Supply Chain Management Exam 1 Vocabulary Flashcards

Vocabulary practice flashcards covering core definitions, concepts, and key terminology from Chapters 1 through 3 of Introduction to Supply Chain Management.

Inbound Logistics

Logistics operations focused on materials and goods coming into the organization.

Outbound Logistics

Logistics operations focused on moving finished goods out to customers.

Tier 1 Supplier

Supply chain partners that a manufacturer deals with directly.

Tier 2 Supplier

Supply chain partners that supply Tier 1 suppliers, located two steps away from the manufacturer (e.g., raw material suppliers).

Tier 1 Customer

Direct customer partners that a manufacturer deals with directly, such as a wholesaler or distributor.

Tier 2 Customer

Customer partners located two steps away from the manufacturer, such as a retailer.

Facilitating Goods

Tangible items, such as food, supplies, and equipment, that are used in the process of delivering intangible services.

Reverse Logistics

The logistics process of moving products backward through the supply chain for repair, recycling, reclamation, or disposal.

Logistics

A component of Supply Chain Management that includes warehousing (material handling and storage), distribution, and transportation.

Economies of Scale

The economic concept where the cost per unit decreases as the quantity purchased or produced increases.

Efficient Supply Chain Model

A supply chain model designed for stable, predictable functional products, focusing on low cost.

Responsive Supply Chain Model

A supply chain model designed for new, fast-changing innovative products, focusing on speed and agility.

Make-to-Stock

Also known as the Push Model or Make to Forecast; a strategy that starts with a demand forecast to achieve economies of scale and reduce costs.

Make-to-Order

Also known as the Pull Model; a production strategy that starts with a customer order and maintains low inventory.

Demand Planning

The process of combining quantitative forecasting math with human management judgment to estimate demand.

Independent Demand

Demand for finished goods or spare parts that is forecasted in the Master Production Schedule (MPS).

Dependent Demand

Demand for component parts or raw materials that is calculated directly in Material Requirements Planning (MRP).

Qualitative Forecasting

Forecasting techniques based on human opinion and judgment, such as Historical Analogy, Personal Insight, Delphi Method, Jury of Executive Opinion, and Customer Surveys.

Quantitative Forecasting

Forecasting techniques based on mathematical calculations and historical data, categorized into Time Series and Cause and Effect models.

Regression

A quantitative forecasting approach that establishes a historical cause-and-effect relationship between an independent variable and a dependent variable.

Bullwhip Effect

The magnification of demand variability as orders move upstream in a supply chain due to guessing and over-reacting.

Agility

The ability of a supply chain to respond quickly to changes without sacrificing quality or raising costs.

Random Variation

A demand pattern caused by sudden, unexpected events such as a hurricane or labor strike.

Seasonal Variation

A demand pattern that repeats at regular intervals every year, such as demand for snow shovels in winter.

Cyclical Variation

A demand pattern characterized by wavelike fluctuations that extend longer than a year, such as macroeconomic business cycles.

Trend Variation

A demand pattern characterized by a steady long-term upward or downward movement over time.

Naïve Forecasting Method

A time-series forecasting technique where the forecast for the next period is set equal to the actual demand from the most recent period ($\text{Next} = \text{last actual}$).

Simple Moving Average (SMA)

A forecasting method calculated by adding actual demand over the last $n$ periods and dividing by $n$.

Weighted Moving Average (WMA)

A forecasting method where demand in each prior period is multiplied by a specific weight (weights summing to $1$) and then summed.

Exponential Smoothing

A forecasting calculation using the formula $\text{Forecast} = (\text{Actual} \times S) + (\text{Forecast} \times (1 - S))$, where $S$ represents the smoothing factor.

Mean Absolute Deviation (MAD)

A forecast error metric representing the average error in units, calculated while ignoring error signs to measure magnitude.

Mean Absolute Percentage Error (MAPE)

A forecast error metric representing the average forecast error expressed as a percentage of actual demand.

