MKT 411 Exam 3 Study Guide

what is the impact on return rates (and thus reverse logistics) due to the growth of e-commerce?

Returns can represent significant challenges to a supply chain. In many cases, reverse logistics is viewed as an unwanted activity of supply chain management. In these cases, reverse logistics is seen simply as a cost of doing business or a regulatory compliance issue. Problems include the inability of information systems to handle returns or monitor reverse product flow, lack of worker training in reverse logistics procedures, little or no identification on returned packages, the need for adequate inspection and testing of returns, and the placing of potentially damaged returned products into sales stocks. A poor reverse logistics system can affect the entire supply chain financially and can have a large impact on how a consumer views a product brand, potentially impacting future sales. Some recent studies indicate the real costs of returns take up roughly 3 to 5 percent of total revenue. From a marketing perspective, an effective returns process can create goodwill and enhance customers' perceptions of product quality and purchase risk. From a quality perspective, product failure and returns information can be used by quality personnel in root cause analyses and by design personnel to reduce future design errors (the number one reason for a product return is a defective or damaged item). From a logistics perspective, returned products can still create value as original products, refurbished products, or repair parts. This also tends to reduce disposal costs.

what is the Malcolm Baldridge Award and its role in recognizing production excellence?

Stimulate firms to improve, recognize firms for quality achievements, and establish guidelines so organizations can evaluate their improvement and provide guidance to others Categories measured: ▪ Leadership ▪ Strategic planning ▪ Customer and market focus ▪ Information and analysis ▪ Human resource focus ▪ Process management ▪ Business results

what is TL?

TL carriers on the other hand have trailers dedicated to a single shipper's cargo. A customer loads a trailer full and then the TL company transports the shipments to a final destination where it is received and unloaded

How many defects (per million) that a six sigma approach will tolerate?

The statistical likelihood of non-defects 99.99966% of the time or 3.4 defects/million observations

what is a distribution center?

a warehouse that performs breakbulk activities and then forms outbound specific product assortments that are then shipped to the customer

The following is a term that refers to error or mistake proofing: a. Kanban b. Muda c. Poka-yoke d. Kaizen

c. Poka-yoke

what is form postponement?

involves the delay of final manufacturing until a customer order is received and is commonly regarded as an approach to mass customization

What does LTL stand for?

less than truckload carrier

what is kaizen?

ways to reduce supplier delivery and quality problems, solve movement problems, visibility problems, machine breakdown problems, machine setup problems, and internal quality problems

what is waiting?

access idle machine an operator and inventory wait time

what are the common forms of intermodal transport?

aka piggyback service - Truck trailer-on-flatcar (TOFC) - Container-on-flatcar (COFC)

what is public warehouse?

an independent warehouse that is operated as a for-profit. contract out or lease a wide range of light manufacturing, warehousing, and distribution services to other companies. Public warehouses provide a number of specialized services that firms can use to create customized shipments and goods. Public warehouses provide the short-term flexibility and investment cost savings that private warehouses cannot offer. If a firm's demand changes or its products change, the short-term commitments required at public warehouses allow the firm to quickly change warehouse locations. Public warehouses allow firms to test various market areas and withdraw quickly if demand does not materialize as expected. The cost for firms to use a public warehouse can also be very small if their capacity requirements are minimal. One of the main disadvantages associated with public warehouses is the lack of control provided to the goods owners. Other problems include lack of communication with warehouse personnel, lack of specialized services or capacity at the desired locations, and the lack of care and security that might be given to products. Firms might find it advantageous to use public warehouses in some locations and private warehouses in others. For large, established markets and relatively mature products, large firms may decide that owning and operating a warehouse makes the most sense, whereas the same firm may lease space and pay for services at public warehouses in developing markets and low-demand areas.

what is jidoka?

automatically stopping the process when something is wrong and then fixing the problems on the line itself as they occur

Calculate the inventory container size required given the following: Demand rate = 10 parts per hour, Safety stock required = 16%Number of containers = 14, Time to cycle through entire system = 6 hours a. 2 parts b. 5 parts c. 4 parts d. 3 parts

b. 5 parts

________________ are the most flexible mode of transportation and account for 70 percent of all the freight tonnage moved in the U.S. a. Water Carriers b. Air Carriers c. Motor Carriers d. Rail Carriers

c. Motor Carriers

what is Six Sigma and its origins?

