Supply Chain Management Comprehensive Exam Study Guide

Comprehensive vocabulary flashcards covering fundamental concepts, forecasting methods, planning tools, accuracy formulas, and production strategies from the Supply Chain Management study guide.

Supply Chain

The network of organizations, suppliers, manufacturers, logistics providers, and customers involved in creating, delivering, and supporting a product or service.

Supply Chain Management (SCM)

The active management and coordination of an integrated network of independent trading partners to maximize customer value, reduce costs, and gain a sustainable competitive advantage.

Goal of SCM

To increase customer satisfaction while simultaneously reducing inventory and operating expenses by delivering the right product at the right place, time, and lowest total cost.

Tier 1 Partner

An entity with a direct relationship in the supply chain, such as an immediate supplier or direct wholesale customer.

Tier 2 Partner

An entity one step removed in the supply chain, such as a supplier's supplier or a customer's customer.

Tier n Partner

An indirect upstream or downstream partner situated further along the supply chain network.

Supply Chain Disruption

A break at any single node in the supply chain that affects all upstream and downstream partners.

Manufacturing Supply Chain

A supply chain centered on physical material flow, transformation, assembly, warehousing, and transportation.

Service Supply Chain

A supply chain focused on managing relationships and labor expertise rather than physical goods, where services cannot be produced in advance or stored in inventory.

Facilitating Goods

Tangible items used alongside a service, such as medical supplies in a hospital or cutlery in a restaurant.

Efficient Model

A supply chain capability model configured for high volume, low cost, high capacity utilization, and predictable demand, ideal for functional products.

Responsive Model

A supply chain capability model configured for speed, flexibility, and quick response to dynamic markets, ideal for innovative products.

Push Model (Make-to-Stock)

A business model where products are manufactured based on demand forecasts prior to receiving customer orders, representing approximately $95BASE_PERCENT$ of products.

Pull Model (Make-to-Order)

A business model where products are manufactured only after receiving an actual customer order, representing approximately $5BASE_PERCENT$ of products.

Logistics

A subset of SCM focused internally on moving, storing, warehousing, and transporting goods within a single organization.

Forecasting

An estimate of future demand using mathematical models, historical data, and management judgment.

Demand Planning

The practice of combining statistical forecasts with qualitative market intelligence, promotion plans, and strategy to finalize an actionable demand estimate.

Independent Demand

External demand for finished goods, spare parts, or services that must be forecasted.

Dependent Demand

Internal demand for subassemblies, parts, and raw materials directly calculated from the production schedule of the parent item.

Personal Insight

A qualitative forecasting method based on the judgment of a single experienced individual.

Jury of Executive Opinion

A qualitative forecasting model that relies on a consensus panel of internal executives.

Delphi Method

A qualitative forecasting method that uses an iterative questionnaire process collected independently by a facilitator to prevent groupthink.

Historical Analogy

A qualitative forecasting model that uses the sales history of a comparable existing product to estimate demand for a new product.

Customer Survey

A qualitative forecasting approach where direct feedback is solicited from target consumers through surveys or focus groups.

Time Series Models

Quantitative forecasting models that operate on the assumption that future demand is a continuation of historical patterns.

Naïve Forecast

A time series forecasting model that sets the next period's forecast equal to the last period's actual demand, expressed as $F_{t+1} = A_t$.

Simple Moving Average

A time series model calculating average demand over a fixed number of recent periods ($n$), defined as $F_{t+1} = \frac{\text{Sum}(A_i)}{n}$.

Weighted Moving Average

A time series model that assigns specific weights to past periods summing to $1.0$, placing higher emphasis on recent data, expressed as $F_{t+1} = \text{Sum}(A_i \times W_i)$.

Exponential Smoothing

A weighted average forecast formula defined as $F_{t+1} = (A_t \times \text{alpha}) + [F_t \times (1 - \text{alpha})]$, using actual demand ($A$), previous forecast ($F$), and a smoothing constant ($\text{alpha}$ between $0$ and $1$).

Linear Trend

A time series technique that fits a straight line across historical data to project future demand.

Simple Regression

A cause and effect quantitative model that uses one independent variable to predict demand.

Multiple Regression

A cause and effect quantitative model that uses two or more independent variables to predict demand.

Trend

A time series data pattern representing long-term upward or downward movement over time.

Random Variation

Unpredictable, short-term spikes or dips in demand data caused by unforeseen events like weather or strikes.

Seasonal Variation

Repeating demand patterns that occur predictably within a single year.

Cyclical Variation

Wave-like demand fluctuations that span across multiple years driven by economic factors.

Forecast Error

The mathematical difference between actual demand and forecasted demand, calculated as $\text{Error} = A - F$ and \text{ErrorBASE_PERCENT} = \frac{A - F}{A} \times 100.

Mean Absolute Deviation (MAD)

A metric measuring overall forecast error magnitude, calculated as $\text{MAD} = \frac{\text{Sum}(|A - F|)}{n}$.

