exam 2 ops

The EOQ lot technique in MRP produces or acquires exactly the amount of product that is needed each time period with none carried over into future periods - t/f

false

The fixed time period model is an appropriate approach for planning expensive raw materials used in production t/f

false

Transaction cost is dependent on

he level of integration and automation incorporation into the system. Manual systems such as simple two-bin logic depend on human posting of the transactions to replenish inventory, which is relatively expensive compared to using a computer to automatically detect when an item needs to be ordered. Integration relates to how connected systems are

Two common measures to evaluate supply chain efficiency are

inventory turnover and weeks-of-supply.

Products demand for end items come primarily from two main sources:

(1) Known customers who have placed specific orders, such as those generated by sales personnel, or from interdepartmental transactions and (2) the aggregate production plan which reflects the firm's strategy for meeting demand in the future. In addition to the demand for end products, customers also order specific parts and components either as spares or for service and repair. These demands are not usually part of the master production schedule; instead they are fed directly into the material requirements planning program at the appropriate levels.

Demand for the meters and components originates from two sources:

(1) regular customers that place firm orders in advance based on the needs of their projects; (2) and other, typically smaller, customers that buy these items as needed.

Inventory Costs

-Holding (or carrying) costs -Setup (or production change) costs -Ordering costs -Shortage costs When the demand is not met and the order is canceled, this is referred to as a stock-out. A backorder is when the order is held and filled at a later date when the inventory for the time is replenished.

3 categories TCO

1) acquisition costs, (2) ownership costs, and (3) post-ownership costs

Purposes of Inventory

1. To maintain independence of operations 2. To meet variation in product demand 3. To allow flexibility in production scheduling 4. To provide a safeguard for variation in raw material delivery time 5. To take advantage of economic purchase-order size 6. other domain specfic reasons

The average cost of inventory in the United States is

30-35% of its value

Third-party logistics company:

A company that manages all or part of another company's product delivery operations

Single-period problem:

Answers the question of how much to order when an item is purchased only one time and it is expected that it will be used and then not reordered

"core" and "strategic" activities.

Core activities are key to the business, but do not confer a competitive advantage such as a bank's information technology operations Strategic activities are a key source of competitive advantage. Because the competitive environment can change rapidly, companies need to monitor the situation constantly and adjust accordingly

Price-break model:

Deals with the fact that, generally, the selling of an item varies with the order size

Which of the following is a key output of the MRP process?

Planned order releases

Weeks of supply:

Preferred measure of supply chain efficiency that is mathematically the inverse of inventory turn times 52

Inventory:

The stock of any item or resource used in an organization

If the cost to change from producing one product to producing another were almost zero, then the production lot size could be very small-t/f

true

A super bill-of-materials includes items...

with fractional options (A super bill can specify, for example, 0.3 of a part.

Fixed-time period model (P-model):

(multiperiod) An inventory control model that specifies inventory is ordered at the end of a predetermined time period. The interval of time between orders is fixed and the order quantity varies

Fixed-order quantity model (Q-model):

(multiperiod) An inventory control model where the amount requisitioned is fixed and the actual ordering is triggered by inventory dropping to a specific level of inventory

Enterprise resource planning (ERP):

A computer system that integrates application programs in accounting sales, manufacturing, and the other functions in a firm

Available to promise:

A feature of MRP systems that identifies the difference between the number of units currently included in the master schedule and the actual (firm) customer orders.

Product-process matrix:

A framework depicting when the different production process types are typically used depending on product volume and how standardized the product is The horizontal dimension relates to the volume of a particular product or group of standardized products Standardization is shown on the vertical axis and refers to variations in the product that is produced These variations are measured in terms of geometric differences, material differences, and so on Standardized products are highly similar from a manufacturing processing POV, whereas low standardized products require different processes

Inventory turnover:

A measure of supply chain efficiency Good inventory turnover values vary by industry and the type of products being handled. Values of six to seven are typical for manufacturing firms

Inventory turn:

A measure of the expected number of times inventory is replaced over a year

Cycle counting:

