Operational Strategies
Competitive advantage
Is defined as a condition or circumstance that puts a company in a favorable or superior business position over its competitors.
What does kanban do?
It signals one production process to pull from another preceding process based on a demand driven system.
Finished goods
Items are ready to ship to the customer. No more work is required.
Quantity Discounts:
Items usually cost less, per unit, when purchased in bulk. Therefore, the order quantity directly influences the purchase price of an item.
In the fixed order interval model, what is the formula for calculating the order-up-to level?
M = D(R + L)
ABC analysis have been
developed to determine which inventory items should receive the highest level of control.
t. A perpetual inventory system continuously
monitors inventory levels. It is also known as a continuous review system. Under such a system, inventory transactions are recorded as they occur.
The EPQ model assumes
that a company will produce its own quantity or parts,
A firm can minimize its total annual costs of ordering and holding inventory by using??
the EOQ model
The method of multiplying the dollar value of each item by its annual usage is called
ABC analysis
Which of the following would prioritize the inventory items that should be tracked closely?
ABC analysis
Conveyance Kanban (C-Kanban)
An authorization to move a container of parts or materials; nothing can move without it. is associated with the movement of container of parts
TPM involves three main components: (total prevention maintenance)
An emphasis on preventive maintenance: The allocation of time each day for maintenance: The allocation of time each day for maintenance:
Which term refers to a capability valued by customers that enables a firm to improve its profitability?
Competitive advantage
Perpetual inventory system
Continuously monitors inventory levels and is also called continuous review systems. Requires human input (cahsier) and the ordering of more inventory is triggered by reorder.
Electronic Kanban (E-Kanban)
Digital signal or electronic authorization to move a container of parts or replenishment of materials. Can also be used to authorize production of parts or subassemblies. barcodes ect
JIT's Influence on Competitive Advantage Strategies are
Elimination of waste People utilization Cost reduction Quality and reliability Product flexibility Volume flexibility Delivery dependability
Which statement is true for periodic inventory systems?
Exact inventory balances cannot be kept without a physical count.
Which statement about inventory is correct?
Holding inventory includes both fixed and variable costs.
Which of the following is an advantage of the perpetual inventory system?
Improves the accuracy of financial statements.
A customer contacts a major retailer one month after purchasing a display model of a BBQ grill island that has been discontinued. The grill was sold "as-is." During the installation, the customer somehow loosened a fitting that is part of a subassembly and is concealed inside the unit. The only way to access the fitting is to dismantle an external bulkhead after removing the stone veneer finish the customer has installed. This repair is a major headache, and the customer is not taking any responsibility for their incorrect actions. What is the socially responsible solution for the major retailer?
Negotiate a cost-sharing agreement with the customer and schedule a visit with the customer to get the grill repaired
list includes seven areas of waste to consider:
Overproduction: Waiting Transportation Overprocessing Inventory Motion or movement: Defects
Which of the following is calculated by determining the ratio of outputs achieved divided by the inputs consumed to achieve those outputs?
Productivity
A retail store is planning to place a large order. Their suppliers will offer a lower price per unit for a large order. Which model will help the store decide the optimal quantity to order?
Quantity Discount Model !!!
Imelda Company wants to minimize the total of their ordering costs and holding costs. However, they also understand that ordered items usually cost less per unit when purchased by the case rather than individually. Which inventory management model should they use?
Quantity discount model
Periodic inventory system
Randomly monitors inventory levels and is also called the fixed order interval system. Not expensive to implement or maintain.
Which of the following is a characteristic of a perpetual inventory system?
Recording inventory transactions as they occur.
Which of the following statements about the EOQ model is correct?
The EOQ model determines the point at which the total cost function is minimized.
Replacement parts inventory:
These are maintained to replace other parts in machinery or equipment as those parts wear out.
Work-in-process (WIP)
These are partly finished parts, components, subassemblies, or modules.
Raw materials:
These parts and materials are obtained from suppliers and are used in the production process.
Production Kanban (P-Kanban)
Used to authorize the production of parts. is associated with the production of parts to fill an empty container.
EOQ (Economic Order Quality)
Used to help companies control the cost of ordering, receiving, and holding inventory.
Value stream mapping
allows the organization to identify the non-value-adding activities or items and reduce or eliminate their impact on cost and time required to deliver the service, thereby delivering greater value to the customer.
advantages of the perpetual inventory system
are that a company has a running balance of how much capital is invested in inventory at all times, the alignment of inventory replenishment methods with the accounting method, and more accurate financial statements.
economic production quantity (EPQ)—helps companies control the
cost of ordering, receiving, holding inventory.
A periodic inventory system is most likely used by a firm when its suppliers
deliver only at specific intervals
True or false? As indicated with flat-screen televisions, when a firm makes improvements to product quality, product costs increase significantly.
false
most obvious aspect of JIT,
inventory reduction most valuable benefit is that it forces a company to uncover problems and inefficiencies in its operations
Cycle time
is a measure of how often a particular product is made.
ordering cost.
is represented by the costs associated with changing over equipment from producing one item to producing another and is referred to as setup cost.
.An oder point
is simply a level of inventory at which an order should be placed, accounting for lead time and safety stock, so that the order will arrive before a stockout occurs.
downside of a perpetual inventory system
is that these kinds of solutions are typically expensive to implement and maintain. require a costly start-up investment in capital and human resources to implement the system, plus ongoing resources for system updates, upgrades, debugging, and both proactive and reactive maintenance.
The primary disadvantage periodic
is the inability to determine exact inventory balances without a physical count.
The primary advantage of a periodic inventory system
is the low-cost of implementation. Companies with very small amounts of inventory need not commit resources for a large-scale system. Companies with lots of small merchandise in inventory might find it easier to update their inventory levels periodically instead of daily or weekly.
review interval
is the time between assessments that will determine average order quantity because the annual demand must be met during one year.
The time that it takes for an order to reach the supplier's offices, the time to fill the order, and the shipping time is collectively known as??
lead time
Kanban
refers strictly to a card that is used to signal the need for more materials, parts, or subassemblies at downstream operations.
Swot
strengths (internal), weaknesses (internal), opportunities (external), threats (external)
A pull system
such as just-in-time moves materials through a system as they are needed. Daily builds are scheduled only when there are orders for the products. (JITT uses)
economic order quantity (EOQ)
the optimal order size to minimize the sum of ordering, carrying, and stockout costs
The goal of firms using the EOQ model is
to minimize the total annual costs of ordering and holding inventory by varying the order quantity.
highly variable process will not be able
to produce as many satisfactory products as a process with lower variability
In the EOQ model, the economic order quantity is the point at which the
total cost function is minimized
A push system
uses a master schedule to plan builds out in time, and parts (raw materials, subassemblies, etc.) are ordered based on this build plan.
