Logistics Exam 2
Performance (Product Quality)
How well the product performs in comparison to how it was designed to perform
disadvantages of mass customization
communication logistics process costs
Mass customization (WHAT)
individually customized products being produced at the low cost of standardized, mass produced goods -produces a unique product quickly and at a low cost using a high volume production process -objective is to increase variety while realizing cost advantages of high volume continuous and line flow processes -Dell, M&Ms, Reebok
Volume
traditionally treated according to the principle of economy of scale -average cost to produce product declines as manufacturing volume increases -particularly important when high fixed costs are present
intermittent processes
used to produce a large variety of products with different processing requirements in lower volumes -project process & batch process
features (product quality)
what different functions or tasks can the product perform
Forecasts are necess\
-support collaborative planning: help avoid inventory excess and out of stock situations -drive requirements planning to determine: production requirements, replenishment requirements, inventory projections, distribution requirements -improve resource management through cost trade-offs of strategy such as: extra production capacity, extra storage capacity, speculative production or product movement -outsourcing
Supply planning uses requirements from demand management to develop a realistic manufacturing plan. Which one of the following represents the Basic Planning Formula? A. Beginning Inv +Production -Demand=Ending Inv B. Beginning Inv (BI) - Demand =Production C. Production - Demand = Ending Inv D. Demand-Production=End Inv
A. Beginning Inv +Production -Demand=Ending Inv
TCM vs. Strategic Alternatives
As volume goes up... A. Manufacturing and Procurement costs go down due to economies of scale B. Inventory and Warehousing costs go up C. Transportation costs go down but level off at high volumes as the shipping container gets filled to capacity and another container must be used
Which of the following is NOT a valid reason to hold inventory? A. Decouple dependencies in the supply chain B. Efficient utilization of warehouse space C. Buffering against uncertainty in demand or supply D. Decouple supply from demand
B. Efficient utilization of warehouse space
In which facility layout are resources grouped by process, and then the product is moved between groupings based on need? A. Fixed Position Layout B. Process Layout C. Product Layout D. Cellular Layout
B. Process Layout
Which planning process is known for bringing all the demand and supply plans for the business together to provide senior management with the information necessary to strategically direct the business to achieve a competitive advantage? A. Advanced Planning and Scheduling B. Sales & Operations Planning C. Collaborative Planning, Forecasting, and Replenishment D. Demand Planning and Fulfillment
B. Sales and Operations Planning
Which of the following forecasting techniques "focuses entirely on historical patterns and pattern changes to generate forecasts"? A. Qualitative B. Time Series C. Casual D. Regression
B. Time Series
The production plan for any business must consider which of the following: A Processes B People C Packages D Programs A. A, B, and C only B. B,C, and D only C. A, B, and D only D. All of the above
C. A, B, and D only
There are 8 keys to successful S&OP implementation. Which of the following is NOT one of them? A. Executing the process every month B. Process ownership and clarity of roles and responsibilities C. Focus of the short-term D. One plan that integrates the actions of the entire organization E. Senior management decision making (bottom up/ top down)
C. Focus on the short-term
Which of the following is NOT one of the 8 wastes described in Lean Production A. Transportation B. Excess Inventory C. Small Batch Scheduling D. Over Processing
C. Small Batch Scheduling
Which of the following inventory types is characterized as "inventory bought to hedge a currency exchange or to take advantage of a discount"? A. Cycle Stock B. Safety Stock C. Strategic Stock D. Pipeline Inventory
C. Strategic Stock
description of forecasting model components
-base demand: long term average demand after other components are removed -trend component: long range shift in periodic sales -seasonal component: annual recurring upward or downward movement in demand -cyclic component: periodic shifts in demand lasting more than a year -promotional component: demand swings initiated by a firm's marketing activities -irregular component: includes random or unpredictable quantities that do not fit other components A meaningful forecast process requires the integrated and consistent combination of components
ISO Certified Suppliers
-have to conform to an externally defined set of standards for quality and delivery of service -They are usually more open to sharing supply chain information -They welcome building relationships with their customers -They have formal processes in place for continual improvement of their products, services and processes -They are easier for procurement to initially qualify and periodically audit -Certification is done by an external register agency -Firms have to be re-certified every three years
Six Sigma Quality Concepts
-identify sources of variability and then systematically reduce them Get the "Root Cause" -Goal is to achieve a process standard deviation that is six times smaller than the range of outputs allowed by the product's design specification -2 methodologies
ISO 14000- International Environmental Standard
-intended to assist organizations to manage the environmental effect of their business practices -Deal with how a company manages the environment inside its facilities and the immediate outside environment -call for analysis of the entire life cycle of a product, from raw material to eventual disposal -they do not mandate a particular level of pollution or performance, but focus on awareness of the processes and procedures that can effect the environment -adherence to the ISO 14000 standards does not release a company from any national or local regulations regarding specific performance issues regarding the environment
