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24 Cards in this Set

  • Front
  • Back
Benefits of a pull system
o Reduced costs – lower WIP and less rework
o Improved quality – pressure for internal quality and better detection of problems
o Better customer service – short CT and predictable outputs
o Greater flexibility – work is pulled into the system only when it is ready to be worked on
Advantages of push over pull systems
- Observability - WIP in pull systems can be observed directly, capacity in push systems must be estimated
- Efficiency – Pull system achieve a given level of TH with smaller amount of inventory
- Robustness – pull systems are less sensitive to errors in setting the WIP level
Equation for profit
Profit = r * TH - h * WIP
Stock
inputs that arrive at the production process before they are ready to use them
Backlog
when a customer order occurs before the production needed to satisfy it has been completed
Working stock
inventory that is actively being processed or moved
Congestion stock
inventory that builds up unintentionally as a consequence of variability in the system
Cycle stock
inventory that results from batch operations
Safety stock
inventory that exists intentionally to buffer variability
Anticipation stock
inventory that is built up in expectation of future demand
Conditions of EOQ
- Demand is fairly steady over time
- Cost to place an order is reasonably stable and independent of the quantity ordered
- Replenishments are delivered all at once
Base stock
The most basic inventory replenishment system in which a replacement is ordered each time an item is removed
Net inventory
on hand inventory – backorders
Inventory position
net inventory + replenishment orders
Risk
Exposure to negative consequences of uncertain events
Buffering
Maintaining excess resources (inventory, capacity, time) to cover for fluctuations in supply or demand
Pooling
SHaring buffers to cover multiple sources of variability
Contingency Planning
Establishing a preset course of action for an anticipated scenario
Crisis Management
Generating responses to events for which buffers and contingency plans are inadequate
Buyback contract
The manufacturer agrees to purchase unsold goods from the retailer at a prespecified price
Quantity flexibility contract
The manufacturer allows the retailer to return, at full wholesale price, excess inventory up to some limited amount
Revenue-sharing contract
The manufacturer sells the item to the retailer at a discounted price in return for a share of the sales revenue from each unit sold by the retailer
Sales rebate contract
The manufacturer offers a rebate on sales above a specified level
Factors that lead to bullwhip effect
 Batching
 Forecasting
 Pricing
 Gaming behavior