Rutgers Intro to Supply Chain Management Exam 1 Bell

Supply Chain

The flow of materials and products from SUPPLIERS to MANUFACTURERS to CONSUMERS

4 Flows of Supply Chain

- Product and service flow

- Information flow

- Payment Flow

- Returns Flow

What is the difference between Tier 1 and other tier suppliers?

You have a direct relationship with tier 1 suppliers, and indirect with the others

Supply Chain Management

The coordination of the network of otherwise independent trading partners who are creating a desired product or service

The goals of Supply Chain Management

- To maximize customer service and profit

- Do minimize cost and inventory

facilitating goods

Tangible elements that are used or consumed by the customer or the service provider along with the service provided

6 elements of the SCOR Model

- plan

- source

- make

- deliver

- return

- enable

Foundations of Supply Chain Management

Supply, operations, logistics, integration

Operations Management

A specialized area in management that converts or transforms resources (including human resources) into goods and services.

Supply Management

in its broadest form, refers to the processes that enable the progress of value from raw material to final customer and back to redesign and final disposition

Logistics Management

Planning, implementing, and controlling the efficient and effective flow and storage of products and information from the point of origin to consumption to meet customers' needs and wants

Integration Management

managing all of the enabling systems necessary to facilitate integration of operations

Independent Demand

Demand for finished products

Dependent Demand

demand for items that are subassemblies or component parts to be used in the production of finished goods

Qualitative methods of forecasting

jury of executive opinion, delphi method, historical analysis, market survey

Jury of executive opinion

a forecasting technique that uses the opinion of a small group of high-level managers to form a group estimate of demand

Delphi Technique

A decision-making technique in which group members do not meet face-to-face but respond in writing to questions posed by the group leader.

historical analogy

a forecasting technique that uses data and experience from similar products to forecast the demand for a new product

customer survey

measures how satisfied customers are with the organization's performance

quantitative forecasting methods

Time series: Naive, simple moving average, weighted moving average, exponential smoothing, linear trend

Cause and effect: simple regression, multiple regression

Naive method

forecasting method that assumes next period's forecast is equal to the current period's actual value

Simple Moving Average

forecast is the average of a fixed number of past periods

weighted moving average

a forecasting model that assigns a different weight to each period's demand according to its importance

Exponential Smoothing

A weighted-moving-average forecasting technique in which data points are weighted by an exponential function.

linear trend

a straight line (line of best fit) can be drawn through the data, with sales as the y axis and quarters as the x axis

Trend Variations

linear trend, s-curve, asymptotic, exponential

Linear trend

line of best fit

S-curve trend

Looks like a positive S

Asymptotic trend

concave down

exponential trend

concave up

Production strategies

Level production, chase production, hybrid production

Level production strategy

the firm produces at a constant rate over the year

Chase production strategy

a production strategy that adjusts output to exactly match the demand during each production period

Hybrid production strategy

combines level and chase strategies to match demand as closely as possible

Material Requirements Planning (MRP)

A planning system that schedules the precise quantity of materials needed to make the product

Pros of MRP

- Materials required for production are available on time

- Facilitates lower inventory levels

- Helps optimize the use of production resources and lowers costs

- Works well with make to order

Cons of MRP

- MRP ignores capacity

- There is a loss of visibility for products with a multi-level bill of materials

- Does not work well for make-to-order

Time bucket

the individual time period for planning

Parent item

Item produced from one or more components

Components

items that become part of the final product

Planning factor

The number/quantity of each component or material needed to produce a single unit of the parent item

MRP Explosion

The process of converting a parent item's planned orderreleases into component gross requirements

Pegging

The process of identifying the parent items that have generated a given set of material requirements for an item

Lot size

order size for MRP logic

Safety stock

the amount of inventory carried in addition to the expected demand

Bill of materials (BOM)

document that shows an inclusive listing of all component parts and assemblies making up the final product

Available to promise

A calculation to provide a response to customer order inquiries,based on product availability

Time fencing

to minimize the impact of changes in the MPS

Master Production Schedule (MPS)

A time-phased plan specifying how many and when the firm plans to build each end item.

Sales & Operations Planning (S&OP)

A method companies use to align production with demand by merging tactical and strategic planning methods across functional areas of the business

Aggregate Production Planning (APP)

balances production, inventory, resources and demand

Types of inventory stock levels

strategic stock, safety stock, cycle stock, pipeline inventory

Strategic Stock

Additional inventory beyond cycle and safety stock, generally used for a very specific purpose or future event, and for a defined period of time.

Cycle stock

the amount of inventory needed to meet expected demand

Pipeline Inventory

inventory that is created when an order for an item is issued but not yet received

Costs Related to inventory

Direct/Indirect

Fixed/Variable

Order/Carrying

Direct costs

Costs that can be specifically identified with a particular project or activity.

indirect costs

Costs that cannot be easily and accurately traced to a cost object.

Variable costs

costs that vary with the quantity of output produced

Fixed costs

costs that remain constant as output changes

Carrying costs

costs that rise with increases in the level of investment in current assets

Order costs

costs of processing orders, including clearing costs and the costs of recording transactions

Periodic review system

an inventory system operated according to a fixed order interval policy

Continuous review system

updates inventory balances after each inventory transaction

Reorder point

specifies the level to which the inventory balance of an item must fall before an order to replenish stock is initiated

ROP = Demand during lead time (dL) + Safety stock (If applicable)

EOQ (Economic Order Quantity)

the optimal order size to minimize the sum of ordering, carrying, and stockout costs

single period inventory model

model used to determine the order size for a one-time purchase

Linear barcode

A series of alternating bars and spaces printed or stamped on parts, containers, labels, or other media, representing encoded information that can be read by electronic readers

2d barcode

a barcode that represents data with a matrix of small squares and stores information both horizontally and vertically so it can hold significantly more data than a conventional one-dimensional barcode

RFID (radio frequency identification)

uses radio signals to communicate with a tag placed in or attached to an object

ABC System

a method for classifying inventory items according to their dollar value to the firm based on the principle that only a few items account for the greatest dollar value of total inventory