SCM 301 : FINAL EXAM
164 Cards in this Set
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Work Breakdown Structure
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Breaks down program into project, task, subtask, work package.
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Gantt Chart
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A type of bar graph that illustrates a project schedule.
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Critical Path
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The path taking the longest time
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Critical Path Method (CPM)
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Helps to identify the critical path(s) in the project networks.
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CPM with a single time estimate
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Used to determine timing estimates for the project, each activity in the project, and slack time for activities.
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Time-Cost Models and Project Crashing
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Used to determine the least cost in reducing total project time.
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Pure Project
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Where a self-contained team works full-time on the project
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Structuring Projects Pure Project:
Advantages
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1) The project manager has full authority over the project
2) Team members report to one boss
3) Shortened communication lines
4) Team pride, motivation, and commitment are high
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Structuring Projects Pure Project: Disadvantages
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1) Duplication of resources
2) Organizational goals and policies are ignored
3) Lack of technology transfer
4) Team members have no functional area "home"
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Functional Project
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Housed within a functional division
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Functional Project:
Advantages
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1) A team member can work on several projects
2) Technical expertise is maintained within the functional area
3) The functional area is a “home” after the project is completed
4) Critical mass of specialized knowledge
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Functional Project:
Disadvantages
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1) Aspects of the project that are not directly related to the functional area get short-changed
2) Motivation of team members is often weak
3) Needs of the client are secondary and are responded to slowly
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Matrix: Advantages
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—1) Enhanced communications between functional areas
2) —Pinpointed responsibility
3) —Duplication of resources is minimized
—4) Functional “home” for team members
—5) Policies of the parent organization are followed
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Matrix: Disadvantages
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1) Too many bosses
2) Depends on project manager’s negotiating skills
3) Potential for sub-optimization
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Supply chain strategies must consider the potential trade-offs existing between? (4)
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cost, quality, quantity, and service
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Total SCM Costs
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Cost to process orders
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SC cash-to-cash cycle time
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Avg. # of days between paying for materials and getting paid by SC partners
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SC Production Flexability
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Avg. time required to provide an unplanned 20% increase in production
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SC delivery performance
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Avg. % of orders filled by requested delivery date
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SC Perfect Order Fulfillment Performance
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average % of orders that arrive on time, complete, and undamaged
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SC e-business performance
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Avg. % of electronic orders received for all SC members
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SC Environmental Performance
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Avg. % of environmental goals met
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ISO 14000
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Governs environmental management standards
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ISO 9000
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International quality management standards of production
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SCOR
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—Plan, Source, —Make, Deliver, Return
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Silo Mentality
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—“I win, you lose”
—Using the cheapest suppliers
—Ignoring customers
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Operations managers are continuously involved in balancing ____ and _____ ?
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Capacity and Output
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Two types of planning
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Materials Plans and Capacity Plans
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Aggregate Planning
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Long-term plan that s pecifies the optimal combination of production rate, workforce level and inventory on hand
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Aggregate Scheduling Goals
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Meet demand, Use capacity efficiently, Meet inventory policy, Minimize cost
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Required Inputs to the Production Planning System (External to firm):
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Competitors' Behavior, Raw Material availability, Market Demand, External capacity, Economic conditions
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Required Inputs to the Production Planning System (Internal to the firm):
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Current physical capacity, Current workforce, Inventory levels, Activities required for production
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Chase Strategy
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A strategy that involves hiring and laying off employees to match the demand forecast.
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Level Strategy
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Stable workforce with constant output, inventory and backlogs absorb fluctuations in demand
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Primary Reports
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Planned order schedules for inventory and production control
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Secondary Reports
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Exception reports Planning reports Performance control reports
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Materials Requirement Planning (MRP)
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The logic for determining the number of parts, components, and materials needed to produce a product
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What drives MRP?
