MPR Chapter 4

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Sandy2015
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309434
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MPR Chapter 4
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2015-10-13 00:40:32
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Distribution planning
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Distribution planning
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This is chapter 4 of MPR: Distribution planning
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  1. What  factors influence distribution network planning?
    • Distribution channel design considerations
    • network configuration alternatives
    • selection of alternative transportation modes
    • inventory location decisions
  2. What are functional distribution channels
    • Marketing and sales
    • storage/break bulk/cross docking
    • consolidation
    • transportation
  3. What are institutional distribution channels?
    • manufacturers
    • brokers
    • distributors
    • dealers
    • retailers
  4. What are channels of distribution or channel members?
    This is intermediary organizations from the manufacturer to the customer
  5. What options do manufacturers need to consider in terms of channels of distribution?
    • Direct/internal channel - the manufacturer performs all marketing and distribution and sales functions internally. ex: jet planes
    • Exclusive and selective channel - limited  number of partners - High end apparel
    • Complex channel - using internal and external (good for high volume of product to a broad market and customer base)
  6. What are four factors of channel structure design?
    • 1. customer service criteria
    • 2. Distribution intensity
    • 3. Channel dependence
    • 4. Channel design attribute matrix
  7. Channel structure must address four criteria relating to customer service. What are they?
    • 1. Product variety
    • 2. Lead time
    • 3. Lot size
    • 4. Location convenience
  8. What is the lead time implication for distributors and retailers, ie the shorter the lead time the lower?
    • 1. safety stock requirement
    • 2. the need to rely on forecasts for demand periods farther into the future
  9. What are the major influences on the design of institutional channels?
    • Customer service criteria
    • distribution intensity
    • channel dependence
    • Channel design attribute matrix
  10. True or False

    Distributors and retailers also add value by breaking large bulk loads into smaller shipments to retailers and retail customers
    True
  11. What are the channel design implications for lot size? (by type of product ie MTO, MTS, ETO, etc)
    • MTO and ETO - small lot sizes
    • MTS - small lot sizes but high variety
    • Distributors/retailers - smaller lot sizes lead to better customer value and service through lower payables cash flow, storage requirements, and risk from damage/obsolesense
  12. For each channel type, what is the distribution intensity?
    Complex
    Selective
    Exclusive
    Internal/direct
    • Complex - High distribution int - low control - Everyday consumer packaged goods
    • Selective - medium dist int - med/high control - select group of intermediaries that provide the high levels of marketing, sales support and customer service
    • Exclusive - Low/Medium dist int - high / medium control - Car dealerships, brand name apparel franchise
    • Internal/direct - low dist int - high control - MTO and ETO
  13. What is channel structure design factor, or channel dependence?
    the degree to which channel members need to collaborate or to attain competitive advantage based on their own vertically integrated resources
  14. For each channel type, describe the level of dependence:
    Single transaction
    conventional
