Supply Chain MGMT Exam 2 review

Which of the following results from using the chase production strategy? a. None of these is correct b. The workforce fluctuates in response to the demand pattern c. It relies on fluctuating finished goods inventories and backlogs to meet demand d. The firm keeps its workforce levels constant

The workforce fluctuates in response to the demand pattern

Economic Manufacturing Quantity Model

The classic independent demand inventory system that computes the optimal order quantity to minimize total inventory costs.

reorder point

The lowest inventory level at which a new order must be placed to avoid a stockout during the order cycle time period.

Inventory Turnovers

The number of times a firm's inventory is utilized and replaced over an accounting period, such as a year.

Issues with master production schedule

1. The plan is not agreed 2. The plan is not constrained 3. Information doesn't flow from other areas of the business 4. Poor S&OP (Sales and operations planning) 5. MPS is not flexible and becomes out of synch with demand patterns 6. Time fences used are inappropriate 7. Inexperienced MPS custodian 8. Actual demand falls short of forecast 9. The mix is wrong - common parts, complete assemblies etc 10. The MPS plan doesn't get executed

If at the end of the year, the cost of revenue = $2,000, total revenue = $10,000 and inventory value = $1,500, the inventory turnover ratio would be: a. 0.750 b. 0.188 c. 5.333 d. 1.333 e. 6.667

1.333

When demand and delivery lead time are known and constant, daily demand = 7, purchase lead time = 3 days, and the purchase price = $20/unit, then the reorder point is: a. 32 b. 24 c. 42 d. 21 e. 28

21

se the information below to calculate the number of orders per year when using the EOQ: Annual demand for an item is 37,000 units. The cost to place an order is $190. The per unit cost of the item is $35The annual holding rate is 25% Choose the closest answer. a. 58 b. 29 c. 158 d. 41

29

The cost of a product is $5, and the carrying cost rate is 20%; the cost of processing an order is $55 and the annual demand is 800. What is the economic order quantity (EOQ)? a. 160 units b. 297 units c. 27 units d. 148 units e. 15 units

297

Forecast performance

Biased forecast will lead to excessive inventories or stockouts, Key to accurate forecasts is collaboration with different partners inside and outside of the firm working together to eliminate forecasting error, Collaboration can lead to significant improvements in forecasting accuracy.

multiple regression forecast

A forecast technique using multiple regression

naïve forecast

A forecasting approach where the actual demand for the immediate past period is used as a forecast for next period's demand

Pareto Analysis

A graphic technique that prioritizes the most frequently occurring problems or issues. The analysis recommends that problems falling into the most frequently occurring category be assigned the highest priority and managed closely.

Forecast bias

A measure of the tendency of a forecast to be consistently higher (negative bias) or lower (positive bias) than the actual demand

rough cut capacity plan

A plan that is used to check the feasibility of the master production schedule.

Chase Production Strategy

A production strategy that adjusts output to match the demand pattern during each production period

Mixed Production Strategy

A strategy that strives to maintain a stable core workforce while using other short-term means such as overtime, an additional shift, subcontracting, or the hiring of part-time and temporary workers to meet short-term high demand.

Radio Frequency Identification (RFID)

A technology that enables huge amounts of information to be stored on chips (called tags) and read at a distance by readers, without requiring line of-sight scanning.

Production Order Quantity Model

A variation of the classic EOQ model, used to determine the most economical number of units to produce.

Quantity Discount Model

A variation of the classic EOQ model, wherein purchase price is allowed to vary with the quantity purchased.

Inventory Turnover Ratio

A widely used measure to analyze how efficiently a firm uses its inventory to generate revenue.

What plan specifies which end product is to be made, how many are required, and when they need to be completed? a. Aggregate production plan b. Super bill of materials c. Master production schedule d. Bill of material

Aggregate production plan

What is one of the challenges of widespread application of AI in demand forecasting? a. Access to "right" data b. Talent scarcity c. All of these are correct d. Trust in AI systems

All of the above

Which one of the following is a reason for firms to NOT carry inventory? a. Inventory can become obsolete very quickly b. It is expensive and requires storage space c. Inventory can deteriorate quickly while it is in storage d. All of these are correct

All of the above

business cycle

Alternating periods of economic expansion and contraction in economic activity

active RFID tags

An RFID tag that is equipped with an onboard power supply to power the integrated circuits and broadcast its signal to the tag reader.

An advantage/benefit of utilizing an ERP system includes which of the following? a. All of these are correct b. ERP systems are inexpensive to implement for a small firm c. ERP system can provide a firm and its supply chain partners with a significant competitive advantage d. ERP systems require very little training to get the system up and running

ERP system can provide a firm and its supply chain partners with a significant competitive advantage

Which of the following is considered a DISADVANTAGE of utilizing an ERP system? a. ERP systems decrease supply chain inventories b. ERP systems use a single database and common infrastructure c. ERP systems are very complex and have proven difficult to implement d. Once ERP information is entered it is made available to all users

ERP systems are very complex and have proven difficult to implement

Why are firms migrating to ERP systems? a. ERP systems tie together a variety of specialized systems b. ERP systems are successful with two-dimensional processes c. ERP systems are inexpensive to implement d. ERP systems are easy to implement, particularly in large organizations

ERP systems tie together a variety of specialized systems

quantitative forecasting methods

Forecasts based on mathematical models and relevant historical data.