A physical inventory-taking technique in which inventory is counted frequently rather than once or twice a year. The key to effective cycle counting and, therefore, to accurate records lies in deciding which items are to be counted, when, and by whom The easiest time for stock to be counted is when there is no activity in the stockroom or on the production floor. This means on the weekends or during the second or third shift, when the facility is less busy Some firms strive for 100% accuracy, whereas others accept a 1, 2, or 3 percent error The accuracy level often recommended by experts is +- 0.2% for A items, +- 1% for B items, and +- 5% for C items

Customer order decoupling point:

A point where the inventory is positioned to allow processes or entities in the supply chain to operate independently Selection of decoupling points is a strategic decision that determines customer lead times and can greatly impact inventory investment The closer this point is to the customer, the quicker the customer can be served Quicker response to customer demand comes at the expense of greater inventory investment

Assemble-to-order firms:

A production environment where pre assembled components, subassemblies and modules are put together in response to a specific customer order A primary task is to define a customer's order in terms of alternative components and options since it is these components that are carried in inventory Good example is the way Dell Computers makes its desktop computers. The number of combinations that can be made may be nearly infinite One of the capabilities required for success in the assemble-to-order environment is an engineering design that enables as much flexibility as possible in combining components, options, and modules into finished products The number of finished products is usually substantially greater than the number of components that are combined to produce the finished product

Make-to-stock firms:

A production environment where the customer is served "on-demand" from finished goods inventory The essential issue in satisfying customers is to balance the level of finished inventory against the level of service to the customer Examples include TV, clothing, and packaged food products Focus in the make-to-stock environment is on providing finished goods where and when the customers want them

Make-to-order firms:

A production environment where the product is built directly from raw materials and components in response to a specific customer order Customer decoupling point could be in either raw materials at the manufacturing site or possibly even with the supplier inventory (same with engineer-to-order)

Continuous replenishment:

A program for automatically supplying groups of items to a customer on a regular basis Advantages for the retailer: Cost to carry the inventory of a given product for a year equals at least 25% of what they paid for the product A two-week inventory reduction represents a cost savings equal to nearly 1% of sales. The average retailer's profits equal about 2% of sales so this savings is enough to increase profits by 50% Because the retailer makes more money on specific products, it has an incentive to carry a broader line of that product and give them more shelf space

Transportation method:

A special linear programming method that is useful for solving problems involving transporting products from several sources to several destinations The two common objectives of such problems are (1) minimize the cost of shipping n units to m destinations or (2) maximize the profit shipping n units to m destinations

Centroid method:

A technique for locating single facilities that considers the existing facilities, the distances between them, and the volumes of goods to be shipped Often used to locate intermediaries or distribution warehouses. This method assumes that inbound and outbound transportation costs are equal, and it does not include special shipping costs for less than full loads

Forward buying:

A term that refers to when a customer, responding to a promotion, buys far in advance of when an item will be used. Retailers have to pay to carry the year's supply, and the shipment bulge adds costs throughout the supplier's system

Performing the MRP Calculations:

An MRP record is kept for each item managed by the system. The record contains gross requirements, scheduled receipts, projected available balance, net requirements, planned-order receipts, and planned-order releases data.

Net change systems:

An MRP system that calculates the impact of a change in the MRP data (the inventory status, BOM or master schedule) immediately.

Factor-rating systems:

An approach for selecting a facility location by combining a diverse set of factors. Point scales are developed for each criterion. Each potential site is then evaluated on potential criterion and the points are combined to calculate a rating for the site Do not account for the wide range of costs that may occur within each factor

Cross-docking:

An approach used in these consolidation warehouses, where, rather than making larger shipments, incoming shipments are broken down into small shipments for local delivery in an area. This often can be done in a coordinated manner so that the goods never are stored in inventory

Inventory turn:

An efficiency measure where the cost of goods sold is divided by the total average value of inventory For two similar consumer products manufacturers, an inventory turn of six times per year is certainly much better than a firm turning inventory two times per year

Total cost of ownership (TCO):

An estimate of the cost of an item that includes all the costs related to the procurement and use of an item, including any related costs in disposing of the item after it is no longer useful Concept can be applied to a company's internal costs or it can be viewed more broadly to consider costs throughout the supply chain Highly dependent on the actual situation

Reorder point:

An order is placed when the inventory position drops to this level

Hub-and-spoke systems:

Combine the idea of consolidation and that of cross-docking. The warehouse is referred to as a "hub" and its sole purpose is sorting goods

