SCM 301 Exam 1

Which of the following best illustrates the impact of systems thinking on supply chain management?

Ensuring that all elements of the supply chain are aligned to enhance overall performance

How does the Supply Chain Operations Reference (SCOR) model enhance the efficiency of supply chains?

 By providing a standardized framework to analyze and improve supply chain processes.

What is a Supply chain?

The flow of goods and/or services, money and information, from the point/moment of need identification to the point of value for the final customer

What is a Supply chain strategy

overarching plan for the planning, design, execution, control, and monitoring of supply chain activities

What are Core competencies?

 the defining products, services, skills, and capabilities that give a business advantages over its competitors

What are the Four Performance Dimensions?

1. Integration

2. Operations

3. Logistics

4. Supply

A company wants to improve supply chain performance beyond its own operations. Which approach best reflects the principles described?

Coordinate suppliers, logistics providers, wholesalers, retailers, and customers across product, information, and financing flows.

What firms gain the most from successful SCM?

Firms with large system inventories

What is Supply chain resilience?

ability of a supply chain to withstand disruption and minimize the effects of upheaval on revenue, costs, and customers 

What is Reduced Bullwhip Effect?

Erratic demand causing forecasts to include safety stock, which in turn magnify forecasts and cause production planning problems (extra water bottle pack)

A firm wants to reduce the impact of supplier disruptions while limiting demand amplification across its supply chain. Which approach best aligns with the recommended supply chain management practices?

Coordinate planning and information sharing across key and second-tier partners

What is the triple bottom line?

Taking care of people, planet, and profits

Which approach best reflects how supply chain management has evolved from its earlier functional roots to its current emphasis?

Balancing people, planet, and profits while protecting future generations

A firm wants to improve supply chain performance across several partner organizations. Which approach best aligns with the principles described?

Coordinate processes around common goals while balancing transportation, distribution, capacity, and inventory trade-offs

What are Supply chain analytics?

Examining raw supply chain data and reaching conclusions or making predictions with the information 

What is a Circular economy?

Economic system for eliminating waste and the continual use of resources

A firm wants its supply chain performance system to support continuous improvement across multiple supplier and customer tiers. Which design best reflects the principles described?

 Use linked financial and nonfinancial measures, communicate them broadly, and develop them through shared planning and cooperation

A supply chain serves customers who value product variety, frequent delivery, high quality, and sustainability more than the lowest price. Which strategy best aligns the supply chain with these requirements?

 Audit and adjust member capabilities, strengthen cooperation, and reassess performance regularly.

A firm evaluates departments using output standards and labor productivity. Managers meet targets by producing excess inventory and purchasing unnecessary supplies. What best explains this outcome?

The measures encourage local target attainment at the expense of long-term firm or supply chain performance.

What are the Steps to develop world class performance measures?

• Identify the firm's strategic objectives

• Develop an understanding of each functional areas set of requirements for achieving the strategic objectives

• Design and document performance measures for each functional area that adequately track each require capability

• Assure the compatibility and strategic focus of the performance measures to be used

What is Balanced Scorecard?

Approach developed in 1992 by Kaplan, Norton, and company reps

What are Ways to closely match supply and demand?

• Supplier holds plenty of stock available at all times

• Use of flexible pricing to change demand

• Short term methods to increase supply (overtime, subcontracting, temporary workers etc)

What is CPFR (Collaborative, planning, forecasting, and replenishment)?

Seeks cooperative management of inventory through joint visibility and replenishment of inventory 

What is Jury of Executive Opinion?

• group of senior executives make forecast

What is Delphi Method?

• Internal and external experts are surveyed during several rounds

What is Sales Force Composite?

•  knowledge of the market and estimates of customers’ needs

What is Customer Surveys?

• Questionnaires uses input from customers

What is Time series forecasting?

• Assumes the future is an extension of the past

A company needs to forecast demand several years ahead while accounting for historical patterns and changing customer needs. Which approach best fits the forecasting guidance provided?

Combine quantitative forecasting techniques with qualitative forecasting techniques

A product’s demand has remained relatively stable across recent periods, and historical demand data are available. Which forecasting approach best fits this situation?

Use a simple moving average based on historical demand

What is Weighted moving average?

Weight increases as you get closer to present

What is Mean absolute deviation (MAD)?

MAD of 0 indicates the forecast exactly predicted demand

What is Mean absolute percentage error (MAPE)?

provides a perspective of the true magnitude of the forecast error

What is Mean squared error (MSE)?

analogous to variance since large forecast errors are heavily penalized?

What is Running Sum of Forecast Errors (RSFE)?

indicates bias in the forecasts or the tendency of a forecast to be consistently higher or lower than actual demand

In a four-period weighted moving average, which observation has the greatest influence on the forecast?

The most recent period, because it receives the largest weight

 Following pandemic-related shutdowns, panic buying, and sudden shortages, which response would best improve an organization’s ability to manage future demand disruptions?

 Revise forecasting models, identify demand drivers, and improve supply chain communication

A company wants to use predictive AI to improve demand forecasts, optimize inventory, and reduce waste. Which approach best supports these goals?

Strengthen data governance, protect privacy, and use reliable current and past data

A company wants forecasts that respond quickly to changing consumer demand and improve through daily use. Which approach best reflects a complete demand sensing solution?

Combine real-time external data, AI/ML pattern recognition, and self-adjusting automated algorithms.

What is Machine learning?