    networked supply
    • Single transaction - temporary channel cooperation (one time transactions) - ie capital equipment or facilities
    • Conventional - opportunistic cooperation - lasting relationship, but not stable - noone is fully committed to or dependent on an efficient supply chain system.
    • Networked supply - collective commitment to efficiency of the channel - Channel members acknowledge and value interdependence as a way of reducing overall supply chain costs and meeting customer needs
  15. Describe these attributes for Direct/Internal Channel:
    Manufacturing environment
    Examples of products
    Distribution Intensity
    Product variety
    End user order lead time
    Lot size or volume
    Location convenience
    Channel dependency need
    Production cost per unit
    Inventory cost
    • Manufacturing environment - ETO/MTO
    • Examples of products - Aircraft engines
    • Distribution Intensity - Low
    • Product variety - High
    • End user order lead time - High
    • Lot size or volume- Low
    • Location convenience - Low
    • Channel dependency need - Low
    • Production cost per unit - High
    • Inventory cost - Low
  16. Describe these attributes for Exclusive or Selective Channel:
    Manufacturing environment
    Examples of products
    Distribution Intensity
    Product variety
    End user order lead time
    Lot size or volume
    Location convenience
    Channel dependency need
    Production cost per unit
    Inventory cost
    • Manufacturing environment - MTO, ATO, MTS
    • Examples of products - Autos, brand apparel
    • Distribution Intensity - Medium
    • Product variety - Medium
    • End user order lead time - Medium
    • Lot size or volume- Medium
    • Location convenience - Medium
    • Channel dependency need - Medium
    • Production cost per unit - Medium
    • Inventory cost - Medium
  17. Describe these attributes for Complex Channel:
    Manufacturing environment
    Examples of products
    Distribution Intensity
    Product variety
    End user order lead time
    Lot size or volume
    Location convenience
    Channel dependency need
    Production cost per unit
    Inventory cost
    • Manufacturing environment - MTS
    • Examples of products - Groceries
    • Distribution Intensity - High
    • Product variety - Low
    • End user order lead time - Low
    • Lot size or volume - High
    • Location convenience - High
    • Channel dependency need - High
    • Production cost per unit - Low
    • Inventory cost - High
  18. True or false
    Distribution networks can be characterized as the playing field for the functional and institutional channels that move products from manufacturers to end users.
    True
  19. What are channel functions?
    • Distribution processes that add value to manufactured products sold to customers:
    • marketing/sales
    • storage, break bulk, cross docking, returns
    • consolidation
    • Transportation
  20. What are design issues for distribution networks?
    • size of customer base
    • product volume
    • transportation costs
    • market breadth or dispersion
  21. What are design decisions for distribution networks?
    • Number of plants
    • Number or density of stocking locations
    • Transportation modes
    • Distribution tiers
  22. Describe the strategic influences on network configuration
    • 1. Customer service objectives - lower safety stock and shorter lead times
    • 2. Distribution intensity (product exposure)
    •  3. Channel dependency - high level of IT
    • 4. Transaction complexity (reduction)
    • 5. Logistics strategy
  23. What are the physical components to Distribution networks?
    • Regional/local warehouses
    • Cross docking facilities
    • Retail Stores
    • Transportation Equipment
    • IT Infrastructure
  24. What is DRP?
    Distribution Resource Planning

