Test 3: Module D, Chapter 11, 12

his may include

(1) developing economical shipments of less than truckload lots; (2) providing discounts based on total annual volume rather than size of individual shipments; and (3) reducing the cost of ordering through techniques such as standing orders and various forms of electronic purchasing.

Assets committed to inventory

(average inventory investment / total assets) x 100

Annual holding cost=

(average inventory level) x (holding cost per unit per yeaer) = (Q/2)(H)

basic ROP

(demand per day)(lead time in days)= dxl

Multiple server queuing system- (multiple channel)

) a service system with one waiting line buyt with several servers

Negative exponential probability distribution

- - a continuous probability distribution often used to describe the service time in a queueing system - shows that if service times follow a negative exponential distribution, the probability of any very long service time is low.

Limited, or finite

- - a queue in which there are only a limited number of potential users of the service (add section)

unlimited

- A queue is unlimited when its size is unrestricted, as in the case of the toll booth serving arriving automobiles

Digitalization and the Internet-of-Things (IoT)

- All of the forgoing opportunities are being enhanced by digitalization. As a part of the IoT, digitalization is permeating supply chain processes—just as it is many aspects of our lives - With its inherent precision and speed, digitalization enables supply chains to manage a deluge of information from multiple channels. The result is improved visibility throughout the supply chain.

Supply Chain Costs

- As firms strive to increase their competitiveness via product customization, high quality, cost reductions, and speed to market, added emphasis is placed on the supply chain. Through long-term strategic relationships, suppliers become "partners" as they contribute to competitive advantage.

- One means of evaluating a service facility is to look at total expected cost. Total cost is the sum of expected service costs plus expected waiting costs - Managers in some service centers can vary capacity by having standby personnel and machines that they can assign to specific service stations to prevent or shorten excessively long lines.

- As the level of service improves (that is, speeds up), however, the cost of time spent waiting in lines decreases. (Refer to Figure D.5.) Waiting cost may reflect lost productivity of workers while tools or machines await repairs, or it may simply be an estimate of the cost of customers lost because of poor service and long queues. In some service systems (for example, an emergency ambulance service), the cost of long waiting lines may be intolerably high.

break bulk

- Break-bulk, function by accepting a cheaper full truckload inbound shipment and then dividing it for distribution to individual sites

Consolidation

- Consolidation, gathering shipments from multiple sources to send outbound in one cheaper, fully loaded truck

cross docking

- Cross-docking, accepting shipments from a variety of sources and recombining them for distribution to a variety of destinations, often without actually storing any goods during the transition.

Pattern of arrivals: Poisson Distribution

- Customers arrive at a service facility either according to some known schedule (for example, one patient every 15 minutes or one student every half hour) or else they arrive randomly. Arrivals are considered random when they are independent of one another and their occurrence cannot be predicted exactly.

functions of inventory

- Inventory can serve several functions that add flexibility to a firm's operations. The four functions of inventory are: - · To provide a selection of goods for anticipated customer demand and to separate the firm from fluctuations in that demand. Such inventories are typical in retail establishments. - · To decouple various parts of the production process. For example, if a firm's supplies fluctuate, extra inventory may be necessary to decouple the production process from suppliers. - · To take advantage of quantity discounts, because purchases in larger quantities may reduce the cost of goods or their delivery. - · To hedge against inflation and upward price changes.

Waiting line characteristics

- Limited vs unlimited - Queue discipline

Behavior of arrivals

- Most queuing models assume that an arriving customer is a patient customer. Patient customers are people or machines that wait in the queue until they are served and do not switch between lines. Unfortunately, life is complicated by the fact that people have been known to balk or to renege.

Other queueing issues

- Often, however, variations of these specific cases are present in an analysis. Service times in an automobile repair shop, for example, tend to follow the normal probability distribution instead of the exponential.

Model a continued

- Once we have computed the operating characteristics of a queuing system, it is often important to do an economic analysis of their impact. Although the waiting-line model just described is valuable in predicting potential waiting times, queue lengths, idle times, and so on, it does not identify optimal decisions or consider cost factors - As we saw earlier, the solution to a queuing problem may require management to make a trade-off between the increased cost of providing better service and the decreased waiting costs derived from providing that service.

The SCOR model describes the business activities associated with satisfying a customer's demand, which include plan, source, make, deliver, and return Define 200 process elements, 550 measurable metrics, and 500 best practices SCOR

- Plan- demand or supply planning and management - Source- identify, select, manage, and assess sources - Make- manage production execution, testing and packaging - Deliver- invoice, warehouse, transport and install - Return- raw material - Return- finished goods

Size of the arrival (source) population

- Population sizes are considered either unlimited (essentially infinite) or limited (finite).

postponement

- Postponement, providing final customer-specific value-added processing to the product before final shipment.

Service characteristics

- Service design - Statistical distribution of service

Service time distribution

- Service patterns are like arrival patterns in that they may be either constant or random. If service time is constant, it takes the same amount of time to take care of each customer. This is the case in a machine-performed service operation such as an automatic car wash. More often, service times are randomly distributed

Arrivals to the system characteristics The input source that generates arrivals or customers for a service system has three major characteristics:

- Size of the population size - Behaviors of arrivals - Statistical distribution of arrivals (pattern of arrivals)

Risks and Risk reduction tactics

- Supplier failure to deliver- use multiple suppliers, effective contracts with penalties, subcontractors on retainer, pre planning - Supplier quality failure- careful supplier selection, training, certification, and monitoring - Outsourcing- take over production provide or perform the service yourself - Logistics delays or damage- multiple/redundant transportation modes and warehouses, secure packaging, effective contracts with penalties - Distribution- careful selection, monitoring, and effective contracts with penalties - Information loss and distortion- redundant databases, secure IT systems, training of supply chain partners on the proper interpretations and uses of information - Political- political risk insurance, cross country diversification, franchising and licensing - Economic- hedging to combat exchange rate risk, purchasing contracts that address price fluctuations - Natural catastrophes- insurance, alternate sourcing, cross country diversification - Theft, vandalism, and terrorism- insurance, patent protection, security measures including RFID and GPS, diversification

eoq model notes

- The EOQ model is robust (giving satisfactory answers even with substantial variation in the given parameters) - It works even if all parameters and assumptions are not met - The total cost curve is relatively flat in the area of EOQ

advantage of littles law

- The advantage of these formulas is that once two of the parameters are known, the other one can easily be found. This is important because in certain waiting-line situations, one of these might be easier to determine than the other. - mportant because it makes no assumptions about the probability distributions for arrivals and service times, the number of servers, or service priority rules.

Model A (M/M/1): Single-Server Queuing Model with Poisson Arrivals and Exponential Service Times

- The most common case of queuing problems involves the single-server (also called single-channel) waiting line. In this situation, arrivals form a single line to be serviced by a single station

Model D (M/M/1 with Finite Source): Finite-Population Model

- When there is a limited (or finite) population of potential customers for a service facility, we must consider a different queuing model. This model would be used, for example, if we were considering equipment repairs in a factory that has 5 machines - This model differs from the three earlier queuing models because there is now a dependent relationship between the length of the queue and the arrival rate.

Unlimited, or infinite-

- a queue in which a virtually unlimited number of people (arrivals) request the services, or in which the number of customers or arrivals on hand at any given moment is a very small portion of potential arrivals Examples of unlimited populations include cars arriving at a big-city car wash, shoppers arriving at a supermarket, and students arriving to register for classes at a large university.

Quantity Discount Models -1

- a reduced price for items purchased in large quantities u Reduced prices are often available when larger quantities are purchased u Trade-off is between reduced product cost and increased holding cost u Total cost = Setup cost + Holding cost + Product cost u TC = d/q S + q/2 H + PD

Multiphase system-

- a system in which the customer receives services from several stations before exiting the system

Perpetual inventory system-

- a system that keeps track of each withdrawal or addition to inventory continuously, so records are always current ▶ Orders placed at the end of a fixed period ▶ Inventory counted only at end of period ▶ Order brings inventory up to target level ▶ Only relevant costs are ordering and holding ▶ Lead times are known and constant ▶ Items are independent of one another

Standardization

- hat is, rather than obtaining a variety of similar components with labeling, coloring, packaging, or perhaps even slightly different engineering specifications, the purchasing agent should try to have those components standardized.

Model B (M/M/S): Multiple-Server Queuing Model

- n which two or more servers are available to handle arriving customers. We still assume that customers awaiting service form one single line and then proceed to the first available server. Multiple-server, single-phase waiting lines are found in many banks today:

Queueing costs

- operations managers must recognize the trade-off that takes place between two costs: the cost of providing good service and the cost of customer or machine waiting time. Managers want queues that are short enough so that customers do not become unhappy and either leave without buying, or buy, but never return. However, managers may be willing to allow some waiting if it is balanced by a significant savings in service costs.

shrinkage

- retail inventory that is accounted for between receipt and sale - Shrinkage occurs from damage and theft as well as from sloppy paperwork.

Supply Chain Management

- the coordination of all supply chain activities involved in enhancing customer value, starting with raw materials and ending with a satisfied customer - Thus, a supply chain includes suppliers; manufacturers and/or service providers; and distributors, wholesalers, and/or retailers who deliver the product and/or service to the final customer - A well-functioning supply chain has information flowing between all partners. The chain includes transportation, scheduling information, cash and credit transfers, as well as ideas, designs, and material transfers.

The bullwhip effect -

- the increasing fluctuation in orders that often occurs as orders move through the supply chain - on the supply chain occurs when changes in consumer demand causes the companies in a supply chain to order more goods to meet the new demand. Cost is increased with inventory, transportation shipping and receiving while decreasing customer service and profitability

service level

- the probability that demand will not be greater than supply during lead time. It is the ocmplemetn of the probability of a stockout

setup time

- the time required to prepare a machine or process for production Setups usually require a substantial amount of work even before a setup is actually performed at the work center. With proper planning, much of the preparation required by a setup can be done prior to shutting down the machine or process.

limited

- when it cannot, either by law or because of physical restrictions, increase to an infinite length.

