SCM 301 #2

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Author:
belanger
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268617
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SCM 301 #2
Updated:
2014-03-31 13:32:46
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scm
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  1. Two types of operations planning
    • Materials plans
    • Capacity plans
  2. What are operations managers continuously involved in?
    balancing capacity & output
  3. Long-range planning
    • greater than a year
    • yearly increments

    • Capacity Plan
    • Materials Plan
    • Forecasting & Demand management
  4. Intermediate-range planning
    • 6-18 months
    • monthly or quarterly increments

    • Rough-Cut Capacity Planning (RCCP)
    • Master Production scheduling
    • Distribution Requirements Planning (DRP)
  5. Short-range planning
    • 1 day- 6 months
    • weekly increments

    • Capacity Requirements Planning (CRP)
    • Materials requirements Planning (MRP)
    • Bill of materials & Inventory Statuts
  6. Goal of Aggregate Planning
    optimal combo of production rate, workforce level, & inventory on hand

    • Demand
    • capacity
    • inventory
    • cost
  7. Chase Strategy
    • match production to orders
    • hire/fire
    • never backlogged

    hire/fire costs are largest costs
  8. Level Strategy
    • constant workforce
    • absorb fluctuations


    • backorder costs
    • largest changes in production level
  9. Costs with Aggregate Planning
    • Direct/indirect labor
    • Changing production rate (hire/fire)
    • Holding
    • Backordering
  10. Master Scheduling Process
    Amounts & dates of each end item to be produced
  11. Inputs of Master Scheduling Process
    • Beginning Inventory
    • Forecast
    • Customer orders
  12. Outputs of Master Scheduling Process
    • Projected inventory
    • Master production schedule
    • Uncommitted inventory
  13. Material Requirements Planning (MRP)
    • determining number of parts needed to produce product
    • Dependent demand drives MRP
  14. Primary Reports (MRP)
    planned order schedules for inventory & production control
  15. Secondary Reports (MRP)
    • Exception reports
    • planning reports
    • performance control reports
  16. Flow of planning
    Aggregate product plan > Master Production Schedule (MPS) > Materials Planning (MRP) > Primary & Secondary reports
  17. MRP Explosion
    converting planned production into component gross requirements

    • Planned orders
    • Order release notices
    • Changes in due dates
    • Cancellations/suspensions
    • Inventory
  18. Enterprise Resource Planning Systems (ERP)
    connecting all functional areas to effectively share relevant info

    means for SC to share info & min SC inventories
  19. ERP Advantages
    • added visibility= reduced SC inventories
    • standardize processes
    • measure performance & communicate in standardized methods
  20. ERP Disadvantages
    • Substantial time & capital investment
    • Complexity
    • Firms adapt processes to meet ERP system
  21. Total Logistics costs
    • Total Inventory-Related costs +
    • Total Transportation costs +
    • Adminstration/shipper cost
  22. Driving change in logistics
    • deregulation
    • technology
    • power shift in SC
    • globalization
  23. Logistics cost trade-offs
    • Inventory vs Production
    • Inventory vs Cost of Lost Sales
    • Transport vs COLS
    • transport vs inventory
    • transport vs warehousing
  24. Total Logistics concept
    lowest cost that supports customers service requirements
  25. Four categories of inventory
    • Finished goods
    • Raw materials
    • Work-n-process (WIP)
    • Maintenance, repair & operating (MRO)
  26. Two functions of inventory
    Buffer uncertainty in demand (independent demand)

    Decouple dependencies in SC (dependent demand)
  27. Inventory-Related costs
    • Item
    • Ordering/setup
    • Carrying:
    •   Risk
    •   Storage Space
    •   Service
    •   Capital/Finance
    • Stockout
  28. How much do I order?
    • EOQ
    • Price Break model
  29. What inventory level should be maintained?
    • Reorder point
    • Safety stock
  30. When should orders be placed?
    • Periodic review
    • Continuous review
  31. How much effort to put into managing inventory?
    • ABC inventory
    • Inventory turnover
  32. Questions to ask while managing inventory
    • how much
    • level to maintain
    • when to order
    • effort into managing
  33. Economic order Quantity (EOQ)
    • independent demand
    • find Q that min TC
  34. EOQ Model
    TAIC= annual purchase cost + annual ordering cost + annual holding cost
  35. EOQ Equation
    EOQ= sqrt( 2*annual demand*order cost/annual holding cost)
  36. Price-Break Model
    • 1. calculate EOQ
    • 2. choose lowest TAIC
  37. Reorder Point Equation
    average demand * Lead Time