- A system that stresses commitment by top management to enable a firm to identify customer expectations and excel in meeting and exceeding those expectations - A type of TQM method devised by Motorola in 1987 - A statistics-based decision making framework designed to make significant quality improvements in value-adding processes

What is the Toyota Production System?

- An operating philosophy of waste reduction and value enhancement - Created by key Toyota executives o Earlier versions were based on Ford assembly plants and US supermarket distribution systems - The idea is to make the best use of an organization's time, assets, and people in all processes in order to optimize productivity

what are rail carriers?

- Compete favorably when the distance is long, and the shipments are heavy or bulky - Less expensive than air and motor carriers - Compete fairly well on long hauls ▪ Disadvantages: • Slow • Inflexible • Shipment damages • Equipment availability • Service frequency • Rail companies use each other's rail cars but can be problematic keeping track of rail cars & getting them where needed

what are the principles of the toyota production system?

- Continuous improvement - Respect for people - The right process will produce the right results - Add value to the organization by developing your people and partners - Continuously solving root problems drives organizational learning

what are water carriers?

- Inexpensive - Includes inland waterway, coastal, intercoastal, and deep-sea - Competes well with rail and pipeline - Inland waterway transportation can be used for heavy, bulky, low-value materials ▪ Disadvantages: • Slow • Inflexible

Consider the simple activity we did in class - what it demonstrated in terms of stop/start, experience, and training effects on productivity?

- Inventory setup and time reduction - Seemingly simple changes in the execution of a process can have profound changes in outcomes

what are pipeline carriers?

- Little maintenance once pipeline is running - Materials hauled in a liquid or gaseous state - Transported items include water, oil, gasoline, natural gas, and coal slurry - Inexpensive - Unique ▪ Disadvantages: • Limited in what they can carry • Most controversial pipelines is the proposed Keystone XL pipeline

what does logistics involve?

- Move goods from suppliers to buyers - Move finished goods to the customer - Move work-in-process materials within a firm - Return or recycle goods - Store items along the way in supply chains

what are lean layouts, and their typical impacts on productivity?

- Move people and materials when and where needed ASAP - Very visual with operators at one processing center able to monitor work at another

what are motor carriers (or trucks)?

- Often classified as less-than-truckload carriers or truckload carriers - Are the most flexible mode of transportation and account for 70 percent of all the freight tonnage moved in the United States. - Low fixed and variable costs. - Can compete favorably with rail and air carriers for short-to-medium hauls. - Competitive with other firms of transportation for long cross-country shipments ▪ Disadvantages: • Weather • Traffic problems

What must managers commit to (in terms of the workforce) for lean production to be successful?

- Providing subordinates with the skills, tools, time, and other necessary resources to identify problems and implement solutions - Create a culture in which workers are encouraged to speak out when problems are found

how is kanban involved in small-batch scheduling?

- Small production batches are accomplished with the use of kanbans - Kanbans generate demand for parts at all stages of production creating a "pull" system

What is intermodal transportation?

- The use of combinations of the various transportation modes - Very popular transportation arrangement and can make the movement of goods cheaper, quicker, and more secure

what are air carriers?

- Very fast - The best option for long distance - Accounts for only a small portion of total freight hauled ▪ Disadvantages: • Cannot carry extremely heavy or bulky cargo • Expensive • Limited geographic coverage

why the toyota production system includes visual cues so heavily?

