LSC

2 general types of multi period inventory systems

1. Fixed-order quantity model (EOQ model and Q model) 2. Fixed-time period model (period system, periodic review system, fixed order interval system, and P model)

Different types of time fences are

1. Frozen 2. Slushy 3. Liquid

Product demand for end items comes primarily from two main sources:

1. Known customers who have place specific orders (no forecasting is involved) 2. Aggregate Production Plan (reflects the firm's strategy for meeting demand)

4 lot sizing techniques

1. Lot for lot (L4L) 2. Economic Order Quantity (EOQ) 3. Least Total Cost (LTC) 4. Least Unit Cost (LUC)

What 3 sources are used to become the data resources for the MRP

1. MPS 2. BOM 3. Inventory records file

differences between the Q model and the P model

1. P model has larger inventory because it protects against stock out. 2. Q model favor more expensive items because inventory is lower. 3. Q model is more appropriate for important items 4. Q model requires more time to maintain

Flexibility within a MPS depends on several factors

1. Production lead time 2. commitment of parts and components to a specific end item 3. relationship between the customer and vendor 4. amount of excess capacity 5. reluctance or willingness of management to make changes.

What are the operations and functions in an ERP system?

1. Sales 2. Production 3. Quality 4. Materials 5. Maintenance

3 Models that use probability distribution to manage risk

1. Single-period model 2. fixed-order quantity model 3. fixed time period model

In making any decisions that affects inventory size, the following cost must be considered:

1. holding cost (carrying)- the cost for storage 2. setup cost (production change) 3. ordering cost 4. shortage cost

to ensure good master scheduling, the master scheduler must

1. include all demands from the product sales 2. Never lose sight of the aggregate plan 3. be involved with customer order promising 4. be visible to all levels of management 5. objectivity trade off manufacturing 6. identify and communicate all problems

Two characteristics that describe demand

1. independent demand- demands for various items are unrelated to each other. uncertain, extra units must be carried in inventory 2. Dependent demand- the need for any one item is direct result of the need for some other item.

types of possible approaches to signal the need for production

1. kanban squares 2. container system 3. colored golf balls

You can divide design a lean supply chain into 3 categories

1. lean layouts 2. lean production schedules 3. lean supply chains

What is expected of different components using lean focus:

1. lean suppliers 2. lean procurement 3. lean manufacturing 4. lean warehouses 5. lean logistics 6. lean customers

10 successful techniques applied to service companies

1. organize problem-solving groups 2. upgrade housekeeping 3. upgrade quality 4. clarify process flows 5. revise equipment and process technologies 6. level the facility load 7. eliminate unnecessary activities 8. reorganize physical configuration 9. introduce demand pull scheduling 10. develop supplier networks

Approaches to calculating safety stock

1. probability stock 2. fixed order quantity model

all firms keep a supply of inventory for the following reasons

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 materials delivery time 5. to take advantage of economic purchase order size

contriversail features of lean production

1. underutilization 2. over-utilization

7 prominent types of waste to be eliminated from the supply chain

1. waste from overproduction 2. waste of waiting time 3. transportation waste 4. inventory waste 5. processing waste 6. waste of motion 7. waste from product defects

the basic purpose of inventory analysis is to specify

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

value stream mapping is a two part process

1st. depicting the "current state" of the process 2nd. depicting a possible "future state"

ABC Inventory Classification scheme divides inventory items into 3 groupings

A. High dollar volume B. Moderate dollar volume C. Low dollar volume

Economic Order Quantity (EOQ)

Explicitly balances setup and holding cost. the EOQ model uses an estimate of total annual demand. The EOQ was not designed for a system with discrete time periods such as MRP. EOQ assumes that parts are used continuously during the period.

Toyota's president who identified 7 prominent types of waste

Fujio Cho

kaizen

Japanese philosophy that focuses on continuous improvement

Lot for lot (L4L)

Most common technique. Sets planned orders to exactly match the net requirements. produce exactly what is needed each week. minimized carrying cost. does not take into account setup cost or capacity limitations. cased high setup cost

in the 19th century Villefredo Pareto termed the

Pareto principal

Modular Bill of Materials and Super Bill of Materials is referred to as

Planning bills of materials

Enterprise Resource Planning

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

Available to promise

a feature identifies the difference between the number of units currently included in the master schedule and firm customer orders.

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 customer orders

value stream mapping

a graphical way to analyze where value is or is not being added as material flows through a process

Material Requirements Planning (MRP)

a key piece of logic that ties the production functions together. The reason that MRP is logical, is because it is easily understandable approach to determining the materials required for each part. MRP is based on dependent demand.

dollar volume

a measure of importance

group technology

a philosophy in which similar parts are grouped into families, and the processes required to make the parts are arranged in a specialized workcell

cycle counting

a physical inventory taking technique in which inventory is counted frequently rather than once or twice a year.

