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Five Assumptions
1. Demand rate is constant and known with certainty. 2. No constraints are placed on the size of each lot. 3. The only two relevant costs are the inventory holding cost and the fixed cost per lot for ordering or setup. 4. Decisions for one item can be made independently of decisions for other items. 5. The lead time is constant and known with certainty.
Materials Requirement Planning (MRP)
A computer-based operations management system that uses sales forecasts to make sure that needed parts and materials are available at the right time and place.
Bill of Resources
A record of a service firm's parent-component relationships and all of the materials, equipment time, staff, and other resources associated with them, including usage quantities.
Mixed Strategy
A strategy that considers the full range of supply options
Level Strategy
A strategy that keeps the workforce constant, but varies its utilization via overtime, under time, and vacation planning to match the demand forecast
Which method of forecasting uses contextual knowledge gained through on the job experience?
A. Judgement
Component
An item that goes through one or more operations to be transformed into or become part of one or more parents
Which method of inventory keeps track by performing inventory counts constantly, or on a frequent and regular basis, instead of once per year or once per quarter?
Cycle
Forecasting permits businesses to:
D. All of the Above
Inventory is:
D. All of the above
New Product Development Process
Design, Analysis, Development, Full Launch
The method to ensuring the lowest aggregate inventory cost (holding and ordering costs) is:
EOQ
Chase Strategy
Hiring and laying off workers to match demand forecast over time
Four Types of Forecasting
Judgement, casual, time-series, trend projection using regression
An estimate of time between placing an order and receiving the item is:
Lead Time
Levels in Operations Planning and Scheduling
Level 1: Sales and Operations Planning Level 2: Resource Planning Level 3: Scheduling
Inventory cannot be eliminated, it can only be:
Managed
In order to keep aggregate inventory and costs at a minimum, purchasers should attempt to:
Order as little and as late as possible
In terms of goods sold, what are the three types of inventories?
Raw Materials, Work in Process, Finished Goods
What is Naive forecasting?
The forecast for the next period equals the demand for the current period
ABC Analysis is a process of dividing SKU's into classes, according to their dollar usage, so that managers can focus on items that have the highest dollar value.
True
Using a linear regression helps to prevent making decision based on a false trend.
True
While items are in transit, they are still considered to be part of the shipper's inventory even if the recipient has yet to pay for them.
True
Enterprise Process
a company wide process that cuts across functional areas, business units, geographical regions, and product lines
Parent
a product that is manufactured from one or more components
Cycle inventory
average amount of inventory a business needs to meet customer demand between orders
Measure of Performance
did the product perform
Bullwhip Effect
erratic shifts in orders up and down the supply chain
Periodic Review System
fixed interval reorder system or periodic reorder system
Measure of Effectiveness
how well did the product achieve the desired end state
Anticipation Inventory
inventory used to absorb uneven rates of demand or supply, keeps extra stock on hand
Resource Planning
process that takes sales and operation plans; processes information in the way of time standards, routing, and other information on how services or products are produced; and then plans the input requirements
Pipeline Inventory
products that are in the company's shipping chain that have yet to reach their ultimate destination.
Safety Stock Inventory
surplus inventory that a company holds to protect against uncertainties in demand, lead time, and supply changes
Continuous Review System
system designed to track the remaining inventory of a SKU each time a withdrawal is made to determine whether it is time to reorder
Economic Order Quantity
the lot size that minimizes total annual inventory holding and ordering costs
Dependent Demand
the need for any one item is a direct result of the need for some other item, usually an item of which it is a part
Supply Chain Risk Management
the practice of managing the risk of any factor or event that can materially disrupt a supply chain
Operations Planning and Scheduling
the process of balancing supply with demand
Exponential Soothing
weighted moving average that calculates the average of a time series by implicitly giving recent demands more weight than earlier demands
ABC anaylsis
what type of inventory to keep and how much