Supply Chain Visibility
-into location and status of supply chain inventory and resources -exception management for changes in the flow to minimize/prevent potential problems
error measurement methods
-simple average error: can hide problems as positive errors are offset by negative ones -Mean Absolute Deviation (MAD) -Mean Absolute Percentage Error (MAPE)
Cause and Effect
Uses one or more factors to predict future demand -regression: uses other independent variables such as price, promotion plans, or related product volumes, to predict sales -multivariate: uses more complex statistical techniques to identify more complex demand history relationships; techniques include spectral analysis, Fourier analysis, transfer functions, and neural networks
total quality management (TQM)
a philosophy focused on meeting customer expectations with respect to all needs across all company functions and recognizing all customers both internal and external
cellular layout
group items based on similar processing characteristics and arrange workstations to form a number of small assembly lines called work cells BATCH PROCESS/LINE PROCESS (MTO/ATO/MTS) -identify products that have similar processing requirements, called product families -each work cell can be dedicated to make a product family
constraints
interact with volume and variety to create realistic manufacturing plans -capacity is how much you produce in a given unit of time -equipment; must consider how flexible it is -setup/changeover considers how quickly can you change from one variety of product to another
2 categories of manufacturing process
intermittent processes repetitive processes
facility layout strategy
physical arrangement of all resources within a facility -significant impact on production costs, time, and flexibility
Business Plan
plan states company's objectives for profitability, growth rate, and return on investment and is typically updated and reevaluated annually
What needs to be considered in developing the plan for production
products plants processes programs people
benefits of mass customization
profits lower costs inventory market exploitation
Just in Time Interfaces
purchased materials and components arrive at the manufacturing or assembly point just at the time they are required for the transformation process
Forecasting Techniques
qualitative: relies on expert opinion, intuition, and special information (surveys, panels, consensus, costly and time consuming, ideal for situations with little historical data) quantitative: uses mathematical models and historical data (time series: focus entirely on historical patterns and pattern changes to generate forecasts) (Causal: uses specific information to develop relationships between lead events and forecasted activity)
supply chain planning system
requires coordination of key processes and stakeholders plan: demand planning responsiveness source: supplier relationship collaboration make: manufacturing customization deliver: order fulfillment, customer relationship collaboration return: reverse logistics
Product Layout
resources are arranged in sequence to enable efficient production of the product LINE PROCESS/CONTINUOUS PROCESS (ATO/MTS) -best suited for producing high volume of one or a very few similar products -minimize processing times, and planning, scheduling, and control are simplified
Process layout
resources are grouped by process, and product is moved between groupings based on need (ATO/MTS) BATCH PROCESSES -best suited for producing many different types of products in low volume -each product may take a different route through the operation
Logistical Interfaces
resources must be procured, positioned, and coordinated as needed to support the manufacturing strategy selected -Just in Time (JIT) -Materials Requirements Planning (MRP) -Design for Manufacture (DFM) -Design for Logistics (DFL)
manufacturing process
strategy involves developing a manufacturing process that can create the exact product that has been designed -many have characteristics in common -two broad categories
Demand Managment
the demand management system is the information technology component of the S&OP process -develops forecasts used by other supply chain processes to anticipate sales levels -must maintain forecast data consistency across multiple products and warehouse facilities
Make to Stock (MTS) (train schedule)
to manufacture products for stock based on demand forecasts, which is a push system -supply schedule MTS for which the forecast demand for each time period can be determined from past data -EX: necessities-processed foods, sundries, and textiles -ONE ISSUE: avoid having excess inventory
continuous process
used to manufacture such items as gasoline, laundry detergent, and chemicals (inflexible, high capital investment) Product Variety: very limited Volume: very high Strategy: MTS Customer Lead time: very short
fixed position layout
used when a product cannot be moved during production (processes are moved to the product) (ETO/MTO) PROJECT PROCESSES -used for producing large items such as ships and airplanes -CHALLENGE in timing and sequencing of different tasks
Time Series Forecast
uses historical data to predict future demand patterns -simple moving average: an un-weighted average of the previous periods of sales -weighted moving average: a weighted average of the previous periods of sales -exponential smoothing: an exponentially weighted moving average using a smoothing constant to place greater weights on more recent demands
peoples role in production
wages and salaries safety and training working conditions leadership and motivation unionization communication
serviceability (product quality)
what is the ease of fixing or repairing the product if it fails
True/False: "Days of Supply" is the term used to describe the level of inventory which triggers an action to replenish the inventory for an item. It is typically calculated as the demand during the replenishment lead time plus safety stock
False
True/False: A Project Process (aka Job Shop) is an inflexible manufacturing process that requires high capital investment.