- Visual communication is the most effective means of communication people understand the message quicker, and with great comprehension than any other means of communication. In addition, in a manufacturing setting different information needs to be communicated simultaneously to multiple people. Using other means of communications, such as sounds would result in confusion. - Some visual communication, such as safety signs, are required by OSHA - Other forms of visual communication are used to improve productivity, ensure quality, and provide needed information

what is reverse logistics? what activities can it involve

- aka returns management) refers to the backward flow of goods from customers in the supply chain occurring when goods are returned, either by the end-product consumer or by a business customer within the supply chain - Refers to the movement, storage, and processing of returned goods

what are the four different legal forms of transportation service companies?

- common carriers - contract carriers - exempt carriers - private carriers

what are the major modes of transportation?

- motor carriers (or trucks) - rail carriers - air carriers - water carriers - pipeline carriers

what are the seven types of muda?

- overproducing - waiting - transportation - overprocessing - excess inventory - excess movement - scrap and rework

what is a kaizen blitz?

A rapid improvement event or workshop, aimed at finding big improvements

why some companies have tried to implement the toyota production system but had limited access?

Companies often fail because they do not realize that you need to put the entire system in place, and not just bits and pieces of it, to gain the same type of culture and process improvement that Toyota can boast of

what is small-batch scheduling?

Drives down costs by: - Reducing purchased, works in progress, and finished goods inventories - Makes the firm more flexible to meet customer demand

what is LTL?

LTL carriers move small packages or shipments that take up less than one truckload and the shipping fees are higher per hundred weight than TL fees, since the carrier must consolidate many small shipments into one truckload and then break the truckload back down into individual shipments at the destination for individual deliveries. For many shippers using LTL carriers is a much less expensive alternative using a TL carrier

How logistics strategy should be tied to larger corporate goals - and the types of goals most directly relevant to (and affected by) logistics

Management first defines the organizations visions and goals and then logistics strategies are designed to ensure achievement of these goals. It should be a two-way connection. For global goods movements, logistics managers must be aware of a number of issues not impacting domestic movements such as regulatory requirements, import/export limitations, port and warehousing issues, and the modes of transportation available. Poor logistics management can literally bring a supply chain to its knees, regardless of the production cost or quality of the products. Alternatively, good logistics management can be one of the elements creating a competitive advantage for supply chains.

what is a kaizen blitz designed to accomplish?

Most kaizen improvements though, are small individual events, emphasizing creativity

what is producer's risk?

Type I Error - The chance we reject a good lot a buyer rejects the shipment of good quality units because the sample quality level did not meet standards

what is consumer's risk?

Type II Error - The chance we accept a bad lot fire accepts a shipment of poor-quality units because the sample falsely provides a positive answer

what is crossdocking?

a continuous replenishment logistics process at a distribution center, where incoming goods are sorted and/or consolidated, and then shipped out to their final destinations, without the need to store the goods. Crossdocking generally takes place within 24 hours, sometimes even less than an hour, after shipment arrivals and is used to replenish high demand inventories

_______________ carry the majority of the world's water-transported manufactured goods. a. Containerships b. Barges c. Supertankers d. None of these choices are correct.

a. Containerships

For integrated supply chains, logistics is considered: a. Critically important b. Important c. Not at all important d. Somewhat important

a. Critically important

The acts of receiving shipments, breaking down shipments, repackaging shipments, and distributing components to a manufacturing location or finished products to customers by a distribution center is referred to as: a. Crossdocking b. Customs Brokering c. Risk pooling d. Piggy backing

a. Crossdocking

Which company probably played the largest role in the development of the Toyota Production System? a. Ford b. Chrysler c. General Motors d. Boeing

a. Ford

A product positioned strategy: a. Places warehouses close to the sources of supply b. Places warehouses midway between the sources of supply and the customers c. Places warehouses close to customers d. None of these choices are correct.