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Dependent Demand
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MRP Inputs
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MPS ( Master Production Schedule), Inventory Records, Bill of Material
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Bill of Material
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List of components & quantities needed to make the product
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Manufacturing Resource Planning (MRP II)
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Plan and monitor all resources of a manufacturing firm which include: manufacturing, marketing, finance, and engineering
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Advantages of ERP Systems
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Added visibility reduce supply chain inventories, Helps to standardize manufacturing processes, Measure performance & communicate via a standardized method
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Disadvantages of ERP Systems
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Substantial time & capital investment, Complexity, Firms adapt processes to meet ERP system
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Inventory
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The stock of any item or resource used in an organization
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Broad Categories of Inventories
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Finished goods, Raw materials, Work-in-process (WIP), Maintenance, repair & operating (MRO)
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Two Primary Functions of Inventory
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Buffer uncertainty in the workplace and decouple dependencies in the supply chain
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Inventory Accuracy
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Refers to how well the inventory records agree with the physical count
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Cycle Counting
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Inventory is counted on a frequent basis rather than once or twice a year
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Answers the question, " How much do I order?"
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EOQ and Price Break Model
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Answers the question, " What inventory level should be maintained?"
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Reorder point and safety stock
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Answers the question, " When should orders be placed?"
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Periodic review and continuous review
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Answers the question, " How much effort to put into managing inventory?"
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ABC inventory and inventory turnover analysis
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Economic Order Quantity (EOQ)
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Used for independent demand items and is used to find the order quantity (Q) that minimizes the total cost (TC) of managing inventory.
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Total annual inventory cost (TAIC)
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annual purchase cost + annual ordering cost + annual holding cost
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TAIC equation
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RC+(R/Q)S+(Q/2)kC
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R (TAIC Equation)
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Annual Demand
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C (TAIC Equation)
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Cost per unit
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R/Q (TAIC Equation)
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# of orders per year
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S (TAIC Equation)
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Ordering Cost per Order
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Q/2 (TAIC Equation)
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Average Inventory
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kC (TAIC Equation)
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Annual holding cost per unit
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Reorder Point Equation
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d*LT
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d (Reorder Point)
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Average daily demand (constant)
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LT (Reorder Point)
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Lead Time (Constant)
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Average Inventory Equation
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Q/2 + SS
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Continuous Review System
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Physical inventory levels are counted on a continuous or daily basis
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Periodic Review System
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Reviews physical inventory at specific points in time
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ABC inventory
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Categorizing of inventory into 3 types (A-larger $ value, but small volume, C-small $ value, but large $ volume, B-everything in between)
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Inventory turnover ratio
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Ratio showing how many times a company's inventory is sold and replaced over a period (Faster is better)
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Inventory Turnover Ratio Equation
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COGS / avg inventory
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Warehousing Emphasizes?
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Storage of Products
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Distribution Centers Emphasize?
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—R apid movement of products through the facility
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Cross-docking
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The p ractice of unloading an inbound vehicle and reloading the product onto an outbound vehicle with little or no storage.
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Warehousing is a ____ industry?
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Big
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Warehousing Reduces _____ and Increases _____?
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The amount of lanes you have to deal with; the amount of product being able to be shipped per lane.
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Strategic Warehousing Decision Questions
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What kind of ownership? How many and what size?
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Private Warehousing
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Own the warehouse, fixed cost high variable cost low
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Public Warehousing
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Lease the warehouse, fixed cost low variable cost high
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Ownership Decision: Throughput Volume
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Private: High Public: Low
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Ownership Decision: Demand Variability
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Private: Stable Public: Fluctuating
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Ownership Decision: Market Density
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Private: High Public: Low
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Ownership Decision: Special Physical Control
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Private: Yes Public: No
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Ownership Decision: Customer Service Required
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Private: High Public: Low
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Ownership Decision: Security Requirements
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Private: High Public: Low
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Ownership Decision: Multiple Use Needed
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Private: Yes Public: No
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Centralized Warehousing
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Limited number of warehouses but large warehouses
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Decentralized Warehousing
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Many warehouses but smaller warehouses.
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No universal rule whether to choose ___ or _____? Situation based.