Management challenges of reverse logistics

1. Forecasting- forward logistics relatively straightforward, reverse logistics more uncertain 2. Product quality- forward logistics uniform, reverse logistics not uniform 3. Product packaging- forward logistics uniform, reverse logistics often damaged 4. Pricing- forward logistics relatively uniform, reverse logistics dependent on many factors 5. Speed- forward logistics often very important, reverse logistics often not a priority 6. Distribution costs- forward logistics easily visible, reverse logistics less directly visible 7. Inventory management- forward logistics consistent, reverse logistics not consistent

Reasons for Buying

1. Frees management to deal with its core competence 2. Lower acquisition cost 3. Preserve supplier commitment 4. Obtain technical or management ability 5. Inadequate capacity 6. Reduce inventory costs 7. Ensure alternative sources 8. Inadequate managerial or technical resources 9. Reciprocity 10. Item is protected by a patent or trade secret

Applicable techniques include the following:

1. Good personnel selection, training, and discipline: 2. Tight control of incoming shipments: 3. Effective control of all goods leaving the facility:

Random Phenomena:

1. Hurricane, Tsunamis, Earthquakes, World map of seismic stations.Bathymetry and topography: US Department of Commerce, National Oceanic and Atmospheric Administration, National Geophysical Data Center, 2006. 2-minute Gridded Global Relief Data ( ETOPO2v2)

Supplier evaluation-

1. involves finding potential suppliers and determining the likelihood of their becoming good suppliers § Finding potential suppliers (vendors) § Determine likelihood of their becoming good suppliers § Evaluation criteria critical to the firm might include these categories as well as production process capability, location, and information systems. The supplement to this chapter provides an example of the commonly used factor weighting approach to supplier evaluation.

Reasons for making

1. maintain core competence 2. Lower production costs 3. Unsuitable suppliers 4. Assure adequate supply (quantity or delivery) 5. Utilize surplus labor or facilities 6. Obtain desired quality 7. Remove supplier collusion 8. Obtain unique item that would entail a prohibitive commitment for a supplier 9. Protect personnel from a layoff 10. Protect proprietary design or quality 11. Increase or maintain size of company

accidents

2. Nuclear, Oil Spill, chemical Accidents - Political - Trade barriers - Brexit, US ? - Non-Compliance (biotech companies) - Competition - Economy - Social Disconnect - Intentional Disruption

Question content area Part 1 A​ firm's probability of a stockout for a popular item is​ 2%. Given this​ information, what is its service level for this popular​ item? Part 2 A. ​2% B. ​4% C. ​98% D. ​96%

98%

Which of the following represents a customer who reneged due to the waiting​ line? Part 2 A. A husband and wife decide to eat out instead after seeing the movie ticket line. B. A student ordered pizza online because the phone line was busy. C. A car drives past the first​ fast-food restaurant on Hamburger Row because the​ drive-through was full. D. A Black Friday shopper skipped one store because the line went around the building. E. A customer at a gas station went inside to buy a​ soda

A customer at a gas station went inside to buy a​ soda, but after waiting in line for a minute left the soda behind and went outside​ empty-handed.

littles law

A practical and useful relationship in queuing for any system in a steady state is called Little's Law. A steady state exists when a queuing system is in its normal operating condition (e.g., after customers waiting at the door when a business opens in the morning are taken care of). Ls= yWs Or Lq= yWq

Control of service inventories

Although we may think of the service sector of our economy as not having inventory, that is seldom the case. Extensive inventory is held in wholesale and retail businesses, making inventory management crucial.

Which of the following is an example of a​ fixed-period inventory​ system? Part 2 A. A coffee shop owner decides 30 minutes before closing whether they should make a fresh pot of coffee. B. An administrative assistant orders more legal pads on the first day of each month. C. Every​ morning, a real estate agent schedules​ walk-throughs with potential home buyers. D. A bookstore owner buys copies of a popular​ author's books on the day they are released.

An administrative assistant orders more legal pads on the first day of each month.

Shipping Systems-

Because of this high cost, firms constantly evaluate their means of shipping.(as much as 25% of product cost)

Building the Supply Base 1

Building the Supply Base 1- We now examine supplier selection as a four-stage process: (1) supplier evaluation, (2) supplier development, (3) negotiations, and (4) contracting.

Ethics within the supply chain

But firms must establish standards for their suppliers, just as they have established standards for themselves. Society expects ethical performance throughout the supply chain. - The challenge of enforcing ethical standards is significant, but responsible firms such as Gap are finding ways to deal with this difficult issue.

Which of the following statements is NOT true regarding channel​ assembly? Part 2 A. Channel assembly postpones final assembly of a product so the distribution channel can assemble it. B. Channel assembly sends individual​ components, modules, and finished​ products, to the distributor. C. Channel assembly treats distributors more as manufacturing partners than as distributors. D. Channel assembly represents one way to implement postponement.

Channel assembly sends individual​ components, modules, and finished​ products, to the distributor.

Which of the following occurs as the level of service​ decreases? Part 2 A. Cost of waiting time first​ decreases, then​ increases; while cost of providing service decreases. B. Cost of waiting time​ decreases, and cost of providing service decreases. C. Cost of waiting time​ decreases, and cost of providing service increases. D. Cost of waiting time​ increases, and cost of providing service increases. E. Cost of waiting time​ increases, and cost of providing service decreases.

Cost of waiting time​ increases, and cost of providing service decreases.

service level

Cs/Cs+Co

Maximize Chain Surplus=

Customer Value-supply chain cost

daily demand

D/number of working days in a year

At the end of the chapter, students are expected to:

Describe the characteristics of arrivals, waiting lines, and service systems Apply the single-server queuing model equations Conduct a cost analysis for a waiting line Apply the multiple-server queuing model formulas Understand the constant-service-time model Understand the finite-population model Discuss the limited-population model and its usage

How to companies hide a queue?

Doctors office- many rooms that may have patients that you may not be aware of

Which of the following statements is NOT​ true? Part 2 A. ​Top-notch supply chain performance requires good downstream​ management, just as it does good upstream management. B. An effective supplier management program and an effective distribution management program may make the difference between supply chain success and failure. C. Finding the optimal number of facilities represents a critical and static decision. D. Packaging and logistics are important distribution​ decisions, because the manufacturer is usually held responsible for breakages and serviceability.

Finding the optimal number of facilities represents a critical and static decision.

Chapter 11- Supply Chain management

For Week 11 we will discuss Chapter 11 Supply Chain Management (SCM). It is a "total systems" approach to the integration of activities that procure materials and/or services, transform them into intermediate goods and services, final products, and deliver them to customers. Its activities cut across many business functional areas including accounting, finance, marketing, and operations. Efficient supply chains can simultaneously improve customer service, reduce operating expenses, and minimize capital investments. The objective of SCM is to build a chain of suppliers, manufacturers, and distributors that focus on maximizing value to the ultimate customer. At the end of this chapter, students should be able to:

Chapter 12-Inventory Management

For week 12, we will talk about Inventory Management. Inventory is one of the most expensive assets of many companies, representing as much as 50% of total invested capital. Operations managers around the globe have long recognized that good inventory management is crucial. On the one hand, a firm can reduce costs by reducing inventory. On the other hand, production may stop, and customers become dissatisfied when an item is out of stock. The objective of inventory management is to strike a balance between inventory investment and customer service. You can never achieve a low-cost strategy without good inventory management.

An inventory decision rule​ states, "When the inventory level goes down to 14​ gearboxes, 100 gearboxes will be​ ordered." Which of the following statements is​ TRUE? Part 2 A. The number 100 is a function of demand during lead time. B. Fourteen is the safety​ stock, and 100 is the reorder point. C. Fourteen is the reorder​ point, and 100 is the order quantity. D. One hundred is the reorder​ point, and 14 is the order quantity. E. None of the above is true.

Fourteen is the reorder​ point, and 100 is the order quantity.

Warehousing (8 to 10% product cost)

Fundamental purpose is to store goods May be expensive, but alternatives may be more so May provide other functions such as consolidation break bulk cross docking postponement

Ethical behavior regarding the environment

Good ethics extends to doing business in a way that supports conservation and renewal of resources. This requires evaluation of the entire environmental impact, from raw material, to manufacture, through use and final disposal. - Operations managers also ensure that sustainability is reflected in the performance of second- and third-tier suppliers. Enforcement can be done by in-house inspectors, third-party auditors, governmental agencies, or nongovernmental watchdog organizations.

Which of the following statements about the basic EOQ model is​ FALSE? Part 2 A. If annual demand were to​ double, the number of orders per year would increase by​ 73%. B. If the setup cost were to​ decrease, the EOQ would fall. C. If the holding cost were to​ increase, the EOQ would decrease. D. If annual demand were to​ double, the EOQ would rise. E. None. All of the above statements are true.

If annual demand were to​ double, the number of orders per year would increase by​ 73%.

Which of the following statements about the basic EOQ model is​ FALSE? Part 2 A. If the setup cost were to​ decrease, the EOQ would fall. B. If the holding cost were to​ increase, the EOQ would decrease. C. If annual demand were to​ double, the EOQ would rise. D. If annual demand were to​ double, the number of orders per year would increase by​ 73%. E. None. All of the above statements are true.

If annual demand were to​ double, the number of orders per year would increase by​ 73%.

All organizations have some type of inventory planning and control system. A bank has methods to control its inventory of cash. A hospital has methods to control blood supplies and pharmaceuticals. Government agencies, schools, and, of course, virtually every manufacturing and production organization are concerned with inventory planning and control.

In cases involving physical products, the organization must determine whether to produce goods or to purchase them. Once this decision has been made, the next step is to forecast demand, as discussed in Chapter 4. Then operations managers determine the inventory necessary to service that demand. In this chapter, we discuss the functions, types, and management of inventory. We then address two basic inventory issues: how much to order and when to order.

quantity discount Solution Procedure

STEP 1: Starting with the lowest possible purchase price in a quantity discount schedule and working toward the highest price, keep calculating �* from Equation (12-10) until the first feasible EOQ is found. The first feasible EOQ is a possible best order quantity, along with all price-break quantities for all lower prices. STEP 2: Calculate the total annual cost TC using Equation (12-9) for each of the possible best order quantities determined in Step 1. Select the quantity that has the lowest total cost.

Single-Channel (single Server)

Service is on a first come first serve basis (FIFO based) Arrivals are independent of preceding arrivals but the average number of arrivals does not change over time Arrivals follow a Poisson distribution and come from an infinite population (no balking, reneging, or jockeying) Service times vary and are independent of one another, but their average rate is known Service times occur according to the negative exponential distribution The service rate is faster than the arrival rate

1-Arrival Characteristics

Size of the arrival population þ Finite (limited) or infinite (unlimited) Pattern of arrivals þ Scheduled or random (often a Poisson distribution) Behavior of arrivals þ Wait in the queue and do not switch lines þ No balking or reneging

Prior to embarking on supply chain​ design, why do operations managers first consider​ "make-or-buy" and outsourcing​ decisions? Part 2 A. Organizations owe it to the community to share customer profits. B. Modern accounting practices require a quantitative analysis of production options. C. Globalization dictates focusing on fewer products or services to remain competitive. D. Some products or services may be better or less expensive if obtained externally.

