Chapter 6; Manufacturing Procurement

The point in the supply chain where inventory is positioned to allow the preceding processes to operate independently is the

customer order decoupling point.

True or false: Typically, there is a trade-off where quicker response to customer demand comes at the expense of greater inventory investment.

TRUE

Which of the following is an example of a product made with a project layout?

a house

Firms that combine a number of preassembled modules to meet customers' specifications are called

assemble-to-order.

Firms that service customers from finished goods inventory are known as which of the following

make-to-stock.

Which process layout is best used for manufacturing liquids?

Continuous

Customer order decoupling points:

1. Can dictate lead times 2. Can impact investment

Which of the following statements about inventory measures is TRUE?

1. Inventory turn compares cost of goods sold to average inventory. 2. Days-of-supply measures how long (on average) a firm's inventory can support sales.

The Production Process:

1. Sourcing 2. Making 3. Delivering

Inventory Measure based on Definition:

1. Total Average Value of Inventory: Sum of raw materials, work-in-process, and finished goods inventory 2. Inventory Turn: Cost of goods Sold/ Average Inventory Value 3. Days of Supply: Average Inventory / Cost of goods sold

Customer order decoupling points:

1. can impact inventory investment. 2. determine lead times

Lead time can vary based on _______.

1. customization of the product being produced. location of the manufacturing facility.

A computer manufacturer offers 3 types of hard disk drives, 2 types of monitors, 4 types of batteries, and 5 choices of operating systems. How many total combinations are possible using these choices?

120 Combinations 3x2x4x5 = 120

Last year a firm had an average inventory of $1,500,000 and the cost of goods sold was $3,750,000. What was the inventory turn last year?

2.5

Which of the following is NOT true about a workcenter layout?

A workcenter layout is commonly used for systems with high production volumes.

Which layout moves product from workstation to workstation at a controlled rate?

Assembly line

Which of the following type of work flow is appropriate when production volume is high?

Assembly line (repetitive times go faster)

Last year a firm had an average inventory of $1,500,000 and the cost of goods sold was $3,750,000. What was the days-of-supply last year?

Days of Supply = Average Inventory/ COGS = 1,500,000/ 3,750,000 = 0.4 x 365 days = 146

Little's law relates inventory, throughput rate, and flow time as

Inventory = Throughput rate x Flow time

______ techniques are typically used to manage production processes that follow a project layout structure.

Project management

Firms invest in lean manufacturing programs in order to:

achieve high customer service with minimum levels of inventory investment

Which of the following is not a step required to make a good?

decoupling

The time required to respond to a customer order is known as:

lead times

The issue of balancing the level of finished inventory against the level of service to the customer occurs in which type of firm?

make - t0 - stock

Firms that service customers from finished goods inventory are known as which of the following:

make - to - stock

Which type of firm invests in lean manufacturing programs in order to improve customer service levels for a given inventory investment?

make - to - stock

If inventory turn is known, days-of-supply is calculated by

multiplying the inverse of inventory turn by 365 days.

In an assemble-to-order system, the total number of unique combinations possible is calculated by:

multiplying the number of options for each choice together.

A production process map is built by

tracking the flow of material through the system.