MGT 301 Exam 3

Explain why it's preferred to use a combination of qualitative and quantitative forecasts

Using a combination of qualitative and quantitative data can improve an evaluation by ensuring that the limitations of one type of data are balanced by the strengths of another. This will ensure that understanding is improved by integrating different ways of knowing.

Apply and interpret x-charts and r-charts

SPC Control Charts for Variables: X chart: used to measure the mean of the process output (avg ounces in a 12 oz soda is likely very close to 12 oz) R chart: used to measure output variability (orange of fill in a 12 ounce soda sample might be 11.85 to 12.05)

Discuss the unique characteristics of services that require different SC solutions (ex - can't inventory a service)

dimensions: physical presence what is processed contact intensity personal attention method of devleity High Contact: present people active, visible personal face-to-face Low contact: absent possessions or information passive, out of sight ipersonal regular mail or email ie; doctor is a high contact ie; turbotax is file taxes is low contact

Explain the limitations of smoothing models when there is trend in the sales data

Forecasts will lag behind trend Can lead to: -too little capacity, inventory, staff and vice-versa

Discuss the underlying assumption of time series forecasting and what to do if that assumption is not upheld (that the past is a good predictor of the future)

If the past is not a good predictor of the future then you must use a qualitative method. If data is unavailable, limited, or not currently relevant

Define Collaborative Planning, Forecasting and Replenishment (CPFR) and explain its benefits and process

A nine-step process for SC integration that allows a supplier and customers to collaborate on forecasting by using the Internet -combines the intelligence of multiple trading partners in the planning & fulfillment of customer demands -links sales & marketing best practices, such as: Category Management Supply Chain Planning Processes Increased availability & Decreased costs (inventory, transportation & logistics)

Calculate and define Available to Promise and interpret the results of the ATP calculation

Available-to-Promise (ATP) Quantities- -the MPS decides whether additional orders can be accepted for difference between confirmed customer orders & the quantity the firm planned to produce. 1. add the Beginning Inventory to the MPS for Period 1, subtracting the Committed Customer Orders for period 1ATP(1) = BI + MPS(1) - CCO(1) 2. for time periods 2 and beyond, calculate available to promise by subtracting committed customer orders in that time period from the master production schedule in that time period.ATP(i) = MPS(i) - CCO(i) 3. If the ATP is negative in a time period must reduce prior weeks' ATP to cover such shortages

Define ETO, MTO, ATO, MTS and Mass Customization and explain the tradeoff between lead-time and customization of each of these market orientations.

MTS- make to stock -literally means to manufacture products for stock based on demand forecasts, which is a push system. -since the accuracy of the forecasts will prevent excess inventory and opportunity loss due to stockout, the critical issue is how to forecast demands accurately. -a train schedule (supply schedule) for which the number of passengers (forecast demand) for each time period can be determined from the past data. Most daily necessities such as processed foods, sundries, and textiles are MTS-type products. Issue: to avoid having excess inventory. Companies today that operate with an MTS model struggle to make the correct product at the correct time in the correct quantities. -features economies of scale, large volumes, long production runs, low variety, and distribution channels ATO- assemble to order -a manufacturing strategy where products ordered by customers are produced quickly and are customizable to a certain extent -requires that the basic parts for the product are already manufactured but not yet assembled -a hybrid strategy between a Make-to-Stock strategy where products are fully produced in advance, and the Make-to-Order strategy where products are manufactured once the order has been received. -attempts to combine the benefits of both strategies - getting products into customers' hands quickly while allowing for the product to be customizable -when base components are made, stocked to forecast, but products are no MTO- make to order -a manufacturing strategy that typically allows customers to purchase products that are customized to their specifications. -manufactures the end product once the customer places the order, creating additional wait time for the consumer to receive the product but allowing for more flexible customization. -It is like an elevator because MTO starts by receiving an order as an elevator starts by pressing a button -relieves the problems of excess inventory that is common with the traditional Make-to-Stock strategy -is not appropriate for all types of products. It is appropriate for highly configured products such as computer servers, aircraft, ocean vessels, bridges, automobiles, or products that are very expensive to keep in inventory -relies on relatively small quantities, but more complexity ETO- engineer to order - a manufacturing process in which the component is designed, engineered, and built to specifications only after the order has been received -a more dramatic evolution of a Make-to-Order supply chain -building a unique product every time. -there may be components that are common from one product to another, but not in the same quantity as in repetitive manufacturing -cost of poor quality can be very high -the warranty costs and the cost of rework to replace an item in a complex assembly can have a serious negative effect on profit margins. -quality must be part of the entire process, and not just part of purchasing and manufacturing—the typical focus of a repetitive manufacturer -used when products are unique and extensively customized for the specific needs of individual customers Mass Customization: -Achieve both Economy of Scale and Economy of Scope -Postponement- Delaying Differentiation -Have lead time and cost of MTS with customization of MTO/ETO

Value Steam Mapping

Value Stream - ALL steps required to complete a product/service from beginning to end: Includes both value added and non-value added activities Value Stream Maps allow us to "see the waste" by documenting inventory, capacity or production imbalances, waiting, overproduction, etc.