    replenishment planning within internal networks to fulfill demand for products at local warehouse locations or retail stores
  25. Why are multilevel networks used?
    • to serve customers over a broad geographic market
    • Regional and satellite DC's are major features 

    • -customer service advantages
    • - cost advantages
  26. For Multilevel networks, what are the cost advantages?
    • Transportation costs are minimized
    • Consolidation of shipments
    • Less Safety stock requirements
  27. For Multilevel networks, what are the customer service advantages?
    • more reliable, short distance deliveries to customers
    • Safety stock decreased
  28. What is BOD?
    Bill of Distribution- aka distribution network structure
  29. What is the purpose of BOD?
    Facilitate the transfer of demand for the product, from the point of customer demand at the lowest level satellite warehouses/DCs, upward through the distribution channel to the central supply source

    Document the channels of inventory replenishment from one or more channel supply sources, such as manufacturers or major distributors, to distributed inventory stocking locations and on to customers
  30. Why is BOD significant?
    • Traces inventory flow channels for every item sold
    • provides the location and flow information that support the 2 main distribution planning functions (logistics resource requirements planning and DRP in conjunction with master scheduling)
  31. What are the 2 main distribution planning functions?
    • 1. Logistics resource requirements planning (LRRP) in conjunction with S&OP, and logistics capacity planning in master scheduling
    • 2. DRP in conjunction with master scheduling
  32. What are BOD benefits?
    • 1. Provides inventory planners with visibility to supply and demand relationships in the distribution channel
    • 2. Clearly establishes the relationship between inventory stocking locations at different levels, such as central supply, regional DC, and satellite DC
    • 3. Clearly defines the resupply path for each item in each stocking location
    • 4. Enables the DRP software application to begin low level coding at the lowest stocking location in the distribution channel and progress up through each level to the appropriate sources of channel supply
  33. What are qualitative factors in distribution site locations?
    • proximity to customers
    • skilled labor
    • labor relations
    • government regulations
    • transportation systems
    • climate
    • schools, medical, recreation
    • infrastructure
  34. What are different types of distribution facilities?
    • central supply facilities
    • regional DCs
    • satellite DCs or warehouses
    • customer service and customer care centers
  35. What is the most dominant factor in site selection for a DC?
    Transportation costs
  36. What does DRP address?
    • When, where and how much inventory is needed at DCs
    • What resources are needed, and when, to ensure that replenishment inventory can be delivered, handled, and stored according to replenishment plans
  37. What two levels are forecasts needed at in DRP?
    • the product family level by distribution channels during the S&OP process
    • The item level during the master scheduling process
  38. What is the actual replenishment timing and quantity based on?
    item forecast
  39. Why is the product family forecast important?
    • 1. during S&OP, it is uesd to ensure that resources are available to transport, handle, and store replenishment inventory within major distribution channels. 
    • 2. During DRP, which is an input to master production scheduling, product family forecasts by channel are disaggregated to the item mix level and then are allocated down through the BOD to plan the replenishment of inventory stocking locations.
  40. What does LRRP provide in Distribution channel forecasts? (logistics resource requirements planning)
    • ensures channel resources are available to handle DC replenishment.
    • provides source for disaggregation to item level in DRP
  41. What does Distribution requirements planning provide in Distribution channel forecasts?
    • disaggregates product family forecasts to the item mix level
    • allocates total item forecasts to lowest level stocking points
    • adjusts item forecasts by inputs from sales, marleting, CRM, and DCs
  42. What are quantitative factors to distribution site location?
    • Inbound transportation costs
    • outbound transportation costs
    • utilities and facilities costs
    • land costs
    • local tax structures
    • local labor costs
    • operating costs
  43. What are the objectives of the operations of a warehouse?
    • provide high levels of customer service
    • minimize operating costs
    • minimize inventory investment
  44. What are the parameter of replenishmnet planning?
    • balance between ordering and carrying costs, or economic order quantity
    • accuracy of forecasts
    • adequacy of stock levels between order replenishments
  45. What are the two approaches to replenishment planning?
    • push
    • pull
  46. What are key attributes to pull systems?
    • 1. authority to initiate replenishment order - decentralized
    • 2. planning - simple - plan for the warehouse channel
    • 3. customer service - measured at the warehouse level
    • 4. reorder point - standard order point, min/max, and periodic review
    • 5. systemwide safety stock - high - safety stock carried at each location and level in the distribution network
    • 6. organizational implications - downstream inventory requirements not visible to regional and national supply points
  47. What are the key attributes for push systems?
    • 1. Authority to initiate - centralized
    • 2. planning - single inventory plan for total system inventory
    • 3. Customer service - measured on a systemwide basis
    • 4. reorder point - when projected available inventory balance for a given future period is negative or below the safety stock level
    • 5. systemwide safety stock - lower - consolidated at one lcoation 
    • 6. organizational implications - assumption of planning responsibility by central planners
  48. What are the advantages for an order point pull system?
    • demand data used to determine replenishment may be more timely and accurate
    • local dcs are closer to the source of the demand
  49. What are the disadvantages of the orderpoint pull system?
    • Upstream stocking locations, or the regional DCs and central supply, do not have access to the forecasts made by the local DCs
    • Demand arrives unpredictably and in a lumpy pattern
    • Orders are released without being coordinated with the needs of the other DCs
    • Orders released are not coordinated with regional DC replenishment schedules or factory production schedules
    • Overall, upstream visibility to downstream forecasts and inventory levels is very poor
  50. What are 3 basic concepts relating to push systems?
    • Data analysis and communication
    • Feasibility
    • Time phased planning logic
  51. True or false
    The centralized nature of push systems planning requires a high degree of data sharing and communication
    True
  52. true or false

