SUPPLY CHAIN TAITT EXAM 1

What are the goals of Supply Chain Management?

Increase customer service and reduce inventory investment and operating expenses

What are the 5 modes of transportation?

Truck, Rail, Air, Pipeline, Water

What are the 4 foundations of supply chain management?

Operations management, supply management, logistics management, and integration

Operations Management
-Managing Internal Resources

Forecasting and Demand Planning
Planning Systems
Inventory Management
Process Management

Supply Management
-Managing all of the supplies and suppliers that are needed to run the business

Purchasing Management
Strategic Sourcing
Supplier Relationship Management

Logistics Management
-Managing all of the movement and storage of products and materials within the supply chain, whether the flow is forward or reverse

Warehousing & Distribution
Transportation
International Trade Management
Customer Relationship Management
Service Response Logistics

Integration
-Managing all of the enabling systems necessary to facilitate the complete integration of the operations, supply, and logistics functions outlined above

Enabling Systems
Supply Chain Risk and Security Management
Performance Measurement
Project Management

Push or Make-to-stock

Producing stock on the basis of anticipated demand. Demand forecasting can be done via a variety of sophisticated techniques.

Pull or Make-to-order

Producing stock in response to actual demand

Supply chain management starts with understanding the flow

A. True
B. False

A. True

It was intense global competition that led manufactures to adopt Supply Chain Management (SCM) and other practices such as Just-in-Time (JIT)

A. True
B. False

A. True

The goal of Supply Chain Management is to increase customer service by increasing inventory and reducing costs.

A. True
B. False

B. False

Service firms offer intangible products (meaning products that cannot be physically touched), therefore, they do not have a supply chain.

A. True
B. False

B. False

Which of the following statements is TRUE?

A. Supply chain management was invented by the auto manufacturing industry

B. Strategic partnerships are seen as one of the foundations of supply chain management

C. Purchasing is seen as the final and most difficult step in the supply chain

D. Logistics and Supply Chain Management are synonymous terms (i.e., they mean the same thing).

B. Strategic Partnerships are seen as one of the foundations of supply chain management

Which one of the following is NOT a common modes of transportation in the supply chain?

a. Air
b. Bus
c. Pipeline
d. Rail
e. Truck
f. Water

B. Bus

Successful modern supply chain management typically includes the practice of ?

a. Keeping high inventories throughout the supply chain
b. Always purchasing materials with the lowest per unit cost
c. Collaborating and sharing information between supply chain partners
d. Issuing ultimatums to your supply chain partners

C. Collaborating and sharing information between supply chain partners

Which one of the following is NOT one of the four Foundations of Supply Chain Management?

a. Logistics Management
b. Operations Management
c. Demand Management
d. Supply Management
e. Integration

C. Demand Management

Forecast

an estimate of future demand

Forecasting

the business function that estimates future demand for products so that they can be purchased or manufactured in appropriate quantities in advance of need

Demand

the need for a particular product or component

Demand Planning

the process of combining statistical forecasting techniques and judgement to construct demand estimates for products or services

Independent Demand

demand for an item that is unrelated to the demand for other items, such as finished product, a spare part, or a service part

Dependent Demand

demand for an item that is directly related to other items or finished products, such as a components or material used in making a finished product

What are the two basic forecasting techniques?

Qualitative and Quantitative

Qualitative Forecasting

Forecasting which is based on opinion and intuition

What are the five qualitative forecasting models?

Personal insight, Jury of executive opinion, delphi method, sales force estimation, and customer survey

Personal Insight

forecast is based on the inside of the most experienced, most knowledgeable, or most senior person available

Jury of executive opinion

forecast from people who know the most about the product and the marketplace that would likely form a jury to discuss and determine the demand

Delphi Method

forecast where the input of each of the participants is collected separately so that people are not influenced by one another

Sales force estimation

forecast performed specifically with a group of salespeople

Customer survey

forecast where customers are directly approached and asked to give their opinions about the particular product

Quantitative Forecasting

forecasting which uses mathematical models and historical data to make forecasts

What are the types of quantitative forecasting?