Know the chase and level production planning approaches and be able to calculate the level production plan and ending inventory each month

**LOOK AT NOTEBOOK TO SEE DIAGRAM** Chase (MTO) Production Planning: -adjusts capacity to match the demand pattern -firm hires & lays off workers to match production to demand -workforce fluctuates but finished goods inventory remains constant -works well for make-to-order firms Level (MTS) Production Planning: -relies on a constant output rate & capacity -rary inventory & backlog levels according to fluctuating demand pattern -workforce levels stay constant & firm relies on fluctuating finished goods inventories & backlogs to meet demand -works well for make-to-stock manufacturing firms

Define the Bill of Materials (BOM) and apply the planning factor to determine how many components are needed to produce the product.

Bill of Materials (BOM): -an engineering document that shows an inclusive listing of all component parts & assemblies making up the final product. Multilevel Bill of Materials: -shows the parent-component relationships & the specific units of components known as the planning factor. The multilevel bill of materials can be presented as an indented bill of materials. At each level of indentation, the level number increases by one.

· understand the connection between the bottleneck and a system's capacity

Bottlenecks usually determine the capacity of the system. However much a bottleneck can produce determines the capacity of how much can be produced

Describe the quality philosophies of Deming, Juran, and Crosby

Deming: -Led Japanese quality revolution after being ignored by US companies -Quality: management responsibility that required fundamental change and a long term (3-5 years) time horizon -Focused on reduction of variation through tools/methods (SPC) -Quality as an organization-wide activity, NOT a technical task A common variation is an inherent part of any process: -Managers are the only ones responsible for common variation and change in systems by setting policies and procedures -Workers are not responsible for the problems of the system, however, it primarily determines worker performance Thus, lack of competitiveness is a result of 'failure of top management to manage' Juran: -Problems with the implementation of Quality Control = Juran's invitation to Japan (1954) -Focus on the cost of quality and data to shock management into action -Quality = 'fitness for use' (-Users should expect service/product to provide what they need/want -To achieve, all aspects (design, vendor relations, process development, customer relations, etc.) must be managed and analyzed) -Categorize the costs of quality (more in a notebook) Crosby: Quality = conformance to requirements (poor Quality from a design/manufacturing/etc. problem) Quality is free (low quality, defects, rework, warrant work, etc. cost $) Quality management = savings that pay for itself The goal of quality improvement: 'zero defects' Believed that impact could be made in a few months through results, stir management action

Understand statistical variability and dependent events and how that impacts a system's capacity

Dependent Events: -A series of events must take place before another can begin. -The subsequent event depends upon ones prior to it-Dependent Events in Manufacturing = One operation has to be completed before another --> parts are made in a sequence of steps Statistical Fluctuations: -Types of information that you can't predict -Types of information that vary from one instance to the next -Fluctuations don't necessarily average out over time, can eventually accumulate -Most of the factors in the plant can't be successfully determined ahead of time. Example: In a medley relay, the team has 4 swimmers that each swim 50 yds. of a stroke before switching off to the next person. The dependent events in this example are the swimmers. If one takes longer to swim their part, the rest behind him will fall behind as well. The statistical fluctuations of this example would be how or why each swimmer is not swimming at the set pace. If a swimmer goes slower because they have water in their goggles, that is a statistical fluctuation. If a swimmer has an energy boost halfway through the 50yds. and swims faster than the pace was set at, that is a statistical fluctuation. The entire time it takes for the team to swim their 200yds. is the throughput time.

Define Distribution Requirements Planning (DRP) and explain how DRP is used to calculate total demand for factory production (or from the central warehouse.)

Distribution Requirements Planning: -a time-phased finished good inventory replenishment plan in a distribution network -ensures that goods are delivered in the most efficient manner. DRP is a logical extension of the MRP system & ties physical distribution to manufacturing planning and control system Distribution Requirements Planning (DRP) is the process of determining the right quality of finished goods to be sent to each distribution center or warehouse in order to meet customer demand. -During DRP, customer and forecasted demand are translated into purchase orders. This process depends on actual demand signals such as customer orders as those orders are used to plan the gross requirements of the supply source. -One of the biggest challenges during DRP is caused by the high levels of demand variability. As demand can vary, how can manufacturing operations properly plan for the number of finished goods that are required on-site and positioned to the correct location? In addition, how can these goods arrive at the correct facility in the time frame required in the most efficient manner? The outputs of DRP can help supply chain managers answer questions such as: Which products will we need? What quantity of each product will we need? Where are those finished goods needed? What quantity do we have on hand and how much do we need to produce?

· Know what factors can reduce capacity

Effective capacity may differ from maximum capacity due to factors such as: -Product mix -Skill level of the workers -Product change-overs -Preventative maintenance -Machine/tool breakdowns -Quality problems -Machine starvation and blockage

Discuss the role of customer contact (high vs. low)

High- customers visit store, call/email/talk to you somehow Low- you never really see the customer Advantages: - Increased customer net value - Better quality, faster delivery, greater flexibility, and lower cost - Reduction in costs (product, shipping, and inventory) - Coordination across the supply chain Disadvantages: - Potentially disruptive - Managing timing and volume can be challenging - Quality measurement can be difficult - Requires interpersonal skills - Multiple locations

Define dependent and independent demand

Independent Demand: the demand for final products & has a demand pattern affected by trends, seasonal patterns, & general market conditions. Dependent Demand: describes the internal demand for parts based on the demand of the final product in which the parts are used. Subassemblies, components, & raw materials are examples of dependent demand items.