Some products or services may be better or less expensive if obtained externally.

Prior to embarking on supply chain​ design, why do operations managers first consider​ "make-or-buy" and outsourcing​ decisions? Part 2 A. Some products or services may be better or less expensive if obtained externally. B. Modern accounting practices require a quantitative analysis of production options. C. Globalization dictates focusing on fewer products or services to remain competitive. D. Organizations owe it to the community to share customer profits.

Some products or services may be better or less expensive if obtained externally.

Model C (M/D/1): Constant-Service-Time Model

Some service systems have constant, instead of exponentially distributed, service times. When customers or equipment are processed according to a fixed cycle, as in the case of an automatic car wash or an amusement park ride, constant service times are appropriate. - Because constant rates are certain, the values for ��, ��, ��, and �� are always less than they would be in Model A, which has variable service rates. As a matter of fact, both the average queue length and the average waiting time in the queue are halved with M/D/1

Why might an organization strive to form​ long-term relationships with a few dedicated​ suppliers? Part 2 A. The organization wishes to take advantage of diseconomies of scale. B. The organization needs the flexibility to meet rapidly increasing demand. C. Suppliers must quote the lowest cost to retain the​ organization's business. D. Suppliers are encouraged to provide design innovations and technological expertise.

Suppliers are encouraged to provide design innovations and technological expertise.

expected time between orders

T= numbero fo working days per year/N

ABC analysis divides​ on-hand inventory into three​ classes, generally based upon which of the​ following? Part 2 A. unit price B. annual dollar volume C. annual demand D. the number of units on hand E. item quality

annual dollar volume

What is a​ long-term purchase commitment to a supplier for items that are to be delivered against​ short-term releases to​ ship? Part 2 A. drop shipping B. advanced shipping notice C. blanket order D. postponement

blanket order

Queuing models are useful for Part 2 A. manufacturing but not service firms. B. both manufacturing and service firms. C. service but not manufacturing firms. D. primarily agricultural applications.

both man and service firms

As orders are relayed from​ retailers, to​ distributors, to​ wholesalers, to​ manufacturers, the fluctuations in order quantities increase at each step in the sequence. What is this​ called? Part 2 A. bullwhip effect B. quantity discounts C. demand bias D. local optimization

bullwhip efffect

Omnichannel Strategy, Drop shipping and special packaging

bypasses the seller and reduces costs

Question content area Part 1 Which of the following is an example of a finite arrival​ population? Part 2 A. shoppers arriving at a supermarket B. copy machines in a copying shop that break down C. cars arriving at a suburban car wash D. students at a large university registering for classes E. all of the above

copy machines in a copying shop that break down

Inventory Turnover

cost of goods sold/average inventory

setup costs

cost to prepare a machine or process for manufacturing an order This includes time and labor to clean and change tools or holders.

cost of overage

cost/unit - salvage value

§ Three classic types of negotiation strategies:

cross based market based competitive bidding

Question content area Part 1 Which of the following describes using one supplier for a component and a second supplier for another​ component, where each supplier acts as a backup for the​ other? Part 2 A. outsourcing B. ​cross-sourcing C. ​parallel-sourcing D. ​dual-sourcing E. ​backup-sourcing

cross sourcing

Which of the following describes using one supplier for a component and a second supplier for another​ component, where each supplier acts as a backup for the​ other? Part 2 A. outsourcing B. ​parallel-sourcing C. ​dual-sourcing D. ​backup-sourcing E. ​cross-sourcing

cross sourcing

reneging customers-

customers are those who enter the queue but then become impatient and leave without completing their transaction.

Which of the following statements is NOT generally an implication stemming from an increase in the number of​ facilities? Part 2 A. quicker response B. increased facility costs C. decreased total logistics cost D. increased customer satisfaction

decreased total logistics cost

As the level of service​ increases, the cost of waiting time Part 2 A. first​ decreases, then increases. B. increases. C. decreases. D. remains unchanged.

decreases

ROP using safety stocks

demand during lead time +SS

Six Sourcing Strategies-3-Vertical Integration-

developing the ability to produce goods or services previously purchased or actually buying a supplier or a distributor § Developing the ability to produce goods or services previously purchased § Integration may be forward, towards the customer, or backward, towards suppliers (firm purchases its suppliers) § Can improve cost, quality, delivery, and inventory but requires capital, managerial skills, and demand § Risky in industries with rapid technological change § Vertical integration appears to work best when the organization has a large market share and the management talent to operate an acquired vendor successfully.

Which of the following is an example of establishing a virtual​ queue? Part 2 A. distributing pagers B. placing mirrors strategically C. providing free drinks D. providing a VR headset to all customers in line

distributing pagers

Supply chain managers outsource logistics to meet three​ goals: Part 2 A. drive down inventory​ investment, lower delivery​ costs, and provide better market response. B. lower delivery​ costs, improve delivery reliability and​ speed, and provide better market response. C. drive down inventory​ investment, improve delivery reliability and​ speed, and provide better market response. D. drive down inventory​ investment, lower delivery​ costs, and improve delivery reliability and speed.

drive down inventory​ investment, lower delivery​ costs, and improve delivery reliability and speed.

Which of the following tactics may reduce risks in supplier​ delivery, logistics, and​ distribution? Part 2 A. secure IT systems B. outsourcing supplier selection C. ​cross-country diversification D. effective contracts with penalties

effective contracts with penalties

Question content area Part 1 Inventory control models assume that demand for an item is Part 2 A. always independent on the demand for other items. B. either independent of or dependent on the demand for other items. C. identical to the demand for other items. D. always dependent on the demand for other items.

either independent of or dependent on the demand for other items.

One advantage of cycle counting is that it cycles or rotates the inventory constantly. Part 2 True False

false

Which of the following is an advantage of shipping manufactured goods by​ truck? Part 2 A. small environmental impact B. rapidly increasing capacity C. speed D. flexibility

flexibility

Distribution Management-

focuses on the outbound flow of products. § Design Distribution Networks to meet Customer expectations suggest 3 criteria: § 1) Rapid response, 2) Product choice, and 3) Service § Increasing the number of facilities generally improves response time and customer satisfaction § Selection and development of dealers or retailers § Just as firms need an effective supplier management program, an effective distribution management program may make the difference between supply chain success and failure § Top-notch supply chain performance requires good downstream (distributors and retailers) management, just as it does good upstream (suppliers) management.

Which of the following inventory items warrants the use of a​ single-period inventory​ model? Part 2 A. steel rebar for bridge construction B. disposable face masks C. toothbrushes in popular colors D. fresh bread in a​ baker's case

fresh bread in a bakers case

Which of the following inventory items warrants the use of a​ single-period inventory​ model? Part 2 A. steel rebar for bridge construction B. disposable face masks C. fresh bread in a​ baker's case D. toothbrushes in popular colors

fresh bread in a​ baker's case

A​ single-period inventory model is NOT applicable for Part 2 A. furniture. B. seasonal goods. C. milk. D. newspapers.

furniture

When an inventory manager uses ABC​ analysis, which of the following will they consider to be the most critical A​ item? Part 2 A. highest​ dollar-volume each year B. largest storage space required C. largest demand each year D. highest cost per unit

highest dollar volume each year

Which of the following is NOT one of the benefits accrued from a centralized purchasing​ function? Part 2 A. Maintain professional control over the purchasing process. B. Increase the duplication of tasks. C. Devote more resources to the supplier selection and negotiation process. D. Leverage purchase volume for better pricing.

increase the duplication of tasks

As the level of service​ increases, the cost of providing service Part 2 A. increases. B. first​ decreases, then increases. C. decreases. D. remains unchanged.

increases

Which organization has developed principles and standards to be used as guidelines for ethical​ behavior? Part 2 A. Institute for Supply Management B. Institute for Vendor Management C. Institute for Procurement Management D. Institute for Purchasing Management

institute for supply management

The Customer Developer:

integrates itself with the customer and takes over their entire logistics function. These providers will have few customers, but will perform extensive and detailed tasks for them.

Which of the following should a company include as part of an​ item's holding​ cost? Part 2 A. investment​ costs, including taxes and insurance B. process​ costs, including equipment setup C. labor​ costs, including purchasing and clerical support D. ordering​ costs, including forms and order processing

investment​ costs, including taxes and insurance

A Poisson distribution Part 2 A. is frequently used to describe the arrival rate in queuing theory. B. is the same as a beta distribution. C. is the position version of the negative exponential distribution. D. is normally distributed and can include a z​-score.

is frequently used to describe the arrival rate in queuing theory.

Airfreight Part 2 A. is the oldest means of freight transportation. B. is a​ fast-growing mode of shipping. C. represents about​ 10% of the tonnage shipped in the United States. D. is the best way to transport natural gas.

is the fast growing mode of shipping

waiting lines

items or people in a line awaiting service

Which of the following strategies is part​ collaboration, part purchasing from few​ suppliers, and part vertical​ integration? Part 2 A. horizontal integration B. keiretsu networks C. joint ventures D. virtual companies

keiretsu networks

Which of the following strategies is part​ collaboration, part purchasing from few​ suppliers, and part vertical​ integration? Part 2 A. joint ventures B. horizontal integration C. virtual companies D. keiretsu networks

keiretsu networks

Which of the following strategies is part​ collaboration, part purchasing from few​ suppliers, and part vertical​ integration? Part 2 A. keiretsu networks B. horizontal integration C. virtual companies D. joint ventures

keiretsu networks

Japanese manufacturers often pursue a strategy that is part​ collaboration, part purchasing from a few​ suppliers, and part vertical integration. What is this approach​ called? Part 2 A. keiretsu B. kaizen C. samurai D. ​poka-yoke E. kanban

kieretsu

Measuring Queue Performance Formulae

l =Mean # of arrivals per time period µ =Mean # of units served per time period Lq =Average # in the queue Ls =Average # of units (customers) in the system Wq = Average time spent in the queue Ws = Average time a unit spends in the system (waiting time plus service time)

Which of the following is NOT one of the assumptions of​ fixed-period systems? Part 2 A. Lead times are known. B. Items are independent of one another. C. Lead times are variable. D. The only relevant costs are the ordering and holding costs.

lead times are variable

Which negotiation strategy bases price on a​ published, auction, or index​ price? Part 2 A. ​market-based price model B. ​cost-based price model C. competitive bidding D. ​supply-based price model

market based price model

Waiting costs Part 2 A. may include the cost of line management and the cost of marketing. B. may reflect lost productivity. C. may include appraisal costs. D. may reflect inventory shrink.

