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