Time Series and Cause and effect

Time Series

based on the assumption that the future is an extension of the past. Historical data is used to predict future demand
( most frequently used amount all the forecasting models)

Cause and Effect

assumes that one or more factors predict future demand

Five models of Time Series

Naive forecasting, simple moving average forecasting, weighted moving average, exponential smoothing, and linear trend

Two models of Cause and Effect

Simple regression and multiple regression

Mean absolute deviation (MAD)

measures the size of the forecast error in units. It is calculated as the average of the unsigned, i.e., absolute, errors over a specified period of time.

MAD = ∑(|A - F|) / n

Mean Absolute Percent Error (MAPE)

measures the size of the error in percentage terms. It is calculated as the average of the unsigned percentage error.

MAPE = ∑ ((|A - F|)/ A) / n

Mean Squared Error (MSE)

magnifies the errors by squaring each one before adding them up and dividing by the number of forecast periods.

MSE = ∑ (A-F) ² / n

The Qualitative forecasting method is based on opinion & intuition

A. True
B. False

A. True

Forecasts are more accurate the farther out into the future that you forecast.

A. True
B. False

B. False

Cause-and-Effect Models can have multiple independent variables.

A. True
B. False

A. True

Independent Demand is demand for an item that is directly related to other items or finished products, such as a component or material used in making a finished product.

A. True
B. False

B. False

What does the acronym CPFR represent?

a. Coordinated Planning & Forecasting Relationships
b. Collaborative Planning, Forecasting, & Replenishment
c. Centralized Purchasing & Forecasting Relationships
d. Collaborative Purchasing, Forecasting, & Receivables

b. Collaborative Planning, Forecasting, & Replenishment

Which one of the following is NOT a type of qualitative forecasting?

a. Sales force composite
b. Consumer survey
c. Jury of executive opinion
d. Naïve method

D. naive method

In the absence of any other information or visibility, individual supply chain participants can begin second-guessing what is happening with ordering patterns, and potentially start over-reacting. This is know as?

a. Forecast Bias
b. The Bullwhip Effect
c. A Tracking Signal
d. The Running Sum of Forecast Errors

B. The Bullwhip Effect

When creating a quantitative forecast, data should be evaluated to detect for a repeating pattern of demand from year to year, or over some other time interval, with some periods of considerably higher demand than others. This is known as a?

a. Trend Variation
b. Random Variation
c. Seasonal Variation
d. Cyclical Variation

C. Seasonal Variation

Supply Chain Planning

the element of supply chain management responsible for determining how best to satisfy the requirements created by the demand plan

Three board categories of supply chain planning

Long range, intermediate range, and short range

Long Range

involves planning for actions such as construction of facilities and major equipment purchase
-executive level

Intermediate Range

shows the quantity and timing of end items (master production schedule)
-Mid level

Short Range

detailed planning process for components and parts to support the master production schedule (Materials requirement planning)
-Planner, 1st line supervisor

Closed Loop MRP

synchronizes the purchasing or materials procurement plans with the master production schedule

Manufacturing Resource Planning (MRP II)

computer based system can create detailed production schedules using real time data

Enterprise Requirements Planning (ERP)

an extension of MRP II and includes DRP which determines the need to replenish finished product inventory

Sales & Operations Planning (S&OP)

a process that brings all the demand and supply plans for the business (sales, marketing, development, production, sourcing, and finance) together to provide management with the ability to strategically direct the business to achieve a competitive advantage

Aggregate Production Plan (APP)

hierarchical planning process that translate annual business, marketing plans, and demand forecasts into a production plan for a product family in a plant or facility

Master Production Schedule (MPS)

detailed disaggregation of the aggregate production plan (APP), listing the exact end items to be produced by a specific period

Available-to-Promise (ATP)

business function that provides a response to customer order inquiries, based on resource availability. It generates available quantities of the requested product and delivery due dates

Methods of calculating the available-to-promise quantities

Discrete Available-to-promise, cumulative available-to-promise

Time fencing

to minimize the impact of changes in the MPS

What are the three basic production strategies?