may reflect lost productivity

Policies based on ABC analysis might include investing Part 2 A. extra care in forecasting for C items. B. more in inventory security for C items. C. more in supplier development for A items. D. the most time and effort verifying the accuracy of records for B items.

more in supplier development for A items

Question content area Part 1 Most bank teller services are operated with what kind of​ system? Part 2 A. ​multiple-server, single-phase B. ​single-server, multiphase C. ​single-server, single-phase D. ​multiple-server, multiphase

multi server single phase

In queuing​ problems, which of the following probability distributions is typically used to describe the time to perform the​ service? Part 2 A. negative exponential B. normal C. binomial D. Poisson E. lognormal

negative exponential

Which distribution most frequently describes the service time in queuing​ theory? Part 2 A. Normal B. Poisson C. Negative exponential D. Beta

negative exponential

What distribution do service times in an automobile repair shop​ follow? Part 2 A. Gamma B. Normal C. Poisson D. Negative exponential

normal

Annual setup cost

number of orders/year* cost per order = D/Q(S)

learning objectives

o Conduct an ABC analysis o Explain and use cycle counting o Explain and use the EOQ model for independent inventory demand o Compute a reorder point and explain safety stock o Apply the production order quantity model o Explain and use the quantity discount model o Understand service levels and probabilistic inventory models · · ♦The Importance of Inventory · · ♦Managing Inventory · · ♦Inventory Models · · ♦Inventory Models for Independent Demand · · ♦Probabilistic Models and Safety Stock · · ♦Single-Period Model · · ♦Fixed-Period (P) Systems

Combine one or more-

of the preceding negotiation techniques. The supplier and purchaser may agree to review cost data, accept some form of market-based cost, or agree that the supplier will "remain competitive."

The advantage of having many potential suppliers is their willingness to Part 2 A. participate in JIT. B. provide technical expertise. C. provide innovations. D. offer lower prices in the short term.

offer lower prices in the short term

The advantage of having many potential suppliers is their willingness to Part 2 A. provide technical expertise. B. participate in JIT. C. provide innovations. D. offer lower prices in the short term.

offer lower prices in the short term

Local optimization is a​ supply-chain complication best described​ as: Part 2 A. optimizing​ one's local area without full knowledge of supply chain needs. B. obtaining very high production efficiency in a decentralized supply chain. C. the prerequisite of global optimization. D. the result of supply chains built on suppliers with compatible corporate cultures. E. the opposite of the bullwhip effect.

optimizing​ one's local area without full knowledge of supply chain needs.

Which of the following does NOT belong to holding​ costs? Part 2 A. insurance on inventory B. ​pilferage, scrap, and obsolescence C. order processing D. storage costs

order processing

What is transferring a​ firm's activities that have traditionally been internal to external​ suppliers? Part 2 A. keiretsu network B. vertical integration C. ​make-or-buy D. outsourcing

outsourcing

What is transferring a​ firm's activities that have traditionally been internal to external​ suppliers? Part 2 A. outsourcing B. keiretsu network C. vertical integration D. ​make-or-buy

outsourcing

What is transferring a​ firm's activities that have traditionally been internal to external​ suppliers? Part 2 A. vertical integration B. ​make-or-buy C. keiretsu network D. outsourcing

outsourcing

Fixed-Period (P) Systems

periodic review- a system which inventory orders are made at a regular time intervals

Question content area Part 1 What tracks both receipts and subtractions from inventory on a continuing​ basis? Part 2 A. perpetual inventory B. periodic system C. shrinkage D. cycle counting E. ABC analysis

perpetual inventory

A system that keeps track of each withdrawal or addition to inventory continuously is Part 2 A. a fixed period system. B. a continuous inventory system. C. a perpetual inventory system. D. a constant monitoring system.

perpetual inventory system

Which of the following industries has the highest supply chain cost as a percentage of​ sales? Part 2 A. automobile B. petroleum C. restaurants D. metals

petroleum

Question content area Part 1 What is the cost to prepare a machine or process for​ production? Part 2 A. preparation cost B. setup cost C. holding cost D. ordering cost

setup cost

Total annual cost

setup cost + holding cost

Drop shipping-

shipping directly from the supplier to the end consuer rather than from the seller, saving both time and reshipping costs

For seasonal​ products, the service level should be set to equal Part 2 A. shortage cost​ / (overage cost​ + shortage​ cost). B. shortage cost​ / (overage cost − shortage​ cost). C. overage cost​ / (overage cost​ + shortage​ cost). D. overage cost​ / (overage cost − shortage​ cost).

shortage cost​ / (overage cost​ + shortage​ cost).

Question content area Part 1 A system in which the customer receives service from only one station and then exits the system is which of the​ following? Part 2 A. a​ limited-access system B. a​ single-phase system C. a multiple channel system D. a​ single-channel system E. a multiphase system

single phase system

vA lawnmower assembly plant uses a variety of​ nuts, bolts,​ screws, and other fasteners in its operation. Its supplier delivers these items directly to the point of use on the assembly line and ensures that there are always sufficient quantities of fasteners to maintain the production schedule. This is an example of Part 2 A. single stage control of replenishment. B. ​e-procurement. C. ​vendor-managed inventory. D. postponement.

vendor managed inventory

Question content area Part 1 What is developing the ability to produce goods or services previously purchased or actually buying a supplier or a​ distributor? Part 2 A. vertical integration B. outsourcing C. virtual companies D. horizontal integration

vertical integration

Question content area Part 1 What is developing the ability to produce goods or services previously purchased or actually buying a supplier or a​ distributor? Part 2 A. vertical integration B. virtual companies C. outsourcing D. horizontal integration

vertical integration

Items or people waiting in line for service are called Part 2 A. patience discipline. B. waiting lines​ (queue). C. waiting science. D. line analysis.

waiting lines (queue)

incentives

§ (Sales Incentives, Quantity Discounts, Quotas, and Promotions) push merchandise into the supply chain for sales that have not occurred ▶ This generates fluctuations that are ultimately expensive to all members of the chain.

Reverse auctions for buyers-

§ - In reverse auctions, a buyer initiates the process by submitting a description of the desired product or service. Potential suppliers then submit bids, which may include price and other delivery information. § Price not always the most important factor

2-Few Suppliers

§ A strategy of few suppliers implies that rather than looking for short-term attributes, such as low cost, a buyer is better off forming a long-term relationship with a few dedicated suppliers § Value created through economies of scale & learning curve improvements § Suppliers more willing to participate in JIT programs and contribute design and tech. expertise § Cost of changing suppliers is huge § Trade secrets and other alliances may be at risk This strategy also encourages those suppliers to provide design innovations and technological expertise

Managing the Integrated Supply Chain 2 ▶ Opportunities for effective management:

§ Accurate "pull" data, shared POS (point of sales) and CAO (computer assisted ordering) information. Accurate sales data that initiate transactions to pull product through the supply chain § Lot size reduction, shipping, discounts, reduced ordering costs

1. Market-based price model

§ Based on published, auction, or indexed prices § any commodities (agricultural products, paper, metal, etc.) are priced this way.

§ Railroads

§ Capable of carrying large loads § Little flexibility though containers and piggybacking have helped with this § Railroads in the U.S. employ 220,000 people and ship 40% of the ton-miles of all commodities, including 93% of coal, 57% of cereal grains, and 52% of basic chemicals. Containerization has made shipping of truck trailers on railroad flat cars a popular means of distribution.

Multimodal

§ Combines shipping methods § Common, especially in international shipments § Aided by standardized containers § The use of standardized containers facilitates easy transport from truck to rail to ship and back again, without having to unload products from the containers until the very end. § Faster shipping is generally more expensive than slower shipping § Faster methods tend to involve smaller shipment sizes while slower methods involve very large shipment sizes

1. Competitive bidding

§ Common policy for many purchases § Does not generally foster long-term relationships § t may also make difficult the communication and performance that are vital for engineering changes, quality, and delivery.

1-Many Suppliers

§ Commonly used for commodity products § a supplier responds to the demands and specifications of a "request for quotation," with the order usually going to the low bidder. § Purchasing is typically based on price § Suppliers compete with one another § Supplier is responsible for technology, expertise, forecasting, cost, quality, and delivery § Long-term "partnering" relationships are not the goal.

Centralized purchasing-

§ Companies with multiple facilities (e.g., multiple manufacturing plants or multiple retail outlets) must determine which items to purchase centrally and which to allow local sites to purchase for themselves § Leverage volume, Develop specialized staff § Develop supplier relationships, Maintain professional control § Devote resources to selection and negotiation § Reduce duplication of tasks, Promote standardization

Ethics and Sustainable SCM 1. Personal ethics

§ Critical to long-term success of an organization § Supply chains particularly susceptible § Guidelines · ♦ Promote and uphold responsibilities to one's employer; positive supplier and customer relationships; sustainability and social responsibility; protection of confidential and proprietary information; applicable laws, regulations, and trade agreements; and development of professional competence. · ♦ Avoid perceived impropriety; conflicts of interest; behaviors that negatively influence supply chain decisions; and improper reciprocal agreements.

Airfreight

§ Fast and flexible for light loads § May be expensive § Airfreight represents less than 1% of tonnage shipped in the U.S. However, the proliferation of airfreight carriers such as FedEx, UPS, and DHL makes it a fast-growing mode of shipping.

Six Sourcing Strategies4-Joint Ventures

§ Formal collaboration § firms may engage in collaboration to enhance their new product prowess or technological skills. But firms also engage in collaboration to secure supply or reduce costs § Enhance skills, Secure supply, Reduce costs § Daimler-BMW ( Standard part, Volume purchasing) § The challenge is to cooperation without diluting brand or conceding competitive advantage

Building the Supply Base 2 Negotiation-

§ In fact, negotiation represents a significant element in a purchasing manager's job, and well-honed negotiation skills are highly valued. § A significant element in purchasing and a highly valued skills

§ Online auctions

§ Low barriers to entry § Operations managers find online auctions a fertile area for disposing of excess raw material and discontinued or excess inventory.

Evaluating Disaster Risk

§ Many forms of potential disruption

Supply Chain Risk

§ More reliance on supply chains means more risks § Managing integrated supply chains is a strategic challenge. § Compounded by globalization and logistical complexity § Vendor reliability and quality risks § Political and currency risks § As organizations go global, shipping time (lead time) may increase, logistics may be less reliable, and tariffs and quotas may block companies from doing business

§ Trucking

§ Moves the vast majority of manufactured goods § Chief advantage is flexibility § The flexibility of shipping by truck is only one of its many advantages. Companies that have adopted JIT programs in recent years have put increased pressure on truckers to pick up and deliver on time, with no damage, with paperwork in order, and at low cost.