Why is Mass Customization difficult to achieve and how can postponement help achieve MC

It is hard to produce a lot of products that are also customized to the customer. IE; it is hard to produce 100 products when each one has to be custom Postponement can help because you can have a base of something to start then add to it to match the customized request Postponement- an example is when you go to home depot for paint. They have a wall of thousands of options for colors. You pick a color and they grab a can of white paint then add the pigmentation to match the color you want. They shake it up and 5 minutes later you walk out with the color your desire. Meaning they don't have thousands of paint cans for each color, they only have white with different finishes then they can add color pigmentation to it to create the colors you want

Discuss service vs. manufacturing processes

Manufacturing: physical durable output output can be inventoried low customer contact long response time capital intensive quality easily measured Service: intangible perishable output output cant be inventoried high customer contact short response time labor intensive quality not easily measured

Explain the challenges of resource planning and its importance

The challenge of resource planning is to achieve a rough balance between available capacity and required workload over time. This is complicated by the fact that it is done in an environment of uncertainty. Capacity is a can do Workload is a must do

List & define the components of time series data (trend, seasonality, cyclicality, irregular, random)

Trend: Data consistently increase or decrease persistent upward or downward duration is usually several years or months Seasonality: Data consistently show peaks and valleys that repeat over a consistent interval like hours, days, weeks, months, seasons a regular pattern of up & down fluctuations usually due to the different months and seasons Cyclicality: Data reveal gradual increases and decreases over extended periods wavelike movements that are longer than a year Repeating up & down movements Usually 2-10 years duration Irregular: outliers erratic, unsystematic, "residual" fluctuations it is due to random variations or unforeseen events (tornado, covid) these periods are usually short and non-repeating Random: due to unexpected or unpredictable events these will take place from time to time and are unpredictable

You would tend to use qualitative forecasting techniques when i. Introducing a new product to the market place ii. You have ample past sales data and it is a good predictor of future sales iii. At the end of a product's life iv. a product is in the maturity phase of its life cycle a) ii and iv only b) i, iii, and iv only c) i, ii, and iii only d) i and iii only

d) i and iii only

The benefits of implementing a successful CPFR (Collaborative planning forecasting and replenishment) program include all the following EXCEPT: a) More accurate forecasts b) Working together with trading partners to developing plans to match supply with demand c) Incorporating special events like promotions and store openings into the forecast and plan. d) Exception management e) Reduced costs of excess or shortage for the focal firm only

e) Reduced costs of excess or shortage for the focal firm only

Know/apply the customer contact matrix

picture of diagram is on phone

Define Statistical Process Control (SPC) and compare and contrast natural and assignable variation

the application of statistical techniques to determine whether the output of a process conforms to the product or service design (what the customer wants) -Focus on understanding and controlling those defects -Goal: build quality at the source 1. Common Cause Variation (natural): due to the process itself (errors unassignable, chance, random, or due to common causes) (-Examples: driving to work; some days take a little longer) -Process capability determined by inherent common causes of variation (will remain unless process change made by management) (-Examples: poor hiring & training, stress, mgmt style, poor product design) 2. Special or Assignable Cause Variation: due to events external to the usual functioning of the system (-Examples: driving to work, and construction starts on I25 change of operator, procedures, a new type of raw materials and breakages) -Uncontrolled variation = high costs, unknown quality, and impossibility to evaluate any attempts to improve a system

Define and calculate forecast error & know what forecast bias is

the difference between actual quantity + forecast Error: -MAD mean absolute deviation -MAAPE mean absolute percentage error -MSE mean squared error Bias: -RSFE running sum of forecast errors -TS tracking signal

Understand how to identify a bottleneck in a process

a constrained resource where demand on it exceeds its capacity. Typically the bottleneck will determine the system capacity -Often characterized by long lines or lots of inventory ahead of the bottleneck -ie; washer takes 45 minutes, dryer takes 60 minutes. the dryer is my bottleneck

Forecasting Principles

-Better processes yield better forecasts -Demand forecasting is being done in virtually every company, either formally or informally. The challenge is to do it well—better than the competition -Better forecasts result in better customer service and lower costs, as well as better relationships with suppliers and customers -The forecast can and must make sense based on the big picture, economic outlook, market share, and so on -The best way to improve forecast accuracy is to focus on reducing forecast error -Bias is the worst kind of forecast error; strive for zero bias -Whenever possible, forecast at more aggregate levels. Forecast in detail only where necessary -Far more can be gained by people collaborating and communicating well than by using the most advanced forecasting technique or model

Apply/interpret process capability Cp

-Process capability determined by inherent common causes of variation (will remain unless process change made by management) Cp - This is how it is represented. It denotes the capability of the process that can be achieved when perfectly centered between the lower and the upper limit. Cpk - This is also used for calculating the ability of the process; it determines how close you are to the given target and how consistent you are around your average performance.

Explain the relationship of forecast accuracy to time horizon and level of detail

-real value from sharing forecasts among firms rather than algorithms from single -eliminates inventory shifting among partners -provides SC with abundant benefits but requires a fundamental change in buyer & seller collaboration 1. Collaboration Arrangement Performance 2. Joint business plan 3. Sales forecasting 4. Order planning/forecasting 5. Order generation 6. Order fulfillment 7. Exception management 8. Performance assessment

Know and be able to apply/interpret the 14 principles of the Toyota Production System