False
True/False: CPFR improves customer service by driving inventories up through collaboration with customers on their demand
False
True/False: In the context of Total Cost of Manufacturing; in general terms, the manufacturing, procurement, and transportation COSTS PER UNIT all go down as volume goes down.
False
True/False: While demand uncertainty can be mitigated by maintaining safety stock, supply uncertainty can only be mitigated by maintaining flexibility and responsiveness
False
ISO Standards (Environment)
ISO 14001- Specification of environmental management systems ISO 14004- Guidelines standard ISO 14010-14015-Auditing and related activities ISO 14020-14024-Labeling ISO 14031-14032-Performance Evaluation ISO 14040-14043-Life cycle assessment ISO 14050-Terms and definitions
ISO Standards (Quality)
ISO 9001:2015-requirements of a quality management system ISO 9000:2005-Basic quality concepts and language ISO 9004:2009-focuses on how to make a quality management system more efficient and effective ISO 19011:2011- Guidance on internal and external audits of quality management systems
ISO Standards (Quality and Environment)
ISO was formed after World War II ISO 9000-quality management -shows commitment to providing a high level of customer satisfaction -demonstrates the existence of an effective quality management systems that satisfies the rigors of an independent, external audit -can boost your organization's brand reputation and be a useful promotional tool, especially when going up against competitors who aren't certified
Forecasting over the Product Life Cycle
Pre Launch: patient flow, analogs, conjoint, predictor Launch: Promoted, patient flow, analogs, time series, response modeling Growth: Promoted, patient flow, time series, response modeling, event modeling Maturity: promoted, patient flow, time series, response modeling, event modeling non-promoted, patient flow, time series, event modeling Decline: Generic Intrusion, patient flow, analogs, time series, generic erosion modeling
Key dimensions of Product Quality
1. Performance 2. Reliability 3. Durability 4. Conformance 5. Features 6. Aesthetics 7. Serviceability 8. Perceived quality
manufacturing vision/perspectives
1. brand power 2. volume 3. variety 4. Constraints 5. Lead Time
Which of the following terms is commonly used to describe the point where annual ordering costs and annual inventory carrying costs are equal? A. Economic Order Quantity (EOQ) B. Quantity Discounts C. Normal Distribution Curve D. Reorder Point
A. Economic Order Quantity (EOQ)
Which manufacturing strategy is described as a manufacturing process in which the product is designed, engineered, and built to specifications only after the order has been received? A. Engineer to Order B. Make to Order C. Assemble to Order D. Make to Stock
A. Engineer to Order
Which of the following would be the most appropriate business practice/process to use if you were trying to analyze the implications of alternative decisions through "What If" scenarios, highlight problems, and consequences, and recommend the best overall solution that considers both material and resource availability? A. Collaborative Planning, Forecasting, and Replenishment B. Sales and Operations Planning C. Advanced Planning and Scheduling D. Demand Planning and Forecasting
C. Advanced Planning and Scheduling
DMAIC
Define, Measure, Analyze, Improve, Control improving products and processes used when company wants to improve an existing business process most widely adopted methodology in use
Design for Manufacture
Design for assembly: minimize # of parts and easing the assembly process Design for Product Serviceability-easing the disassembly for repair, replacement, and reuse of product components Design for Six Sigma-systematically evaluates the consistency with which a good or service can be produced or delivered given the capabilities of the processes used
Supply Chain Planning
Determining how to best satisfy the requirements created by the Demand Plan -objective is to balance supply and demand in a way that realizes the financial and service objectives of the company -combination of all the planning processes that are used across the supply chain
Which of the following is NOT a benefit of Integrated Operations Planning? A. Greater Integration with enterprise financial plans B. Increased inclusion of strategic initiatives and activities C. Improved simulation and modeling of alternatives D. Easier translation between aggregate and detailed planning levels E. Only A,B, and D are benefits of Integrated Operations Planning F. All of the above are benefits of Integrated Operations Planning
F. All of the above are benefits of Integrated Operations Planning
True/False: Safety Time is defined as discrete increments of time used to facilitate planning activities
False
Manufacturing Strategies
Make-to-Stock (MTS) Assemble-to-Order (ATO) Make-to-Order (MTO) Engineer-to-Order (ETO)
True/False: Improving the accuracy of forecasting requires error measurement followed by analysis, and some of the best methods for measuring forecast accuracy are to calculate the Mean Absolute Deviation or the Mean Absolute Percentage Error
True
True/False: Inventory Ordering Cost components include the cost of material handling
True
True/False: Manufacturing processes that are designed to facilitate the rapid switch in production from one product to another while retaining efficiency, are said to provide economies of scope.