Establishing Sustainability in Supply Chains

§ Prepares for returns prior to product introduction

- Supplier certification

§ Qualification, Education, Certification § international quality certifications such as ISO 9000 and ISO 14000 are designed to provide an external verification that a firm follows sound quality management and environmental management standards. § A certification process often involves three steps: (1) qualification, (2) education, and (3) the certification performance process. Once certified, the supplier may be awarded special treatment and priority, allowing the buying firm to reduce or eliminate incoming inspection of materials.

Building the Supply Base 3 § Contracting

§ Share risks, benefits, create incentive structures to encourage supply chain members to adopt policies that are optimal for the entire chain § The idea is to make the total pie (of supply chain profits) bigger and then divide the bigger pie among all participants. The goal is collaboration.

Security and JIT

§ Shipments get misrouted, stolen, damaged, or excessively delayed § There is probably no society more open than the U.S. This includes its borders and ports—but they are swamped. § some 5% of the container movements are misrouted, stolen, damaged, or excessively delayed. § Technological innovations are improving security and inventory management § Location, motion sensors, broken seals, temperature § Tracking can help expedite shipments

§ E-Procurement

§ Speeds purchasing, reduces costs, integrates supply chain § It reduces the traditional barrage of paperwork and, at the same time, provides purchasing personnel with an extensive database of supplier, delivery, and quality data.

§ Online catalogs and exchanges

§ Standard items or industry-specific web sites § Online exchanges are typically industry-specific Internet sites that bring buyers and sellers together. Marriott and Hyatt created one of the first,

1. Cost-based price model

§ Supplier opens books to purchaser § The contract price is then based on time and materials or on a fixed cost with an escalation clause to accommodate changes in the vendor's labor and materials cost.

The Customer Adapter:

§ The Customer Adapter: takes over complete control of the company's logistics activities

Waterways

§ Typically used for bulky, low-value cargo § The usual cargo on internal waterways is bulky, low-value cargo such as iron ore, grains, cement, coal, chemicals, limestone, and petroleum products. § Used when shipping cost is more important than speed § Waterways are one of the nation's oldest means of freight transportation, dating back to construction of the Erie Canal in 1817. Included in U.S. waterways are the nation's rivers, canals, the Great Lakes, coastlines, and oceans connecting to other countries.

Pipelines:

§ Used for transporting oil, gas, and other chemical products

Closed-loop supply chain-

§ a supply chain designed to optimize both forward and reverse flows § Proactive design of a supply chain that tries to optimize all forward and reverse flows § A closed-loop supply chain prepares for returns prior to product introduction

Vendor managed inventory (VMI)-

§ a system in which a supplier maintains material for the buyer, often delivering directly to the buyers using department ▶ If the supplier can maintain the stock of inventory for a variety of customers who use the same product or whose differences are very minor (say, at the packaging stage), then there should be a net savings.

Blanket orders

§ against which actual orders are released. Long term purchase commitment to a supplier for items that are to be delivered against short term releases to ship ▶ Blanket orders are unfilled orders with a vendor and are also called open orders or incomplete orders

Single stage control of replenishment-

§ fixing responsibility for monitoring and managing inventory for the retailer § Single supply chain member responsible for monitoring & managing inventory in the SC.

large lots

§ reduce shipping and production costs but increase inventory holding and do not reflect actual sales § These three common occurrences—Contribute to the distortion of information about what is really happening in the supply chain causing what is known as the bullwhip effect

Electronic ordering and funds transfer speed

§ speed transactions and reduce paperwork ▶ Transactions between firms often use electronic data interchange (EDI), which is a standardized data-transmittal format for computerized communications between organizations

Return or reverse logistics-

§ the process of sending returned products back up the supply chain for value recovery or disposal § Sending returned products back up the supply chain for resale, repair, reuse, remanufacture, recycling, or disposal

Postponement

§ withholds modification as long as possible ▶ The concept is to minimize internal variety while maximizing external variety.

Control may be in the hands of:

§ ♦ A sophisticated retailer who understands demand patterns. Walmart does this for some of its inventory with radio frequency ID (RFID) tags. § ♦ A distributor who manages the inventory for a particular distribution area. Distributors who handle grocery items, beer, and soft drinks may do this. Anheuser-Busch manages beer inventory and delivery for many of its customers. § ♦ A manufacturer who has a well-managed forecasting, manufacturing, and distribution system. Hong Kong's TAL Apparel Ltd. does this for retailers worldwide

Assumptions

· Arrivals are served on a first-in, first-out (FIFO) basis, and every arrival waits to be served, regardless of the length of the line or queue. · Arrivals are independent of preceding arrivals, but the average number of arrivals (arrival rate) does not change over time. · Arrivals are described by a Poisson probability distribution and come from an infinite (or very, very large) population. · Service times vary from one customer to the next and are independent of one another, but their average rate is known and follows the negative exponential distribution. · The service rate is faster than the arrival rate.

Examples

· ♦ Walmart cooperates with its top 200 supplier factories in China to reach the goal of 20% energy efficiency improvement. · ♦ Mercury Marine, the large boat-engine producer, uses the Internet to enhance design with boat builders and engine dealers as it fights off competition from Honda, Yamaha, and Volvo. · ♦ Unifi, the leading U.S. maker of synthetic yarn, shares daily production-scheduling and quality-control information with raw materials supplier DuPont. · ♦ Amazon, to reduce logistics costs, has moved its fulfillment activities for Procter & Gamble products directly into Procter & Gamble's warehouse.

Maintenance/repair/operating (MRO)-

þ )- maintenance, repair, and operating materials þ keep machinery & processes productive þ They exist because the need and timing for maintenance and repair of some equipment are unknown.

perpetual inventory

þ Alternatively, perpetual inventory tracks both receipts and subtractions from inventory on a continuing basis.

Outline & Learning Objectives

þ Characteristics of a Waiting-Line System þ Arrival & Service Characteristics þ Waiting-Line Characteristics þ Measuring a Queue's Performance þ Queuing Costs þ The Variety of Queuing Models þ Model A(M/M/1): Single-Channel Queuing Model with Poisson Arrivals &Exponential Service Times þ Model B(M/M/S): Multiple-Channel Queuing Model þ Model C(M/D/1): Constant-Service-Time Model þ Model D: Limited-Population Model (skip)

inventory

þ Inventory represents as much as 50% of total invested capital for many companies þ Operations managers must balance inventory investment and customer service. Why? 1. To decouple or separate various parts of the production process 2. To decouple the firm from fluctuations in demand 3. Provide a stock of goods to provide a selection for customers 4. To take advantage of quantity discounts

Waiting-Line Characteristics

þ Limited or unlimited queue length þ Queue discipline (FIFO) is most common- This refers to the rule by which customers in the line are to receive service. þ Other priority rules may be used in special circumstances (priority shipping, free shipping)

periodic systems

þ Periodic systems require regular (periodic) checks of inventory to determine quantity on hand þ Necessary to make precise decisions about ordering, scheduling, and shipping þ A variation of the periodic system is a two-bin system. In practice, a store manager sets up two containers (each with adequate inventory to cover demand during the time required to receive another order) and places an order when the first container is empty.

Service Characteristics

þ Queuing system designs þ Single or multiple-channel system þ Single-phase system, multiphase system þ Service time distribution þ Constant service time þ Random service times follow a exponential distribution (a.k.a. negative exponential distribution) - service systems are usually classified in terms of their number of servers (number of channels) and number of phases (number of service stops that must be made).

Record Accuracy

þ Record Accuracy is a critical ingredient in production & Inv. Systems þ Focus on what is needed Accuracy can be maintained by either periodic or perpetual systems.

outline

þ Types of Inventory þ Inventory Management & Models þ Independent vs. Dependent Demand þ Holding, Ordering, and Setup Costs þ Inventory Models for Independent Demand þ Basic Economic Order Quantity (EOQ) Model þ Minimizing Costs, Reorder Points (ROP) þ Probabilistic Models and Safety Stock þ Quantity Discount Models þ Single-Period model þ Fixed-Period (P) Systems

Finished goods-

þ an end item ready to be sold but still an asset on the company's books þ Completed product awaiting shipment

raw material

þ materials that are usually purchased but have yet to enter the manufacturing process þ Purchased but not processed

Work-in-process (WIP

þ products or components that are no longer raw materials but have yet to become finished products þ Undergone some change but not completed þ A function of cycle time for a product þ WIP exists because of the time it takes for a product to be made (called flow time). Reducing flow time reduces inventory. Often this task is not difficult: during most of the time a product is "being made," it is in fact sitting idle.

Dependent demand -

þ the demand for item is dependent upon the demand for some other item in the inventory - New tires and new cars

Independent demand

þ the demand for item is independent of the demand for any other item in inventory Replacement tires and new cars - Assuming most of this chapter

Which of the following statements is true regarding​ cross-sourcing? Part 2 A. ​Cross-sourcing enhances technological skills. B. ​Cross-sourcing uses one supplier for a component and a second supplier for another​ component, where each supplier acts as a backup for the other. C. ​Cross-sourcing develops the ability to produce goods or services previously purchased or actually buying a supplier or distributor. D. ​Cross-sourcing describes suppliers who become part of a company coalition.

​Cross-sourcing uses one supplier for a component and a second supplier for another​ component, where each supplier acts as a backup for the other.