Request for proposal (RFP):

Commonly used for purchasing items that are more complex or expensive and where there may be a number of potential vendors A detailed information packet describing what is to be purchased is prepared and distributed to potential vendors Vendor then responds with a detailed proposal of how the company intends to meet the terms of the RFP In the RFP, the bid is included in the proposal, whereas in a request for bid or reverse auction, vendors actually bid on the time in real time and using the internet software

Bill-of-materials:

Contains the complete product description, listing not only the materials, parts, and components but also the sequence in which the product is created. One of the three main inputs to the MRP program (the other two are the master schedule and the inventory records file). Often called the product structure file or product tree because it shows how a product is put together.

Master production schedule (MPS):

Deals with end items (typically finished goods items sold to customers) and is a major input to the MRP process. If the end item is quite large or expensive, however, the master schedule may schedule major subassemblies or components instead. All production systems have limited capacity and limited resources

Manufacturing cell layout:

Dedicated area where products that are similar in processing requirements are produced. Cells are designed to perform a specific set of processes, and the cells are dedicated to a limited range of products Firm may have many different cells in a production area, each set up to produce a single product or a similar group of products efficiently, but typically at lower volume levels Scheduled to produce "as needed" in response to current customer demand

Customer order decoupling point:

Determines where inventory is positioned to allow processes or entities in the supply chain to operate independently Selection of decoupling points is a strategic decision that determines customer lead time and can greatly impact inventory investment The closer the point is to the customer, the quicker the customer can be served Trade off where quicker response to customer demand comes at the expense of greater inventory investment because finished goods inventory is more expensive than raw material inventory

ABC inventory classification:

Divides inventory into dollar volume categories that map into strategies appropriate for the category Divides items into three groupings: high dollar volume (A), moderate dollar volume (B), and low dollar volume (C) Dollar volume is a measure of importance; an item low in cost but high in volume can be more important than a high-cost item with low volume A items constitute roughly the top 15% of items, B items the next 35%, and C items the last 50% A items may be more clearly controlled with weekly ordering, B items may be ordered biweekly, and C items may be ordered monthly or bimonthly. The unit cost of items is not related to their classification

Project layout:

For large or massive products produced in a specific location, labor, material, and equipment are moved to the product rather than vice versa. Construction sites (houses and bridges) and movie shooting lots are examples

What is the correct order of these key business processes?

Forecast of demand, aggregate plan, MPS, Materials planning

Engineer-to-order:

Here the firm works with the customer to design the product, which is then made from purchased material, parts, and components Engineering determines what materials will be required and what steps will be required in manufacturing

Sourcing:

Implies a more complex process suitable for products that are strategically important

Economic Order Quantity

In an EOQ model, either fairly constant demand must exist or safety stock must be kept to provide for demand variability. The EOQ model uses an estimate of total annual demand, the setup or order cost, and the annual holding cost. Was not designed for a system with discrete time periods such as MRP. Lot-sizing techniques used for MRP assume that part requirements are satisfied at the start of the period. Holding costs are then charged only to the ending inventory for the period, not to the average inventory as in the case of the EOQ model.

To ensure good master scheduling, the master scheduler (human being) must:

Include all demands from product sales, warehouse replenishment, spares, and interplant requirements Never lose sight of the aggregate plan Be involved with customer order promising Be visible to all levels of management Objectively trade off manufacturing, marketing, and engineering conflicts Identify and communicate all problems

Functional products:

Include the staples that people buy in a wide range of retail outlets, such as grocery stores and gas stations Because they satisfy basic needs, which do not change much over time, they have stable, predictable demand and long life cycles Stability invites competition, which often leads to low profit margins Specific criteria for identifying functional products include the following: product life cycle of more than two years, contribution margin of 5-20%, only 10 to 20 product variations, an average forecast error at time of production of only 10% and a lead time for make-to-order products of from six months to one year.

Fixed-Time Period Models:

Inventory is counted only at particular times, such as every week or every month. Desirable in situations such as when vendors make routine visits to customers and take orders for their complete line of products, or when buyers want to combine orders to save transportation costs

Little's Law:

Mathematically relates inventory, throughput and flow time There is a long-term relationship between the inventory, throughput and flow time of a production system in steady state

Innovative products:

Products such as fashionable clothes and high-end personal computers that typically have a life cycle of just a few months Imitators quickly erode the competitive advantage that innovative products enjoy, and companies are forced to introduce a steady stream of newer innovations Short life cycles and the great variety typical of these products further increase unpredictability Fashionable clothing, and personal computers

Manufacturing and services companies' location decisions are guided by a variety of criteria defined by competitive imperatives.