True
True/False: The desired level of customer service (for example, case fill rate or order fill rate) can have a direct impact on the amount of safety stock that is carried for a particular product
True
processes role in production
available capacity available skills type of production costs maintenance requirements
perceived quality (product quality)
based on customer's experience before, during, and after they purchase a product
Forecast Challenges
demand variability, scale of information from marketing and sales, promotions-increased complexity, impact of supply issues on forecasting
conformance (product quality)
does the product meet its specifications as designed
Mean Absolute Deviation (MAD)
evaluates absolute error by ignoring sign of the error SUM of ABS Error/# of time periods
facility layout types
fixed position layout, process layout, product layout, cellular layout
plants role in production
future demand health & safety productivity of equipment reliability of equipment environmental issues
Total cost of Manufacturing (TCM)
generally expressed as cost per unit 1. Manufacturing and Procurement activities 2. Inventory and Warehousing activities 3. Transportation activities
Line process
has standard products with a limited number of variations moving on an assembly line through stages of production Product Variety: limited Volume: high Strategy: ATO/MTS Customer Lead Time: short
forecasting accuracy
improving accuracy of forecasts requires error measurement followed by analysis
Design for Logistics Concept
incorporates the requirements and framework for logistical support of the produce in the early phases of product development
variety
involves frequent product runs and high repetition of small lot sizes -processes that can rapidly switch production from one product to another while retaining efficiency are said to have economy of scope
aesthetics (product quality)
is the styling, color, workmanship pleasing to the customer
S&OP - Senior Leadership Involvement
making S&OP work in an organization requires senior leadership involvement tie manager's compensation to the success of S&OP
Lead Time
measure of elapsed time between release of a work order to the shop floor and completion of all work on the product to achieve ready-to-ship status
Materials Requirement Planning (MRP)
particularly for more complex manufacturing where large numbers of components or subassemblies are used to produce a final product
product role in production
performance aesthetics quality reliability quantity production costs delivery dates
programs role in production
purchasing patterns cash flow need for storage availability of storage transportation
Benefits of Lean systems
reductions: waste (>80%), production costs (>50%), manufacturing cycle time (>50%), Labor (>50%), Inventory (>80%) increases: Capacity (>50%), quality, profits, flexibility, strategic focus, cash flow
Brand Power
the measure of customer preference based on reputation, product quality and supply chain capabilities
span of TQM
total, organization-wide activity versus a technical task
3 Drivers of Effective Supply Chain Planning
1. Supply Chain Visibility 2. Simultaneous Resource Consideration 3. Resource Utilization
2 Six Sigma methods
DMADV DMAIC
Lean Production Waste Reduction
Defects, overproduction, waiting, non-utilized talent, transportation, inventory, motion/movement, extra-processing (DOWNTIME)
True/False: Companies using a make-to-order manufacturing strategy typically maintain safety stock for independent demand items.
False
Sales and Operations Planning (S&OP)
process that brings all the demand and supply plans for the business together to provide management with the ability to strategically direct the business to achieve a competitive advantage operations and sales group must overcome conflicts to develop consensus and then execute their collaborative plans
Integrated Operations Planning
benefits from operational integration are directly related to capturing efficiencies between functions within an enterprise as well as across enterprises in a supply chain
True/False: The goals of LEAN are the elimination of waste and the minimization of all of the resources used in the manufacture of a company's products
True
True/False: The methods and tools that companies use to create a forecast for their products can and frequently do change over the life cycle of the product
True
True/False: The objective of Mass Customization is to increase variety for customers while also realizing the cost advantages of high volume continuous and line flow processes?