a. Places warehouses close to the sources of supply

If you needed to transport bulky products to a customer, your primary concern was keeping costs low, and speed was not a priority, then which of the following modes would be best? a) Rail b) Air c) Pipeline d) Ship e) Truck

a. Rail

Returns management is also known as _______. a. Reverse logistics b. Waste reduction c. Inverted logistics d. Backward logistics

a. Reverse logistics

What type of firm would be most interested in using a third-party logistics service? a. Small firm with no logistics expertise b. A freight forwarder c. Large integrated global manufacturing company d. A for-hire transportation company

a. Small firm with no logistics expertise

True or False: The responsibility of transportation is to create both time utility and place utility, which means that products will be delivered at the right time to the desired location. a. True b. False

a. True

the five-Ss refer to: a. Industrial housekeeping b. Robust evaluation techniques c. Keiretsu relationships d. Overspending habits

a. industrial housekeeping

A company that produces 8 pound bags of cat litter gathered 5 samples of 6 bags each. The weights of each bags' contents are listed below. What would you plot on the x̄ chart for sample 2? a. All of the following numbers: 8.34, 8.22, 7.77, 8.18, 8.13 b. 8.305 c. All of the following numbers: 8.33, 8.22, 8.08, 8.51, 8.41, 8.28 d. 8.130

b. 8.305

Which of the following is a direct benefit from the adoption of NAFTA? a. A reduction in immigrants crossing the border from Mexico b. An increase in trade between U.S., Canada, and Mexico c. An increase in trade between U.S. and China d. An increase in manufacturing job opportunities in the U.S.

b. An increase in trade between U.S., Canada, and Mexico

Which of the following quality gurus believed that companies should strive for zero defects and that quality was, in a sense, free since quality improvement programs invariably paid for themselves? a. Baldrige b. Crosby c. Deming d. Juran

b. Crosby

True or False: A primary advantage for motor carriers is the weather. a. True b. False

b. False

A ___________________ consolidates large numbers of small shipments to fill entire truck trailers or rail cars to achieve truckload or carload transportation rates. a. Load broker b. Freight forwarder c. Consolidation forwarder d. Transportation broker

b. Freight forwarder

It is argued that transportation deregulation is good because: a. It protects consumers in terms of monopoly pricing b. It encourages competition c. It ensures adequate transportation service throughout the country d. All of these choices are correct.

b. It encourages competition

The Quick Response program, developed in the 1980's, was an offshoot of the following supply chain concept: a. Efficient Consumer Response b. Just-in-Time c. Kaisen d. Six Sigma

b. Just-in-Time

Lean production systems are sometimes referred to as pull systems because demand from customers activates the production actions of the manufacturing facilities. In order for this demand to be communicated to everyone in the supply chain/manufacturing facility a signal must be passed from downstream processing centers to the upstream processing centers. This system of relaying signals is referred to as a: a. Keiretsu Network b. Kanban System c. Semaphore System d. TQM Network

b. Kanban System

The foundational concept in the Toyota Production System that defines the value of partnership arrangements is: a) Muda b) Keiretsu c) Flow d) Hunky-dory e) None of the above

b. Keiretsu

In the text, Table 9.1 shows that for-hire logistics expenditures in the U.S., have _____________ in the past thirty-one years. a. Remained the same b. More than quadrupled c. Slowly declined d. Decreased for the first 10 years, then increased

b. More than quadrupled

Which tool is useful for presenting data in an organized fashion, indicating process problems from most to least severe: a. Check Sheets b. Pareto Charts c. Cause-and-Effect Diagrams d. Fishbone Diagrams

b. Pareto Charts

Foreign-trade zones are: a. Secure sites in foreign countries where goods wait for clearance by importing country b. Secure sites within the U.S. where goods and materials can be assembled and exported without being levied domestic duties or excise taxes c. Bodies of water where cargo ships are allowed to dock to deliver imported goods d. Markets in the U.S. where foreign countries set up and sell products

b. Secure sites within the U.S. where goods and materials can be assembled and exported without being levied domestic duties or excise taxes