A large discount store and supermarket has a hair styling salon on its premises. The salon has several operators. Salon customers can shop in other parts of the store until their name is called for salon​ service, at which time the customer will be served by the next available stylist. This scenario provides an example of which of the​ following? Part 2 A. ​multiple-server, unlimited queue length B. multiple​ single-server systems, limited queue length C. ​single-server, multiphase, limited queue length D. ​multiple-server, limited queue length E. ​single-server, unlimited queue length

​multiple-server, unlimited queue length

Criteria other than annual dollar volume may be used

• High shortage or holding cost, • Anticipated engineering changes • Delivery problems, • Quality problems

A.K. Erlang

• How many circuits were needed to provide an acceptable telephone service? • What is the Queue capacity of the Central Telephone switch? • # of Operators to handle a given volume of calls ( Exchanges then used human operators and cord board to switch calls by means of jack plugs). • Psychology of Queueing

Total Cost per Hour- Based on Waiting

• Total cost per Hour= waiting cost + service cost

Managing the Integrated Supply Chain 1

▶ As managers move toward integration of the supply chain, substantial efficiencies are possible. The cycle of materials—as they flow from suppliers, to production, to warehousing, to distribution, to the customer—takes place among separate and often very independent organizations. It can lead to actions that may not optimize the entire chain. On the other hand, the supply chain is full of opportunities to reduce waste and enhance value

minimizing costs

▶ By minimizing the sum of setup (or ordering) and holding costs (total costs) ▶ The objective of most inventory models is to minimize total costs. With the assumptions just given, significant costs are setup (or ordering) cost and holding (or carrying) cost. ▶ Optimal order size Q* will minimize total cost ▶ Optimal order quantity occurs when holding cost and setup cost are equal

▶ Outsourcing logistics can reduce inventory, costs, and improve delivery reliability and speed

▶ Coordinate supplier inventory with delivery services ▶ May provide warehousing, assembly, testing, shipping, customs ▶ meet three goals: (1) drive down inventory investment, (2) lower delivery costs, and (3) improve delivery reliability and speed

perpetual inventory system continued

▶ Inventory is only counted at each review period ▶ May be scheduled at convenient times ▶ Appropriate in routine situations ▶ May result in stockouts between periods ▶ May require increased safety stock ▶ The disadvantage of the P system is that because there is no tally of inventory during the review period, there is the possibility of a stockout during this time. This scenario is possible if a large order draws the inventory level down to zero right after an order is placed.

The Supply Chain's Strategic Importance

▶ The coordination of all supply chain activities, starting with raw materials and ending with a satisfied customer ▶ Includes suppliers, manufacturers and/or service providers, distributors, wholesalers, retailers, and final customers ▶ Large portion of sales dollars spent on purchases ▶ Supplier relationships increasingly integrated and long term ▶ Improve innovation, speed design, reduce costs ▶ Managing supplier relationships has added emphasis

channel assembly

▶ postpones final assembly of a product so the distribution channel can assemble it § Implementation of postponement § Ship components or modules § Distributors become manufacturing partners § Finished goods inventory reduced § Better market response with less investment

Question content area Part 1 A product whose EOQ is 40 units experiences an increase in ordering cost from​ $10 per order to​ $90 per order. The revised EOQ​ is: Part 2 A. ​one-ninth as large. B. ​one-third as large. C. nine times as large. D. three times as large. E. cannot be determined

three times as large

Collaborative planning, forecasting, and replenishment (CPFR)

throughout the supply chain. A system in which members of a supply chain share information in a joint effort to reduce supply chain costs

Why might a company carry​ inventory? Part 2 A. to decouple steps in a production process B. to encourage customers to order in advance C. to synchronize production and distribution schedules D. to prevent inflation

to decouple steps in a production process

Why might a company carry​ inventory? Part 2 A. to decouple steps in a production process B. to prevent inflation C. to encourage customers to order in advance D. to synchronize production and distribution schedules

to decouple steps in a production process

Which of the following represents an unlimited​ queue? Part 2 A. toll booth serving automobiles on an interstate B. restaurant with no outside seating and limited capacity due to fire department restrictions C. ​drive-through lane at a ​fast-−food restaurant D. small barbershop with only 5 chairs for waiting customers E. faculty office with limited seating during office hours

toll booth serving automobiles on an interstate

Most inventory models attempt to​ minimize: Part 2 A. the number of orders placed. B. total​ inventory-based costs. C. the safety stock. D. the likelihood of a stockout. E. the number of items ordered.

total inventory based costsq

outsourcing

transferring a firm's activities that have traditionally been internal to external suppliers - Is part of the continuing trend toward using the efficiency that comes with specialization. The vendor performing the outsourced service is an expert in that particular specialty.

ABC analysis classifies inventoried items into three​ groups, usually based on annual dollar volume. Part 2 True False

true

Question content area Part 1 When the assumptions of the​ M/M/1, M/M/S,​ M/D/1, and​ limited-population queuing models do not hold​ true, other approaches are available to us. Part 2 A. True B. False

true

Supply Chain Risks & Mitigation Tactics (risks and risk reduction tactics) Cross sourcing-

using one supplier for a component and a second supplier for another component, where each supplier acts as a backup for the other Another option is to create excess capacity that can be used in response to problems in the supply chain. Such contingency plans can reduce risk.

expected number of orders=

N=demand/order quanity = D/Q*

Inventory Models for Independent Demand

Need to determine: When & how much to order þ Basic economic order quantity þ Production order quantity þ Quantity discount model

Third-Party Logistics (3PL )

Often provide customized and specialized services depending on needs.

Managing inventory

Operations managers establish systems for managing inventory. In this section, we briefly examine two ingredients of such systems: (1) how inventory items can be classified (called ABC analysis) and (2) how accurate inventory records can be maintained.

What is a Supply Chain

Two or more parties linked by a flow of resources (material, information, and money) to satisfy customer request - Final Customer is the one source of revenue - Payments between SC parties are just fund exchange - Intra SC payments depend on market conditions and competitive advantages Supply Chain consists of all parties involved directly or indirectly, in fulfilling a customer request

Module D- Waiting Lines

Waiting lines, often called queuing theory, is an important part of operations and a valuable tool for the operations manager. Waiting lines are common and may take the form of cars waiting for repair at a Midas Muffler Shop, copying jobs waiting to be completed at a FedEx office, or vacationers waiting to enter a ride at Disney. Waiting-line models are useful in both manufacturing and service areas. Analysis of queues in terms of waiting-line length, average waiting time, and other factors helps us to understand service systems, maintenance activities (that might repair broken machinery), and shop-floor control activities. Indeed, patients waiting in a doctor's office and broken drill presses waiting in a repair facility have a lot in common from an OM perspective. Both use human and equipment resources to restore valuable production assets (people and machines) to good condition.

The psychology of waiting

Waiting represents one of the most stress-inducing experiences for humans. No matter what the context, frustration quickly mounts, resulting in angry customers, shouting matches, switching to a competitor, or even road rage.

Other Probabilistic Models

When data on demand during lead time is not available, there are other models available When demand is variable and lead time is constant When lead time is variable and demand is constant When both demand and lead time are variable note: Lead time and demand should use the same time units either days, weeks,etc..)

Which of the following is NOT a type of​ "waiting cost?" Part 2 A. adding an additional server B. idle employees awaiting machine repairs C. a customer leaving a line because it was too long D. a customer not returning because the line was too long

adding an additional server

Which of the following devices represents an opportunity for technology to improve security of container​ shipments? Part 2 A. devices that measure radiation or temperature B. devices that can communicate the breaking of a container lock or seal C. devices that identify truck and container location D. devices that sense motion E. All of the above.

all of the above

Which of the following is a measure of queue​ performance? Part 2 A. probability of a specific number of customers in the system B. average waiting time in the line C. utilization factor for the system D. average queue length E. all of the above

all of the above

Which of the following statements about the basic EOQ model is​ TRUE? Part 2 A. If the carrying cost were to​ increase, the EOQ would fall. B. If annual demand were to​ double, the EOQ would increase. C. If annual demand were to​ double, the number of orders per year would increase. D. If the ordering cost were to​ double, the EOQ would rise. E. All of the above statements are true.

all of the above

Which of the following statements regarding the reorder point is​ TRUE? Part 2 A. The reorder point is that quantity that triggers an action to restock an item. B. There is a reorder point even if lead time and demand during lead time are constant. C. The reorder point is larger than d × L if safety stock is present. D. A shorter lead time implies a smaller reorder point. E. All of the above are true.

all of the above

Which of the following mitigation tactics is NOT designed to reduce the risk of information loss or​ distortion? Part 2 A. redundant databases B. secure IT systems C. training of supply chain partners on the proper interpretations and use of information D. alternate sourcing

alternate sourcing

Logistics & Distribution Management Logistics management- an

an approach that seeks efficiency of operations through the integration of all material acquisition, movement, and storage activities § Objective is to obtain efficient operations through the integration of all material acquisition, movement, and storage activities § Is a frequent candidate for outsourcing § Allows competitive advantage to be gained through reduced costs and improved customer service

Production Order Quantity Model-

an economic order quantity technique applied to production orders - Used when inventory builds up over a period of time after an order is placed - Used when units are produced and sold simultaneously This model is applicable under two situations: (1) when inventory continuously flows or builds up over a period of time after an order has been placed or (2) when units are produced and sold simultaneously.

Omnichannel approach-

an integrated multichannel strategy for communication and delivery that improves the user experience

Basic EOQ Model-

an inventory control technique that minimizes the total of ordering and holding costs Assumptions Demand is known, constant, and independent Lead time is known and constant Receipt of inventory is instantaneous and complete Quantity discounts are not possible Only variable costs are setup and holding Stockouts can be completely avoided

cost of shortage

sales price/unit - cost/unit

- Tools to help organizations manage waiting process and reduce anxiety

- · ♦Make waiting more comfortable (chairs; air conditioning; refreshments) - · ♦Establish virtual queues (pagers; Disney's Genie+) - · ♦Distract customers' attention (mirrors near elevators; videos) - · ♦Start service early (take drink orders; let customers look at the menu before being seated) - · ♦Explain reasons for the wait (reduces uncertainty; creates understanding and empathy) - · ♦Provide pessimistic estimates of waiting time (customers are pleasantly surprised with a shorter wait) - · ♦Compensate for extraordinary waiting (free drinks; coupons) - · ♦Don't make unrealistic promises (avoids even greater anger later) - · ♦Be fair! (customers more willing to "share the pain" of waiting if others have similar wait times)

Measuring Supply-Chain Performance

-Assets committed to inventory -Inventor Turnover -Weeks of supply Like all other managers, supply chain managers require standards (or metrics, as they are often called) to evaluate performance.

Six Sourcing Strategies

1) Many or 2) Few suppliers, 3) Vertical integration, 4) Joint ventures, 5) Keiretsu networks, or 6) Virtual companies

We use this fact to develop equations that solve directly for �*. The necessary steps are:

1. Develop an expression for setup or ordering cost. 2. Develop an expression for holding cost. 3. Set setup (order) cost equal to holding cost. 4. Solve the equation for the optimal order quantity.