Annual Business Plan

A long-range strategic plan covering a period of $2$–$10$ years, updated annually.

Aggregate Production Plan (APP)

A long-range production plan that targets product families at least $1$ year out and is updated quarterly.

Master Production Schedule (MPS)

An intermediate tactical plan that specifies which end items (finished products) to produce, how many, and on what dates.

Material Requirements Planning (MRP)

A short-range operational system that calculates exact requirements for dependent items, parts, and materials.

Time Fences

Boundaries established in the Master Production Schedule to restrict changes inside a firm period and minimize disruptions.

Distribution Requirements Planning (DRP)

A planning technique that determines the required quantity of finished products to allocate and transport to each distribution warehouse.

Enterprise Resource Planning (ERP)

A software system that integrates all functional departments across an organization using a single shared database.

Scheduled Receipt

An order that has already been placed and is currently in transit, requiring no additional lead time.

Planned Delivery

An order that has not yet been released and must go through the full manufacturing or purchasing lead time.

Level Production Strategy

A production strategy that maintains constant output every period while allowing inventory levels to fluctuate with demand.

Chase Production Strategy

A production strategy that dynamically matches production output to demand by hiring and laying off low-skill workers.

Hybrid Production Strategy

A production strategy that maintains a stable core workforce while utilizing overtime or temporary employees to absorb demand spikes.

Bill of Materials (BOM)

An complete list of every raw material, part, and component required to build a finished parent product.

Parent Item

An independent demand finished good or assembly in an MRP system that receives the primary forecast.

Component

A dependent demand item or part required by a parent item to complete production.

Planning Factor

The specified quantity of a component part required to produce one single unit of a parent item.

Pegging

The process in MRP of tracing a dependent component part back up to the higher-level parent item that created the demand.

Network connection between suppliers, manufacturers, and customers

in a supply chain that enables the flow of goods, information, and finances.

Logistics and enablement

The coordination and management of the flow of goods, services, and information through the supply chain to fulfill customer requirements efficiently.

Supply Chain Management (SCM)

The coordination of a network of independent trading partners creating a desired product or service and moving it to customers when and where they want it.

Sales & Operations Planning (S&OP)

A monthly process integrating marketing, sales, and operations plans into a single aggregate plan to balance supply and demand in the near-to-intermediate term.

Primary formula for profit calculation in SCM

Profit=Revenue−Costs

The 4 Foundations of Supply Chain Management

Operations Management, Supply Management, Logistics Management, and Integration.

Operations Management

The SCM foundation focused on managing internal resources, process management, forecasting, demand planning, and inventory systems.

Supply Management

The SCM foundation focused on managing purchasing, strategic sourcing, and supplier relationship management.

Logistics Management

The SCM foundation focused on managing all forward and reverse movement and storage of products, including warehousing, distribution, and transportation.

Integration

The SCM foundation focused on managing enabling systems, supply chain risk, and security management to tie all operations together.

Multiple Regression

A quantitative cause-and-effect forecasting model that establishes a relationship between demand and two or more independent variables, such as price and advertising.

MRP Ending Inventory Balance Formula

Ending on hand = Starting on hand − Gross + Scheduled receipts + Planned delivery

Forecast Granularity Principle

The rule stating that as a forecast becomes more detailed or granular, its overall accuracy decreases.

Primary operational benefit of Collaborative Planning, Forecasting, and Replenishment (CPFR)

Reduces safety stock and mitigates the bullwhip effect by sharing plans and forecasts across supply chain partners.

Counter-Seasonal Product Mixing

An Aggregate Production Plan strategy of offering complementary products in opposite seasons (such as lawnmowers in summer and snow blowers in winter) to maintain stable plant capacity.

Outsourcing Strategy Rule

A firm should outsource non-core work to external partners while maintaining and developing its core competencies internally.

Qualitative Forecasting

A forecasting approach based on human opinion, intuition, and judgment, typically utili

Quantitative Forecasting

A forecasting approach based on mathematical models and historical numerical data.