Which person was a key figure in developing the Toyota Production System and also developed the concept of poka-yoke? a. Toyoda b. Shingo c. Ohno d. Deming

b. Shingo

Calculate the defects per million opportunities (DPMO) given the following: Blake, owner of Blakester's T-shirt Shoppe, keeps track of customer complaints. For each T-shirt sold, there are four possible complaints: T-shirt shrinks, poor quality, design wears off, and doesn't fit right. Each week, Blake calculates the rate of T-shirt "defects" per total T-shirts sold, and then uses this information to determine his company's DPMO. During the past week, his company sold 1200 T-shirts. His company received 22 customer shrinkage complaints, 16 poor quality complaints, 12 design wears off complaints, 8 doesn't fit right complaints. Calculate his firm's DPMO. a. 5.8 x 10-6 b. 0.193 c. 12,083 d. 69,600

c. 12,083

A current warehouse system has five warehouses with 4,000 units at each warehouse. The company desires to change to three warehouses to become more centralized and keep the same customer service levels. Determine the average warehouse inventory levels, using the square root rule. (Choose the closest answer.) a. 11,619 b. 25,820 c. 15,492 d. 6,667

c. 15,492

A company sells eggs in boxes with 12 cartons and 12 eggs in each carton, thus there are 144 eggs in each box. The organization wants to construct a P-chart to track the proportion of broken eggs in each sample (shown below). If the company used one box of eggs in each sample in the dataset below, what would be the centerline, upper control limit (UCL), and lower control limit (LCL) for the appropriate P-chart? (Use z = 3.) Choose the closest answer. a. Centerline = 0.083, UCL = 0.152, LCL = 0.014 b. Centerline = 0.50, UCL = 0.625, LCL = 0.375 c. Centerline = 0.025, UCL = 0.64, LCL = 0 d. Centerline = 0.30, UCL = 0.70, LCL = 0

c. Centerline = 0.025, UCL = 0.64, LCL = 0

Japanese manufacturing firms sometimes create cooperative coalitions with their suppliers in order to provide the suppliers with a certain degree of financial support. What are these cooperative coalitions called? a. Kaizen Networks b. Jidoka Networks c. Keiretsu Networks d. Kanban Networks

c. Keiretsu Networks

______________ creates the efficient flow of goods between supply chain partners, allowing profits and competitive advantage to be maximized. a. Procurement b. Transportation planning c. Logistics d. Operations

c. Logistics

We discussed in class that logistics strategy is usually best tied to this category of overall business objectives: a) Topline revenue b) Profitability c) Customer satisfaction or NPS d) Operating cost e) Geographic reach

c. customer satisfaction or NPS

A company produces 8-pound bags of cat litter; as shown below, it gathered 5 samples with 6 bags in each sample for quality control purposes. The weights of each of the bags are listed below. a. 8.26 b. 7.97 c. 7.92 d. 8.06

d. 8.06

When mistakes occur in the supply chain, which of the following things might happen? a. Customer service levels drop b. Cost may increase due to expedited deliveries c. More safety stock must be held d. All of these choices are correct.

d. All of these choices are correct.

Which of the following is an example of how lean programs can help to protect the environment? a. Using rubber from used tires in auto parts b. Batch size reduction to reduce plastics c. Parts made from recycled materials d. All of these choices are correct.

d. All of these choices are correct.

An important outcome of statistical process control is: a. Firms can minimize total inventory cost b. Firms can visually monitor process performance c. Firms can take corrective actions before process variabilities get out of control d. Both "Firms can take corrective actions before process variabilities get out of control" & "Firms can visually monitor process performance" e. None of these choices are correct.

d. Both "Firms can take corrective actions before process variabilities get out of control" & "Firms can visually monitor process performance"