Proximity to customers: Buildings plants closer to buyers who want their goods delivered frequently. Such proximity also helps ensure that customer needs are incorporated into products being developed and built Business climate: A favorable business climate can include the presence of similar-sized businesses, the presence of companies in the same industry, and, in the case of international locations, the presence of other foreign companies Total costs: The objective is to select a site with the lowest total cost. This includes regional costs, inbound distribution costs, and outbound distribution costs There are hidden costs that are difficult to measure. These involve (1) excessive moving of preproduction material before final delivery to customers and (2) loss of customer responsiveness arising from locating away from the main customer base Infrastructure. Adequate road, rail, air, and sea transportation is vital Quality of labor. The educational and skill levels of the labor pool must match the company's needs. Even more important are their willingness and ability to learn Other facilities: The location of other plants or distribution centers of the same company may influence a new facility's location in the network Free trade zones: A foreign trade zone or a free trade zone is typically a closed facility (under the supervision of the customs department) into which foreign goods can be brought without being subject to the normal customs requirements Political risk Government barriers: Barriers to enter and locate in many countries are being removed today through legislation Trading blocs: A group of countries that agree on a set of special arrangements governing the trading of goods between member countries. Companies may locate in places affected by the agreement to take advantage of new market opportunities Environmental regulation: The environmental regulations that impact a certain industry in a given location should be included in the location decision. Host community: The host community's interest in having the plant in its midst is a necessary part of the evaluation process. Local educational facilities and the broader issue of quality of life are also important Competitive advantage: Com

Q-models are...triggered" and P-models are...triggered"

Q-models are "event triggered" and P-models are "time triggered"

Specificity:

Refers to how common the item is and, in a relative sense, how many substitutes might be available. Blank DVD disks are commonly available from many vendors and would have low specificity A custom made envelope that is padded and specially shaped to contain a specific item that is to be shipped would be high specificity

Required coordination

Refers to how difficult it is to ensure that the activity will integrate well with the overall process. Uncertain activities that require much back and forth exchange of information should not be outsourced, whereas activities that are well understood and highly standardized can easily move to business partners who specialize in the activity

Manufacturing inventory:

Refers to items that contribute to or become part of a firm's product output. Typically classified into raw materials, finished products, component parts, supplies, and work in process In distribution, inventory is classified as in-transit, meaning that it is being moved in the system, and warehouse, which is inventory in a warehouse or distribution center Retail sites carry inventory for immediate sale to customers In services, inventory generally refers to the tangible goods to be sold and the supplies necessary to administer to service

International logistics:

Refers to managing these functions when the movement is on a global scale.

strategic control

Refers to the degree of loss that would be incurred if the relationship with the partner were severed. Many types of losses that would be important to consider, including specialized facilities, knowledge of major customer relationships, and investment in R&D

Logistics:

Refers to the management functions that support the complete cycle of material flow: from the purchase and internal control of production materials; to the planning and control of work-in-progress; to the purchasing, shipping, and distribution of the finished product An activity can be evaluated using the following characteristics: required coordination, strategic control, and intellectual property

Process selection:

Refers to the strategic decision of selecting which kind of production processes to use to produce a product or provide a service If volume is very low, we may just have a worker manually assemble each computer by hand If volume is higher, setting up an assembly line is appropriate

Continuous process:

Similar to an assembly line in that production follows a predetermined sequence of steps, but the flow is continuous such as with liquids, rather than discrete. Usually highly automated and, in effect, constitute one integrated "machine" that may operate 24 hours a day to avoid expensive shutdowns and start-ups Conversion and processing of undifferentiated materials such as petroleum, chemicals, and drugs

Workcenter layout:

Sometimes referred to as a job shop, is where similar equipment or functions are grouped together, such as all drilling machines in one area and all stamping machines in another. A part being being worked on travels, according to the established sequence of operations, from workcenter to workcenter, where the proper machines are located for each operation

