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35 Cards in this Set
- Front
- Back
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Decouples difference in supply and demand requirements
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Balancing Supply and Demand
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Buffers (protection) against uncertainties: variation in supply and demand are managed with
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Buffer (Safety) Stock
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Price discounts or reduced shipping costs
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Economies
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Supply and Demand locations Vary
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Enabling Geographic Specialization
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5 Part Of Carrying (Holding) Costs
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1. Opportunity Cost (Including cost of captital)
2. Storage and Warehouse Management 3. Taxes, and Insurance 4. Obsolescence, Spoilage, and Shrinkage 4. Obsolescence, spoilage, & shrinkage 5. Material handling, tracking, and management. |
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Purchasing items: placing and receiving orders
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Ordering Cost (invoicing cost)
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Make items: change-over between items
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Setup Cost
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Average Inventory = (beg. inv. + end inv.) / 2 Inventory Carrying Cost
=(avg. inv.) *(unit cost)*(carry cost rate) |
Carrying (Holding) Costs
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Ration of average inventory on hand and level of sales
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Inventory Turnover
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= cost of goods sold/ average inventory at cost
= net sales / average inventory at selling price = unit sales / average inventory in units |
Inventory Turnover
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With an ANNUAL cost of goods sold of $500M and average inventory of $80M.
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Inventory turns = $500/$80 = 6.25
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Length of time operations can be supported with inventory on-hand
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Days of Supply
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Days of supply = Inventory/Daily demand. If inventory is 2M and daily demand is 25,000 day
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Days of supply = 2m/25,000 = 80 days
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Ranking inventory by importance
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ABC analysis
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Small percentage of items have a large impact on sales, profit or costs.
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Pareto's Law
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Variation increases upstream in the supply chain (from consumer to manufacturers)
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Bullwhip Effect
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The vendor is responsible for managing inventory for the customer (LONG TERM COMMITMENTS REQUIRED)
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Vendor-managed inventory (VMI)
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3 Parts to Vendor Manage Inventory
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1. Vendor monitors and replenishes inventory balances (SUPPLIER PLACES REPLENISHMENT ORDERS)
2. Customer saves holding costs 3. Vendor has high visibility of inventory usage (SUPPLIER REPRESENTATIVE LOCATED AT CUSTOMER SITE) |
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CHAPTER 8
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CHAPTER 8
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A philosophy of MINIMIZING THE RESOURCES need for processes
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Lean Systems Approach
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1. Only the good/services that customers want
2. As quickly as customers want 3. With only features customers want 4. With perfect quality 5. In minimum possible lead time |
Lean Systems Approach
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Anything that doesn't add value is waste
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Anything that doesn't add value is waste
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Waste is a symptom of a problem and does not add value
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Waste is a symptom of a problem and does not add value
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Processing more than needed
Symptom (excessive inventory) |
Overproduction
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Excessive or Unnecessary Steps
(Symptom: Repeating setup steps (sorting, testing and inspection) |
Processing
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Unnecessary or excessive Resource activity
(Symptom: High Customer Returns) |
Motion
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Processes are activated by ACTUAL, not forecasted demand (i.e. production Kanban
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Pull System:
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Process change for outcome change
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Process Focus
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Places a high value on respect for people
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Lean System Culture
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Synchronizing output rate with demand rate
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Takt Time
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Output generated in response to actual demand (production ????? - authorizes a worker to replenish an empty bin)
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Kanban (Pull)
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Lean Tools and Techniques
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Most of these tools and those listed on subsequent slide) are direct art reducing variability in the system.
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Redesign so mistakes are impossible or immediately detectable (i.e. electrical plug has one prong bigger than another)
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Poka Yoke
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Effective housekeeping (sort, straighten, scrub, systematize, standardize) (i.e. clerk sorting and straightening various forms)
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5-S
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3 objective of Lean Design
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1. Exactly meet customer needs
2. Support corporate strategy 3. Reduce opportunities of waste |