    Centralized push systems work best when production facilities, regional dcs, and satellite dcs are owned and controlled by a single organization
    true
  53. What is DRP?
    a framework for implementing centralized pull systems in distribution inventory management
  54. What are characteristics of DRP?
    • Time phased order logic
    • Bill of Distribution
    • Imploding to master scheduling
    • Planning horizon
    • Frequency of replanning
  55. What are 2 special conditions DRP must address?
    • Unique marketing events
    • allocation of shortages
  56. What are unique marketing events?
    • promotions
    • events such as major sporting or cultural events
  57. What is allocation of shortages?
    Shortage of inventory needed to supply all regional DCs
  58. What is fair shares method?
    a method to fairly allocate the product on hand to all DCs
  59. What are the key purposes and activities of LRRP?
    • 1. Review the aggregate channel inventory replenishment plan
    • 2. Determine distribution resource requirements over the intermediate term to long term (of no less than 1 year) generated by the inventory replenishment plan and sales and operations plan
    • 3. Provide inputs to S&OP on the effect of logistics resource constraints on the achievability of the sales and operations plan
  60. What is the LRRP concerned with ?
    • Financial
    • Transportation
    • Storage
    • Labor and equipment
  61. What is the purpose of LRRP?
    • provide feedback to S&OP on the feasibility of the sales and operations plan
    • Ensure far enough in advance that resources will be in place when planned orders are released for items in the MPS
  62. what are key features of LRRP?
    • inventory investment report
    • transportation planning report
    • warehouse space report
    • Labor and equipment report
  63. How is Logistics capacity planning different than LRRP?
    • planning is at the item level as opposed to the product family level
    • planning often is on a weekly basis as opposed to monthly
    • The timing of transportation capacity and warehouse space availability determined on a monthly basis during LRRP might not aligh with week to week availability changes during the MPS planning horizon
    • last minute changes in MRP planned order releases require quick solutions from logistics planners to problems of resource availability and costs.
  64. True or false

    Logistics capacity planning is much more dynamic and current operations driven process than LRRP
    true
  65. What are the 7 performance objective categories for DRP?
    • Service - responsiveness
    • Fast flow response - responsiveness
    • Reduction of operating variance - reliability
    • Minimum inventories - asset management 
    • transportation reduction - cost 
    • Quality management - cost reliability-
    • product life cycle support - agility
  66. What are the relevant SCOR metrics for the following:
    Service
    Fast flow response
    reduction of operating variance
    minimum inventories
    Transportation reduction
    quality management
    product life cycle support
    • service - order fulfillment cycle
    • fast flow response - order fulfillment cycle
    • reduction of operating variance - perfect order
    • minimum inventories - cash to cash cycle time
    • transportation reduction - reduce supply chain management cost
    • quality management - reduce supply chain management cost , perfect order
    • product life cycle support - upside supply chain flexibility, upside supply chain adaptability
  67. What are the 3 measures of the Ross framework?
    • Customer service
    • Distribution efficiency
    • Inventory Management
  68. What are customer service metrics wrt Distribution systes?
    • % of orders completely satisfied from stock
    • % of units required filled from stock
    • % of units required delivered on time
    • % of item stockout
    • % of stock cycles without shortages
    • % of months without stockout
  69. What are the two categories of distribution efficiency?
    • 1. Warehouse
    • 2. Transportation Management
  70. Warehouse metrics are?
    • throughput %
    • Order Filling %
    • Shipping accuracy %
    • Inventory record accuracy %
    • Storage utilization %
  71. What are the objectives of warehouse operations?
    • 1. achieve continuous reduction of costs and variances to performance
    • 2. increase levels of reliability, flexibility, and responsiveness
  72. What are the 3 objectives of warehouse performance measurement?
    • 1. provide the quantitative basis for performance standards for warehouse activities
    • 2. track performance against standards
    • 3. identify problems
  73. What are the benefits of performance measurement?
    • 1. gain control of significant variances in key warehouse activities
    • 2. Improve productivity by making workers aware of performance against standards for order fill, throughput, and shipping accuracy
  74. What are 3 critical objectives of logistics?
    • operating cost reduction
    • reduction in operating capital
    • increased customer service
  75. What are the transportation management process steps?
    • 1. Logistics strategy
    • 2. establish costs, rates, and prices
    • 3. transport mode and carrier selection
    • 4. scheduling and routing
    • 5. documentation, audit, and claims
    • 6. performance
  76. what are transportation measures?
    • shipping cost factors
    • mix of transport modes
    • equipment utilization
    • routing efficiency
    • labor efficiency
    • other costs
  77. how do you calculate inventory turns?
    inventory turns  = COGS/avg inventory value
  78. What is cash to cash cycle time?
    inventory days of supply + days of sales outstanding - days payable outstanding
  79. The distribution route, from raw materials through consumption, along which products travel
    Distribution channel
  80. The process of equitably allocating available stock among field distribution centers
    Fair share quantity logic
  81. In Distribution, a system for replenishing field warehouse inventories where replenishment decision making is centralized, usually at the manufacturing site or central supply facility
    Push system
  82. Synonym for BOD
    Distribution network structure
  83. In distribution, a system for replenishing field warehouse inventories where replenishment decisions are made at the field warehouse itself, not at the central warehouse or plant
    Pull systems
  84. The time from receipt of a customer order to the delivery of the product
    delivery lead time
  85. Any series of firms or individuals that participates in the flow of goods and services from the raw material supplier and producer to the final user or consumer
    Channels of distribution
  86. An estimate of sales, often time phased, for a grouping of products or product families produced by a facility or firm
    Aggregate forecast
  87. a warehouse with finished goods or service items
    distribution center
  88. The planned channels of inventory disbursement from one or more sources to field warehouses and ultimately to the customer; there may be one or more levels in the disbursement system
    BOD
  89. Which of the following is the general rule for planning horizons?