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Centralized or decentralized warehousing
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Factors Affecting the Number of Warehouses: Sustainability
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Centralized: Low Decentralized: High
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Factors Affecting the Number of Warehouses: Product Value
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Centralized: High Decentralized: Low
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Factors Affecting the Number of Warehouses: Purchase Size
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Centralized: Large Decentralized: Small
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Factors Affecting the Number of Warehouses: Special Warehousing
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Centralized: Yes Decentralized: No
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Factors Affecting the Number of Warehouses: Product Line
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Centralized: Diverse Decentralized: Limited
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Factors Affecting the Number of Warehouses: Customer Service
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Centralized: Low Decentralized: High
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Productivity Ratio
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(pounds/day)/(labor hours/day)
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Throughput
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Material moved through the system in a given time period
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Overall trends in warehousing
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1. Expansion beyond traditional services 2. Third party providers 3. Reduced labor intensity 4. Integrate warehouse information systems into logistics information systems 5. Emphasis on “flexibility” to changing market conditions
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Logistics is necessary to?
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1. Move goods from suppliers to buyers 2. Move finished goods to the customer
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Time Utility
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Products are delivered at the right time
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Price Utility
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Products are delivered to the desired location
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The Objective of Transportation Management
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1. Maximize value to firm through negotiation to provide profit contribution 2. Make sure service is provided effectively 3. Satisfy customer needs
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Common Carriers
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O ffer transportation services to all shippers at published rates between designated locations without discrimination.
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Contract Carriers
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N ot bound to serve the general public. Contract carriers serve specific customers under contractual agreements.
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Exempt Carriers
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Exempt from regulation of services & rates if transporting certain products
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Private Carrier
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N ot subject to economic regulation and typically transports goods for the company owning the carrier
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Modes of Transportation
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Motor carriage Rail Air Water Pipeline
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Intermodal Transportation
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Coordinated movement involving multiple modes and containers that can be transferred among the modes.
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Largest mode of transportation in terms of $ industry
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Motor
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Motor Carriage Mode (Trucks) Service Characteristics
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1. High accessibility 2. Transit times faster than rail or water. 3. Reliability affected by weather & traffic.
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Truck Load
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Fully loaded and fully unloaded; much bigger industry than LTL
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Less-than-truckload (LTL)
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Not fully loaded, used to make delivery, more facility intensive and more fixed costs
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Railroad Mode
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Small number of carriers relative to trucking industry, l ong haul, large volume system, high fixed costs, owns right-of-ways
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Air Cargo Mode
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A small number of air cargo carriers, c ost structure is highly variable, do not own rights-of-way, transit times are fastest of the modes, but rates are highest.
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Water Mode
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Relatively low cost; no rights-of-way to finance; easy entry and exit, m oves low value, bulk-type mineral, agricultural and forest products long distances.
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Pipeline Mode
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Accessibility is very low, c ost structure is highly fixed with low variable costs, o wn rights-of-way, m ajor advantage is low price
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3 common transport rates
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1. Per Mile 2. Per 100 lbs 3. Flat rate
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Carrier selection determinants
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1. Price 2. Transit time and reliability (Most Important) 3. Capability 4. Accessibility 5. Security
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Bill of Lading
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Common carrier liable for all losses, damage, or delays in shipment
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Key elements of Process Management and have emerged as philosophies & practices
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1. Lean Production (Lean Manufacturing) 2. Six Sigma
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Lean Production
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Refers to the operating philosophy of waste reduction & value enhancement
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Lean Production seeks to eliminate waste in operations from:
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1. Overproduction 2. Waiting time 3. Transportation 4. Excess inventory 5. Over processing 6. Excess motion 7. Defects / rework
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The 5 Ss of Waste Reduction
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1. Sort 2. Set in Order 3. Shine 4. Standardize 5. Sustain
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Kanban system
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Composed of cards and containers ( production card and withdrawal card ); Authorizes production and controls materials movement
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Workforce Commitment
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Managers must support Lean Production by providing subordinates with the skills, tools, time, and other necessary resources to identify problems and implement solutions.