True
reliability (product quality)
likelihood that the product will perform throughout its expected life
Batch process
manufactures a small fixed quantity of an item in a single production run Product Variety: high Volume: Low Strategy: MTO/ATO/MTS Customer Lead Time: Long
Assemble to Order (ATO)
manufacturing strategy where products ordered by customers are produced quickly and are customizable to a certain extent -requires basic parts for product already manufactured but not yet assembled -Once an order is received, the parts are assembled quickly and sent to the customer -HYBRID strategy between MTS and MTO
Mass Customization (WHERE)
market characteristics: sufficiently large customer segments that values "translatable variety", turbulent and dynamic markets, unpredictable demand but not entirely, little impact of regulation or other constraints product/process characteristics: modular or adjustable product building blocks, predictable components/functions interactions, standardized process/skill building blocks, reasonable lead times, steps, work content
simultaneous resource considerations
sequential decision making results=sub optimal planning and capacity utilization to identify tradeoffs where increases in some functional costs may lead to lower total system costs
resource utilization
supply chain decisions influence many enterprise resources which consume a substantial proportion of a firm's assets functional management must focus on resource utilization within the scope of their responsibility
durability (product quality)
the actual life expectancy of the product
repetitive processes
used to produce one, or a few, standardized products in high volumes -line process & continuous process
S&OP Cycle
-If capacity and demand are nearly equal, emphasis should be placed on meeting demand as efficiently as possible -if capacity is greater than demand, emphasis might be on promotion and advertising in order to increase demand -if capacity is less than demand, firm might consider subcontracting a portion of the work load to an outside party
TQM conceptual elements
-Top management commitment and support -maintaining a customer focus in product, service and process performance -integrated operations within and between organizations -a commitment to continuous improvement
forecasting
-achieve enhanced service or reduced inventory: 1. improve forecast accuracy 2. forecast at a higher level of aggregation (good with postponement) Requirements: match product requirements of customers with capacity of the supply chain, must be timely and accurate to align customer demands for high service levels and more product variations
manufacturing
to process or make raw materials or components into a finished product, especially by means of a large-scale industrial operation
primary objectives of a lean system
1. produce only the products that customers want 2. produce products only as quickly as customers want them 3. produce products with perfect quality 4. produce in the minimum possible lead times 5. produce products with features that customers want and no others 6. produce with no waste of labor, materials, or equipment, designate a purpose for every movement to leave zero idle inventory 7. produce with methods that reinforce the occupational development of workers
Which of the following is NOT one of the 8 dimensions of product quality? A. Performance B. Conformance C. Features D. Constraints
D. Constraints
Which Inventory Metric measures how much it costs a company to store inventory over a given period of time? A. Inventory Turnover B. Inventory Days of Supply C. Inventory Accuracy D. Inventory Carrying Cost
D. Inventory Carrying Cost
The forecasting model component that includes random or unpredictable quantities that do not fit other components is known as? A. Seasonal Component B. Cyclic Component C. Promotional Component D. Irregular Component
D. Irregular component
DMADV
Design, Measure, Analyze, Design, Verify designing products and processes used when a company wants to create a new product design or process that is more predictable and defect free
absorption example
Quantity Produced: 100K, 200K, 300K Variable Cost/Unit: $20 Fixed Costs: $250K Total Cost: $2.25M, $4.25M, $6.25M Cost/Unit: $22.50, $21.25, $20.83 Fixed Cost Per Unit Absorbed: $2.50, $1.25, $0.83
project process (Job Shop)
creates a custom product for each customer high customization Product Variety: very high Volume:Very low Strategy: ETO/MTO Customer lead time: Very Long
manufacturing strategy vs. performance cycle
customer delivery cycle, MTS, shortest time customer delivery cycle, manufacturing cycle, ATO, 2nd shortest time customer delivery cycle, manufacturing cycle, procurement cycle, MTO, 2nd highest time customer delivery cycle, manufacturing cycle, procurement cycle, product design, ETO, longest time
Lean systems
customer focused elimination of "waste"/anything that doesn't add value for the customer emphasizes the minimization of the amount of all resources (including time) used in the operation of a company
Engineer to Order (ETO)
manufacturing process in which the product is designed, engineered, and built to specifications only after the order has been received -essence is building a unique product every time -in the ETO world, the cost of poor quality can be very high
Make to Order (MTO) (elevator)
manufacturing strategy that typically allows customers to purchase products that are customized to their specifications -only manufactures the end product once the customer order is placed, creating additional wait time for the consumer to receive the product but allowing for more flexible customization -receives problems of excessive inventory that is common with traditional MTS -appropriate for highly configured products such as computer servers, aircraft, ocean vessels, bridges, automobiles, or products very expensive for inventory