Qualitative forecasting methods

Forecasts based on opinions and intuition.

Fixed-order quantity model

Independent demand inventory models that use fixed parameters to determine the optimal order quantity to minimize total inventory costs.

Which of the following is one of the key objectives of the Collaborative planning, forecasting, and replenishment concept? a. The arrangement of counter-purchasing b. Increased supplier certification c. Information sharing between suppliers and retailers that aids in planning and satisfying customer demands d. Build a production process that meets customer requirements

Information sharing between suppliers and retailers that aids in planning and satisfying customer demands

Which of the following would be considered a dependent demand item? a. Microwave Oven b. Paint c. Shoes d. Microchips used in automobiles

Microchips used in automobiles

When using linear trend forecasts, the trend line is determined using the least squares method, which does what to determine the characteristics of the linear equation? a. Forecasts the next period demand by adjusting the current period's actual demand b. Estimates the next period forecast by using the current period's actual demand c. Applies the smallest weight to most recent data d. Minimizes the sum of the squared deviations

Minimizes the sum of the squared deviations

passive RFID tags

RFID tags that are without an internal power source and require power from a tag reader.

simple moving average forecast

Uses historical data to generate a forecast. Works well when demand is stable over time.

If your company had an annual purchase cost of items equal to $1,900,000, an annual holding cost of $150,000 and an annual ordering cost of $150,000 this scenario would reveal that: a. Your order lot size was lower than the EOQ. b. Your order lot size was equal to the EOQ. c. Your order lot size was higher than to the EOQ. d. Nothing because there is insufficient information to discern where the EOQ would be.

Your order lot size was equal to the EOQ.

master production schedule

a medium range production plan that is more detailed than the aggregate production plan • More detailed than APP & easier to plan under stable demand; Planning horizon shorter than APP, but longer than the lead time to produce the item

Lead Capacity Strategy

a proactive approach that adds or subtracts capacity in anticipation of future market conditions and demand

Lag Capacity Strategy

a reactive approach that adjusts capacity in response to demand

system nervousness

a situation where a small change in the upper level production plan causes a major change in the lower level production plan

Enterprise Resource Planning (ERP)

a suite of applications called modules, a database, and a set of inherent processes for consolidating business operations into a single, consistent, computing platform

Cause-and-effect forecasting

assumes that one or more factors are related to demand and that the relationship between cause and effect can be used to estimate future demand

Time series forecasting

based on the assumption that the future is an extension of the past. Historical data is used to predict future demand

Finished goods

completed products ready for shipment

A company is conducting forecasting that revolves around the global recession and real estate crises. This type of forecasting can be referred to as what component of a time series? a. Random Variations b. Trend Variations c. Cyclical Variations d. Seasonal Variations

cyclical variations

dependent demand

demand for items that are subassemblies or component parts to be used in the production of finished goods

Random variations

due to unexpected or unpredictable events such as natural disasters

Trend Variations

increasing or decreasing over many years

Safety stock

level set so minimum projected on-hand inventory does not fall below the safety stock level

Planned order releases (most important output)

net requirements of the final product and appropriate lead times

bullwhip effect

occurs when distorted product-demand information ripples from one partner to the next throughout the supply chain; amplification of the variation of the demand pattern along the supply chain

Cyclical variations are longer than a year and can be influenced by: a. Population growth b. Imbalances in supply and demand c. Events such as natural disasters d. Political factors

political factors

Which of the following is considered an advantage/benefit of utilizing an ERP system? a. Utilizes multiple databases in order to provide up-to-date information b. Minimal capital investment is needed to purchase and implement the system. c. Reduces the bullwhip effect d. Increases the bullwhip effect

reduces the bullwhip effect

Seasonal variations

show peaks & valleys that repeat over consistent interval (i.e., hours, days, weeks, months, seasons, or years)

System nervousness

small changes in the upper-level-production plan cause major changes in the lower-level production plan

independent demand

the demands for various items are unrelated to each other

Forecast error

the difference between a forecast and the actual demand

Linear Trend Forecast

trend can be estimated using simple linear regression to fit a line to a time series of historical data

Which of the following are components of a time series forecast? a. Seasonal income, a business variations b. Random, quantitative and natural variations c. Trend, cyclical and random variations d. Population growth, cultural changes, and income shifts

trend, cyclical, and random variations

Raw materials

unprocessed purchase inputs

Cyclical variations

wavelike movements that are longer than a year (e.g., business cycle)