SCM 3301: Exam 2
31 Cards in this Set
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EOQ ASSUMPTIONS:
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Demand, Delivery Time, Price, Holding Cost, Order Cost are Known & Constant
Replenishment is Instantaneous
Stock-outs are NOT Allowed
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INVENTORY TURNOVER CALC:
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Cost of Revenue / Avg. Inventory
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Avg. Inventory=
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(Beg. Invent. +End Invent.)/2
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2 REVIEW SYSTEMS
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CONTINUOUS
PERIODIC
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CONTINUOUS REVIEW
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DIFFICULT to Achieve for all inventory Items
Very Expensive to Implement
Requires Less Safety Stock
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Continuous
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DIFFICULT
EXPENSIVE
REQ.S LESS SAFETY STOCK
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Periodic
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Reviewed Regular
Cheaper
Req.s More Safety Stock
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PERIODIC REVIEW
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Physical Inventory is Reviewed at Regular Intervals (wkly, mthly, qrtly, annually)
Lower Cost to Implement
Requires more Safety Stock to buffer the added variation due to longer review period & to protect against inventory system errors.
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SIX SIGMA
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Stresses the Commitment by the Firms top management to help the firm Identify customers expectations & excel in meeting & exceeding their expectations
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Six Sigma Goal:
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Reducing Variation in Processes
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ELEMENTS OF SIX SIGMA:
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1)Demings
2)Phillip Crosby's
3)Joseph Juran
4)Malcolm Bridge Nat. Q Award
5) ISO 9000 & ISO 14,000
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DEMINGS CONTRIBUTION
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14 POINTS FOR MANAGEMENT
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PHILLIP CROSBY'S CONTRIBUTION
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QUALITY IS FREE & QUALITY W/ TEARS
QUALITY & ZERO DEFECTS
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JOSEPH JURAN
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QUALITY CONTROL HANDBOOK
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KEY LEAN PERSPECTIVES:
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Workforce Commitment
Process Improvement
Waste Reduction-Customer Focus
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Workforce Commitment (empowerment)
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Process Owners are RESPONSIBLE FOR IMPROVEMENT NOT for Process Management experts
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PROCESS IMPROVEMENT
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PROCESS DESIGN causes More ORG. PROBLEMS NOT bad workers.
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WASTE REDUCTION
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The desired outcome of waste reduction is VALUE ENHANCEMENT
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7 WASTES
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1) Over Production
2)Waiting
3)Transportation
4)Overprocessing
5)Excess Inventory
6)Excess Movement
7)Scrap & Rework
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Over Prod.
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Unnecessary prod. to maintain high utilizations
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Waiting:
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excess idle machine & operator & inventory wait time
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Transporation
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Excess movement of materials & multi. handling
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Over-processing
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Non-value adding manuf. & other activities
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Excess Inventory:
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Storage of Excess Inventory
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Excess Movement:
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Unnecessary movements of Employees
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Scrap & Rework
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Scrap materials & rework due to poor quality
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RIVER & ROCKS
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Continuous Improvement
Inventory Buffer Stock (hides problems)
Reducing Inventory makes problems visible
Visible Problems are an opport. to eliminate root cause
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CELLULAR LAYOUT ALLOWS:
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Small batch sizes
Pull production
Minimal Transportation
Quality Visibility
Minimal Management
Short Throughput times
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CELLULAR LAYOUT REQUIRES:
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Duplicate work stations
Set up Reduction
Cross-training
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SIX SIGMA IMPROVEMENT CYCLE
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DMAIC
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DMAIC
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Define
Measure
Analyze
Improve
Control
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SCM 3301: Exam 2