    A) a method to fairly allocate the product on hand to all DCs
    B) inventory days of supply + days of sales outstanding - days payable outstanding
    C) True
    D) They extend into the future to cover the lead times through supply processes and delivery to the final distribution point
    D) They extend into the future to cover the lead times through supply processes and delivery to the final distribution point
    (this multiple choice question has been scrambled)
  90. Pull systems of planning and control in a distribution environment

    A) allow each distribution center to manage its own inventory
    B) BOD
    C) item forecast
    D) Fair share quantity logic
    A) allow each distribution center to manage its own inventory
    (this multiple choice question has been scrambled)
  91. Which of the following is the overall goal of a distribution system?

    A) item forecast
    B) the degree to which channel members need to collaborate or to attain competitive advantage based on their own vertically integrated resources
    C) This is intermediary organizations from the manufacturer to the customer
    D) efficient, timely service with minimal inventory investment
    D) efficient, timely service with minimal inventory investment
    (this multiple choice question has been scrambled)
  92. Which of the following can be considered a customer service measurement?
    % of orders completely satisfied
  93. Adding a distributor as a channel between manufacturers and retailers will result in all but the following:

    A. decrease in the number of transactions for retailersB. a decrease in the transportation costsc. an increase in the number of transactions for manufacturersd. a reduction in number of shipments from manufacturers
    c
  94. Which of the following is most effective in maintaining a high level of customer service with a minimum of inventory investment in a dynamic demand situation in a multilevel distribution network?

    A) centralized push system using time phased planning logic
    B) delivery lead time
    C) Pull systems
    D) distribution center
    A) centralized push system using time phased planning logic
    (this multiple choice question has been scrambled)
  95. What is the logical connecting point between the supply system and the distribution system?
    MPS
  96. What manufacturing environment would best support the distribution channel attributes of low distribution intensity, high product variety, and low  channel dependency?
    ETO/MTO
  97. Estimating demand at each final distribution center based on historical demand and summing the total is forecasting by what?
    aggregation
  98. Calculate the new total safety stock requirement given the following information:
    # distribution centers - 1
    # distribution being added = 3
    total safety stock now = $4,000
    $8000
  99. /

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