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Continuous Improvement ( Kaizen )
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Continuous approach to reduce process, delivery, & quality problems
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Continuous Improvement:PDCA Cycle
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Plan, Do, Check, Act
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Total quality management (TQM)
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Managing the entire organization so that it excels on all dimensions of products and services that are important to the customer
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Six Sigma
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A philosophy and set of methods companies use to eliminate defects in their products and processes. Seeks to reduce variation in the processes that lead to product defects
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Design Quality
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Inherent value of the product in the marketplace
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Conformance Quality
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Degree to which the product or service design specifications are met
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Costs of Quality
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1. Appraisal Costs 2. External Failure Costs 3. Prevention Costs 4. Internal Failure Costs
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Defects Per Million Opportunities (DPMO)
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[ Number of defects / (Number of opportunities for error per unit) * # of units ] *1,000,000
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DMAIC Cycle
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Define, Measure, Analyze, Improve, and Control (DMAIC) Overall focus of the methodology is to understand and achieve what the customer wants
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Statistical Process Control Allows Firms To:
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1. V isually monitor process performance 2. C ompare the performance to desired levels or standards 3. T ake corrective action
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Six Major Sources of Variation
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1) People 2) Machines 3) Materials 4) Methods 5) Measurement 6) Environment
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Assignable Causes
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Factors that can be clearly identified and possibly managed
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Natural/common causes
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Inherent to the production process.
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R Chart Center Line
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Average of R bar
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R Chart UCL
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D4 * R bar
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R Chart LCL
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D3 * R Bar
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X chart Center Line
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Average of X Bar
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X Chart UCL
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X Bar + A2 * R Bar
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X Chart LCL
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X Bar - A2 * R Bar
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Bullwhip Effect
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An observed phenomenon in forecast-driven distribution channels that refers to a trend of larger and larger swings in inventory in response to changes in customer demand, as one looks at firms further back in the supply chain for a product.
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Supply Base
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List of suppliers that a firm uses to acquire its materials, services, supplies, and equipment.
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Outsourcing
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Buying materials and components from suppliers instead of making them in-house.
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Backward vertical integration
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Acquiring sources of supply
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Forward vertical integration
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Acquiring customer’s operations.
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Reason's for Buying or Outsourcing
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Cost advantage, insufficient capacity, lack of expertise, and quality
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Reasons for Making
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Protect proprietary technology, no competent supplier, better quality control, use existing idle capacity, control of lead-time, transportation and warehousing cost, and lower cost
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Purchasing
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Obtaining merchandise, capital equipment; raw materials, services, or maintenance, repair, and operating (MRO) supplies in exchange for money or its equivalent
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Merchant Buyers
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Wholesalers and retailers who purchase for resale
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Industrial Buyers
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Purchase raw materials for conversion, services, capital equipment, & MRO supplies
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Material Requisition/Purchase Requisition
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Stating product, quantity, and delivery date. May originate as a planned order release from the MRP system. Traveling requisition used for recurring orders.
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The Request for Quotation (RFQ)
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Buyer identifies suppliers & issues a request for quotation (RFQ) for routine items or a Request for Proposal (RFP) for more demanding products. Supplier Development is used to develop supplier capabilities.
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The Purchase Order (PO)
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Is the buyer’s offer & becomes a binding contract when accepted by supplier. When initiated by the supplier on their own terms, the document is a sales order. The Uniform Commercial Code (UCC) governs transactions in the U.S., except Louisiana.
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Decentralized-centralized
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Decentralized corporate and centralized at business unit
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Centralized-decentralized
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Centralized large national contracts at corporate level and decentralized items specific to business unit
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Vendor managed inventory (VMI)
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Suppliers manage buyer inventories to reduce inventory carrying and stockout costs for the buyer.
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Third-party logistics (3PL) Provider
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An external supplier that performs all or part of a company’s logistics functions
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Lead logistics provider (LLP) or 4PL
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A 3PL provider that also oversees other 3PL’s
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Collaborative Planning, Forecasting, and Replenishment ( CPFR )
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A tool used to coordinate demand forecasting, production and purchase planning, and inventory replenishment between supply chain trading partners.
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Tracking signal (TS)
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Determines if forecast is within acceptable control limits.
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Mean absolute percentage error (MAPE)
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Provides a perspective of the true average magnitude of the forecast error in relative terms.
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SCM 301: FINAL EXAM