Which of the following is NOT consistent with the lean philosophy? a. Positioning WIP inventories near each processing center b. Developing a culture of continuous improvement within the organization c. Cross-training employees to increase processing flexibility d. Increasing batch sizes to take advantage of economies of scale

d. Increasing batch sizes to take advantage of economies of scale

Intermodal marketing companies (IMCs) are companies that act as intermediaries between intermodal a. Trucking companies b. Warehouse management companies c. Waste management companies d. Railroad companies

d. Railroad companies

Reverse logistics can have a positive impact on the environment through activities such as? a. Reneging b. Data warehousing c. Risk pooling d. Recycling

d. Recycling

Which of the following marked the end of the initial push by Congress to deregulate the entire U.S. transportation industry? a. The Granger Laws b. The Interstate Commerce Act of 2013 c. The Transportation Act of 1920 d. The Shipping Act of 1984

d. The Shipping Act of 1984

what is poka-yoke?

error or mistake-proofing

what is transportation?

excess movement of materials and multiple handling

what are exempt carriers?

exempt from regulation of services and rates and if they transport certain exempt products like produce, livestock, coal, or newspapers

True or False: lean production, JIT, and Six Sigma quality mean the same thing

false

what does FOB stand for?

free on board

What is FOB origin pricing?

goods are legal responsibility of buyer at supplier's finished good's pickup location (liability)

what is nemawashi?

informal process of quietly laying the foundation for some proposed change or project, by talking to the people concerned, gathering support and feedback, and so forth

what is overprocessing?

non-value adding manufacturing and other activities

what are contract carriers?

not bound to serve the general public and serve specific customers under contractual agreements

what is a private carrier?

not subject to economic regulation and typically transports goods for the company owning the carrier

what are common carriers?

offer transportation services to all shippers at published rates between designated locations without discrimination

what is keiretsu?

partnership arrangements between Japanese manufacturers and suppliers

what is cost-of-service?

prices based on fixed and variable costs of transportation

what is negotiated pricing?

prices fall somewhere between above cost-of-service and value-of service

what are the major categories of warehouses?

private and public

what is time utility?

products are delivered at the right time

what is place utility?

products are delivered to the desired location

what is time postponement?

refers to the delaying of the forward movement of goods until customer orders have been received

what is scrap and rework?

scrap materials and rework due to poor quality

what is value-of-service?

services prices at market bearing competitive levels

what is kanban?

signal card and part of JIT

what is excess inventory?

storage of excess inventory

What is FOB destination?

supplier is legal owner of the product until it safely reaches its destination (ownership)

what types of utility does logistics involve?

time utility and place utility

What does TL stand for?

truck load carrier

True or False: the malcolm baldrige national quality award recognizes firms for their quality achievements but is only given to U.S. firms

true

True or False: when lean firms share their best practices with supply chain member, this is referred to as yokoten

true

what is excess movement?

unnecessary movements of employees

what is overproducing?

unnecessary production to maintain high utilizations

what is private warehouse?

warehouses that are owned by the firm storing the goods. For firms with large volumes of goods to store or transfer, private warehouses represent an opportunity to reduce costs of warehousing as well as control levels of service provided to customers. firms are free to decide what to store, what to process, what types of security to provide, and the types of equipment to use, among other operational aspects. Private warehousing can also enable the firm to better utilize its workforce and expertise in terms of transportation, warehousing, and distribution center activities. As supply chains become more global to take advantage of cheaper sources of supply or labor, the use of private warehouses tends to increase. Finally, private warehouses can generate income and tax advantages through leasing of excess capacity and/or asset depreciation. For these reasons, private warehousing accounts for the vast majority of overall warehouse space in the United States. Owning warehouses, though, can also represent a significant financial risk and loss of flexibility to the firm. The costs to build, equip, and then operate a warehouse can be very high and most small- to moderate-sized firms simply cannot afford private warehouses. Private warehouses also restrict firms to locations that may not prove optimal as time passes. Warehouse size or capacity is also somewhat inflexible, at least in the short term. Another problem can be insurance. Insurance companies, in many cases, do not like insuring goods in private warehouses, simply because security levels can be meager or nonexistent, creating a significant concern regarding fires or thefts of goods.

what is consolidation warehouses?

warehouses that collect large numbers of LTL shipments from nearby regional sources of supply then deliver in TL or CL quantities to a manufacturer

what is muda?

waste in all aspects of production