Supply Chain Management Exam 2

Front 1

4 elements of waiting lines

Back 1

Customer Population, service facility, priority rule, service system

Front 2

customer population (4 elements of waiting lines)

Back 2

an input that generates potential customers

Front 3

service facility (4 elements of waiting lines)

Back 3

a person(or crew), a machine (or group of machines), or both necessary to perform the services for the customer

Front 4

priority rule (4 elements of waiting lines)

Back 4

a rule that selects the next customer to be served by the service facility

Front 5

service system (4 elements of waiting lines)

Back 5

the number of lines and the arrangement of the facilities

Front 6

customer population - Finite (Finite vs Infinite) 79

Back 6

finite: few customer, small number
ex: jumbo 777 jets
PP: FINITE Pool – Few potential customers. Every customer in the store significantly decreases the chance of another customer arriving. Example: Retail store that sells jumbo jet airplanes.

Front 7

customer population - Infinite (Finite vs Infinite) e79

Back 7

thousands of potential customers
ex: mcdonalds
PP: INFINITE Pool – Many potential customers. Odds barely affected by new arrivals. Example: McDonald’s (All our calculations should be assumed to be infinite pools.)

Front 8

customer population - (Finite vs Infinite)

Back 8

prepared customers have all questions and answers ready or can take a long time; needy customers
ex: grandma

Front 9

Degree of Variability (M5PP)

Back 9

Type of customers – Prepared/unprepared customer, Big/small orders, high/low maintenance customers, Paying cash vs. check
Arrival rates – Steady stream of customers? Busy and slow time periods? Busy and slow days of week? Seasonal trends?

Front 10

Customer Disposition: need for service/patience (M5PP)

Back 10

Balking, Reneging, and Patient/Needy Customers

Front 11

Waiting Lines (M5PP)

Back 11

Number of lines (and number of servers)
Priority discipline rules
Psychological Variables

Front 12

Number of lines (and number of servers) - (Waiting lines)

Back 12

o Single lines
 1st come 1st serve
• Burger King (snake & swerve)
o Multiple Lines
 Jumping lines, good lines, bad lines
• Mcdonalds
PP
SINGLE LINE – 1st Come – 1st Served (FCFS), Sense of Fairness
MULTIPLE LINES – Line Jumping or Jockeying? Bad/Good line?

Front 13

Priority Disciplines rules - who goes first? why? - (waiting lines)

Back 13

 Earliest due date/short processing time (homework)
 Reservations: make schedule
 Emergency rooms: worst situation
 Preemptive discipline: vip lines, frequent flyers
PP

1st Come – 1st Served (Burger King)
Earliest Due Date or Shortest Processing Time (Homework?)
Reservations or Appointments Possible? (Restaurants, Homework)
Emergency Situations? (Emergency Rooms)
Preemptive Discipline – Special Rules (VIP lines, Frequent Fliers)

Front 14

psychological variables - (waiting lines)

Back 14

Un-cooperative customers
Employees not serving those in the line or that “look” slow
Take a number, alternate numbering systems
Free stuff, Televisions, Reading Material

Front 15

Servers (seve)

Back 15

Human resource issues
service rates: who controls the speed?

Front 16

Human resource issues (Servers) (seve)

Back 16

 Hiring the right people
 Hiring enough people
 Scheduling/flexibility
 Prepare them for the job, specialist/generalists

Front 17

Service rates: who controls the speed? (servers) (seve)

Back 17

 Motivated & happy
 Add/take away servers
 Effect on customers

Front 18

Service facility characteristics (seve)

Back 18

o Well designed process
o Equipment and technology
o Facilities layout design
o Laid out: easier for workers use
 Bartending (easy to reach everything at once)

Front 19

Queuing Notation (seve)

Back 19

o λ: mean arrival
 how quickly customers arrive
o µ: mean service rate
 how quickly customers are helped

Front 20

Rates: number per hour (#/hr) (seve)

Back 20

 Numerator: customers, cars, repots, etc.
 Denominator: seconds, minutes, months, years, etc.
 EX: 3 customers served per hour
• 3 customers/1hr…3/hr=.05customers/min

Front 21

Service factor (seve)

Back 21

p=λ/µ = % of the time a server is busy

Front 22

Queuing metrics (seve)

Back 22

ns: avg # of customers in a system
ts: avg tome spent in a system
nl: avg length of queue
tl: acg time spent in a queue
n=number of customers, t=time, l=line/queue s=system

Front 23

Queuing probabilities (seve)