1. Base management decisions on a long-term philosophy (even at expense of short-term financial goals) 2. Create continuous process flow & recognize problems -Design work processes to achieve high value-added, continuous flow -Takt-time planning -One-piece flow (Benefits: Builds in quality, creates flexibility, creates higher productivity, frees up floor space, improves safety, improves morale, reduces cost of inventory) 3. Use "pull" systems to avoid overproduction (system dictates production) -"Pull" system= work released/moved based on status of the system -Provide your downstream customers with what/how much/and when they want it -Minimize work in process (WIP) and warehouse inventory (restock more frequently based on customer demand) -Be responsive to day-to-day shifts in customer demand rather than relying on computer schedule and system tracking -Kanban systems help control inventory 4. Level out the workload (Heijunka) -work like tortoise, not hare 5. Build a culture of stopping to fix problems (zero defects) -Quality drives value prop -Use all modern quality methods available -Invest in equipment: detection of problems and stopping itself -Build into organization: quick problem-solving abilities -Build into your culture: philosophy to slow/stop to achieve initial high quality 6. Standardized tasks are the foundation for continuous improvement and employee empowerment -Foundation for flow and pull: Use stable/repeating methods everywhere for process maintenance of: Predictability, Regular timing. Stable output -Capture accumulated learning about processes by standardizing most up-to-date best practices 7. Use visual control to maintain problem transparency -Use simple visual indicators to help people determine immediately whether in standard condition or deviating from it -Minimize worker distractions with limited computer use -Limit reports to one piece of paper when possible 8. Use reliable, tested tech that serves people & processes -Use technology to support, not replace people -New tech: often unreliable and difficult to standardize; endangers "flow" -Reject technologies that conflict with your culture -Encourage exploration of new tech with new methods 9. Grow leaders who thoroughly understand the work, live the philosophy, and teach it to others -Grow leaders from within -Must be role model for the organization's philosophy -A good leader must understand the daily work in great detail 10. Develop exceptional people and teams who follow your company's philosophy -Create a strong, stable culture with widely shared company values and beliefs -Train exceptional individuals and teams to work within corporate philosophy -Use cross-functional teams and teach teamwork skills -Teamwork is learned 11. Respect your extended network of partners and suppliers by challenging them and helping them improve -Treat partners and suppliers as an extension of your business -Challenge your outside partners to grow and develop In what ways do you help your partners improve? 12. Go and see for yourself to thoroughly understand the situation (genchi genbutsu) -Solve problems by personally going to the source and observing and verifying data -DON'T theorize on the basis of what others tell you -Think and speak based on personally-verified data 13. Make decisions slowly by consensus, thoroughly considering all options -After considering options = implement decisions rapidly -Only choose single solution after thoroughly exploring all potential paths 14. Become a learning organization through relentless reflection (hansei) and continuous improvement (kaizen) -Once you have established a stable process, use continuous improvement tools to identify and correct the root cause of problems. -Design processes that require almost no inventory -Develop the organizational knowledge base (develop stable personnel, slow promotion, and very careful succession systems) Consider the "5 Why's"

Define the different qualitative models and list the strengths and weaknesses of each

1. Jury of executive opinion: Gathers opinions from a group of company executives that meets together to predict sales. The executives' predictions are averaged so that the forecast is a composite of their points of view. Advantages of Jury of Executive opinion? -based on reliable, inside opinion, and knowledge of strategy.-quick and easy to use -good for new product forecasting Disadvantages of the jury of executive opinion? -results depend on executives' skills -all predictions carry equal weight, which is a problem if some execs' predictions are not as relevant/accurate as others -one person can dominate the process. 2.Delphi method: Involves company executives and outside experts such as university professors, consultants, or industry analysts. It is based on the assumption that several experts can arrive at a better forecast than one. Predictions are made secretly and then averaged together. The results of the first poll are sent to the experts, who are asked to respond with a second opinion. The process is repeated until a very narrow, firm median is agreed upon. Advantages of the Delphi Method? -can prevent social pressure and groupthink -can prevent forceful individuals from dominating others -can prevent timeconsuming discussions or arguments -can gather opinions from those who won't speak out in groups -good for long range forecast and technological change. Disadvantages of the Delphi Method. -takes a lot of time to complete multiple rounds of the process -can be expensive 3.Salesforce composite: -Method gathers opinions from the sales force -Each salesperson forecasts his/her sales for the future period -The sales analyst then adds those forecasts together to get the sales force composite forecast for the period. Advantages of the sales force composite? -accurate forecasts for individual products (because sales staff knowledge) -higher sales totals (motivates the salespeople to reach forecast) -inexpensive to use -provides detailed information Disadvantages of salesforce composition. -lacks a long-range view (lack of info to predict future plans) -salesforce resentment due to having to take time away from selling to prepare sales forecasts -Forecasts that benefit sales force (purposely forecasting lower to achieve forecast easily) 4.Consumer survey: market research/ survey of buyer intent -gathers information about consumers' plans to purchase products -analysts ask customers (via phone, personal contact, or questionnaire) what and how much they intend to purchase in the future -information gathered to create sales estimates for individual products -estimates are combined to forecast overall sales for the company Advantages of Market research/ survey of buyer intent -reasonably accurate forecasts -easy to control costs -outside information is available (U.S. Bureau of Census) Disadvantages of Market research/ survey of buyer intent -it can be difficult to create a good questionnaire

Explain all the elements of LEAN - Partnerships, Layout, Continuous Improvement, Workforce Involvement, Scheduling, Inventory Reduction - and how these can be achieved