Cycle counting

a physical inventory-taking technique in which inventory is counted on a frequent basis rather than once or twice a year

Planned order receipts

a schedule of when orders should arrive

level schedule

a schedule that pulls material into final assembly at a constant rate

Master production schedule

a time phased plan specifying how many ad when the firm plans to build each end item

Frozen

absolutely no changes in one company to minor changes

production need is created by

actual demand for the product

non value adding activities

adding activities consume resources and do not directly contribute to the end result desired by the customer.

Liquid

allow almost any variations in products

Slushy

allow changes in specific products within a product group

Pegging requirements

allows us to retrace a material requirement upward in the product structure through each level identifying each parent item that created the demand.

net change systems

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

fixed-time period model (or P-model)

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 (or Q-model)

an inventory control model where the amount requisitioned is fixed and the actual ordering is triggered by inventory dropping to a specified level of inventory

kanban and the chanson pull system

an inventory or production control system that uses a signaling device to regulate flow

kanban pull system

an inventory or production control system that uses a signaling device to regulate flow.

waste

anything that does not add value from the customer's perspective

What industries is MRP most valuable

assembly operations; companies where number of products are made in batches

lean require that plant layout be designed to ensure

balanced work flow with minimum of WIP Inventory.

Why is it easier to use a Modular Bill of Materials

because it simplifies the scheduling and control and also makes it easier to forecast the use of different modules. Another benefit is the same item is used in a number of products. Total inventory investment can be minimized.

backflush

calculating how many of each part were used in production and using these calculations to adjust actual on-hand inventory balances. This eliminated the need to actually track each part used in production

Dependent Demand

caused by the demand for a higher level item. (tires, wheels, and engines are dependent demand items based on the demand for automobiles)

Integration relates to how

connected systems are.

Material Management (MM)

covers all tasks within the supply chain, including purchasing, vendor evaluation, invoice verification, and material use planning.

The inventory records file contains

data such as the number of units on hand and on order.

price break model

deals with the face that generally, the selling price of an item varies with the order size.

the key to effective cycle counting lies in

deciding which items are to be counted, when, and by whom

example of process waste are

defective products, overproduction, inventories, excess motion, processing steps, transportation, and waiting

Multiperiod inventory system

designed to ensure that an item will be available on an ongoing basis

MRP systems seek to

determine the number of dependent demand items needed.

ABC inventory classification

divides inventory into dollar volume categories that map into strategies appropriate for the category

quality

do it right the first time, and when something goes wrong, stop the process or assembly line immediately

Least Unit Cost (LUC)

dynamic lot sizing technique that adds ordering and inventory carrying cost for each trial lot size and divides the number of units in each lost size, picking the lot size with the lowest unit cost.

Least Total Cost (LTC)

dynamic lot sizing technique that calculates the order quantity by comparing the carrying cost and the set up cost for various lot sizes then selects the lot in which these are most nearly equal. Technique is influence by the length of the planning horizon

The focus of the Toyota Production System is on

elimination of waste and respect for people

The master production schedule deals with

end items. is a major input to the MRP process.

What industries is MRP least valuable

fabrication; companies that produce a low number of units annually or companies that produce complex or expensive products.

Bill of Materials (BOM)

file contains the complete product description, listing not only the materials needed but also the sequence in which the product is created.

What is kept in the MRP record

gross requirements, scheduled receipts, projected available balance, net requirements, planned order receipts, and planned order releases data.

a product tree can

help to compute component usage

kaizen burst

identify specific short-term projects that teams work on to implement changes to the process.

The risk of obsolescence is an important consideration.

if an item is infrequently used or only used for a specific purpose.

customer value

in context of lean production is defined as something for which the customer is willing to pay

customer value

in the context of lean, something for which the customer is willing to pay

In distribution, inventory is classified as

in transit (meaning it is being moved in the system, and warehouse)

Super Bill of Materials

includes items with fractional options

BOM often list parts using an

indented structure

lean production

integrated activities designed to achieve high-volume, high-quality production using minimal inventories or raw materials, work-in-process, and finished goods

If the ordering or setup cost remain constant, the LTC method is more attractive because

it is simpler and easier to compute. yet it would be just as accurate under that restriction

Manufacturing inventory

items that contribute to or become part of a firm's product output

Long cycle times are caused by

large amounts of inventory and are undesirable as well

the most significant operations and supply management approach of the past 50 years is

lean production

Transaction cost is dependent on the

level of integration and automation incorporated in the system.

waste reduction relates to the

optimization of the value adding activities

lot sizes

part quantities issued in the planned order receipt and planned order release sections of an MRP schedule

Plant maintenance (PM)

performing repairs and preventative maintenance

preventative maintenance

periodic inspection and repair designed to keep equipment reliable

preventative maintenance

periodic inspections and repair designed to keep a machine reliable. is emphasized to ensure that flows are not interrupted

Time fences

periods of time having some specified level of opportunity for the customer to make changes

quality at the source

philosophy of making factory workers personally responsible of the quality of their output. workers are expected to make the part correctly the first time and to stop the process immediately if there is a problem.