Type of AI that uses algorithm to better predict data

What is AI Forecasting?

 application of AI and machine learning techniques to process large amounts of structured and unstructured data to predict outcomes and trends

What is Bullwhip effect?

exaggeration of demand that worsens downstream

What is Long-Range Aggregate Production Plan?

usually covers a year or more, construction of facilities and major equipment

Intermediate

 6-8 months, quantity and timing of end products (Master production schedule) MPS

Short-range

few days to few weeks (Materials required planning) MRP

What is Aggregate Production Plan?

Process that translates annual business plans and demand forecasts into a production plan for a product family

What is Chase Production Strategy?

Adjusts capacity to match demand

Make-to-order firms

One of a kind, specialty products

What is Level Production Strategy?

Relies on constant output varying and fluctuation

Make-to-stock firms

What is Mixed Production Strategy?

Maintains stable core workforce using overtime, sub-contracting, and part time

What is Master Production Schedule?

Exact items to be produced for a specific period

What is Master Requirements Plan?

system of converting end items from the MPS into a set of time-phased component parts requirements

What is System nervousness?

small changes in the upper-level production plan cause major changes in the lower-level production plan

What is Firmed Segment (AKA demand time fence)?

from current period to several weeks into future. Can only be altered by senior management

What is Tentative Segment (AKA planning time fence)?

from end of firmed segments to several weeks in future

What is Bill of materials (BOM)?

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

Level 0 - Independent Demand  item affected by trends

Level 1 - Dependent Demand item, all components and subassemblies required for final assembly

What is MRP (Material requirement planning)?

software based materials that calculate quantities, dates, etc 

What is SCOR Model Components?

Plan, Source, Make, Deliver, Return, Enable

What is Key Supply Chain Characteristics?

Collaborative, Agile, Resilient, Digital

What are core competencies?

the defining products, services, skills and capabilities that give a business advantages over its competitors

Traditional organizational cultures

emphasized short-term, company focused performance can conflict with the objectives of supply chain management

Reduced Bullwhip Effect

Erratic demand forecasts causing excess safety stocks, which cause production planning problems.

SCM reduces safety stocks and costs due to coordinated planning and better sharing of information

What is Rough-Cut Capacity Plan?

medium-range capacity plan that checks feasibility of MPS

What is Low-Level Coding?

assigns the lowest level on BOM to all common components to avoid duplicate MRP computations

What is Pegging?

Relates gross requirements for a part to the planned order releases

Nearly 70% of companies accelerated their...

digital footprint, including using technology to enable more seamless customer experiences

assessing the performance of several tiers of suppliers and customers....

further complicates an already formidable performance measurement problem

Performance measures must be...

visible and communicated to all SC members while managers collaborate to achieve results that allow firms to plan ahead, create value, and realize benefits

Why was Balanced Scorecard created?

to align an organization's performance measures with its strategic plans and goals

Web-based balanced scorecard applications are also sometimes referred to as...

Performance Dashboards

Rules for Creating a Process Map

1) identify the entity that will serve as the focal point

2) identify clear boundaries and starting and ending points

3) keep it simple

Theory of Constraints

An approach to visualizing and managing capacity which recognizes that nearly all products and services are created through a series of linked processes

Steps to managing a constraint

1. Identify

2. Exploit

3. Subordinate everything

4. Elevate

5. Find the new constraint and repeat

When should you use a combination of quantitative and qualitative techniques?

For long-time horizon forecasts

Trend Variations

increasing or decreasing over many years

Cyclical Variations

wavelike movements that are longer than a year (business cycle)

Seasonal Variations

show peaks and valleys that repeat over a consistent interval such as hours, days, weeks, months, years, or seasons

Random Variations

due to unexpected or unpredictable events such as natural disasters

Naive Forecast

the estimate of the next period is equal to the demand in the past period

Simple Moving Average

Uses historical data to generate a forecast. Works well when demand is stable over time.

Forecast Error

The difference between actual demand and what was forecast.

Mean Squared Error

analogous to variance, large forecast errors are heavily penalized

Tracking signal

determines if forecast is within acceptable control limits. If the tracking signal falls outside the pre-set control limits, there is a bias problem with the forecasting method and an evaluation of the way forecasts are generated is warranted.

Demand Sensing

A way of identifying short-term trends quickly so companies can better forecast what, when, and where consumers want goods.

Cloud-Based Forecasting

Using supplier-hosted or software-as-a-service (SaaS) advanced forecasting applications that are provided to companies on a subscription basis.

Missed due date or stockout.....

magnifies the bullwhip effect

Master Production Schedule

a plan that details what is to be produced and when. spans 6-18 months. Intermediate. production quantity to meet demand from all sources & used forcomputing the requirements of all time-phased end items

Indented Bill of Materials

multilevel BOM which shows the parent-component relationships & the specific units of components known as the planning factor.

Closed-Loop MRP

includes aggregate production planning, master production scheduling, and capacity requirements planning

MRP II

Combined MRP with materials and resource planning. Complete MRP II system includes modules that

-Book orders

-Schedule production

-Control Inventory

-Manage Distribution

-Perform accounting and financial analyses

Parent

Item generating demand for lower-level components.

Components

parts demanded by a parent

Net Requirement

equals gross requirement for that period minus the current on-hand inventory and any scheduled receipts

Project On-Hand Inventory

equals beginning inventory minus gross requirement, plus scheduled receipt and any planned receipt from an earlier planned order release

Time Bucket

time period used on the MRP

Explosion

describes process of converting a parent item's planned order releases into component gross requirements

Planning Factor

Number of components needed to produce a unit of the parent item

Firmed Planned Order

Planned order that the MRP computer logic system does not automatically change when conditions change to prevent system nervousness