1. Waste reduction: is the number one objective of LEAN. Waste is the expenditure of one or more resources for no purpose or value. Companies can reduce costs and add value by eliminating waste from the production system. Waste can occur in many forms. 2. Lean layouts: -Involve moving people and materials when and where needed, and as soon as possible-Lean layouts are very visual, meaning that the lines of visibility are unobstructed, with operators at one processing station or work center able to monitor the progress of work at another work center. Manufacturing cells: -sets of machines are grouped together or in close proximity to one another based on the products or component parts they produce, saving duplication of equipment and labor.• Lean layouts are often U shaped to facilitate easier operator and material movements 3. Inventory, setup time, and changeover time reduction: -Some inventory may be necessary, but excess inventory is a waste -Excess inventory takes up space, and costs money to hold, maintain, protect, secure, and insure. It ties up financial capital which could be used for other aspects of the business. -Reducing inventory levels can free up capital and reduce holding costs. There is less likelihood of waste being created by obsolescence, expiry, spoilage, or damage with lower inventory levels. 4. Small batch scheduling and uniform plant loading: - the ideal schedule is to produce every product as quickly as possible and at the same rate as customer demand. In the real world, material availability, labor availability, and setup or changeover time influence the scheduling of large batches. Small Batch Scheduling: Production is not synchronized with customer demand making a pull system impossible. Throughput times in manufacturing go up and work-in-process inventory goes up, creating more waste in the system. Lean Manufacturing attempts to reverse this through small-batch scheduling. Smaller batches will facilitate production at the same rate as customer demand. Production in small batches creates a smooth workload as production can be synchronized with customer demand, facilitating a pull system. It increases flexibility allowing the company to respond to changes in customer demands more quickly. Throughput times in manufacturing go down, and Work-in-Process inventory goes down, reduce costs and eliminating or minimizing waste in the system. The company can also get the product to the customer more quickly. Shortens manufacturing lead time and the actual time it takes to produce a product, however, setup time must be low so that it is easy to switch from producing one type of product to another. 5. Lean supply chain relationships: - Suppliers and customers work to remove waste, reduce cost, and improve quality and customer service JIT purchasing includes delivering smaller quantities, at right time, delivered to the right location, in the right quantities Firms develop lean supply chain relationships with key customers. Mutual dependency and benefits occur among these partners. 6. Workforce empowerment and respect for people: People are the most valuable resource in any company. Without good people, the business will not succeed. When people do not feel respected, they tend to lose respect for the company. This can become a major problem at any time but particularly when you are trying to implement LEAN. Most people want to perform well in their jobs. They want to feel like they have contributed to the company goals. A company that respects people will appreciate their workers' efforts and keep them in high regard. Some of the more basic ways a company can ensure that their people know they are respected include frequent communication, actively listening to their ideas, praising good performance, and providing help and support when necessary 7. Continuous improvement: -In the context of LEAN manufacturing, continuous improvement is a method for identifying opportunities for streamlining work and reducing waste. Continuous improvement can be viewed as a formal practice or an informal set of guidelines. Continuous improvement helps to streamline workflows; and efficient workflows save time and money, allowing the company to reduce wasted time and effort. • The continuous improvement approach helps to reduce process, delivery, and quality problems such as machine breakdown problems, setup problems, and internal quality problems

What outcome would you expect if you used a simple moving average to forecast sales for the product pictured above? A. Under-forecasting B. Over-forecasting C. A good fit of the forecast to the data D. No biasE. Both C and D

A. Under-forecasting

You have been consistently under-forecasting. Which of the following is most likely FALSE? A) The cost of transportation may rise as you have to express ship product B) The cost of raw materials may rise as you try to buy raw materials on the spot market to fill shortages C) Inventory holding costs may rise due to excess inventory D) Workforce costs may rise as you work overtime, extra shifts, and so on E) Quality costs may rise due to rushed production

C) Inventory holding costs may rise due to excess inventory

Check notebook for figure A linear trend model fit to the data above will most likely: A. Capture the trend and the seasonality effectively B. Capture the seasonality effectively but not the trend C. Capture the trend effectively but not the seasonality D. Not capture either the trend or the seasonality effectively

C. Capture the trend effectively but not the seasonality

· Define capacity

Capacity: maximum average rate of output from a process Constraint: any factor that limits the process's performance and restricts its output (bottleneck) -the rate of output from an operations management system -a variable in the long term -a constraint in the short term Capacity must be managed because it is a major determinant of cost and customer service

Discuss a firm's competitive priorities and how the supply chain design needs to support achieving those priorities

Cost Quality Time Flexibility

Know the costs of quality and how those costs grow as variability increases.

Cost of good quality: 1. Prevention costs incurred from activities intended to keep failures to a minimum. These can include, but are not limited to, the following: -Establishing Product Specifications -Quality Planning -New Product Development and Testing -Development of a Quality Management System (QMS) -Proper Employee Training 2. Appraisal costs incurred to maintain acceptable product quality levels. Appraisal costs can include, but are not limited to, the following: -Incoming Material Inspections -Process Controls -Check Fixtures -Quality Audits -Supplier Assessments Cost of poor quality: 3. Internal Failures costs associated with defects found before the product or service reaches the customer. Internal Failures may include, but are not limited to, the following examples: -Excessive Scrap -Product Re-work -Waste due to poorly designed processes -Machine breakdown due to improper maintenance -Costs associated with failure analysis 4. External Failures costs associated with defects found after the customer receives the product or service. External Failures may include, but are not limited to, the following examples: -Service and Repair Costs -Warranty Claims -Customer Complaints -Product or Material Returns -Incorrect Sales Orders -Incomplete BOMs -Shipping Damage due to Inadequate Packaging