Mean Absolute Percent Error (MAPE)

A forecast accuracy metric calculating average percentage error, defined as $\text{MAPE} = \frac{\text{Sum}(|A - F| / A)}{n} \times 100$.

Mean Squared Error (MSE)

A forecast error metric that penalizes large errors by squaring deviations, defined as $\text{MSE} = \frac{\text{Sum}((A - F)^2)}{n}$.

Running Sum of Forecast Errors (RSFE)

A measure of forecast bias calculated as $\text{RSFE} = \text{Sum}(A_t - F_t)$, where a positive value indicates underestimating demand and a negative value indicates overestimating demand.

Tracking Signal

A metric used to detect persistent bias in a forecast over time, calculated as $\text{Tracking Signal} = \frac{\text{RSFE}}{\text{MAD}}$.

Bullwhip Effect

The distortion and amplification of demand variability as orders move upstream from retailers to wholesalers, manufacturers, and raw material suppliers.

Collaborative Planning, Forecasting, and Replenishment (CPFR)

A business process that mitigates the bullwhip effect through shared information, synchronized inventory management, and joint demand planning.

Aggregate Production Planning (APP)

A long-range strategic process managed by top executives that translates business goals into high-level production targets for product families over a 1-year horizon.

Master Production Schedule (MPS)

An intermediate-range schedule that disaggregates the APP into specific end-item quantities and completion dates across a 3–18 month horizon.

Material Requirements Planning (MRP)

A computer-based tool that calculates precise component quantities and order release dates to meet the Master Production Schedule.

Business Plan

A long-range planning document that establishes strategic direction, revenue target, growth, and ROI objectives over a 2–10 year horizon.

Sales & Operations Planning (S&OP)

A monthly cross-functional process aligning sales, marketing, finance, and operations into a single consensus plan.

Available-to-Promise (ATP)

The uncommitted portion of projected inventory used to promise delivery dates to incoming customer orders, calculated as $\text{Discrete ATP} = \text{On Hand} + \text{MPS Supply} - \text{Customer Orders Ordered}$.

Firmed Time Period

A time fencing policy where the immediate schedule is frozen to prevent system nervousness, requiring manual approval for any alterations.

Planned Time Period

An outer time fencing period where MRP software automatically creates or adjusts planned orders.

Level Strategy

A production strategy maintaining a constant output rate regardless of demand shifts, relying on inventory and backlogs to absorb demand changes.

Chase Strategy

A production strategy that dynamically adjusts production rates to match real-time demand, minimizing inventory but resulting in fluctuating workforce levels.

Hybrid Strategy

A production strategy that combines a stable core workforce with overtime, part-time labor, or subcontracting to manage demand peaks.

Bill of Materials (BOM)

A structured list of all subassemblies, intermediate parts, and raw materials required to produce a single finished end item.

Gross Requirement

The total required quantity of an item calculated in MRP before taking existing inventory on hand into account.

Net Requirement

The unsatisfied demand for an item in a specific period, calculated as $\text{Net Requirement} = \text{Gross Requirements} - \text{On Hand Inventory}$.

MRP Explosion

The process of converting planned order releases for parent items into gross requirements for lower-level components using planning factors.

Resource Requirements Planning (RRP)

A long-range capacity planning check used to verify whether long-term aggregate capacity can support the Aggregate Production Plan.

Rough-Cut Capacity Planning (RCCP)

A medium-range capacity check evaluating whether critical equipment and resources can support the Master Production Schedule.

Capacity Requirements Planning (CRP)

A detailed short-range check verifying whether shop floor work centers have sufficient capacity to execute the MRP schedule.

Distribution Requirements Planning (DRP)

A time-phased inventory planning model for managing finished goods replenishment across a network of distribution centers.

Advanced Planning & Scheduling (APS)

An advanced system using mathematical algorithms to evaluate material, production, and capacity constraints across the supply chain simultaneously in real time.

Enterprise Resource Planning (ERP)

An enterprise software suite connecting functional areas like finance, HR, procurement, operations, and sales through a single centralized database.

Make-to-Stock (MTS)

A manufacturing strategy where products are manufactured based on demand forecasts prior to orders, prioritizing economies of scale.

Assemble-to-Order (ATO)

A hybrid manufacturing strategy where products are assembled from standard pre-made components after receiving a customer order.

Make-to-Order (MTO)

A manufacturing strategy where finished products are produced only after receiving an actual customer order, utilizing raw materials on hand.

Engineer-to-Order (ETO)

A pull manufacturing strategy where products are designed, engineered, and manufactured from scratch according to unique customer specifications.

Manufacturing Production Strategies Comparison

A summary matrix comparing Make-to-Stock, Assemble-to-Order, Make-to-Order, and Engineer-to-Order strategies across definitions, supply chain position, process sequence, trade-offs, and examples.