allows a company to support manufacturing operations and fill customer orders immediately, but too much inventory ties up capital and can become a significant liability.

True

Fundamentals of Forecasting

Your forecast is most likely wrong. The more "granular" the forecast, the less accurate it is. It is easier to forecast next month ore accurately than it is to forecast next year. Simple forecast methodologies trump complex ones. A correct forecast does not prove your forecast method is correct. If you dont use the data regularly, trust it less when forecasting. All trends will eventually end. Its hard to eliminate bias, so most forecasts are biased. Technology is not the solution to better forecasting. Forecasting is really a blend of art and science

Forecasting

first step where the forecast is developed through data analysis and judgment. Business function that estimates future demand for products so that they can be purchased or manufactured in appropriate quantities in advance of need. Mathematically predicting future demand through historic data

Logistics

just one component. the activities that occur within the scope of responsibilities of single organization. focuses on moving a product efficient at right place and time

Reorder Point

lowest inventory level at which a new order must be placed to avoid a stockout

Capacity Planning

process of determining the amount of production capability needed by an organization to produce the goods or services required by its customers

intermediate range

shows the quantity and timing of end items. operations middle management.