    or

    average demand * average LT + Safety Stock
  38. Safety Stock equation
  39. If lead time was constant and demand variable
    Safety Stock decreases a lot
  40. If demand was constant and lead time variable?
    Safety Stock would decrease a little
  41. Diff between 85% of a 99% service level?
    hold a lot more inventory
  42. What are the pros & cons for 85% & 99% service levels?
    holding costs, storage space, perishable, & stock out$
  43. What service level is best for a firm?
    depends on industry, nature of product, & promotions
  44. Average Inventory
    Q/2 + SS
  45. Continuous Review System
    • Fixed-order quantity model
    •     event triggered (run out of stock)
    • Allows for random demand
    • Stock is monitored continuously
  46. Periodic Review System
    • Fixed-time period model
    •      time triggered
    • Assume demand is random
    • Order up to target level at specified time
  47. ABC Method of Inventory Analysis
    • Determine annual $ usage
    • Rank items according to annual $ usage

    • Class A: top 20%
    • Class B: next 30%
    • Class C: bottom 50%
  48. Inventory Turnover Ratio
    cost of rev/average inventory

    cost of goods sold/average aggregate inventory level

    Faster & higher is better
  49. The objective of Transportation Management
    • max value to firm through negotiation
    • makes sure service is provided effectively
    • satisfy customer needs
  50. Forms of Transportation
    • Common
    • Contract
    • Exempt
    • Private
  51. Common carriers
    offer transport services to all shippers at published rates w/o descrimination
  52. Contract carrier
    • not bound to serve general public
    • serve specific customers under contractual agreements
  53. Exempt carriers
    exempt from regulation of services & rates is transporting certain products

    • produce
    • livestock
    • coal
    • newspapers
  54. Private carrier
    • not subject to economic regulation
    • transports goods for the company owning carrier (HyVee)
  55. Modes of Transportation
    • Motor carriage
    • Rail
    • Air
    • Water
    • Pipeline
    • Intermodal
  56. Intermodal transportation
    coordinated movement involving multiple modes and containers that can be transferred among the modes
  57. Motor carrier (trucks) characteristics
    • high accessibility
    • faster than rail or water
    • affected by weather & traffic
    • small vehicle coincides with lower inventory strategies
    • high cost compared to rail & water
  58. LTL Shipments
    • 150-10,000 pounds
    • too big to handle manually
    • too small to fill truck
    • many shippers
    • largest trucking firms
    • pass through terminal
  59. TL Shipments
    • 10,000-42,000 pounds
    • max legal weight of semi's
    • Cost less than LTL
    • No terminal
    • straight to consignee
    • shipper loads & unloads
  60. Railroad
    • smaller than trucking
    • long haul, large volume
    • high fixed cost
    • accessibility can be a problem
    • interlining
  61. Air Cargo
    • 5% of total revenue
    • small number of carriers
    • cost is highly variable; do not own rights-of-way
    • fastest of all modes, but highest rates
    • need to factor in ground transit time
    • high value goods
    • accessibility is low
    • subject to weather
  62. Water Mode (domestic)
    • low value, bulk-type mineral, agricultural & forest products long distances
    • low rates, long transit times
    • low accessibility
  63. Pipeline
    • only to oil (not natural gas)
    • not for general transport
    • High fixed cost
    • Accessibility is very low
    • own rights-of-way
    • major advantage is low price
  64. Transportation Management Activites and Strategy
    • 1. negotiate
    • 2. select carriers & routes
    • 3. contract rates
    • 4. freight consolidation
    • 5. monitor service
    • 6. optimize number of carriers
  65. Bases for Rates- cost of service
    • Supply side
    • based on fixed/variable cost structure
    • rail vs truck
  66. Bases for Rates- value of service
    • demand side
    • product value (how badly needed, carrier liability)
    • transportation competition
  67. General Freight Pricing
  68. Transport Selection Decision
    • Price
    • Transit time & reliability *
    • Capability
    • Accessibility
    • Security
  69. Additional Services
    • Terminal service:
    •    consolidation
    •    interchange
    •    loading & unloading
    • Line-Haul:
    •    reconsignment
    •    diversion
    •    stopping in transit/privileges
  70. Bill of Lading
    List of every item in shipment, size of box

    • carrier liable for all losses, damage, or delays
    • reasonable dispatch
    • freight not accepted is stored at owner's cost
  71. Freight Bill
    • carrier's invoice for charges
    • credit terms stipulated by carrier & can vary
    • credit may be denied
    • Outsourced payment services are also common

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