The high-level view of what is required to make something can be divided into three simple steps

Sourcing the parts we need. Making the item. Sending the item to the customer

Agile supply chains:

Supply chains that utilize strategies aimed at being responsive and flexible to customer needs, while the risks of supply shortages or disruptions are hedged by pooling inventory and other capacity resources They are agile because they have the ability to be responsive to the changing, diverse, and unpredictable demands of customers on the front end, while minimizing the back-end risks of supply disruptions

responsive supply chains:

Supply chains that utilize strategies aimed at being responsive and flexible to the changing and diverse needs of the customers grocery stores

efficient supply chains:

Supply chains that utilize strategies aimed at creating the highest levels of cost efficiencies. Non-value-added activities should be eliminated, scale economies should be pursued, optimization techniques should be deployed to get the best capacity utilization in production and distribution, and information linkages should be established to ensure the most efficient, accurate, and cost-effective transmission of information across supply chain

Risk-hedging supply chains:

Supply chains that utilize strategies aimed at pooling and sharing resources in a supply chain so the risks in supply distribution can be shared. Common in retailing, where different retail stores or dealerships share inventory

Time fences are periods of time when the operation will only allow a specified level of opportunity for customer's input to make changes to the MPS (t/f)

T

The basic purpose of inventory analysis, whether in manufacturing, distribution, retail, or services, is to specify...

(1) when items should be ordered and (2) how large the order should be.

Outsourcing

The act of moving some of a firm's internal activities and decision responsibilities to outside providers. Allows a firm to focus on activities that represent its core competencies Company can create a competitive advantage while reducing costs An entire function may be outsourced, or some elements of an activity may be outsourced, with the rest kept in house One of the drawbacks to outsourcing is the layoffs that often result Even in cases where the outsourcing partner hires former employees, they are often hired back at lower wages with fewer benefits Perceived by many unions as an effort to circumvent union contracts

Choosing the Best Lot Size:

The advantage of the least unit cost method is that it is a more complete analysis and would take into account ordering or setup costs that might change as the order size increases. If the ordering or setup costs remain constant, the lowest total cost method is more attractive because it is simpler and easier to compute; yet it would be just as accurate under that restriction.

Safety stock:

The amount of inventory carried in addition to the expected demand

Fixed-Order Quantity Model with Safety Stock:

The amount of safety stock depends on the service level desired

Cost of goods sold:

The annual cost for a company to produce the goods or services provided to customers

Average aggregate inventory value:

The average total value of all items held in inventory for the firm, valued at cost

Independent demand:

The demands for various items are unrelated to each other A workstation may produce many parts that are unrelated but that meet some external demand requirement

Lot Sizing in MRP Systems

The determination of lot sizes in an MRP system is a complicated and difficult problem. Lot sizes are the part quantities issued in the planned-order receipt and planned-order release sections of an MRP schedule. For parts produced in-house, lot sizes are the production quantities of batch sizes. For purchased parts, these are the quantities ordered from the supplier. Lot sizes generally meet part requirements for one or more periods. Most lot-sizing techniques deal with how to balance the setup or order costs and holding costs associated with meeting the net requirements generated by the MRP planning process.

Strategic sourcing:

The development and management of supplier relationships to acquire goods and services in a way that aids in achieving the immediate needs of the business A firm is no longer constrained by the capabilities of its owns; what matters is its ability to make the most of available capabilities, whether they are owned by the firm or not Outsourcing is so sophisticated that even core functions such as engineering, R&D, manufacturing, information technology, and marketing can be moved outside the firm.

Least Total Cost (LTC)

The least total cost (LTC) method is a dynamic lot-sizing technique that calculates the order quantity by comparing the carrying cost and the setup (or ordering) costs for various lot sizes and then selects the lot in which these are most nearly equal. Unlike EOQ, the lot size covers only whole numbers of periods.

Least Unit Cost (LUC)

The least unit cost (LUC) method is a dynamic lot-sizing technique that adds the ordering and inventory carrying cost for each trial lot size and divides by the number of units in each lot size, picking the lot size with the lowest unit cost.