Which of the following is true? i)MAPE, MSE, and MAD are measures of forecast bias only and can be either positive or negative, indicating over or under forecasting ii)If the tracking signal is between +/- 4 then we would conclude the model is a good fit for the data iii)The tracking signal and the RSFE indicate bias in the forecast and goodness of fit of the forecast model to the data iv)Generally a model with smaller MSE, MAPE and MAD results will be preferred to one with larger results on these measures A) i and ii only B) iii and iv only C) i and iv only D) ii, iii and iii only

D) ii, iii and iii only

Explain the steps in the DMAIC and the PDCA improvement cycles

DMAIC: Define: The problem or project based on customer needs and priorities Measure: The process, output, and defects (SPC) Analyze: The data collected to discover and verify causes of the problem (hypothesis testing, correlation, other statistical tools) Improve: The process using quality tools Control: The process going forward to maintain progress PDCA in notebook

Know the differences between functional vs. innovative products and the implications for different supply chain designs (based on key cost drivers)

Determined by brand characteristics Innovative: -high: cost, product margin, forecast variability -short life cycle -fashion items -many product options and variety -seasonal demand ie; customized jeans with lots of jewels and designs Cost drivers = market mediation costs (cost of too much or too little: meaning you produced too much of something no one wants or too little of a popular item) need a responsive supply chain Functional: -low: cost, profit margin, forecast variability -long life cycle -staple items -limited products options and variety -stable demand ie: pair of levi blue jeans Cost drivers = physical costs (labor, raw materials, manufacturing, transportation) limit/control these costs with a lean efficient supply chain

Discuss the product and inventory strategies (ie - market orientations) like ETO, MTO, ATO, MTS, and Mass Customization - compare lead times, cost, customization, decisions under uncertainty, and the different production environments associated with each market orientation

ETO- won't start production until they get orders. They will design and build after orders are sent in *highly tailored to needs of customer* Economy of scope Less automation and more custom MTO- buy basic raw materials that they use in each of their products. Then wait for the order from a customer to finish and put the product together ATO- buy raw materials, do some subassembly then wait for a customer order to finish it completely and assemble completely MTS- this is most of our items like stuff in stores. it is already ready to go, the customer simply picks it out and pays for it. Economy of scale. More automation Mass customization- you want the customization that ETO gives you but at the price, MTS can provide. Very hard to do. Must have lots of options but make at a high scale. Tries to accomplish both economy of scale and scope Economy of scale- produce more @ lower price Economy of scope- customized @ higher price

Define forecasting and the goals of forecasting.

Forecasting provides an estimate of future demand Goal: minimize forecast error and match supply and demand - Identify factors that influence demand - Companies must accurately forecast demand to produce & deliver the right quantities

List the benefits of improved forecasts.

Improved forecasts benefits all trading partners with: -lower inventories -reduced stock-outs -smoother production plans -reduced costs -improved customer service•

Explain how a kanban system works

Kanban: systems help control inventory "Signal" or "Card" in Japanese used for communication (e.g., visual signal) between workstationsContains information passed between stations.Authorizes production or the movement of materials to the next workstation.Could be conducted through the use of a computer software program, i.e., ERP system. is a scheduling system for lean manufacturing and just-in-time manufacturing (JIT). Taiichi Ohno, an industrial engineer at Toyota, developed kanban to improve manufacturing efficiency. Kanban is one method to achieve JIT.

List the elements of Lean

LEAN is composed of three elements working in unison: -LEAN Manufacturing -Total Quality Management -Respect for People Characteristics of Lean Systems -Pull method of materials flow (customer or system signals production) -Quality at the source (Poka-yoke =mistake proofing) -Small lot sizes (batch production) (Ultimate goal: the batch size of one) -Uniform workstation loads (takt time) What are examples of lean products? EX: customized cars, houses, designer dogs Characteristics of Lean Systems -Preventive maintenance (low inventory increases the importance of reliability) -Close supplier ties (frequent, small deliveries) - Flexible workforce - Line flows - Automated production -Standardized components and work methods

Define LEAN and waste reduction

Lean = a systematic approach to identifying and eliminating waste or non-value-added activity in business processes Value-added : -any activity that increases the market form or function of the product -things that customer would pay more for -Examples of non-value-added activities? Fixing defects, overproducing, bottlenecks Lean Principles Produce: -only product the customer wants -only as quickly as the customer wants -only with the features the customer wants -with perfect quality -with a minimum lead time -with no wasted resources -with methods that develop workers Lean Philosophy -precisely specify a value for each product -identify the value stream -make value flow without interruption -let the customer pull value from the producer -pursue perfection Suppliers and customers work to remove waste, reduce cost, and improve quality and customer service. purchasing includes delivering smaller quantities, at right time, delivered to the right location, in the right quantities. Firms develop lean supply chain relationships with key customers. Mutual dependency and benefits occur among these partners. What is Waste? -inventory(excess) -overproduction -defects -waiting -over-processing -unnecessary movement -unnecessary transportation -underutilized people Waste Reduction: -Firms reduce costs and add value by eliminating waste from the production system. -Waste encompasses wait times, inventories, material and people movement, processing steps, variability, any other non-value-adding activity -Before the waste is removed, processes are often scattered, which can negatively affect your customers -After waste is removed, processes are more streamlined, resulting in more satisfied customers. You'll also save your organization time and money

