Supply Chain Final Exam

Front 1

Two main aspects of Toyota's system

Back 1

- Elimination of waste
- Respecting the person

Front 2

ERP

Back 2

Enterprise Resource Planning

Front 3

MRP

Back 3

Materials Requirements Planning - becoming obsolete - people are looking for ERP systems that also include MRP features

Front 4

Know how to find least total cost and least unit cost from an MRP schedule table

Back 4

Slides from 4/9

Front 5

Types of Forecasting

Back 5

Qualitative, Time Series Analysis, Causal Relationships, Simulation

Front 6

Components of Demand

Back 6

Average demand for a period, a trend, seasonal element, cyclical elements, random variation, and auto-correlation

Front 7

The forecasting model that a firm should choose depends on

Back 7

1) Time horizon to forecast
2) Data Availability
3) Accuracy Required
4) Size of forecasting budget
5) Availability of qualified personnel

Front 8

Simple Moving Average

Back 8

Just sum the values over the past x months and divide the sum by x (last 6 months of sales divided by 6 gives you predicted sales - can include a growth factor but the question on the final doesn't use a growth factor)

Front 9

Qualitative Techniques in Forecasting

Back 9

Market Research, Panel Consensus, Historical Analogy, Delphi Method

Front 10

Delphi Method

Back 10

1) Choose experts to participate
2) through a questionnaire obtain forecasts from all participants
3) Summarize results and redistribute among participants with further questions
4) summarize again, refine forecasts and conditions, and again develop new questions
5) Repeat step 4 if necessary - distribute the final results to all participants

Front 11

Objective of the aggregate operations plan

Back 11

Minimize the cost of resources required to meet demand over that period

Front 12

Know exhibit 12.1

Back 12

Or you will fail at life

Front 13

Long Range Planning

Back 13

Done annually, focusing on a horizon of more than one year

Front 14

Intermediate Range Planning

Back 14

Usually covers a period from 3-18 months - with weekly, monthly, or quarterly time increments

Front 15

Short Range Planning

Back 15

Covers a period from one day to six months

Front 16

Production Planning Strategies

Back 16

Chase Strategy, Stable Workforce, Level Strategy

Front 17

Pure Strategy vs. Mixed Strategy

Back 17

Mixed is when you use more than one of the production planning strategies. Pure is when you use only one.

Front 18

relevant Costs

Back 18

Basic Production Costs, Costs associated with changes in the production rate, Inventory Holding Costs, Backordering Costs

Front 19

Aggregate Planning Techniques

Back 19

Companies commonly use cut and try charting and graphic methods to develop aggregate plans - This involves elaborate spreadsheets and linear programming

Front 20

Cut and Try

Back 20

Costing out various production planning alternatives and selecting the one that is best
Benefits: spreadsheet programs like excel can perform cut and try cost estimates in seconds

Front 21

Level Scheduling

Back 21

A Level Schedule holds production constant over time

Front 22

How does Level scheduling help Just In Time Production

Back 22

1) Entire system can be planned to minimize inventory and work in process
2) Product Modifications are up to date because of the low amount of work in process
3) There is a smooth flow throughout the production system
4) Purchased items from vendors can be delivered when needed, and, in fact, often directly to the production line

Front 23

What is required in order to use a level scheduling technique?

Back 23

1) Production should be repetitive (assembly line format)
2) The system must contain excess capacity
3) Output of the system must be fixed for a period of time (preferably a month)
4) There must be a smooth relationship among purchasing, marketing, and production
5) The cost of carrying inventory must be high
6) Equipment costs must be low
7) The workforce must be multiskilled

Front 24

Yield Management

Back 24

The process of allocating the right type of capacity to the right type of customers at the right price and time to maximize revenue or yield

Front 25

Yield Management is Effective When?

Back 25

1) Demand can be segmented by customer
2) Fixed costs are high and variable costs are low
3) Inventory is perishable
4) Product can be sold in advance
5) Demand is highly variable

Front 26

bullwhip effect

Back 26

variability magnification as we move from customer to producer in the supply chain

Front 27

Hau Lees Uncertainty Framework

Back 27

Demand Uncertainty - X
Low - Functional Products
High - Innovative Products

Supply Uncertainty - Y
High - Evolving Process
Low - Stable Process

Front 28

Outsourcing

Back 28

The act of moving some of a firm's internal activities and decision responsibility to outside providers

Front 29

Green Sourcing

Back 29

Using items internally, eliminating waste, establish lines to help environmentally conscious customers,
1) Assess the opportunity
2) Engage internal supply chain sourcing agents
3) Assess the supply base
4) Develop the sourcing strategy
5) Implement the Sourcing strategy
6) Institutionalize the sourcing strategy