Quality Management (QM)

plans and implements procedures, form inspection, and quality assurance

The inventory status file is kept up to date by

posting inventory transactions as they occur.

JIT (just in time)

producing what is needed when needed and no more. anything over the minimum amount necessary is viewed as waste

Other names for BOM

product structure file or the product tree

Sales Distribution (SD)

products and services are sold to customers

Manufactring inventory is typically classified into

raw materials, finished products, component parts, supplies, and WIP

the requirement for level 0 items

referred to as "end times", retrieved from the master schedule.

JIT is typically applied to

repetitive manufacturing

inventory system

set of policies and controls that monitor levels of inventory and determine what levels should be maintained, when to replenish, and how large orders should be

The sawtooth effect

shows that when the inventory position drops to point R, a reorder is placed.

other words for Kanban in Japanese

sign or instruction card

What is a more efficient way to store items

simple single-level list. That is, each item and component is listed showing only its parent and the number of units needed per unit of its parent. Avoids duplication

uniform plant loading

smoothing the production flow to dampen schedule variation

Why would a firm implement MRP

so they can order the right parts

What causes lumpiness

straight forward multiplication process or when manufacturing occurs in lots (batches), items needed to produce the lot are withdrawn from inventory in quantities (perhaps all at once) rather than one at a time.

Production Planning (PP)

supports both discrete and process manufacturing processes and included the MRP application

In services, inventory generally refers to

tangible goods to be sold and supplies necessary to administer the service.

Modular Bill of Materials

term used for a build-able item that can be produced and stocked as a subassembly. Standard item with no options

The advantage of the LUC method is

that is is more complete analysis and would take into account ordering or setup cost that might change

lumpiness

that the requirements tend to bunch or lump rather than having an even dispersal.

Time buckets

the MRP program accesses the status segment of the record according to specific time periods

safety stock

the amount of inventory carried in addition to the expected demand

inventory positon

the amount on-hand plus on-order minus backordered quantities. In the case where inventory has been allocated for special purposes, the inventory position is reduced by these allocated amounts.

Net requirements

the amounts that are needed week by week in the future. Using net requirements calculates when order should be received to meet requirements

bill of materials

the complete product description, listing the materials, parts, and components, and also the sequence in which the product is created

value chain

the concept that each step in the supply chain process that delivers products and services to customers should create value. if it does not create value it should be removed

independent demand

the demand for various items are unrelated to each other

Pareto principal

the few having the greatest importance and many having little importance.

Kaizen

the japanese philosophy that focuses on continuous improvement

Material Requirements Planning

the logic for determining the number of parts, components, and materials needed to produce a product

dependent demand

the need for any one item is a direct result of the need for some other items usually an item of which it is a part

waste reduction

the optimization of value adding activities and elimination of non value adding activities that are part of the value stream

freeze window

the period of time during which the schedule is fixed and no further changes are possible

inventory

the stock of any item or resource used in an organization

Master Production Schedule (MPS)

the time-phased plan specifying how many and when the firm plans to build each end item. The MSP also states period by period (usually weekly) how many and when each type is needed.

What are gross requirements

the total amount required for a particular item.

value stream

these are the value adding and non-value adding activities required to design order, and provide a product from concept to launch, order to delivery, and raw materials to customers

The purpose of time fences is

to maintain a reasonably controlled flow through the production system

value adding activities

transform materials and information into something the customer wants.

Inventory is costly and large amounts are generally undesirable.

true

The aggregate operations plan specifies product groups. it does not specify exact items

true

The importance of speed and steady consistent flow that is responsive to actual customer demand in lean supply chains is essential

true

To determine an acceptable, feasible schedule, trial master production schedules are run through the MRP program.

true

Value stream mapping is a great way to analyze existing process.

true

a kanan control system uses a signaling device to regulate JIT flows

true

lean production is one of the best tools for implementing green strategies in manufacturing

true

waste elimination is a reasonable goal in service operations

true

Fixed-time period model

used when the item should be in stock and ready to use. The item is ordered at certain intervals of time.

Single-period model

used when we are making a one-time purchase of an item

Fixed-order quantity model

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

Storing items in the indented parts lists is

very inefficient