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24 Cards in this Set
- Front
- Back
Benefits of a pull system
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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 |
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Advantages of push over pull systems
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- 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 |
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Equation for profit
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Profit = r * TH - h * WIP
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Stock
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inputs that arrive at the production process before they are ready to use them
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Backlog
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when a customer order occurs before the production needed to satisfy it has been completed
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Working stock
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inventory that is actively being processed or moved
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Congestion stock
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inventory that builds up unintentionally as a consequence of variability in the system
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Cycle stock
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inventory that results from batch operations
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Safety stock
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inventory that exists intentionally to buffer variability
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Anticipation stock
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inventory that is built up in expectation of future demand
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Conditions of EOQ
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- 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 |
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Base stock
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The most basic inventory replenishment system in which a replacement is ordered each time an item is removed
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Net inventory
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on hand inventory – backorders
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Inventory position
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net inventory + replenishment orders
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Risk
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Exposure to negative consequences of uncertain events
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Buffering
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Maintaining excess resources (inventory, capacity, time) to cover for fluctuations in supply or demand
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Pooling
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SHaring buffers to cover multiple sources of variability
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Contingency Planning
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Establishing a preset course of action for an anticipated scenario
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Crisis Management
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Generating responses to events for which buffers and contingency plans are inadequate
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Buyback contract
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The manufacturer agrees to purchase unsold goods from the retailer at a prespecified price
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Quantity flexibility contract
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The manufacturer allows the retailer to return, at full wholesale price, excess inventory up to some limited amount
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Revenue-sharing contract
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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
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Sales rebate contract
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The manufacturer offers a rebate on sales above a specified level
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Factors that lead to bullwhip effect
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Batching
Forecasting Pricing Gaming behavior |