Materials requirements planning (MRP):

The logic for determining the number of parts, components, and materials needed to produce a product. Installed almost universally in manufacturing firms, even those considered small companies. MRP is a logical, easily understandable approach to the problem of determining the number of parts, components, and materials needed to produce each end item. Provides the schedule specifying when each of these items should be ordered or produced Based on dependent demand which is caused by the demand for a higher-level item (tires, wheels, and engines are dependent demand items based on the demand for automobiles)

Dependent demand:

The need for any one item is a direct result of the need for some other item, usually an item of which it is a part The need for any one item is a direct result of the need for some other item, usually a higher-level item of which it is part

Inventory position:

The on-hand plus on-order minus backordered quantities

Logistics:

The process of coordinating and moving material and other resources from one location to another.

time fences:

The question of flexibility within a master production schedule depends on several factors: production lead time, commitment of parts and components to a specific end item, the relationship between the customer and vendor, the amount of excess capacity, and the reluctance or willingness of management to make changes. The purpose of time fences is to maintain a reasonably controlled flow through the production system Management defines time fences as periods of time having some specified level of opportunity for the customer to make changes. Frozen could be defined as anything from absolutely no changes in one company to only the most minor of changes in another Slushy may allow changes in specific products within a product group so long as parts are available. Liquid may allow almost any variations in products, with the provisions that capacity remains about the same and that there are no long lead time items involved.

Inventory system:

The set of policies and controls that monitor levels of inventory and determine what levels should be maintained, when stock should be replenished, and how large orders should be.

Total average value of inventory:

The total investment in inventory at the firm, which includes raw material, work-in-process, and finished goods

Bullwhip effect:

The variability in demand is magnified as we move from the customer to the producer in the supply chain. Indicates a lack of synchronization among supply chain members Because supply patterns do not match the demand patterns, inventory accumulates at various stages, and shortages and delays occur at others

Fixed-time period model:

This is used when the time should be in stock and read to use. In this case, rather than monitoring the inventory level and ordering when the level gets down to a critical quantity, the item is ordered at certain intervals of time, for example every Friday morning. difficult to predict demand

The single-period model:

This is used when we are making a one-time purchase of an item such as purchasing t-shirts to sell at a sporting event difficult to predict demand

Fixed-order quantity model:

This is used when we want to maintain an item "in stock," and when we resupply the item, a certain number of units must be ordered each time. Inventory is monitored until it gets down to a level where the risk of stocking out is great enough that we are compelled to order difficult to predict demand

Optimal order quantity:

This order size minimizes total annual inventory-related costs

Lean manufacturing:

To achieve high customer service with minimum levels of inventory investment Many make-to-stock firms invest in this Many assemble-to-order companies have applied lean manufacturing as well. By doing so, they are delivering customers' orders so quickly that they appear to be make-to-stock firms from the perspective of the customer

Which of the following describes main purpose of MRP?

To determine the amount of materials needed to produce each end item

Vendor managed inventory:

When a customer actually allows the supplier to manage the inventory policy of an item or group of items for them. Typically there are some constraints related to the maximum that the customer is willing to carry, required service levels, and other billing transaction processes

Stable supply process:

Where the manufacturing process and the underlying technology are mature and the supply base is well established Manufacturing complexity tends to be low or manageable Tends to be highly automated, and long-term supply contracts are prevalent

Evolving supply process:

Where the manufacturing process and the underlying technology are still under early development and are rapidly changing As a result, the supply base may be limited in both size and experience Manufacturing process requires a lot of fine-tuning and is often subject to breakdowns and uncertain yields

Assembly line:

Where work processes are arranged according to the progressive steps by which the product is made. These steps are defined so that a specific production rate can be achieved. The path for each part is, in effect, a straight line Discrete products are made by moving from workstation to workstation at a controlled rate, following the sequence needed to build the product Examples include the assembly of toys, appliances, and automobiles Typically used in high-volume items where the specialized process can be justified

Integration is accomplished through...

a database shared by all the application programs

Functional products tend to have...

a more mature and stable supply process, that is not always the case. Annual demand for electricity and other utility products in a locality tends to be stable and predictable, but the supply of hydroelectric power, which relies on rainfall in a region, can be erratic year by year There are also innovative products with a stable supply process. Fashion apparel products have a short selling season and their demand is highly unpredictable

MRP is most valuable in industries where...

a number of products are made in batches using the same productive equipment. MRP is most valuable to companies involved in assembly operations and least valuable to those in fabrication. MRP does not work well in companies that produce a low number of units annually.