· Define MPS · Define MRP

Master Production Schedule: -weekly build schedule for each product -plan out to cumulative lead time -the MPS provides the production quantity to meet demand from all sources. -it is used for computing the requirements of all time-phased end items. Materials Requirement Planning (Short-Range) MRP: -a computer-based materials management system. The materials requirement plan calculates the exact quantities, need dates, & planned order releases for subassemblies & materials required to manufacture the final products listed on MRP requires: -the independent demand information. -parent-component relationships from the bill of materials. -inventory status of the final product & all of the components. -planned order releases (output of the MRP system)

Define Muda, know the 8 forms of waste, and define a Poka-yoke

Poka-yoke = mistake proofing Muda translates roughly as waste and refers to the inefficiencies within processes which you can seek to reduce or eliminate entirely. ... In effect, lean declares war on waste - any waste. Waste or Muda is anything that does not have value or does not add value. Waste is something the customer will not pay for -firms reduce costs and add value by eliminating waste from the production system. Waste encompasses wait times, inventories, material and people movement, processing steps, variability, any other non-value-adding activity. -before Waste is removed, processes are often scattered, which can negatively affect your customers. --after Waste is removed, processes are more streamlined, resulting in more satisfied customers. You'll also save your organization time and money D.O.W.N.T.I.M.E 1. Defects- anything that does not meet criteria waste due to unnecessary scrap and rework Symptoms: -Rework, scrap, repairs -Customer returns -Impact on brand identity •Causes: -Poor process controls -Insufficient maintenance -Poor training -Bad product design -Unclear customer requirements 2. Overproduction- production before needed or excess of customer requirements. Providing unneeded service. processing more units than necessary Symptoms: -Extra inventory -Excess floor space for storage -High utility costs •Causes: -Complexity -Long set up times -Poor forecast 3. Waiting- Elapsed time between processes when no work is being done. resources wasted waiting for work Symptoms: -Underutilized resources -Low productivity -Idle equipment -Large waiting rooms •Causes: -Unbalanced workload -Long set up times -Poor layout 4. Non-Utilized Talent- Underutilizing people's talents, skills, or knowledge. De-motivating the workforce by not asking for input or recognizing success 5. Transportation- Unnecessary movement of materials or products. moving an input without changing its characteristics Symptoms: -Extra handling equipment -Large storage areas -Overstaffing -Product damage •Causes: -Poor layout -Poor organization -Imbalanced schedules 6. Inventory- Excess products or materials not being processed / supply of items held by the firm to meet demand Symptoms: -Excess storage and handling -High disposal costs -Extra rework Causes: -Poor quality -Unbalanced workload -Poor suppliers 7. Motion- Unnecessary movement of people. Multiple hand-offs. unnecessary motion or excessive activity Symptoms: -Long walking distances -Excess handling -Waiting -Ergonomic issues •Causes: -Poor layout -Poor organization 8. Extra Processing- Unnecessary steps in a process. Redundancies between processes. More work or higher quality than required by the customer. excessive or unnecessary operations Symptoms: -Extra equipment -Long lead times -Extra material movement -Poor productivity •Causes: -Just in case logic -Lack of communication -Redundant approvals and inspections -Poorly defined customer requirements

Resource flexibility and the break even analysis

Process 1: general purpose equipment fixed costs are low labor costs are high Process 2: special purpose equipment

Know the various aspects of the Theory of Constraint

Process: 1. Identify the system bottleneck(s) 2.Exploit the bottleneck(s) 3.Subordinate all other decisions to Step 2 4.Elevate the bottleneck(s) long term 5.Do not let inertia set in 1. the focus is on balancing flow, not on balancing capacity. 2.Maximizing the output and efficiency of every resource will not maximize the throughput of the entire system 3.An hour lost at a bottleneck or constrained resource is an hour lost for the whole system. An hour saved at a non-constrained resource does not necessarily make the whole system more productive. 4.Inventory is needed only in front of the bottlenecks to prevent them from sitting idle, and in front of assembly and shipping points to protect customer schedules. Building inventories elsewhere should be avoided. 5.Work should be released into the system only as frequently as the bottlenecks need it. Bottleneck flows should be equal to the market demand. Pacing everything to the slowest resource minimizes inventory and operating expenses. 6.Activation of non-bottleneck resources cannot increase throughput, nor promote better performance on financial measures.

Compare and contrast qualitative and quantitative forecasts and explain when you would use a qualitative forecast or a quantitative forecast during different stages of a product's life cycle

Qualitative Methods: generally used when data are limited, unavailable, or not currently relevant. The forecast depends on the skill & experience of the forecaster & available information. Based on human judgment, opinions; subjective and nonmathematical. Four models used are: 1.Jury of executive opinion 2.Delphi method 3.Salesforce composite 4.Consumer survey Quantitative Methods: Based on mathematics; quantitative by nature. - Time Series Forecasting (historical data is used to predict future demand) (Assumes that the future is an extension of the past) •Trend Projection (using regression analysis) •Associative forecasting (Cause and Effect) (regression analysis) (One or more factors (independent variables) predict future demand) Use a combination of quantitative and qualitative techniques

What are the 5S's and why are they important?