Level production strategy, chase production strategy, and mixed production strategy

Level production strategy

relies on a constant output rate while varying inventory and backlog according to fluctuating demand. firm relies on fluctuating finished goods and backlogs to meet demand. works well for make to stock firms

Chase production strategy

adjusts capacity to match demand. firm hires and lays off workers to match finished output to demand. finished goods inventory remains constant. works well for make to order firms

Mixed Production stategy

maintains stable core workforce while using other short term means, such as overtime, subcontracting, and part time helpers to mange short term demand

Bill of Materials (BOM)

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

Capacity Planning

determining the amount of capacity required to produce a good or service in the future

Resource Requirement Planning (RRP)

a long range capacity planning module used to check whether aggregate resources are capable of satisfying the aggregate production plan

Rough Cut Capacity Planning (RCCP)

a medium range capacity planning module used to check the feasibility of the master production schedule

Capacity Requirement Planning (CRP)

short range capacity planning module used to check the feasibility of the material requirements plan

Distribution Requirements Planning (DRP)

a time phased finished good inventory replenishment plan in a distribution network. the function of determining the need to replenish inventory at branch warehouses

Enterprise Requirement Planning System (ERP)

information system connecting all functional areas and operations of an organization, and in some cases suppliers and customers, via common software infrastructure and database

Two types of Implementing ERP

best of breed, single integrator solution

The goal of supply chain planning is to balance supply and demand in a way that realizes the financial and service objectives of the company.

A. True
B. False

A. True

Material Requirement Planning is the system intended to develop long-range plans (more than a year away) concerning product families manufactured by the organization

A. True
B. False

B. False

The three basic production strategies for addressing the aggregate planning problem are the chase production strategy, the level production strategy, and the mixed production strategy

A. True
B. False

A. True

The Chase Production Strategy relies on a constant output rate and capacity while varying inventory and backlog levels to handle the fluctuating demand pattern

A. True
B. False

B. False

Which of the following is an engineering document that shows an inclusive listing of all the component parts and assemblies making up the final product?

a. Master Production Schedule
b. Bill of Materials
c. Distribution Requirement Plan
d. Resource Requirement Plan

B. Bill of Materials

The medium-range capacity planning technique used to check the feasibility of the Master Production Schedule (MPS) is called:

a. Resource Requirement Planning (RRP)
b. Rough-cut Capacity Planning (RCCP)
c. Capacity Requirement Planning (CRP)
d. None of the above

B. Rough-cut capacity planning

Which of the following MRP terms represents a committed order awaiting delivery for a specific period?

a. Projected on-hand inventory
b. Time bucket
c. Net requirement
d. Scheduled receipt

D. schedule receipt

Organizations that choose to implement one single system with all of the desired applications from a single vendor is said to have chosen a:

a. Best-of-breed solution
b. Elite integrator solution
c. Single integrator solution
d. Premier application solution

C. single integrator solution

Inventory

quantities of goods and materials that are held in stock. includes all of the raw materials and work in process items used to support production, all of the finished products needed to provide customer service and all of the other materials and supplies needed to run a business

Four Main categories of inventory

Raw materials, work-in-progress, finished goods, maintenance, repair, and operating supplies

Raw Materials

purchased items or extracted material that are converted via the manufacturing process into components and products

Work-in-Process (WIP)

a good or goods in various stages of completion throughout the plant, spanning from raw material that has been released for initial processing up to fully processed material awaiting final inspection and acceptance as finished goods.

Finished Goods

those items on which all manufacturing operations, including final testing, have been completed. These produces are available for sale and/or shipment to the customer

Maintenance, Repair, and operating (MRO)

items used in support of general operations and maintenance such as maintenance supplies, spare parts, and consumables used in the manufacturing process and supporting operations

Service Inventory

activities carried out in advance of the customers arrival

Functions of Inventory

1. to meet customer demand
2. to buffer against uncertainty in demand and/or supply
3. to decouple supply from demand
4. to decouple dependencies in the supply chain

Inventory Management

the function of planning and controlling inventories. goal is to help a company be more profitable by lowering the cost of goods sold and/or by increasing sales

Three levels of internal inventory

Cycle stock, safety stock, and strategic stock

Cycle stock

inventory a company builds to satisfy its immediate demand

Safety stock

buffer stock, inventory that is above and beyond what is actually needed to meet anticipated demand

Strategic stock

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

Types of external inventory

pipeline inventory and obsolete inventory

Pipeline inventory

inventory in transit. inventory held/owned by suppliers, or by wholesalers, distributors, retailers, and customers

Obsolete Inventoy

inventory items that have met the obsolescence criteria established by the company

Types of inventory systems

ABC system
BIN system
Base stock level system
single period inventory model

Economic Order Quantity (EOQ) Model

a quantitative decision model based on the trade off between annual inventory carrying costs and annual order costs