Back 23

p(little n)=(1-p)pn=probability of exactly “n” customers in the system

1 server helping 1 customer: if r=.7, p4=(1-.7).7=.072=7.2%
7.2% chance of that scenario occurring
70% of the time they are busy

Front 24

waiting in line (seve)

Back 24

o channels, priority discipline, arrival/service rates
o process & facility design
o organizational goals
o understanding the customer, different types of customers
o comforting the customer
o call centers
ex: Walmart vs Autorepair vs movie theatres vs airport

Front 25

facility considerations (seve)

Back 25

o balancing space
o backroom vs front office/retail area
o parking, receiving, waiting areas, storage
o Product specialty center layout and plannograms
o customer sales concerns
o security
o 5 Senses
o Facilitating goods: items that need to be kept in inventory at all ties to maintain operations

Front 26

(VMI) vendor managed inventory (seve)

Back 26

o VMI: inventory planning and replenishment system where the supplier or vendor accepts negotiated responsibilities that typically include monitoring and restocking
 What is the value to the vender and the retailer?
 focus on the end customer
 understand partner’s needs
o Retailer: few responsibilities including decreasing costs
o Vendor: better understanding of demand rates
o Challenges
o Goal alignment: vendor, retailer, customer
o Process related: different ways of achieving the same task
o schedule related: when should things get done
o Performance and quality related: metrics, motivation, discipline, reliability, consistency
o IT compatibility, sharing concerns
o People related: everyone must buy-in, culture clashes, equity issues

Front 27

Avoiding Waste: resource management (seve)

Back 27

o Prevent shrinkage
o Focus on
 materials & energy management
 inventory in stock & on floor
 electric, water, fuel
 facility size and design
 appearance vs functionality
 satisfied workforce
 managing customer contacts/touches

Front 28

Lean Manufacturing (seve)

Back 28

o no two companies use the exact ame practice
o typically pull oriented
o goals
a) minimize inventory
b) eliminate 7 types of waste

Front 29

Push/pull systems (seve)

Back 29

o pull: dell computers best (mail it to you)
a) Pros: low inventories, demand driven system, flexible manufacturing, closer supplier ties developed
b) cons: low inventories, risky customer servie rates, tougher sell, hard to troubleshoot (high cost/high performance)
o Push: sony (buy at the store)
a) pros: high inventories, shorter lead times, mistakes and defects tolerance
b) cons: high inventories, low customization, makes mistakes seem less important to employees, foreasting miscalculations can be very costly

Front 30

JIT philosophy (seve)

Back 30

o Only have what you need
o quality at the source: rather than wait for final inspection, assure that quality is built in at every stage of the process
o high performance quality: must outperform push competitor offerings
o consistant quality
o preventative maintenance: avoid downtime
o Continuous improvement: maintain competitive edge
o Well designed layouts: avoid bottlenecks
o goals
a) short cycle times, high quality, low defects, control costs
o Reduce set-up times when changing from manufacturing one product to another
o Employees
a) must be welleducated and empowered
b) easy to learn systems
c) must have consistent quality and fast speed/capacity, reducing per unit costs

• Reason Dell was successful
o tended to all factors of the fast moving technology

Front 31

SCM goals/tradeoffs (seve)

Back 31

o time
a) amount of automation?
b) maximum output/capacity required?
c) line balancing, bottlenecks, lead times
o flexability
a) volume flexability vs customization flexibility
b) postponement?
o quality
a) consistancy and high performance due to proper training and automation
b) Jidoka: everyone is responsible for quality
o Cost
a) inventory, defects, loss, damage, labor, facilities, packaging, product service/support system

Front 32

Risk Pooling (seve)

Back 32

(sq root of “warehouses planned” X “stock present system” = “stock neededproposed system”)/sq root of “present # of warehouses”
o allows you to see how much inventory will be required to maintain similar stockout rates when changing the # of warehouses
o used when market demand is difficult to predict
o pro-centralization: lower required stock decreases warehouse operating costs
o con-centralization: distance/responsiveness, transportation costs

Front 33

bullwhip effect (seve)

Back 33

o very high and verylow supply levels, despite consistant demand levels
o Reasons and results
a) poor forecasting
b) order batching: placement of large orders
c) price fluctuations
d) rationing: demand higher than supply
e) shortage gaming: retailers inflate ordersizes to counteract rationing

Front 34

Challenges of bullwhip effect? (seve)