A modular bill-of-materials is the term for a...

buildable item that can be produced and stocked as a subassembly. Many end items that are large and expensive are better scheduled and controlled as modules (or subassemblies) Particularly advantageous to schedule subassembly modules when the same subassemblies appear in different end items.

Be aware that inventory is...

costly and large amounts are generally undesirable. Long cycle times are caused by large amounts of inventory and are undesirable as well.

Overemphasis on acquisition cost or purchase price frequently results in failure to...

ddress other significant ownership and post-ownership costs. TCO is a philosophy for understanding all relevant costs of doing business with a particular supplier for a good or service It is relevant not only for a business that wants to reduce its cost of doing business but also for a firm that aims to design products or services that provide the lowest total cost of ownership to customers

Total cost of ownership is an estimate of the full lifecycle cost of an item broken downs into three sequential phases: acquisition, ownership, post ownership. All of the following are example of acquisition costs except:

energy cost

An output of the assembly line balancing procedure is the precedence of relationships of manufacturing taste - t/f

false

Cross docking is an approach used in logistics and distribution where smaller inbound shipments are pulled together and combined into larger shipments with a common outbound destination -t/f

false

Low level coding in MRP indicates the exact status of each item managed by the system in real time - t/f

false

The bullwhip effect refers to variability in demand that is magnified as we move downstream from the supplier to the customer t/f

false

There are six widely recognized modes of transportation:

highway (trucks), water (ships), air (aircraft), rail (trains), pipelines, and hand delivery

All of the following are advantages of outsourcing except?

increased logistics activity

Green sourcing

is not just about finding new environmentally friendly technologies or increasing the use of recyclable materials. It can also help drive cost reductions in a variety of ways, including product content substitution, waste reduction, and lower usage As costs of commodity items like steel, electricity, and fossil fuels continue to increase, properly designed green-sourcing efforts should find ways to significantly reduce and possible eliminate the need for these types of commodities Can help establish entirely new lines of business to serve environmentally conscious customers

Lot-for-lot (L4L)

is the most common technique. Sets planned orders to exactly match the net requirements Produces exactly what is needed each week with none carried over into future periods Minimizes carrying cost Does not take into account setup costs or capacity limitations

When implemented correctly, ERP...

links all areas of the business Manufacturing knows about new orders as soon as they are entered into the system. Sales knows the exact status of a customer order. Purchasing knows what manufacturing needs to the minute. Accounting system is updated as all relevant transactions occur.

In the product process matrix, as you move from a project strategy, to a manufacturing cell strategy, to a continuous process strategy, which of the following is statements is true?

product volume

When using the supply chain uncertainty framework to classify supply chains, a supply chain for functional products (common staples) with an evolving supply process is called which of the following?

risk hedging

Special consolidation warehouses are used when...

shipments from various sources are pulled together and combined into larger shipments with a common destination. This improves the efficiency of the entire system.

Throughput:

the amount of work performed by a system during a given period of time The long-term average rate that items are flowing through the process

days of supply

the number of days of business operations that can be supported with the inventory on hand

Fixed-order quantity models attempt to determine

the specific point R, at which an order will be placed and the size of that order, Q. The order point, R, is always a specified number of units. An order of size Q is placed when the inventory available reaches the point R

Flow time:

the time it takes one unit to get through a process

Lead time:

the time needed to respond to a customer order Candy / clothes are typically wanted right away so they are sent to stores immediately Military airplanes are ordered with specific uses in mind and need to be designed and then built which could take years

An inventory system is a set of policies and controls the monitor levels of inventory and determines what safety stock levels should be maintained, when stock should be replenished and how much should be ordered-t/f

true

Spot purchases have lower transaction costs, lower specificity and shorter contract durations - t/f

true

Strategic sourcing is the development and management of global supplier relationships to acquire goods and services in a way that aids in achieving both the immediate and long term needs of the business t/f

true

The closer the customer is to the order decoupling point, the more quickly the customer receives the product - t/f

true

The essential issue in satisfying customers in the make to stock environment is to balance the level of finished inventory against the level of service to the customer- t/f

true

The objective of manufacturing facility location analysis is to select the site with the lowest total cost -t/f

true