Variety of queueing models They all assume:

1. Poisson distribution arrivals 2. FIFO discipline 3. A single service phase

Characteristics of Waiting-Line Systems 5

1. Population of dirty cars 2. Arrivals from general population 3. Queue discipline (waiting line) 4. Service facility (car wash) 5. Exit the system

Corporate Strategy & Supply Chain DecisionMake, Buy, or Outsource- page 446

1. Primary supplier selection criteria- cost strategy, response through capacity, speed, flexibility. Differentiation strategy is product development skills, willing to share information, and jointly and rapidly developing products 2. Supply chain inventory- minimize inventory to hold down costs, response is use buffer stocks to ensure speedy supply, and differentiation is minimize inventory to avoid product obsolescence 3. Distribution network- low cost strategy inexpensive transportation, sell through discount distributors/retailers, response by fast transportation, provide premium customer service. Differentiation is gather and communicate market research data, and knowledgeable sales staff 4. Product design characteristics- low cost strategy maximize performance and minimize costs. Response is low setup time, rapid production ramp up. Differentiation is modular design to aid product differentiation - Firms must achieve integration of strategy up and down the supply chain. And they must expect that strategy to be different for different products and to change as products move through their life cycle.

Policies that may be based on ABC analysis include the following:

1. Purchasing resources expended on supplier development should be much higher for individual A items than for C items. 2. A items, as opposed to B and C items, should have tighter physical inventory control; perhaps they belong in a more secure area, and perhaps the accuracy of inventory records for A items should be verified more frequently. 3. Forecasting A items may warrant more care than forecasting other items. Better forecasting, physical control, supplier reliability, and an ultimate reduction in inventory can all result from classification systems such as ABC analysis.

continued The SCOR Model

1. Reliability- addresses the ability to perform tasks as expected. Reliability focuses on the predictability of the outcome of a process. Typical metrics for the reliability attribute are: on time, the right quantity, the right quality. The SCOR KPI (level 1 metric) is perfect order fulfillment. It is a customer focus attribute 2. Responsiveness- describes the speed at which tasks are performed. Ex: cycle time metrics. SCOR KPI is order fulfillment cycle. It is a customer focused attribute 3. Agility- describes the ability to respond to external influences and the ability to change. Ex: non forecasted increases or decreases in demand, suppliers or partners going out of business, natural disasters, acts of terrorism, availability of financial tools (economy), or labor issues. SCOR KPI include flexibility and adaptability. Customer focused attribute 4. Costs- describes the costs of operating the process. Includes labor costs, material costs, and transportation. SCOR KPIs are cost of goods sold and supply chain management costs. These two indicators cover all supply chain spend. Cost is an internally focused attribute 5. Assets- describes the ability to efficiently utilize assets. Ex: inventory reduction and insourcing vs outsourcing. Metrics include: inventory days of supply and capacity utilization. SCOR KPIs: cash to cash cycle time and return on fixed assets. It is an internally focused attribute

Summary of models

1. Single server system (M/M/1)- checkout at 7 eleven, single channel, single phase, Poisson, negative exponential, unlimited population size, FIFO 2. Multiple server (M/M/S)- airline ticket counter- Multi server channel, single phase, Poisson, negative exponential, unlimited population, FIFO 3. constant service (M/D/1)- automated carwash- single channel, single phase, Poisson, negative exponential, constant population, FIFO 4. Finite Population (M/M/1 with fininte source)- shop with only a dozen machines that might break, single channel, single phase, Poisson, negative exponential, limited population, FIFO

Common Queuing Situations

1. Super market- arrivals (shoppers) service process (checkout clerks) 2. Highway toll booth- automobiles, collection of tolls at booth 3. Doctors office- patients, doctors and nurses 4. Computer system- programs to be run, computer process jobs 5. Telephone company- callers, switching equipment to forward calls 6. Bank- customer, transaction's handled by teller 7. Machine maintenance- broken machines, repair people fix machines 8. Harbor- ships and barges, dock workers load and unload

Supplier development-

1. Supplier development may include everything from training, to engineering and production help, to procedures for information transfer. § Integrate the supplier into the system § Quality requirements, § Product specifications, § Schedules and delivery § Procurement policies, Training § Engineering and production help § Information transfer procedures

The SCOR Model

1. Supply chain reliability- sample metric perfect order fulfillment =total perfect orders/total number of orders 2. Supply chain responsiveness- average order fulfillment cycle time = sum of actual cycle times for all orders delivered/total number of orders delivered 3. Supply chain agility- upside supply chain flexibility =time required to achieve an unplanned 20% increase in delivered quantities 4. Supply chain costs- supply chain management costs =cost to plan + cost to source + cost to deliver + cost to return 5. Supply chain asset management- cash to cash cycle time = inventory days of supply + days of receivables outstanding - days of payables outstanding Benchmarking useful May not be adequate Audits may be necessary Continuing communication, understanding, trust, performance, corporate strategy Foster a mutual belief that "we are in this together"

Which of the following statements is NOT​ true? Part 2 A. A supply chain includes​ suppliers; manufacturers​ and/or service​ providers; and​ distributors, wholesalers,​ and/or retailers who deliver the product​ and/or service to the final customer. B. Supply chain management describes the coordination of all supply chain​ activities, starting with raw​ materials, and ending with a satisfied customer. C. An increased sales effort may help a firm reach its profit goals more easily than would effective cost cutting. D. The objective of supply chain management is to coordinate activities within the supply chain to maximize the supply​ chain's competitive advantage and benefits to the ultimate consumer.

An increased sales effort may help a firm reach its profit goals more easily than would effective cost cutting.

Waiting-line models are useful in both manufacturing and service areas.

Analysis of queues in terms of waiting-line length, average waiting time, and other factors helps us to understand service systems (such as bank teller stations), maintenance activities (that might repair broken machinery), and shop-floor control activities.

weeks of supply

Average inventory investment / (Annual cost of goods sold/52 weeks)

Measuring Queue Performance queuing models help managers make decisions that balance service costs with waiting-line costs. Queuing analysis can obtain many measures of a waiting-line system's performance, including the following:

Average time that each customer or object spends in the queue Average queue length Average time each customer spends in the system Average number of customers in the system Probability that the service facility will be idle Utilization factor for the system Probability of a specific number of customers in the system

Which of the following statements is​ true? Part 2 A. ​"Reverse logistics" is the opposite of​ "closed-loop supply​ chain." B. Reverse logistics refers to the supplier selection process. C. A​ closed-loop suppy chain is designed to optimize only reverse flows. D. A​ closed-loop supply chain prepares for returns prior to product introduction.

A​ closed-loop supply chain prepares for returns prior to product introduction.

Which of the following statements is NOT true about a​ fixed-period system? Part 2 A. A​ fixed-period system is also called​ "continuous review." B. The advantage of the​ fixed-period system is that there is no physical count of inventory items after an item is withdrawn. C. The disadvantage of the​ fixed-period system is that because there is no tally of inventory during the review​ period, there is the possibility of a stockout during this time. D. A​ fixed-period system is appropriate when vendors make routine visits to customers to take fresh orders or when purchasers want to combine orders to save ordering and transportation costs.

A​ fixed-period system is also called​ "continuous review."

lead time

Lead time- in purchasing systems, the time between placing an order and receiving it; in productions systems, the wait move, queue, setup, and run times for each components produced

Which of the following is NOT a type of​ inventory? Part 2 A. ​work-in-process B. finished goods C. raw material D. MRP

MRP

ISM Ethical Standards

PERCEIVED IMPROPRIETY: Prevent the intent and appearance of unethical or compromising conduct in relationships, actions and communications CONFLICTS OF INTEREST: Ensure that any personal, business or other activity do not conflict with the lawful interests of your employer ISSUES OF INFLUENCE: Avoid behaviors or actions that may negatively influence, or appear to influence, supply management decisions RESPONSIBILITIES TO YOUR EMPLOYER: Uphold fiduciary and other responsibilities using reasonable care and granted authority to deliver value to your employer SUPPLIER AND CUSTOMER RELATIONSHIPS. Promote positive supplier and customer relationships SUSTAINABILITY AND SOCIAL RESPONSIBILITY. Champion social responsibility and sustainability practices in supply management CONFIDENTIAL AND PROPRIETARY INFORMATION: Protect confidential and proprietary information RECIPROCITY: Avoid improper reciprocal agreements APPLICABLE LAWS, REGULATIONS AND TRADE AGREEMENTS: Know and obey the letter and spirit of laws, regulations and trade agreements applicable to supply management PROFESSIONAL COMPETENCE. Develop skills, expand knowledge and conduct business that demonstrates competence and promotes the supply management profession

Which of the following is NOT a recommended tool for managing the waiting process and reducing customer​ anxiety? Part 2 A. Start service early. B. Provide optimistic estimates of waiting times. C. Distract​ customers' attention. D. ​Don't make unrealistic promises.

Provide optimistic estimates of waiting times.

inventory management

The objective of inventory management is to strike a balance between inventory investment and customer service - You can never achieve a low-cost strategy without good inventory management.

Supply-Chain Management objective

The objective of supply chain management is to structure the supply chain to maximize its competitive advantage and benefits to the ultimate consumer

issues

Three issues complicate development of an efficient, integrated supply chain: local optimization, incentives, and large lots.

5-Keiretsu Networks-

a Japanese term that describes suppliers who become part of a company coalition § A middle ground between few suppliers and vertical integration § Many large Japanese manufacturers have found another strategy: it is part collaboration, part purchasing from few suppliers, and part vertical integration. § Supplier becomes part of the company coalition § Often provide financial support for suppliers through ownership or loans § Members expect long-term relationships and provide technical expertise and stable deliveries § May extend through several levels of the supply chain § Members of the keiretsu can also have second- and even third-tier suppliers as part of the coalition. Similar networks exist in other countries—in South Korea, they are more family-controlled than keiretsu networks and known as chaebols.