Back 34

o Planning and strategy
 bullwhip effect
 manufacturing: overproduction, quality, capacity
 measuring: lack of important data, poor analysis
o Operations Management
 shrinkage
 resources: wrong people with lack of expertise and motivation
 purchasing proper efficient equipment
 purchasing quanties and qualities
 logistics
o Third Party Issues
 unreliable, less motivated for high performance
 outsourcing decreases your control of overall strategy including quality
 external bariers: laws, taxes, fraud of 3rd party company

Front 35

Supply Chain Integration (seve)

Back 35

• # of systems that have to work together or one error will ruin it all
• Goals/responsibilities
o meet customer demand: make the customer happy
o contribute to profitability: buy good parts at low costs
o continuous improvement
a) paranoid lifestyle: will they want better tomorrow?
• upstream: in direction of suppliers
• Downstream: direction of customer
• Backend: out of sight to customers, things in your organization they cannot see and are unaware of
• forend: things the customers can see

Front 36

Global Sourcing reasons (seve)

Back 36

• Firms go global to simply make money
• Reasons to go abroad
o Growth opportunities: new markets, managing risk, understanding markets and trends
o Cost reductions: cheap labor and resources, tax benefits, leads to better understanding of market trends, gain new ideas from other cultures’ operations
• Companies entering a country can also bring risk upon the industry of that company
o EX: heart transplant from marathon runner

Front 37

X-Box example (seve)

Back 37

o Electric Manufacturing Services Industry
 Companies can take on numerous primary supply chain responsibilities associated with the manufacturing of electronic components assembled end lines
 Exploit economies of scale in the manufacturing of electronic devices
 Similar parts, processes, designs, techniques, channels of distribution
o Commodity parts: Flextronics orders and purchases
o Some Custom Parts: Microsoft negotiated, Flextronics controlled
o Special/critical parts: Microsoft purchased, delivered to Flextronics

Front 38

Euro vs Dollar (seve)

Back 38

• Euro vs Dollar: exchange rate hit the 2004 VW hard in Europe due to extreme fluctuations
o In the US, however, rates were much more stable, and trends showed this pattern was going to continue, so VW focused on targeting the US much more
• In previous decades, computers, cameras, phones, radios, etc were all made with relatively different technology, and looked much different too
o Now, cameras, computers, cellphones etc use much of the same technology. While appearances of the final product still differ, they still look much more alike eachother then they used to, and now many of these items can be combined into one product
 iphone with internet capabilities, built in camera, and apps that play the radio, all built with the same sort of technology

Front 39

Captive outsourcing OR offshoring (m7pp)

Back 39

low cost- labor, resources, energy, taxes, tariffs, fines...

prodimity to customers
lead times
logistics costs
market responsiveness

infrastructure/channels of distribution

proximity to suppliers
lead times and costs - materials, labor, energy
supplier relationships - research, design, development

pursuing a Hedging Strategy - minimize effects of currency fluctuations

Front 40

outsourcing 132

Back 40

the procurement of selected value-adding activities, including production of intermediate goods or finished products, from independent suppliers

Front 41

business process outsourcing (BPO) 132

Back 41

the outsourcing of business functions to independent suppliers, such as accounting, payroll, human resource functions, IT services, customer service, and technical support

Front 42

Captive sourcing 133

Back 42

sourcing from the firm's own production facilities located abroad

Front 43

configuration of value-adding activity 133

Back 43

the pattern or geographic arrangement of locations where the firm carries out value-chain activities

Front 44

Global sourcing 130

Back 44

the procurement of products or services fro independent suppliers or company-owned subsidiaries located abroad for consumption in the home country or a third county

Front 45

contract manufacturing 134

Back 45

an arrangement in which the focal firm contracts with an independent supplier to manufacture products according to well-defined specifications

Front 46

offshoring 135

Back 46

the relocation of a business process or entire manufacturing facility to a foreign country

Front 47

benefits of global sourcing 141

Back 47

cost efficiency - improved bottom line profitability

strategic benefits -
faster corporate growth
access to qualified personnel abroad
improved productivity and service
business process redesign
increased speed to market
access to new markets
technological flexibility
improved agility by shedding unnecessary overhead

Front 48

challenges to global sourcing 141

Back 48

vulnerability to exchange rate flucutations
parner selection, qualification, and monitoring costs
increased complexity of managing a worldwide network of production locations and partners
complexity of managing global supply chain
limited influence over the manufacturing processes of the supplier
potential vulnerability to opportunistic behavior or actions in bad faith by suppliers
constrained ability to safeguard intellectual assets

Front 49

# global supply chain 143

Back 49

the firm's integrated network of sourcing, production, and distribution, organized on a worldwide scale and located in countries where competitive advantage can be maximized