New version page

FSU MAN 3504 - CHAPTER 13

Documents in this Course
Load more
Upgrade to remove ads

This preview shows page 1-2-3 out of 10 pages.

Save
View Full Document
Premium Document
Do you want full access? Go Premium and unlock all 10 pages.
Access to all documents
Download any document
Ad free experience
Premium Document
Do you want full access? Go Premium and unlock all 10 pages.
Access to all documents
Download any document
Ad free experience
Premium Document
Do you want full access? Go Premium and unlock all 10 pages.
Access to all documents
Download any document
Ad free experience

Upgrade to remove ads
Unformatted text preview:

1MAN 3504 Test #3 Conceptual Review GuideCHAPTER 13Objective of Inventory Management: to keep enough inventory to meet customer demand, while being cost effectivePurpose of Inventory Management: to determine the amount of inventory to keep in stock, how much to order, + when to orderTypes of Inventory:1.Cycle Inventory – order extra just for today due to cost of placing orders(Goal: Balance cost of ordering + cost of holding inventory)2.Anticipation Inventory – based on seasonal/cyclical demandWhat Do We Inventory?Raw Materials WIP ProductsPurchased Parts + Supplies Finished GoodsTools + Equipment Items Being TransportedReasons to Hold Extra Inventory:1.Buffer against demand variations-Safety Stock (in case demand is higher than expected)-Decoupling Inventory (keep WIP inventory sitting around in case of machine breakdown)-Bullwhip Effect (as you move farther from actual demand, order quantities get larger)2.Ensure that production can continue smoothly even with work stoppagesLevel of Customer Service: ability to effectively meet internal demand as well as external demand in a timely, efficient manner(Inventory must be sufficient to provide high-quality customer service)Types of Demand:1.Dependent Demand – demand for items used to produce final products(dependent on your own decisions)*2.Independent Demand – demand that comes from external customersInventory Costs:Carrying Costs – cost of holding inventory (opportunity, spoilage, facility, obsolete costs)Ordering Costs – cost of replenishing inventoryShortage Costs – cost incurred when demand cannot be met2(losing customers, expediting costs, word of mouth)Types of Inventory Control Systems:Continuous System – Fixed-Order Quantity; constantly monitoring inventory level; place preset order amount when inventory hits preset amount(Quantity – Constant; Time – Variable)Periodic System – Fixed-Time-Period; based on calendar; place order at predetermined point in time; order enough to reach target inventory level(Quantity – Variable; Time – Constant)ABC Classification System (focusing/prioritizing mechanism)A Items – few items, sell large amount (pay most attention to these items)C Items – lots of items, sell small amountB Items – in between A + CEconomic Order Quantity (EOQ): the optimal order quantity that will minimize total inventory costs (associated with continuous inventory system)Assumptions of EOQ Model:-Demand is known + is constant-No shortages allowed ((only worry about holding + carrying costs)-Lead-time for receipt of orders is constant (time btw. place + receive order)-Order quantity is received all at onceOrder Cycle: the time between receipt of orders in an inventory cycle*Annual Ordering Cost (KNOW HOW TO CALCULATE)*Annual Carrying Cost (KNOW HOW TO CALCULATE)*Total Annual Inventory Cost (KNOW HOW TO CALCULATE)(annual ordering cost + annual carrying cost)*Optimal Q: the lowest point on the total cost curve(CALCULATION FORMULA ON FORMULA SHEET)*Reorder Point: the level of inventory at which a new order should be placed (CALCULATION FORMULA ON FORMULA SHEET)Quality Discounts: price per unit decreases as order quantity increases; given for specific higher order quantities(TOTAL COST W/ QUANTITY DISCOUNTS CALCULATION FORMULA ON FORMULA SHEET)-the calculation determines if an order size w/ a discount is more cost effective than optimal Q*Stockout: an inventory shortage; when you run out of inventory3Safety Stock: buffer added to on-hand inventory during lead time(rather expensive form of inventory; typically holding “just in case”)Service Level: the probability that you don’t stockoutReorder Point w/ Variable Demand (KNOW HOW TO CALCULATE)(In-Class Problem #3 from March 26th)A Periodic Inventory System normally requires a larger safety stock (time btw. orders is constant but order size varies)CHAPTER 2What is Quality? – the characteristics of a product/service that bear on its ability to satisfy stated/implied needsCustomer’s Perspective of Quality:Fitness for Use – how well the product/service does what it is supposed to doQuality of Design – designing quality characteristics into productProducer’s Perspective of Quality:Quality of Conformance – ensuring product/service is produced according to designDimensions of Quality (Manufactured Goods):1.Performance 6:Serviceability (ease of service)2.Features 7:Aesthetics3.Reliability 8:Safety4:Conformance (meet standards?) 9:Other Perceptions5:DurabilityDimensions of Quality (Services): not as easily measured1:Time + Timeliness 5:Accessibility + Convenience2:Completeness 6:Accuracy3:Courtesy 7:Responsiveness4:ConsistencyDeming Wheel: (PDCA Cycle)4.Act  1.Plan › fl3.Check  2.DoEvolution of Quality Management:4**W. Edwards Deming (statistician)-quality was about management philosophy-led to transform of Japan’s manufacturing systems*Joseph M. Juran-first to really consider the costs of quality-thought of as strategic issue to think about alwaysCost of Quality:-cost of achieving good quality (prevention + appraisal)-cost of poor quality (internal + external)(cost of poor quality exceeds cost of good quality)Prevention Cots:Project Planning Costs Training CostsProduct-Design Costs Information CostsProcess CostsAppraisal Costs:Inspection + Testing Costs Operator CostsTest Equipment CostsInternal Failure Costs: (incurred before it gets to the customer)Scrap Costs Process Downtime CostsRework Costs Price-Downgrading CostsProcess Failure CostsExternal Failure Costs: (incurred once it gets to the customer)Customer Complaint Costs Product Liability CostsProduct Return Costs Lost Sales CostsWarranty Claims CostsNote: Quality Saves You MoneyTotal Quality Management (TQM) Involves:Being Customer-Oriented Continuous ImprovementLeadership CooperationStrategic Planning Statistical MethodsEmployee Responsibility Training + EducationQuality Management Systems (QMS): systems to achieve customer satisfaction that complements other company systemsParticipative Problem Solving: employees are directly involved in the quality management process5Kaizen: involves everyone in a process of continuous improvementQuality Circle: group of workers + supervisors from the same area who address quality problemsProcess Improvement Team: includes members from the interrelated functions/departments that make up a processBenchmark: “best” level of quality achievement in one company that other companies seek to achieveSix Sigma: measure of how


View Full Document
Download CHAPTER 13
Our administrator received your request to download this document. We will send you the file to your email shortly.
Loading Unlocking...
Login

Join to view CHAPTER 13 and access 3M+ class-specific study document.

or
We will never post anything without your permission.
Don't have an account?
Sign Up

Join to view CHAPTER 13 2 2 and access 3M+ class-specific study document.

or

By creating an account you agree to our Privacy Policy and Terms Of Use

Already a member?