Queuing theory

a body of knowledge about waiting lines

cycle counting

a continuing reconciliation of inventory with inventory records þ Items are counted and records are Updated periodically þ Often used with ABC analysis to determine cycle þ Has several advantages þ Eliminates shutdowns and interruptions þ Eliminates annual inventory adjustment þ Trained personnel audit the accuracy of inventory. þ Allows causes of errors to be identified & corrected þ Maintains accurate inventory records

Poison distribution-

a discrete probability distribution that often describes the arrival rate in queueing theory

ABC Analysis -2

a method for dividing on hand inventory into three classifications based on annual dollar volume (pareto principle) ▶ Divides inventory into three classes based on annual dollar volume § Class A - high annual dollar volume (15% inv items) (75% dollar vol) § Class B - medium annual dollar volume (30% inventory items) (20% dollar vol) § Class C - low annual dollar volume (55% inventory items) (5% dollar vol) ▶ Used to establish policies that focus on the few critical parts and not the many trivial ones ▶ What it sales the most of. Focusing on dollar volume

First-In, First-Out (FIFO) rule

a queue discipline in which the first customers in the line receive the first service

Single service queuing system- (single channel)

a service system with one line and one server

The Supply Chain Operations Reference (SCOR) Model-

a set of processes, metrics, and best practices developed by the APICS supply chain council § Processes, metrics, and best practices

Inventory theft (pilferage)-

a small amount of theft

Probabilistic models

a statistical model applicable when product demand or nay other variable is not known but can be specified by means of a probability distribution

Single-Period Model

a system for ordering items that have little or no value at the end of a sales period (perishables) ▶ Only one order is placed for a product ▶ Units have little or no value at the end of the sales period

Single phase system-

a system in which the customer receives service from only one station and then exits the system (fast food resteraunt)

Blockchain-

a technology that tracks, documents, and verifies by adding blocks of information after each transaction

§ Local optimization can magnify fluctuations

a. Slight upturns in demand are overcompensated for because no one wants to be caught short. Similarly, slight downturns are overcompensated for because no one wants to be caught holding excess inventory.

The common measures of a queuing​ system's performance​ include: Part 2 A. average time each customer spends in the​ system, probability that the service system will be​ idle, and average time each customer spends in the queue. B. maximum queue​ length, maximum time a customer may spend in the​ queue, and average queue length. C. average queue​ length, maximum time a customer may spend in the​ queue, and the utilization factor for the system. D. probability that the service facility will be​ idle, average queue​ length, and probability that the waiting time will exceed a specified duration. E. average time each customer spends in the​ system, maximum queue​ length, and probability of a specific number of customers in the system.

average time each customer spends in the​ system, probability that the service system will be​ idle, and average time each customer spends in the queue.

Question content area Part 1 A fried chicken​ fast-food chain that acquired feed mills and poultry farms has performed which of the​ following? Part 2 A. backward integration B. horizontal integration C. job expansion D. current transformation E. forward integration

backward integration

Question content area Part 1 Customers who​ ________ refuse to join the waiting line because it is too long to suit their needs or interests. Part 2 A. Poisson B. balk C. renege D. queue

balk

A response strategy requires suppliers be selected based primarily on Part 2 A. product development skills. B. cost. C. ​capacity, speed, and flexibility. D. being willing to share information.

capacity, speed, and flexibility

Make-or-Buy Decisions-

choosing products and services that can be advantageously obtained externally as opposed to produced internally is known as the make-or buy decision. - Supply chain personnel evaluate alternative suppliers and provide current, accurate, and complete data relevant to the buy alternative.

The appropriate level of safety stock is typically determined by Part 2 A. carrying sufficient safety stock so as to eliminate all stockouts. B. taking the square root of the economic order quantity. C. choosing the level of safety stock that assures a given service level. D. minimizing the expected stockout cost.

choosing the level of safety stock that assures a given service level.

What is a supply chain designed to optimize both forward and reverse​ flows? Part 2 A. ​closed-loop supply chain B. ​bullwhip-loop supply chain C. ​reverse-loop supply chain D. ​open-loop supply chain

closed loop supply chain

6-Virtual Companies-

companies that rely on a variety of supplier relationships to provide services on demand. Also known as hollow corporations or network companies ▶ Rely on a variety of supplier relationships to provide services on demand ▶ Fluid organizational boundaries that allow the creation of unique enterprises to meet changing market demands ▶ The relationships may be short- or long-term and may include true partners, collaborators, or simply able suppliers and subcontractors. Whatever the formal relationship, the result can be exceptionally lean performance. ▶ Exceptionally lean performance, low capital investment, flexibility, and speed (efficiency) ▶ The apparel business provides a traditional example of virtual organizations. ▶ A contemporary example is exemplified by Vizio, Inc., a California-based producer of flat-screen TVs that has about 400 employees but huge sales.

The​ do-it-yourselfer plucked a gallon can of base paint from the shelf of the local hardware store and handed it to​ Keith, the cheerful clerk at the paint counter. Their eyes met briefly and the​ do-it-yourselfer silently handed over sample​ 150C-1, Musical​ Mist, to the clerk. It was impractical to keep several gallons of every possible color on the shelves at the hardware​ store, so the paint manufacturer had created clever workaround. The workaround was a​ computer-based system that added predetermined quantities of pigments to a gallon can of base paint depending on the desired​ shade, in this​ case, Musical Mist. The hardware store now needed to stock only the base​ paint, this​ machine, and a small supply of paint pigments in order to create the thousands of colors in its catalog. This scenario is a prime example of Part 2 A. drop shipping. B. postponement. C. ​vendor-managed inventory

postponement

What is the practice of keeping a product generic as long as possible before​ customizing? Part 2 A. keiretsu B. forward integration C. postponement D. backward integration E. ​vendor-managed inventory

postponement

With regard to the​ cost-based price model negotiation​ strategy, which of the following is​ true? Part 2 A. Prices are based upon supplier costs. B. Potential suppliers each submit quotations as to​ price, delivery, and so on. C. Prices are based in some way upon market standards agreed to by both supplier and purchaser. D. Prices float based on what the customer is willing to pay.

prices are based upon supplier costs

Which of the following best describes backward​ integration? Part 2 A. develop the ability to produce products that complement the original product B. build​ long-term partnerships with a few suppliers C. produce goods or services previously purchased D. develop the ability to produce the specified good more efficiently than before E. sell products to a supplier or a distributor

produce goods or services previously purchased

Service Developer 3PL:

provider will offer their customers advanced value-added services such as: tracking & tracing, cross Docking, specific packaging, or providing a unique security system

Question content area Part 1 When determining the optimal number of​ facilities, logistics-related costs do NOT usually include which of the following​ costs? Part 2 A. purchasing B. transportation C. facility D. inventory

purchasing

Which of the following mitigation tactics could reduce economic​ risk? Part 2 A. franchising and licensing B. multiple transportation modes and warehouses C. purchasing contracts that address price fluctuations D. subcontractors on retainer

purchasing contracts that address price fluctuations

fixed quantity

quantity- an ordering system with the same order amount each time

What is another name for a waiting​ line? Part 2 A. cube B. quag C. key D. queue

queue

Supply Chain RiskWhat could go Wrong?

random phenomena accidents

Which three criteria should be considered when designing distribution networks to meet customer​ expectations? Part 2 A. ​capacity, security, environment B. rapid​ response, product​ choice, service C. ​cost, volume, profit D. ​convenience, selection, value

rapid response, product choice, service

Which of the following types of inventory describes inventory that has been purchased but not​ processed? Part 2 A. ​finished-goods inventory B. ​maintenance/repair/operating supply inventory C. ​work-in-process inventory D. raw material inventory

raw material

Supply chain management describes the coordination of all supply chain​ activities, starting with​ _______ and ending with​ _______. Part 2 A. component​ suppliers; distributors B. ​manufacturers; retailers C. raw​ materials; satisfied customers D. ​quality; differentiation

raw materials, satisfied customers

Types of Inventory

raw materials, work in process, maintenance/repair/operating finished goods

Supply chain management describes the coordination of all supply chain​ activities, starting with​ _______ and ending with​ _______. Part 2 A. ​manufacturers; retailers B. component​ suppliers; distributors C. raw​ materials; satisfied customers D. ​quality; differentiation

raw materials; satisfied customers

customers who balk

refuse to join the waiting line because it is too long to suit their needs or interests

Question content area Part 1 The shopper who says to​ himself, "I've waited too long in this line. I​ don't really need to buy this product​ today," and leaves the store is an illustration of which element of arrival​ behavior? Part 2 A. renege B. frustration C. random arrival D. random departure E. balk

renege

Which of the following is NOT one of the four main types of​ inventory? Part 2 A. ​maintenance/repair/operating supply inventory B. safety stock inventory C. ​finished-goods inventory D. raw material inventory E. ​work-in-process inventory

safety stock inventory

Which of the following is NOT true about reverse logistics as compared to foward​ logistics? Part 2 A. Speed is often very important. B. Forecasting is more uncertain. C. Distribution costs are less directly visible. D. Pricing is dependent on many factors.

speed is often very important

EOQ (Economic Order Quantity)

square root 2DS/H

production order quantity

square root 2DS/H[1-(d/p)]

The objective of inventory management is to Part 2 A. decouple various parts of the production process. B. provide a selection of goods for anticipated customer demand. C. strike a balance between inventory investment and customer service. D. take advantage of quantity discounts.

strike a balance between inventory investment and customer service.

The objective of inventory management is to Part 2 A. strike a balance between inventory investment and customer service. B. decouple various parts of the production process. C. take advantage of quantity discounts. D. provide a selection of goods for anticipated customer demand.

strike a balance between inventory investment and customer service.

The first stage of supplier selection involves finding potential suppliers and determining the likelihood of their becoming good suppliers. What is this stage​ called? Part 2 A. supplier development B. supplier evaluation C. negotiation D. contracting

supplier evaluation

Holding costs

the costs of holding or "carrying" inventory over time therefore, holding costs also include obsolescence and costs related to storage, such as insurance, extra staffing, and interest payments.

ordering costs

the costs of placing an order and receiving goods cost of supplies, forms, order processing, purchasing, clerical support and or forth

A disadvantage of the​ "few suppliers" sourcing strategy​ is: Part 2 A. possible violations of the Sherman Antitrust Act. B. the risk of not being ready for technological change. C. the lack of cost savings for customers and suppliers. D. the high cost of changing partners. E. the suppliers are less likely to understand the broad objectives of the procuring firm and the end customer.

the high cost of changing partners

reorder point

the inventory level (point) at which action is taken to replenish the stocked item - EOQ answers the how much question - The reorder point ROP tells you when or order

objectives

· Explain the strategic importance of Supply Chain · Sourcing Issues: Make-or-Buy & Outsourcing · Six Sourcing Strategies · Evaluating Disaster Risk in the Supply Chain · Managing the Integrated Supply Chain · Building the Supply Base · Logistics & Distribution Management · Ethics and Sustainable Supply Chain Management · Measuring Supply Chain Performance 11.1 Explain the strategic importance of the supply chain 11.2 Identify six sourcing strategies 11.3 Explain issues and opportunities in the supply chain 11.4 Describe the steps in supplier selection 11.5 Explain major issues in logistics management 11.6 Compute percentage of assets committed to inventory and inventory turnover

Assumptions

· There is only one server. · The population of units seeking service is finite.5 · Arrivals follow a Poisson distribution, and service times are negative exponentially distributed. · Customers are served on a first-come, first-served basis