Seiri/Sort: Keep only necessary items in the workplace, eliminate the rest Seiton/Straighten-Organize and arrange items to promote an efficient workflow Seiso/Shine: Clean the work area so it is neat and tidy Seiketsu/ Standardize: Schedule regular cleaning and maintenance Shtsuke/Sustain: Stick to the rules. Maintain and review the standards"There is a place for everything, and everything should be in its place

How does Lean Scheduling improve flexibility and what is the connection between set up times and small batch scheduling

Small Batch Scheduling and Uniform Plant Loading: -the ideal schedule is to produce every product as quickly as possible and at the same rate as customer demand. In the real world, material availability, labor availability, and setup or changeover time influences the scheduling of large batches. Large batches can exacerbate the Bullwhip Effect as production in large batches creates an uneven workload. Production is not synchronized with customer demand, making a pull system impossible.Throughput times in manufacturing go up, and work-in-process inventory goes up, creating more waste in the system Small Batch Scheduling: - LEAN Manufacturing attempts to reverse this though small batch scheduling. -Smaller batches will facilitate producing at the same rate as customer demand. -Production in small batches creates a smooth workload as production can be synchronized with customer demand, facilitating a pull system. -It increases flexibility allowing the company to respond to changes in customer demands more quickly. -Throughput times in manufacturing go down, and Work-in-Process inventory goes down, reducing costs and eliminating or minimizing waste in the system. Can be facilitated through the use of Kanbans

Define all the Terms Used in MRP (examples - parent, component, gross requirements, etc)

Terms used in MRP: 1.Parent: Item generating demand for lower-level components. 2.Components: parts demanded by a parent. 3.Gross requirement: A time-phased requirement prior to netting out on-hand inventory & lead-time 4.Net requirement: The unsatisfied item requirement for a specific time period. Gross requirement for period minus current on-hand inventory. 5.Scheduled receipt: A committed order awaiting delivery for a specific period. 6.Projected on-hand inventory: Projected closing inventory at end of period. Beginning inventory minus gross requirement, plus scheduled receipt & planned receipt & planned receipt from planned order releases. 7.Planned order release: Specific order to be released to the shop or to the supplier. 8.Time bucket: Time period used on the MRP. Days or weeks. 9.Explosion: Process of converting a parent item's planned order releases into component gross requirements. 10.Planning factor: Number of components needed to produce a unit of the parent item. 11.Firmed planned order: Planned order that the MRP computer logic system does not automatically change when conditions change to prevent system nervousness. 12.Pegging: Relates gross requirements for a part to the planned order releases 13.Low-level coding: assigns the lowest level on BOM to all common components to avoid duplicate MRP computations. 14.Lot size: The order size for MRP logic 15.Safety Stock: Protects against uncertainties in demand supply, quality, & lead time

Define SIX SIGMA

The Origins of Six Sigma Quality Six Sigma - near quality perfection (statistical likelihood of non-defects 99.99966% of the time) • Pioneered by Motorola in 1987 • A statistics-based decision-making framework designed to make significant quality improvements in value-adding processes a disciplined, statistical-based, data-driven methodology for identifying, and removing the cause of defects (errors) and minimizing variability in manufacturing and in business processes. It was originally developed by Motorola

Understand and apply the Taguchi loss function

The cost of quality is NOT: Good part = free Bad part = costly -There is a spectrum of Quality costs -The further apart is from perfect = the more likely it is to cost $ eventually The loss function is in a notebook

Define and apply the tools of SIX SIGMA - Flow Diagrams, Check Sheets, Pareto Diagrams, Cause-and-effect diagrams

Tools and Techniques for TQM: Key to good quality = good management (to create the change, management needs to train people in the tools and techniques to improve quality) 7 Basic TOM Tools: -Pareto analysis -Checklists -Flow charts (or value stream maps) -Cause and effect diagrams -Histograms -Scatter diagrams -Control charts (SPC) **examples of each of these will be in a notebook** Flow Charts: allow team members to see the actual flow of a process; able to capture all steps rather than just what can be seen from one spot. Block diagrams are similar. Block Diagram: is a diagram of a system in which the principal parts or functions are represented by blocks connected by lines that show the relationships of the blocks. They are heavily used in engineering in hardware design, electronic design, software design, and process flow diagrams Check Sheets: structured lists/frameworks of likely causes which can be systematically solved; when new issues are found they are added to the list. Histogram: used to represent this information in visual form Scatter Diagram: used to plot variables against each other and help identify correlations or other patterns Pareto Chart: is a graph that indicates the frequency of defects, as well as their cumulative impact. Pareto Charts are useful to find the defects to prioritize in order to observe the greatest overall improvement Cause-and-effect diagram: is a visual tool used to logically organize possible causes for a specific problem or effect by graphically displaying them in increasing detail, suggesting causal relationships among theories.

Associative forecasting attempts to link the sales of your product to one or more explanatory variables using regression analysis. Linear trend forecasting is a special case of associative forecasting where the explanatory variable is time. a) True b) False

a) True

Companies should use multiple forecasting methods, both qualitative and quantitative methods, in order to reduce the bias in the forecast and increase the forecast accuracy. a) True b) False

a) True

You have traditionally used past sales data to forecast future sales of your product (product A) using time series forecasts. These methods have been successful for you yielding high levels of forecast accuracy. You just launched a new version of product A (call it A-prime), but plan to sell the old version, product A, too. Based on this you should: a) Continue to use the time series forecast models you have always used to forecast future sales of product A. b) Stop using the methods discussed above but look for new time series models c) Explore qualitative forecast methods. Since the future will no longer be an extension of the past, time series models may yield inaccurate results.

c) Explore qualitative forecast methods. Since the future will no longer be an extension of the past, time series models may yield inaccurate results.