Front 30

Inventory Turnover

Back 30

cogs / average aggregate inventory value

Front 31

Weeks of Supply

Back 31

(aggregate average inventory value / cogs) * 52 Weeks

Front 32

Decisions Related to Logistics

Back 32

Highway (Truck) - everything uses this at least a little bit - flexible
Water (Ship) High capacity, cheap, but slow
Air - Fast but expensive
Rail (trains) - Good in Europe but not the US - low cost, can be slow and variable

Front 33

Pipelines

Back 33

Limited to liquids, gases, and slurry solids- high initial cost, but cheap and specialized

Front 34

Hand Delivery

Back 34

Last step in many supply chains - high labor cost

Front 35

Cross- Docking

Back 35

At consolidation warehouses cross docking is done to break large shipments into smaller shipments so that people don't have to store inventory

Front 36

Issues in facility location

Back 36

Proximity to Customers
Business Climate
Total Costs
Infrastructure
Quality of Labor
Suppliers
Other Facilities
Free Trad Zones
Political Risk
Government Barriers
Trading Blocs
Environmental Regulation
Host Community
Competitive Advantage

Front 37

Lean Production

Back 37

Eliminating as much waste as possible

Front 38

Toyota System

Back 38

Elimination of waste and respect for people -
7 Types of waste
Overproduction
Waiting Time
Transportation Waste
Inventory Waste
Processing waste
Waste of motion
Waste from product defects

Front 39

Lean Supply Chain Principles

Back 39

Lean Suppliers
Lean Procurement
Lean Manufacturing
Lean Warehousing
Lean Logistics
Lean Customers

Front 40

Kanban

Back 40

Kanban = sign or instruction card

Front 41

kanban pull system

Back 41

Using containers - two card system
Kanban squares
Conatiner System
Colored Golf Balls

Front 42

Kanban Conatiner Equation

Back 42

(Expected demand during lead time + safety stock) / Size of the container

D*L*(1+S) / C

Front 43

Building a Lean Supply Chain

Back 43

Specialized Plants
Work with Suppliers
1) Value must be defined jointly for each product family based on the customer's perception of value
2) All firms in the stream must make adequate return on Investment
3) Firms must work together to find and eliminate muda (waste)
4) Once those are met the firms must find new muda and make new goals to eliminate
5) Every firm has the right to find muda in other firms and help correct it

To be lean, everyone's got to be on the same page

Front 44

Purposes of Inventory

Back 44

Maintain independence of operations
Meet Variation in Product Deman
Allow Flexibility in Production Scheduling
Provide a Safeguard for variation in raw material delivery time
Take advantage of economic purchase order size

Front 45

Inventory Costs

Back 45

Holding/Carrying Costs
Setup or Production Costs
Ordering Costs
Shortage Costs

Front 46

Fixed Order Quantity Model

Back 46

D = Annual Demand
L = Lead Time
R = Order Point
S = Setup cost for placing order
H = Annual holding cost per unit of average inventory
Total annual Cost = DC + (D/Q)*S + (Q/2)*H

Optimal Quantity = Root(2DS/H)

Front 47

Safety Stock

Back 47

Amount of inventory on hand in excess of expected sales -
Common approaches - weeks of supply - probability approach is better

Front 48

ABC Inventory Classification

Back 48

Purpose - classify most important items as A to ensure that you don't stock-out
Usually top 15% expensive items are A, 35% B, and bottom 50% are C - but you can change those to put important items as A or whatever

Front 49

MRP

Back 49

Material Requirements Planning - based on dependent demand - ties all of the production functions to the demand functions - increases production and orders raw materials depending on demand factors

Front 50

Master Production Scheduling

Back 50

Deals with end items and is a major input of the MRP process.
1) Include all demands from sales, warehouse, spares, interplant needs, etc.
2) Never lose sight of the aggregate plan
3) Be involved with customer order promising
4) Be visible to all levels of management
5) Objectively trade off manufacturing marketing, and engineering conflicts
6) Identify and communicate all problems

Front 51

Three Inputs into MPS (Master Production Schedule)

Back 51

Firm Orders from customers
Aggregate product plan
Forecasts of demand from customers

Front 52

Three inputs into MRP (Master Computer Program)

Back 52

Bill of Materials File (Engineering design changes)
MPS (Master Production Schedule)
Inventory Records File (Inventory Transactions)

Front 53

Bill of Materials

Back 53

Contains listing of materials, parts, and components as well as the sequence in which the product is created

Front 54

Lot Sizing

Back 54

Strategies that have to do with how big of lots, or batches to order
L4L (Lot for Lot)
- High setup costs
Economic Order Quantity
- Ignores holding costs during the period, but only applies at the end of the period
- Root(2DS/H)
Least Total Cost
- weighs setup and carrying costs