Supply Chain Management Exam Review Flashcards

These flashcards cover essential vocabulary and concepts related to supply chain management, providing definitions and explanations for exam preparation.

Kraljic matrix

A framework to categorize supplies based on profit impact and supply risk.

Leverage items

Items with high profit impact but low supply risk in the Kraljic matrix.

Supply strategy for bottleneck items

Establish long-term supplier relationships to minimize supply risk.

Total cost of ownership (TCO)

A calculation that includes acquisition cost, operating cost, and disposal cost.

Multi-criteria decision analysis

The process of evaluating suppliers based on multiple criteria like price, quality, and reliability.

Outsourcing

The practice of contracting out non-core activities to focus on core competencies.

Make-or-buy analysis

A comparison of internal production costs with external supplier costs.

Simple moving average

A forecasting method suitable for stable demand patterns.

Weighted moving average

A forecasting method that gives more importance to recent demand data.

Positive bias in forecasts

Indicates the forecast is underestimating actual demand.

Mean absolute deviation (MAD)

A metric that measures forecast accuracy.

Causal forecasting

A method where an independent variable explains changes in demand.

MRP (Materials Requirements Planning)

A system that ensures materials are available for production and delivery schedules.

Shortcomings of MRP

MRP systems are computer intensive and inflexible once operating.

Sales and Operations Planning (S&OP)

A process aimed at balancing supply and demand.

Qualitative S&OP benefit

Improved cross-functional communication.

Cycle stock

Inventory kept to meet normal demand during replenishment cycles.

Safety stock

Inventory held to protect against variability in demand and lead time.

Dependent demand

Demand for items like raw materials and components that depend on the demand for finished goods.

EOQ (Economic Order Quantity) model

A model that balances holding costs and ordering costs.

80/20 rule (Pareto Principle)

A principle stating that 80% of sales come from 20% of inventory items.

Just-in-Time (JIT) system

An inventory strategy aimed at reducing inventory by synchronizing production with demand.

Kanban

A scheduling system in JIT that signals replenishment needs and coordinates material flow.

Chase production strategy

A strategy where production rates are adjusted to match demand exactly.

Level production strategy

A production planning strategy that maintains constant production while using inventory to absorb demand fluctuations.

Causal modeling

A forecasting method that uses regression analysis to explain changes in sales.